March 2011 - Alaska Business Monthly

Legal Issues: Contract Employees

March 2011

Banking on Agriculture Will loans dry up, leaving industry in fray?

Page 64

Special Section: Construction Directory

$3.95

Ken Gerondale CEO/President Construction Machinery Industrial LLC

Heavy Equipment Sales Trending Up Mining projects sustain trade in soft construction market Page 104

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E M P L O Y E E

B E N E F I T S

MARCH 2011 TA B L E O F C O N T E N T S

D E PA R T M E N T S From the Editor . . . . . . . . . . . . . . . 7 Inside Alaska Business . . . . . . . . 8 Right Moves . . . . . . . . . . . . . . . . 26 Events Calendar . . . . . . . . . . . . . 38 Market Squares . . . . . . . . . . . . . 45 Alaska Trends . . . . . . . . . . . . . 119 Ad Index . . . . . . . . . . . . . . . . . . 122

ABOUT THE COVER Ken Gerondale, CEO and president of Construction Machinery Industrial LLC, was interviewed this issue for a Building Alaska story on commercial construction vehicles. Story begins on page 104.

Cover photo ©2011 Chris Arend.

R E G U L A R F E AT U R E S

ARTICLES

View from the Top

Legal Issues Linda Vollertsen, Owner ����������������������������������������������� 11 Are Independent Contractors Your Company’s Ticking Time Bomb? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Terra Bella Inc. Be sure you understand State and federal laws

By Renea I. Saade

By Peg Stomierowski

Associations

Oil & Gas Alaska Forest Association ������������������������������������������� 12 Surviving an Oil Spill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Supporting Alaska’s timber industry

By Tracy Barbour

Alaskans teach southern states how to cope

By Heidi Bohi

HR Matters

Film Does Religion Play a Part in Your Business ��������������� 25 Alaska Travel Industry Association Updates TV Ads . . . . . . 34

By Lynne Curry

Alaska This Month

New ads take advantage of Film Office incentives

By Tracy Kalytiak

Oil & Gas Ski Race Caps Nordic Season ������������������������������������� 36 Refineries Okay Despite Challenges . . . . . . . . . . . . . . . . . . . 40 Tour of Anchorage draws nearly 2,000 racers

By Nancy Pounds

Providing fuel to Alaskans and beyond

By Mike Bradner

Towns in Transition

Oil & Gas Whittier Awaits ��������������������������������������������������������������� 50 Arctic Poised to Become Next Economic Hub . . . . . . . . . . . 46 Residential and commercial development

By Heidi Bohi

Regional Review

As ice melts, new opportunities, challenges arise for Alaska’s northern communities

By Vanessa Orr

Telecommunications Bristol Bay Region, Home to the World’s Largest Sockeye Salmon Fishery ������������������������������� 52 Connecting Southwest Alaska . . . . . . . . . . . . . . . . . . . . . . . . 56 May be home to huge mining operation

By Tracy Barbour

GCI’s TERRA-SW hybrid network

By Heidi Bohi

Ripe for Redevelopment

Financial Services Alaska Credit Union Evolution . . . . . . . . . . . . . . . . . . . . . . . . 60

Southcentral energy benefit

By Gail West

financial institutions

By Tracy Kalytiak

Revitalizing the Knik Arm Power Plant ����������������������� 84 Employee-serving nonprofits have become full-service community

ARTICLES

Financial Services Agricultural Revolving Loan Fund Running Dry . . . . . . . . . 64 Could Alaska face a land without agriculture?

Health & Medicine

By Deborah Jeanne Sergeant American Cancer Society Provides Alaskans with Help, Hope . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Environmental Air, Water and Soil Quality Control . . . . . . . . . . . . . . . . . . . . 67 Alaska businesses support ongoing partnerships and teamwork

By Vanessa Orr

4

Environmental services companies help protect environment, investments

By Vanessa Orr

(continued on page 6)

www.akbizmag.com • Alaska Business Monthly • March 2011

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MARCH 2011 TA B L E O F C O N T E N T S ARTICLES

ARTICLES

Environmental Sustainable Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Winter Construction in Alaska . . . . . . . . . . . . . . . . . . . . . 100

Environmentally friendly stores spring up in Anchorage

By Jody Ellis-Knapp

Native Business Native Corporations Diversify, Reap Rewards . . . . . . . . . . 74 Not even recession holds them down

By Julie Stricker

Cold hampers some projects, helps others

By Louise Freeman

Heavy Equipment Sales Trending Up . . . . . . . . . . . . . . . 104 Mining projects sustain trade in soft construction market

By Jack E. Phelps

Alaska ‘Top of its Game’ . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Transportation Alaska’s Time-Sensitive Freight . . . . . . . . . . . . . . . . . . . . . . 78 Important air cargo industry segment

By Tracy Barbour

State’s construction sector will be busy in 2011

By Jack E. Phelps

Plenty of Applicants in Construction Industry . . . . . . . . 112

By Deborah Jeanne Sergeant

Oil & Gas OP-ED Why ANWR? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 Is there really any oil there?

By Irven F. Palmer Jr.

BUILDING ALASKA SPECIAL SECTION Spinell Homes Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Challenges are there, but company doing well

By Stephanie Jaeger

2011 Alaska Business Monthly Construction Directory . . 90

CORRECTION Thank you for your article “MBA Options for Alaskans” in the January 2011 issue of Alaska Business Monthly. The article presents a great deal of valuable information for prospective MBA students. I wanted to contribute a clarification about accreditation through the Association to Advance Collegiate Schools of Business (AACSB). The University of Alaska Anchorage MBA and Bachelors of Business programs have been accredited since 1994, and along with The University of Alaska Fairbanks are the only accredited programs in the state. The accreditation process is thorough and painstaking, but helps to promote the quality of our program offerings.

Sincerely, Rashmi Prasad, PhD Director of Graduate Programs College of Business and Public Policy University of Alaska Anchorage

YOU KNOW US, BUT DO YOU KNOW ALL THAT WE DO? Calista Corporation is the second largest of the 13 Alaska Native Regional Corporations.

We are dedicated to our Shareholders, our customers, and our mission.

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301 Calista Court, Suite A, Anchorage, AK 99518 ★ t: (907) 279-5516 ★ f: (907) 272-5060 ★ calista@calistacorp.com

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www.akbizmag.com • Alaska Business Monthly • March 2011

Fr

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the

Ed

itor

Grass Greener in 2011 Volume 27, Number 3 Published by Alaska Business Publishing Co. Anchorage, Alaska Vern C. McCorkle, Publisher 1991~2009

EDITORIAL STAFF Managing Editor Associate Editor

Art Director

Art Production Photo Consultant

Contributing

Photographers

Debbie Cutler Susan Harrington Candy Johnson Linda Shogren Chris Arend Judy Patrick Azimuth Adventure Photography

BUSINESS STAFF President National Sales Mgr.

Account Mgr.

Account Mgr. Traffic Coordinator

Accountant

Jim Martin Charles Bell Anne Campbell Bill Morris Ann Doss Mary Schreckenghost

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Pacific Northwest Advertising Sales 1-800-770-4373 ALASKA BUSINESS PUBLISHING CO., INC. ALASKA BUSINESS MONTHLY (ISSN 8756-4092) is published monthly by Alaska Business Publishing Co., Inc., P.O. Box 241288, Anchorage, Alaska 99524; Telephone: (907) 276-4373; Fax: (907) 279-2900, ©2011, Alaska Business Publishing Co. All rights reserved. Subscription Rates: $39.95 a year. Single issues $3.95 each; $4.95 for October.

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A

Southcentral tourism shows stability, some growth

t a recent Anchorage Convention and Visitors Bureau (ACVB) Report to the Community, the organization’s president and CEO Julie Saupe said 2010 was “challenging” but good, and that 2011 held promise.

That’s a good way to start the year for the organization with more than 35 years in Anchorage promoting travel/ tourism to Southcentral Alaska.

“We prepared for 2010 with some very tough decisions,” Saupe said in her speech. “We made difficult cuts and deferred some projects to put ACVB on the best footing for what was projected to be a tough economic year in general.

In retrospect, 2010 was a better-thanexpected year for Southcentral ….”

Good News

That’s good news, and even better news waits. Neal Fried, an economist with the Alaska Department of Labor, said there will be positive job growth in the state in 2011, with tourism sharing in that expansion, noted Saupe.

“Looking ahead to 2011, we still face challenges and uncertainty,” Saupe said.

Projections for leisure and business travel in the U.S. are up for 2011.

That said, any international financial instability could spill over to the U.S. and hamper recovery. Here in Alaska, the overall cruise capacity is expected to see only moderate gains this year, with more ships added in 2012.”

Alaska: Be Seen!

Still, Alaska is garnishing its share of attention: New TV shows, new advertisement for Alaska tourism reaching audiences worldwide, more conventions scheduled, including the largest international convention ever staged in Anchorage – the 2011 Lion’s Leadership forum, which will bring with it 3,000 delegates and an economic impact of $2.9 million.

“There is a lot of marketplace interest in Alaska … we will build on that momentum,” Saupe said.

ACVB’s operations are funded through one-third of the bed tax in Anchorage. And the organization reported much to celebrate last year: n “More than $93 million in future conventions were sold n “More than 3,000 in the travel trade received Anchorage and Alaska training n “ACVB’s Web properties received more than 933,000 visits n “Advertising equivalency for Anchorage editorial – national and international – was roughly $7.5 million, 110 percent of goal n “ACVB welcomed 101 new members, closing 2010 with more than 1,020 total members n “The Anchorage Convention Centers exceeded budget expectations.”

“2010 held some momentous and revolutionary firsts for Anchorage,” Saupe said in her speech. “The arrival of the Amsterdam (cruise ship) provided a boost to business every other Monday from May to September .… Film projects, including ‘Everybody Loves Whales’ and ‘Ghost Vision’ marked a new era in Alaska’s development as a destination for film projects. ACVB opened the Film Anchorage office to provide even more support to the industry, and hosted ‘Lights, Camera, Anchorage’ a seminar on growing filmrelated businesses to better prepare our members and other Anchorage businesses to capitalize on film.”

She said she is “confident” in 2011, “we can build on our gains, tackle new obstacles, bring even more business to Anchorage and share Alaska with the world.”

— Debbie Cutler

Managing Editor

www.akbizmag.com • Alaska Business Monthly • March 2011

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Inside Alaska Business Send your news briefs to editor@akbizmag.com for inclusion in a future Inside Alaska Business.

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Magazine Honors Knik Arm Ferry

orkBoat magazine chose the M/V Susitna as one of the 10 most significant vessels built by the shipbuilding industry in 2010. The Matanuska-Susitna Borough will operate the vessel as a ferry on the Knik Arm between the borough and Anchorage. Alaska Ship & Drydock Inc. built the M/V Susitna, with funds from the Office of Naval Research. The unique ferry was designed to operate as a variable draft, beachable landingcraft vessel capable of providing a stable ride on open seas at high speeds with large payloads and variable weather.

The M/V Susitna also is the world’s first ice-cutting, twin-hulled vessel, attributes that buoy its ability to serve in the North Pacific and Arctic oceans.

The award was presented in New Orleans at the International WorkBoat Show late last year. Alaska Ship & Drydock received the contract to build the vessel in 2005. The company was honored for its successful construction of a challenging design, WorkBoat officials said. WorkBoat magazine’s 10 Significant Boats of 2010 Awards honor vessel designers, builders and owners of U.S.-built vessels. The editorial staff reviewed more than 70 boats that appeared in the magazine during the previous 12 months and selected 10 vessels that demonstrated innovations in design or technological advances or speed, style and uniqueness.

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Preservation Group Hands Out Awards

he Alaska Association for Historic Preservation recognized several groups with its annual awards. Friends of Nike Site Summit received the Organizational Stewardship Award. The group works to preserve the Nike Site Summit site at Fort Richardson near Arctic Valley Ski Area in Anchorage.

Last summer, group members logged more than 800 volunteer hours to restore three sentry stations. Erin and Falene Reeve received the Restoration Project Award for their completed work on the Burkhart-Dibrell-Monrean House in Ketchikan. They purchased the property in 2004. Burkhart House is the last remaining Queen Anne Victorian property in Ketchikan with a turret and other prominent details from that period.

The Alaska Association for Historic Preservation awarded the 10 Most Endangered Grant to the Sage Building at Sheldon Jackson School in Sitka.

The Sage Building was built in 1929.

The grant program funds preservation work on endangered properties serves as seed money to leverage funding from other sources.

Cruise Lines Land Coast Guard Award

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he U.S. Coast Guard awarded the Gold William M. Benkert Marine Environmental Protection Award to Holland America Line and Norwegian Cruise Line. The presentation marks the first time a cruise line has

Compiled By Nancy Pounds received the distinction. The biennial award honors excellence in marineenvironmental protection, which surpass regulatory standards.

“We can all take pride in how far our industry has come over the last decade,” said John Binkley, president of the Alaska Cruise Association. “We lead the world in responsible and innovative marine conservation.”

According to Holland America officials, the company works to conserve fuel and water, uses high-tech wastewater purification methods and uses innovative strategies to reduce and manage its solid waste. The company also is increasingly using shore power at ports.

Norwegian Cruise Line reports it has reduced solid waste and improved black and gray wastewater quality in the past two years. The company also delivered 150,000 gallons of cooking oil onshore that has been converted to bio-fuel for use in motor vehicles and taught children ages 2 to 17 to become better stewards of the environment in its Officer Snook education program.

Personal Chefs Serve Anchorage, Mat-Su Area

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aul and Janice Villnerve, who operate Moose Bites Personal Chefs, now serve the Anchorage and PalmerWasilla areas. The couple prepares custom meals at private homes. The Villnerves meet with clients to determine dietary needs, menus and a cooking day. Moose Bites Personal Chefs shop for food and cook in the home weekly or several times a month

www.akbizmag.com • Alaska Business Monthly • March 2011

Inside Alaska Business to prepare about 10 meals. Meals are packaged and labeled, with some meals frozen for future dining. For information, visit Moose Bites online at www.moose-bites.com.

Klawock Center Earns Federal Certification

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he U.S. Centers for Medicare and Medicaid Services certified the SouthEast Alaska Regional Health Consortium Alicia Roberts Medical Center in Klawock as a Frontier Extended Stay Clinic. The center is the fourth clinic nationwide to be certified as a Frontier Extended Stay Clinic. The Haines Health Center was certified in November. The other certified centers are the Inter Island Medical Center in Friday Harbor, Wash., and Iliuliuk Family and Health Services Inc. in Unalaska. A Frontier Extended Stay Clinic must be located in a community is at least 75 miles away from the community or is inaccessible by public road, according to federal guidelines. This type of clinic provides a qualified facility for ailing patients while they await a medevac transport, which can be delayed due to weather.

The clinic also is for patients who need to be monitored or rehydrated in their home community without being transferred to an acute-care facility.

Surgery Center Opens in Anchorage

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urgery Center of Anchorage opened a new ambulatory surgery center in December. The new facility is a joint

venture between 19 of the Anchorage area’s surgeons and the national surgery center management company Regent Surgical Health. The new center is located at 4001 Laurel Street. Center officials decided to remodel a vacant surgery center at the location. The center provides general surgery, gynecological, colorectal, gastrointestinal and urological services. The center is open weekdays from 6 a.m. to 5 p.m.

Addition Expands McGrath Health Care Facility

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outhcentral Foundation opened the Rose Winkelman Building in McGrath late last year. The facility, which debuted in December, triples health center space available in McGrath. The project has been in the works since 2002, when the Denali Commission awarded a grant to the community to begin planning a replacement clinic. Southcentral Foundation later took over the project. The Denali Commission, Southcentral Foundation, a Recovery Act grant and community donations, including a five-acre tract of land donated by MTNT Ltd., supported the project.

“The new space will accommodate an increase in customers served with its larger size and efficient design,” said Dustin Parker, clinic manager.

“Our emergency area has increased, and we’ve added more secure storage for pharmaceuticals and medical supplies; additional dental space will allow the dentists traveling in from Anchorage to see more than one patient at a time.”

Crowley Inks Deal with Shell

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rowley Maritime Corp.’s Alaska fuel sales and distribution enterprise inked a deal in December to add eight Shell-branded service stations in Anchorage and Eagle River to its wholesale network. Crowley serves dealers at all 17 Shell-branded service stations in Alaska, including three outlets owned and operated by Crowley.

Crowley makes wholesale purchases of Shell motor fuel and transports, distributes and sells the fuel to the independently owned and operated sites.

Shell stations are located in Anchorage, Eagle River, Kenai and the MatanuskaSusitna Borough. The agreement allows Shell and its dealers the opportunity to rely on Crowley’s statewide transportation and distribution services. Crowley provides providing transportation, distribution and sales of petroleum products to more than 280 communities across Alaska, including communities along the Kuskokwim and Yukon rivers. The company also handles work on the North Slope, provides tanker escort services in Valdez for Alyeska Pipeline Service Co.’s Ship Escort/Response Vessel System and at the Tesoro Alaska Co. refinery in Nikiski.

NMS Garners Safety Award

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ANA Management Services received the National Safety Council’s Corporate Culture of Safety Award. The company garnered 61 workplace-safety awards in 2010. The award is given to organizations that have been the recipient of more than 50 awards with the National Safety

www.akbizmag.com • Alaska Business Monthly • March 2011

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Inside Alaska Business Council Awards Program. The National Safety Council’s Occupational Excellence Achievement Award recognizes participants that reported injuries and illnesses involving days away from work equal to or less than 50 percent of the Bureau of Labor Statistics rate for their national industry classification and recorded no fatalities during a calendar year. NANA Development Corp. and Sodexho own NMS.

Expansion for Nursing Home

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onstruction plans are under way for a new extended care-nursing home in Kotzebue at the Maniilaq Health Center. The 14,340-square-foot addition will provide care for up to 18 older Alaskans and add 20 full-time jobs. The center is scheduled to open in late summer. Alaska Growth Capital BIDCO Inc., Maniilaq Association, the State of Alaska, Dudley Ventures LLC and New York Community Bank secured about $18 million using leverage from a federal community development tax-incentive program.

“This facility will ensure that our elders will receive the best possible care close to their families and friends in Northwest Alaska,” said Maniilaq President Ian Erlich.

Southcentral Foundation Adds Dental Clinic

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outhcentral Foundation opened an Anchorage dental clinic for older Alaskans in January. The facility is located adjacent to the Southcentral

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Foundation Elder Program near Tudor Road. The new clinic was developed in response to elder input gained from surveys. Services include dental exams, cleanings and fillings, initially one to two days per week.

The Elder Program transports Alaska Native and American Indian people older than age 55 via bus to health care appointments at its Anchorage facility. More than 1,000 older Alaskans are enrolled in the program, which provides meal services, health screenings and classes among other options.

Tunista Lands FBX Contract

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unista Construction LLC was awarded a $1.6 million contract for work this summer on renovations at Weller Elementary School in Fairbanks. Tunista is owned by Calista Corp., the Alaska Native corporation representing the Yukon-Kuskokwim Delta. The Fairbanks North Star Borough awarded the design-build contract, which calls for replacing existing lighting and light controls, installing a new suspended ceiling and upgrading exterior lighting. Tunista was started in 2009 and received 8(a) certification in 2010.

TekMate Gets Industry Honors

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ekMate LLC of Anchorage received the 2010 Level Platforms Partner Comeback of the Year Award.

The award honors a Level Platforms partner that has shown significant growth in the past year. TekMate was chosen from more than 3,000 other firms. Alaska Communications

acquired 49 percent interest in TekMate in 2010. TekMate more than doubled its managed services business since December 2009, company officials said.

“Managed services, cloud services and IT outsourcing are some of the fastest growing verticals in the IT industry,” said Dan Wensley, Level Platforms’ vice president, partner development and marketing. “There were many strong candidates for this award. TekMate was a clear winner because of its investment not only in technology, but also in leading-edge service delivery.”

Global Food Collaborative Upgrades Website

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lobal Food Collaborative LLC of Anchorage has expanded its website, GFC-Connect.com. The changes include improved search functions, enhanced new product request forms, improved navigation and private and confidential collaboration between members. The company works with commercial buyers and independent suppliers of food, beverage and agriproducts to connect for product sales and distribution. Global Food Collaborative LLC also is coordinating the Global Food Alaska Conference and Showcase, set for June 8-10. The conference will feature meetings with industry professionals, site tours in Homer, a listen-to-the-buyers conference and a showcase called Alaska’s grocery store of products/capacities. Organizers are also planning an all-Alaska dinner.

For information, visit www.globalfood alaska.com. q

www.akbizmag.com • Alaska Business Monthly • March 2011

View

from the

Top

Compiled By Peg Stomierowski

Linda Vollertsen Owner

Terra Bella Inc. T

erra Bella, which began as a drive-through on Benson Avenue, features a full breakfast and lunch menu at its Dimond Street bakery and café. The firm, which employs 18, celebrated its sixth anniversary in January.

Owner Linda Vollertsen, whose roots trace to 19th century Nome, said, “one side of the family had a gold mine, the Daisy mine, and the other operated an air taxi, Mirow Air Service, which later became part of Alaska Airlines.” Michael McGuire, a coffee roaster from Homer, was an early mentor who designed Terra Bella’s proprietary five-bean espresso blend.

CUTTING EDGE Terra Bella is a progressive company in a cutting-edge city. Anchorage has awakened to the importance of organic, fair-trade products; you can see this in several newly opened businesses. We are blessed in Alaska to live in one of the last untrammelled places on Earth. Each product we buy, each dollar we spend, represents a vote for what and whom we want to support. We want to give Alaskans a choice, an opportunity, each time they buy even a cup of coffee, to protect the environment and support those who labor to bring us the products we use each day.

RESPECT We seek to offer a healthy and creative work environment, to respect customers by providing excellent service and remarkable food in a warm and fun atmosphere, and to respect farmers and the earth by selecting ingredients and products that are organically grown and purchased in fair trade. If we can do this on a daily basis at Terra Bella, then all things are possible.

BUILDING ALLIANCES Creating an alliance of the like-minded, although not easy, is essential. We seek out vendors who share similar values. We profile and donate to businesses and nonprofits that promote sustainable practices in their communities. We have worked, for instance, with Alaska Community Action on Toxics (ACAT), Bioneers, Alaska Center for the Environment, the Renewable Energy Alaska Project, Aurora Waldorf School, Organic Alaska, Good Earth Garden School, Solace International and Coffee Kids. We also provide a venue for local artists, authors and musicians by participating in First Friday events and a rotating art show.

NUTRITION EDUCATION We choose to use natural, organic products, including milk, sugar and grains, and to avoid high-fructose corn syrup or hydrogenated oils. We also strive to provide a platform for environmental, agricultural and whole-food education. Our classes have ranged from reflexology to garden chemicals and fertilizers to making your own chemically safe home cleansers. Our first speaker this year was addressing longevity, metabolism and eating for your body type.

©2011 Chris Arend

SCRATCHING OUT SUCCESS We make everything from scratch, use the freshest ingredients we can find, are one of the few places in town to offer gluten-free baked goods, and we are always looking for new ways to use such healthy ingredients as oatmeal, hemp seed, flax meal, pumpkin and applesauce.

SIGNATURE INGREDIENT All of our bakers, cooks and baristas are encouraged to play and create in their work. I am constantly amazed at their creativity and talent. It is humbling to realize that we really are always teaching and learning simultaneously in this business. We hope that our customers, as a result, discover tantalizing flavors and unusual dishes that add to the fun of going out for a decadently delicious meal. q Linda Vollertsen www.akbizmag.com • Alaska Business Monthly • March 2011

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A s s o c iat i o n s

By Tracy Barbour

The Ketchikan-based association works to advance the restoration, promotion and maintenance of a healthy, viable forest products industry, contributing to the economic and ecological health in Alaska’s forests and communities.

Alaska Forest Association Supporting Alaska’s timber industry

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Photos by Owen Graham

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he Alaska Forest Association has a distinct mission closely connected to the viability of the state’s forest-products industry. The Ketchikan-based association works to advance the restoration, promotion and maintenance of a healthy, viable forest products industry, contributing to the economic and ecological health in Alaska’s forests and communities.

The AFA has a long-standing history in the state. It was formed March 6, 1956, by a select group of individuals who wanted to establish an association for Alaska loggers. The group opted to affiliate with the Timber Operators Association and selected the name S.E. Division of Timber Operators Association. During its first year in existence, the association developed a workers’ compensation program and hired a safety engineer.

In 1957, the group withdrew from the Timber Operators Association and formed the Alaska Loggers Association.

Over the years, the association has expanded its scope beyond loggers to include a broader membership. In 1991, the organization was appropriately renamed the Alaska Forest Association.

The AFA engages in a wide range of initiatives to support the Alaska timber industry and its 115 regular and associate members. This includes maintaining an active public information program, a group health insurance program (the Tongass Timber Trust) and a pension program, which has evolved considerably over the years. In 2003, the association froze its defined benefit plan because the declining industry could no longer meet the Pension Benefit Guaranty Corporation requirements, accord-

Alaska Forest Association Executive Director Owen Graham at Prince of Wales Island. The AFA works to grow the state’s forest industry.

ing to AFA Executive Director Owen Graham. A new plan has since emerged.

“We allowed participants to continue to vest in the old plan, and we started a defined contribution plan,” Graham explains. “By January 2008, the new plan had accumulated sufficient funds to add a 401(k) feature. Currently, all regular AFA members are eligible to participate in the plan.”

Key Concerns: Sustainability and Supply

The AFA also sponsors the Sustainable Forestry Initiative program in Alaska.

Under the program, the association supports responsible timber management by all timberland owners in the state. It also addresses permitting, safety and other matters, and sponsors a Timber Issues Committee that meets

www.akbizmag.com • Alaska Business Monthly • March 2011

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regularly to resolve relevant issues. The committee includes State, private and federal timber-sale purchasers, road builders, mill operators, and U.S. Forest Service and State employees. “We support the program in order to assure our customers and others that we operate our businesses in a responsible manner,” Graham says.

The Sustainable Forestry Initiative program is currently in maintenanceonly status. “Right now, we no longer have the resources or the need to expand the program,” Graham says.

“This program will be ramped up, along with our operations and employment once our timber supply is restored to a reasonable level.”

Timber supply is another key issue of concern for the AFA. According to Graham, the federal government controls about 94 percent of the land in Southeast Alaska where most AFA members work. The State’s timber-sale program is reliable, but small, he says.

“The private timberland owners have good operation, but they, too, have supply issues; that’s why we support the Sealaska land-selection legislation (S.881),” Graham says.

S.881 Crucial to Industry

U.S. Senate Bill 881 – officially entitled the Southeast Alaska Native Land Entitlement Finalization Act – authorizes Sealaska Corp. to select its remaining entitlements under the Alaska Native Claims Settlement Act of 1971. Under current law, much of the land available for Sealaska’s land selection is in inventoried roadless areas, intact watersheds, municipal watersheds, and high-value fish and wildlife habitat important for subsistence resources and to commercial fisheries. S.881, also known as the Haa Aaní land bill, would allow Sealaska to select its final 85,000 acres outside the federally mandated withdrawal areas.

More than 70 percent of the acres identified in the bill have roads. The bill also provides for protection of old-growth forest and unprecedented land access.

Graham and other supporters feel S.881 would help sustain the forestproducts industry in Southeast Alaska, among other benefits. The bill’s timber selection provision, he says, is critical.

14

Owen Graham at Stanley Creek on Prince of Wales Island.

“Sealaska’s operations support about 40 percent of our industry jobs,” Graham says. “Sealaska has told us that without access to their remaining timber selections, they will have to begin curtailing their operation within the next three to five years.”

The current Tongass Land Management Plan allows timber harvest on only 4 percent of the Tongass – not enough to support a viable manufacturing industry, according to Graham.

He says the federal government controls about 94 percent of the land in Southeast Alaska, so although the State and private landowners sell timber to the local mills, the mills must have more federal timber sales if they are to survive. “In the meantime, we desperately need to continue Sealaska’s operations; otherwise, our industry cannot survive,” he adds.

Efforts to Address the Issues

The AFA is working closely with the local Forest Service and State representatives to try to improve the timber supply from the Tongass National Forest.

This includes writing letters, attending community meetings and traveling to Washington, D.C. to encourage support of the Sealaska land-selection legislation. AFA advocates full funding to

enable the Forest Service to prepare and offer timber sales at the level provided in the current Tongass Land Management Plan.

Graham points out that the forestproducts industry provided several thousand jobs and several hundred million dollars of economic activity from the 1960s through the mid1990s. The timber supply contracts the government sold in the mid- to late-1950s supported most of those jobs and economic activity. Only about 2 percent of the Tongass (8 percent of the commercial timberland) has been harvested since the national forest was formed in 1908.

“All of those harvested lands now support healthy regrowth, but the young trees will not be mature for another 40 to 60 years,” he adds. “All we need now is to restore an old-growth (mature) timber supply to get us through the next four to six decades, and then we will be able to sustain our industry in perpetuity on mature young growth timber.”

In the mean time, the AFA will continue to encourage a restoration of a reliable timber supply. It also plans to work with the Alaska Department of Labor to institute a job-training program to equip new employees for a larger timber supply in the future. q

www.akbizmag.com • Alaska Business Monthly • March 2011

HEALTH & MEDICINE

American Cancer Society Provides Alaskans with Help, Hope Alaska businesses support ongoing partnerships and teamwork

Photo courtesy of ACS Great West Division

By Vanessa Orr

Relay For Life.

W

hen a person is diagnosed with cancer, everything can seem overwhelming. There are so many questions: How did I get it?

Where can I find treatment? How am I going to feel tomorrow, next week, next month? Who can I turn to for help?

Fortunately, there are answers available, and the American Cancer Society (ACS) can help. Established in 1913, the organization’s Great West Division has served the people of Alaska for more than 50 years.

“In the past few years, we’ve really grown in terms of the events we hold

16

and the programs that we provide for patients across the state,” said Sarah Robinson, district executive director, Great West Division, American Cancer Society Inc. “We let people know what resources exist so that they are empowered to get help. In addition to our 800 number, which is available 24/7, we also have a website with more than 5,000 pages of relevant researchbased information and support groups.”

Multiple Programs

ACS takes a many-pronged approach to helping those diagnosed with the

disease. One program, Reach to Recovery, provides one-on-one support for women newly diagnosed with breast cancer by matching each woman with an ACS volunteer who has had a similar cancer experience. Road to Recovery provides transportation to and from doctors’ appointments and treatment sessions for patients who have no ride available. A Cancer Resource Center, located on the third floor of Alaska Regional Hospital, provides volunteer patient navigators who meet with patients to help them find information about their diagnoses and local programs and

www.akbizmag.com • Alaska Business Monthly • March 2011

Photo courtesy of Era Alaska

resources. Online patient navigators are also available to help those in outlying areas by accessing ACS’ website.

Grants from a number of different organizations help provide financial assistance for patients in true financial need, and a Patient Lodging Program can help those who need a place to stay when they have to travel to Anchorage or the Lower 48 for treatment.

“Our goal is to eliminate barriers to treatment so people can receive the care they need,” Robinson said. “One of the concerns of cancer patients is leaving their families in debt if they don’t survive.

“We are able to do what we do because of the community support that we receive from local businesses,” she continued. “For example, for the past 10 years, Era Alaska has donated free round-trip flights for patients who use the airline to travel for cancer treatment. And Davis Constructors and Engineers got involved with the ACS’ Relay for Life three years ago, and to date have raised more than $500,000.”

Counter agents at Era Alaska.

or her life, you want to be able to help in some way. Getting them to the care they need is our way of doing that.”

Relay for Life

Davis Constructors and Engineers first got involved with ACS when cancer hit

Helping Alaska Businesses Grow

Fitting Partnership

According to Lori Goodman, Era Alaska’s director of sales and marketing and community relations, partnering with the American Cancer Society just seemed like a good fit. “Giving back to our communities has always been very important us,” she said. “Partnering allowed us to not only benefit an important statewide organization, but to also help folks out during difficult times.”

Era Alaska offers up to three free round-trip flights for patients to travel from their home communities to receive necessary medical treatment. The company also offers a medical fare, discounted for those who need to travel for qualified medical needs. The trips are offered anywhere Era Alaska offers scheduled service, which includes nearly 100 communities statewide.

Individuals are qualified through the American Cancer Society.

“Over the years, we’ve donated in excess of 3,500 round-trips for those in need of cancer treatment – approximately $1 million in contributions,” Goodman said. “It’s a privilege to partner with the American Cancer Society knowing the good work they do. Naturally, when someone is fighting for his

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17

close to home. “One of the women in our office thought it would be good to sponsor a Relay for Life team and asked Kyle Randich, our former president, about it. Not only did he agree that we would sponsor a team made up of employees and their families, but he decided we should really rally behind it,” says Lynn Steeves, marketing coordinator, Davis Constructors and Engineers.

“At the time, an architect who had helped us build our business had recently died of cancer. One of our suppliers was struggling with the disease, and I had beat cancer the year before,” she said. “We all know someone who had been affected by cancer, and wanted to help ACS so that they could help others.”

Despite holding its first kick-off meeting only one month before the

American Cancer Society Grant to Aid in Native Arts-Based Education Program

By Vanessa Orr

Photo courtesy of Alaska Native Tribal Health Consortium

C

ommunication is a big part of the battle when it comes to dealing with cancer. Understanding the importance of symptoms, family histories, health risks and screening tests can make a difference in whether a person is diagnosed early enough to increase their chances of survival.

Melany Cueva, RN, Ed.D., has found a unique way to provide this information to those at risk. In January 2009, Cueva received a five-year, $627,000 grant from the American Cancer Society to fund her study, Developing Arts-Based Cancer Education with Alaska Native People.

Now in its third year, Cueva’s research has two goals: to determine ways that expressive arts can be a culturally respectful pathway for learning to communicate cancer knowledge and support shifts in knowledge, attitudes, beliefs and behaviors among Alaska Native community health care providers; and to support Cueva’s efforts to design, implement and evaluate the feasibility of an expressive arts toolkit to facilitate community-based cancer education in rural Alaska.

“I feel truly honored to be the recipient of this award,” said Cueva, who has worked for the Alaska Native Tribal Health Consortium since 1997. “I believe it is Melany Cueva, RN, Ed.D. the first of its kind to be awarded to someone in the state and it is my understanding that the last time ACS funded research in Alaska was 42 years ago.”

In addition to participating in trainings, working with mentors and completing a two-year certificate in the use of the expressive arts and a month-long NCI cancer course, Cueva has also leveraged the grant funding to provide several cancer education materials requested by Alaska’s community health workers. These include a cancer education flip chart; an update of a breast health booklet; a colon booklet; development of a new Readers’ Theatre script, What’s the Big Deal? that focuses on colon screening; a colorectal cancer PSA; and a series of four short video clips explaining how to prepare for colonoscopy and sigmoidoscopy exams.

Future materials development include a booklet to complement the flip chart, a new Readers’ Theatre script that focuses on colorectal cancer diagnosis and treatment, and an interactive CD-ROM that focuses on colon health. n

18

event, the company achieved amazing results. “It kind of got out of control,” Steeves says. “We decided to take a three-pronged approach to get everyone involved from our architects to engineers to subcontractors and suppliers.

The owners of the company and our employees made calls, and we sent letters. We also held T-shirt and wristband sales and raffles for four-wheelers.

“The most fun thing we did was hold a Miss Relay contest, conning a few of our guys to be Team Davis Miss Relay contestants,” she added. “We went to our jobsites to sell T-shirts and had guys in the field vote for who should be Miss Relay – we ended up raising $1,500 just doing that.”

When Team Davis announced their goal was $100,000, ACS was doubtful.

“The entire ACS event had previously raised $89,000, and the Relay was only three weeks away,” Steeves said. “At two weeks out, Kyle raised our goal, and then he raised it again to $250,000.

And the money kept pouring in.”

Davis Constructors and Engineers raised $300,000 that first year, and raised $100,000 each of the next two years. “Subcontractors, owners, architects, engineers – everyone generously opened their pockets; even our competitors,” Steeves said. “It was really special. And we found out later that we had raised more money than any team in the history of the event.”

Healthy Living Initiatives

In addition to promoting events such as Relay for Life, ACS also has a number of other initiatives in place to bring attention to the disease. An employee initiative is designed to reach adults in the workplace to show them how to lessen their chances of developing the disease through healthier living. Active for Life is a six-week online program during which employees track minutes of exercise, which can be used to encourage interoffice competitions. ACS also provides a free wellness newsletter, co-branded with its logo and individual companies’ logos that provides healthy recipes and tips on how to burn calories, and access to its Quit for Life stop smoking program.

“We’ll do an assessment within companies where our staff goes through questions with the Human Resources

www.akbizmag.com • Alaska Business Monthly • March 2011

Department, focusing on what policies are in place to help employees be healthier,” Robinson said. “For example, companies can post signs around campus marking how many miles it is to encourage people to walk. And if they have a $10 co-pay on colon screenings, we might suggest they eliminate it because when there are no co-pays, screenings go up.”

According to Robinson, one-third of cancers are caused by tobacco use and one-third are caused by obesity. “Sixty percent of cancers are preventable if a person quits smoking, is involved in physical activity, and practices good nutrition,” she said.

ACS also has an advocacy team that works to get laws passed that protect cancer patients and their families. In

2008, ACS got a law changed so colon cancer screenings could be covered by insurance, and last year, the organization was instrumental in getting a law passed to protect cancer patients in clinical trials.

To learn more about ACS, visit www.cancer.org. Information on Relay for Life events is online at www. alaskarelay.org. q

Cancer Survivors Help Others through Shared Experiences

By Vanessa Orr n Alaska, cancer is the leading cause of death, with 2,860 new cases diagnosed in the state this year. The good news is people are surviving longer, with more than 11 million cancer survivors living in the U.S. Ariel Courtright and Care Tuk are two such survivors who encourage others who face the same battle.

“I was first introduced to the American Cancer Society when my mom got cancer,” Tuk says. “I was 16. She lost her battle, but doctors in Seattle had networked us with ACS, so three years later when I received my first diagnosis with cancer, I knew where to go to look for answers.”

Tuk has since beaten cancer 10 times, including battles with breast, ovarian, thyroid and colorectal cancers, as well as lymphoma and malignant melanoma. Tuk’s mother was prescribed DES to prevent miscarriages, but no one knew at the time that it would lead to cancer in female offspring.

“I didn’t want cancer to be my thing – my banner or badge,” Tuk says. “But someone said to me that as a cancer survivor, I should share my stories with others. I could provide tips and techniques about how you get through it, and I could help raise funds so one more person could celebrate one more birthday. I walked my first survivors’ lap at a Relay for Life in Enumclaw, Wash., and that was all it took.”

Tuk has served on the Relay Committee in Alaska for six years, and has walked in survivor laps in the state and in the Lower 48. “Why do I do the Relay? Because I can. I’m here,” she said.

Now battling her 11th round of cancer, Tuk says she relies on faith, family, friends and fun to get through it. “I wake up every day with no regrets,” she said. “At the end of the road, I want to have made a difference.”

Ariel Courtright, 17, was diagnosed with acute lymphoblastic leukemia at age 4. Though she was diagnosed in Alaska, most of her treatment took place at Children’s Hospital in Seattle. “My parents talked to ACS, and they filled them in on what to expect. And since I lived in Alaska, they helped connect us to a Ronald McDonald House in Washington, which became my home away from home,” she explained.

Courtright also attended ACS’s summer camp, Camp Goodtimes, in Vashon Island, Wash. “It was like a fairytale,” she said. “When you’re a child going through cancer, you’re not like everyone else. But at camp, you’re just a kid again because everyone there has cancer or has a sibling with it. And the staff was amazing, just like another family to me.”

After graduating from high school, Courtright plans to attend the University of Washington to become a pediatric oncologist. “It’s kind of ironic, but because I had cancer, I want to help other people with cancer,” she said. “I want to do for other families what was done for mine. I Cancer Survivor Care Tuk. am proof that you can make it through.” n Cancer Survivor Ariel Courtright. www.akbizmag.com • Alaska Business Monthly • March 2011

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Photos courtesy of ACS Great West Division

I

LEGAL ISSUES

Are Independent Contractors Your Company’s Ticking Time Bomb?

Be sure you understand State and federal laws

By Renea I. Saade

G

iven the current economic climate, most companies are hesitant to expand their work force.

Many companies are still recovering from having to make the extremely difficult decision to lay off a portion of their work force.

It is, therefore, a natural consequence many companies are opting to turn to independent contractors for their staffing needs. It makes sense. Independent contractors (who are also referred to as “1099 workers” because a 1099 IRS Form is issued to them instead of a W-2 IRS Form) appear to be the perfect solution to a company’s dilemma.

They typically provide the immediate addition to the company’s work force without requiring the company to pledge significant overhead expenses or make any real commitment to that person.

Under a true independent contractor relationship, a company is not obligated to cover the expense of training the worker, provide the worker with any equipment or tools necessary to perform the work at issue, provide the worker any of the benefits the company typically extends to its work force (medical, dental, vacation or sick pay, 401k contributions, etc.), pay unemployment taxes or benefits, pay workers’ compensation premiums or benefits, withhold federal income taxes or withhold and pay social security and Medicare taxes.

A genuine independent contractor also does not have protection under federal or State anti-discrimination

20

Photo courtesy of Renea I. Saade

Renea I. Saade

employment laws or wage and hour laws (i.e., minimum wage or overtime rules) other workers are afforded.

For these reasons, one can easily see why working with an independent contractor is more appealing to a company than hiring a new employee, particularly when companies are making concerted efforts to keep overhead costs as low as possible.

A Growing Trend

According to a 2005 study by the Bureau of Labor Statistics, more than 10 million American workers are classified as independent workers. Unfortunately, independent contractors are not the easy fix they appear to be.

It is difficult for a company to create

a legitimate independent contractor relationship with a worker.

Labeling the worker an “independent contractor” does not suffice.

Even entering into an “independentcontractor agreement” with the worker is not enough to legally establish a bona fide independent-contractor relationship. In order to have an authentic independent-contractor relationship recognized by law, certain circumstances surrounding the working relationship must exist. If the working relationship does not meet the criteria set out by applicable State or federal law, the company is not legally entitled to treat the worker as a nonemployee.

Based upon a comprehensive 2000 study commissioned by the U.S. Department of Labor, up to 30 percent of employers misclassify at least some of their workers. In light of the recent events in our country’s economy, that percentage has likely substantially increased.

The failure to create a legally recognized independent contractor relationship can have disastrous consequences.

If a regulatory federal or State agency decides a company has misclassified workers as independent contractors (when they were in fact employees), the company is usually obligated to pay back wages (which can include overtime pay) for hours worked, retroactively provide certain benefits, pay overdue payroll taxes and workers’ compensation premiums or benefits, and can be required to pay lost wages

www.akbizmag.com • Alaska Business Monthly • March 2011

to certain workers who may have been unlawfully “terminated.”

A Hard Lesson

In some circumstances, civil penalties and late fees are also imposed upon the company for those unpaid wages or taxes. The amounts quickly add up, and if the misclassification affected a group of workers, the company can very easily find itself facing an obligation to pay an amount in the five- to seven-figure range. Needless to say, such a financial obligation creates a strain on any business.

Failure to properly classify its workers can also possibly disqualify a company from serving as a governmental contractor or participating in publicly funded programs or projects. Learning that it must convert its independent contractors to employees usually turns a company’s business model and operating expenses upside down and dramatically changes the company’s financial outlook.

Thus, for many companies, their independent contractors are ticking time bombs. It is, therefore, a wise decision for all companies with any existing independent contractors to self-audit their arrangement with these workers (preferably with the assistance of legal counsel) to confirm that the arrangement is properly classified.

And, if it is determined that the arrangement does not legally qualify as an independent contractor relationship, changes should immediately be made to mitigate any potential financial exposure to the company.

Check and Double Check

There are various tests used to classify independent contractors and which one applies depends on the type of employee benefit or protection at issue. The most common classification tests are for: (1) ERISA benefits; (2) wage and hour obligations under either the Fair Labor Standards Act (the federal wage law codified at 29 U.S.C. § 201, et seq.) and/or local State law; (3) workers’ compensation; and (4) payroll tax issues.

Each classification test is detailed and requires a review of various factors and criteria. There is quite a bit of crossover among the tests, but there www.akbizmag.com • Alaska Business Monthly • March 2011

21

To further complicate matters, a worker can meet the test as an independent contractor for wage and hour law but not for workers’ compensation purposes. are nuances that should not be ignored.

And, unfortunately, the application of the tests by auditors and courts is regularly changing. To further complicate matters, a worker can meet the test as an independent contractor for wage and hour law but not for workers’ compensation purposes.

Therefore, every company should seek the advice of legal counsel to determine which tests apply to its work force and how the facts and circumstances of the arrangement should be analyzed under each applicable test.

In general, however, the underlying goal for each test is to determine the power and financial dynamics of the relationship. In other words, each test attempts to establish who controls what the worker does, how the worker does his or her job, who controls the business and financial aspects of worker’s activities, and so forth.

For example, the Fair Labor Standards Act six factor test (known as the “economic reality test”) requires an analysis of: (1) degree to which person is independent or controlled by the employer regarding how the work is done; (2) worker’s opportunity for profit or loss; (3) worker’s investment in equipment or material; (4) the degree of skill needed to do the work; (5) the permanency and length of the relationship between the company and worker; and (6) how much of the work performed by the worker is a major part of the employers business.

Under applicable Alaska law (AS 23.30.055), a “relative nature of the work” test is applied to distinguish employees from independent contractors for purposes of workers’ compensation.

Under this test, the character of the worker’s work or business is re-

22

viewed as well as the relationship of the worker’s work or business to the company’s business. To determine the character of the worker’s work, three factors are considered: (1) the degree of skill involved; (2) whether the worker holds him or herself out to the public as a separate business; and (3) whether the worker bears the accident burden.

Check List

To evaluate the character of the relationship, three factors are reviewed: (1) extent to which the worker’s work is a

regular part of the company’s regular work; (2) whether the worker’s work is continuous; and (3) whether the duration of the work is such that it amounts to hiring of continuing services rather than a contract for a specific job. As these examples show, each test’s analysis is very fact specific and if an independent contractor relationship changes over time, periodic review or re-evaluation is necessary to ensure that the arrangement continues to be properly classified.

There is no dispute. Embarking upon a self-audit is not fun. Similarly,

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... companies with independent contractor relationships are better off when they discover any misclassifications themselves rather than wait for a federal or State agency to point it out for them. the prospect of having to possibly significantly change your work force and incur additional overhead expenses does not invoke excitement. However, companies with independent contractor relationships are better off when they discover any misclassifications themselves rather than wait for a federal or State agency to point it out for them.

Act Now

Time is of the essence. Enforcement is on the rise and employee advocates are lobbying for increased penalties. In February of 2010, the IRS commenced a three-year employment tax audit that will randomly review 6,000 companies to determine whether they are properly

24

classifying their workers and fulfilling their employment tax obligations.

The current U.S. Secretary of Labor (Secretary Hilda Solis) has vowed to develop multi-agency initiatives to address the issue of worker misclassification and more than $12 million has been allocated in the 2011 budget for increased enforcement of wage and overtime laws in cases where workers have been misclassified.

Although the recent November election has shaken up the composition of the legislature, it is readily apparent that workers’ rights will continue to be a hot topic particularly when increased enforcement and penalties can yield additional revenue for the government.

So, as your company embarks upon 2011 and prepares for the years ahead, it would be prudent to evaluate its existing or proposed independent contractor relationships and ­­quickly disarm any ticking time bombs. n A copy of the 2005 study is found at www.bls.gov/opub/ted/2005/jul/ wk4/art05.htm n A copy of the 2000 study is found at: www.wdr.doleta.gov/ owsdrr/00-5/00-5.pdf.

n Info on the FSLA is found at: www. dol.gov/whd/flsa/index.htm n Info on the IRS test is found at: www.irs.gov/newsroom/article/ 0,,id=173423,00.html n Info on the IRS 3 year audit is found at: www.irs.gov/businesses/small/ article/0,,id=215350,00.html n Info on the DOL’s planned initiative is found at: http://www.dol.gov/opa/media/ press/whd/WHD20100541.htm Please note that the foregoing is provided on an informational basis only and shall not constitute legal advice. Any questions or concerns should be discussed with an attorney of your choice. q About the Author Renea I. Saade is an attorney with Oles Morrison Rinker & Baker LLP. She has more than 11 years of experience and regularly assists employers with their legal needs. She lives with her husband, Kyle, son, Kaden, and English Bulldog named Benson on the Eastside of Anchorage. Renea may be reached at 258.0106 or saade@oles.com.

www.akbizmag.com • Alaska Business Monthly • March 2011

HR M at t e r s

By Lynne Curry

Does Religion Play a Part in Your Business? n Allow religious expression among

employees to the same extent other types of personal expression are allowed. For example, a group of employees might request the chance to have prayer time in the coffee room at break time. At the same time, if company managers start staff meetings with a group prayer, individuals who don’t want to participate need to be allowed to bow out without negative repercussions.

J

ohn (fictional name) applies for a job and is devoutly religious. Although he has good qualifications, he brings up his religion twice during the interview process: first, when asked about outside organizations to which he gives time; and second, when he mentions his last employer’s company culture, particularly the drinking at beer Fridays, which made him feel uncomfortable given his religious tenants.

Although your company’s management team has nothing against any religion, you decide not to hire John as he brought up religion twice. Did you make a mistake?

Your office manager is everyone’s mom. When employees have rough times, they seek out “Alice” and she comforts them and tells them she’ll pray for them. Although Alice does this behind closed doors, everyone knows when it happens. Do you need to ask Alice to do her consoling after hours?

One of your managers, a born-again Christian, wears cross earrings. You know this makes a few of her employees uneasy because they’ve told you about it. They say they’re spiritual, but not religious. Do you need to ask your manager to leave her earrings at home?

Managers and employees want to be whole people at work and for many that includes being openly religious. Many large companies embrace this. Ford and Xerox sponsor spiritual retreats to spark creativity. Multiple businesses include Christian symbols and Bible verses on company advertising.

Chick-fil-A closes on Sundays to honor the Sabbath and dedicates each new store to “God’s glory.”

What traps does this have for employers, particularly as religious discrimination charges filed with the federal Equal Employment Opportunity Commission (EEOC) increased by 87 percent in the last decade?

©2011 Chris Arend

n Provide a publicized, consistently

Obey the Law

The Civil Rights Act of 1964 prohibits employers from discriminating against employees or applicants because of their religion when making hiring, firing or other employment-related decisions.

Employers cannot force an employee to participate in a religious activity, nor prevent an employee from participating in a religious activity. This means employers need to reasonably accommodate to their employees’ sincerely held religious practices unless doing so would create an undue hardship for the employer. This might involve flexible scheduling, job reassignments or modifications of grooming requirements.

In one recent example, the EEOC required United Parcel Service (UPS) to pay $23,500 to an employee after UPS forced the employee to work past sundown on his Sabbath.

Jeanne Goldberg, EEOC Office of Legal Counsel senior attorney advisor, says private employers may discuss religion in the workplace unless employees say it’s unwelcome, as protections extend to those who profess no religious beliefs. Similarly, offensive comments about an employee’s religious beliefs or practices, or lack of belief, constitute illegal harassment if frequent or so severe that they create a hostile, offensive work environment.

Companies that want to walk the fine balance between allowing religious expression and not creating offense for those uncomfortable with religion can do the following:

applied anti-harassment policy covering religious harassment and describing procedures and multiple avenues for bringing issues to management’s attention and assuring employees the company protects complainants against retaliation.

In the initial three scenarios, management erred when turning down John. Although they may have feared he would bring religion up too much in the workplace, they penalized him when he gave relevant answers to questions they asked. Because employees seek out Alice, she can console employees on work time. As long as your manager treats all employees fairly, she can wear cross earrings – to ask her to leave them at home would allow her to inhibit her personal, heart-felt expression. q About the Author Dr. Lynne Curry runs an Alaskabased management consulting firm with 3,500 clients in 14 states and three countries. Her company specializes in management training and provides HR On-Call services to clients. Her team includes a J.D. (attorney), an MPA (Masters in Public Administration), and an SPHR (Senior Professional in Human Resources), and provides a free monthly Breaking News HR/ Management newsletter along with two seminars each month. Visit www.thegrowthcompany.com for more information.

www.akbizmag.com • Alaska Business Monthly • March 2011

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Right Moves International Tower HIll Mines Ltd.

Debbie Evans was appointed controller in Fairbanks for International Tower HIll Mines Ltd.’s Alaska operations. The company, based in Vancouver, British Columbia, works on the Livengood Gold Project near Fairbanks. Evans previously worked as mines controller at Kensington Mine, operated by Coeur Alaska Inc.

Parker, Smith & Feek

Lynne Seville and Jana Smith were appointed principals at Parker, Smith & Feek, an insurance and risk-management firm. Seville serves as risk-control specialist in Anchorage and works with the firm’s construction and transportation clients. Smith is an account executive who helped developed the firm’s health care and energy business. She also manages major accounts for Alaska Native corporations. Todd Eisinger joined Parker, Smith & Feek as chief financial officer. The insurance and risk-management brokerage firm has offices in Anchorage and Bellevue, Wash. He has served as a board member of the Construction Financial Management Association. .

Alaska Communications Systems Group Inc.

John Niles Wanamaker was added to the board of directors for Alaska Communications Systems Group Inc. He will also serve on the board’s nominating and corporate governance committee. Wanamaker leads Alaska Venture Partners, an angel-investment firm, and serves as chairman of Venture Ad Astra, a venture-capital company he co-founded. .

Ukpeagvik Iñupiat Corp.

Sandra Halliwill was chosen director of information. technology for Ukpeagvik Iñupiat Corp.

Halliwill previously worked in enterprise implementation management at BP Exploration (Alaska) Inc. She has 20 years Halliwill of industry experience, specializing in information technology and supply chain management.

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Compiled By Nancy Pounds Anchorage Museum

Julie Decker was hired as chief curator at the Anchorage Museum. Decker is the former director of the International Gallery of Contemporary Art and the Trailer Arts Center, both in Anchorage. She is an artist and instructor at the University of Alaska Anchorage.

CRW Engineering Group LLC

Jensen

Hebnes

Erica Jensen and Steven Hebnes of CRW Engineering Group LLC earned certifications as professional civil engineers in Alaska. For the past six years, Jensen has designed roads and trails, and drainage, water and wastewater projects, primarily in Anchorage. Hebnes has 10 years of engineering and construction experience. He has worked on several water and sewer upgrade projects for rural Alaska.

Architecture/Engineering Marketing Association of Alaska

Evelyn Clark received the first outstanding service award from the Architecture/Engineering Marketing Association of Alaska. Clark was honored for her dedication to the group, which includes three oneyear terms as president. She has worked for Coffman Engineering, Kiewit Construction and most recently kpb architects.

State Government

Tom Crafford was chosen director of the State Department of Natural Resources Office of Project Management and Permitting. Crafford has worked for the department since 2005. He has worked in the Alaska geological and mining industry since 1974.

Ben Ellis was hired as DNR’s director of Parks and Outdoor Recreation. He most recently led his own company and worked at Institute of the North, focusing on international Arctic issues.

Gov. Sean Parnell appointed Cora Campbell as commissioner of the Alaska Department of Fish and Game. She served briefly as acting commissioner.

She also worked as fisheries policy advisor to former Gov. Sarah Palin, beginning in 2007.

Missy Tyson was chosen employee of the year for the State Department of Transportation and Public Facilities Southeast Region. Tyson is the foreman at the Skagway maintenance and operations station where she is responsible for maintaining State roads including a border crossing and an airport, which is open year-round. She is also responsible for challenging snow removal on the Klondike Highway, which rises from sea level to 3,292 feet in elevation in 15 miles.

Pat Kemp was appointed deputy commissioner of highways for the State Department of Transportation and Public Facilities. Kemp most recently worked with the Federal Highway Administration and as an independent-consulting engineer.

Calista Corp.

Marcia Davis was hired as general counsel for Calista Corp. Davis previously served as deputy commissioner for the State Department of Revenue, specializing in tax and natural resource issues.

Thom Leonard joined Calista as communications manager. He recently worked as public relations manager for Southcentral Foundation and relationship director for Chaz Ltd. Collision Express.

KeyBank

Steve Campanella was chosen district retail leader for KeyBank in Alaska. He has 16 years of financial services experience. He most recently managed retail banking and secondary-market lending at State Bank of Illinois in Naperville.

Port

of

Tacoma

Larry St. Clair was appointed to lead the Port of Tacoma’s breakbulk business. St. Clair, who has worked for the port since 2006, has more than 30 years of maritime industry experience.

www.akbizmag.com • Alaska Business Monthly • March 2011

Right Moves Mikunda Cottrell & Co.

Laura Edmondson joined Mikunda Cottrell & Co. as consulting manager. She most recently served as vice president and chief financial officer for Ahtna Inc. .

Aleut Industrial Services

Taft

Don Taft was appointed president of Aleut Industrial Services, a subsidiary of The Aleut Corp. Taft most recently served as president of another Aleut Corp. subsidiary, C & H Testing Ser vices, based in Bakersfield, Calif.

Sponsored by Northern Air Cargo Anchorage, ConocoPhillips Alaska Inc.; Gary Morrison, Wrangell, retired forester/geologist; Theresa Fiorino, Anchorage, Defenders of Wildlife; Roy Ashenfelter, Nome, Norton Sound Economic Development Corp. Reappointed members are Amalie Couvillion, Anchorage, The Nature Conservancy; and Michael McDougall, Eagle, Alaska Trappers Association.

Northrim Bank

Federal Government

Interior Secretary Ken Salazar appointed several Alaskans to the Alaska Resource Advisory Council to advise the Bureau of Land Management on public land issues. New member are: Stan Foo, Anchorage, Barrick Gold Corp.; David Brown,

Access Alaska Inc.

Kerry Turnbow joined Access Alaska Inc. as Interior regional director in Fairbanks. He most recently served as clinical director at Boys and Girls Home of Alaska in Fairbanks. He teaches psychology at the University of Alaska Fairbanks. kpb architects

Rasmuson Foundation

Jeff Baird was hired as program associate at the Rasmuson Foundation. He most recently worked as a law clerk in the Alaska Court System in Anchorage and Bethel. His career also includes six years as a reporter for daily newspapers in North Dakota and Minnesota.

Seven Alaska nonprofit leaders were chosen for the 2011 Rasmuson Sabbatical Program. The program supports three- to six-month sabbaticals to retain nonprofit leaders who often deal with crises as part of their job. The 2011 Sabbatical Program leaders are: Kaye Kanne, Juneau Family Birth Center; Jennifer Burkmire, Matanuska Community Health Care; Elaine Dahlgren, Volunteers of America of Alaska; Kristie Young, Native Village of Tetlin; Emily Ennis, Fairbanks Resource Agency; Mollie Boyer, Valley Community for Recycling Solutions; and Ken Fate, Raven Radio Foundation. The deadline to apply for the next program is Oct. 1. For application information, visit www.rasmuson.org.

interns are Jessica Crump and Jordan O’Connell.

David Matheny serves in the Fairbanks office, and Elizabeth Slotnick works in the Juneau office.

Schulman Cessnun Benjamin Schulman was hired as assistant vice president, branch sales manager for Northrim Bank.

He previously worked 10 years for Wells Fargo. Bill Cessnun was hired as vice president, commercial loan officer. He has worked for Key Bank of Alaska, Merrill Lynch and as an owner/operator of an Allstate Insurance Agency.

SouthEast Alaska Regional Health Consortium

Cynthia Reeves joined the SouthEast Alaska Regional Health Consortium as patient advocate in Klawock for its clinics and programs on Prince of Wales Island. She previously worked as a substitute teacher with the Craig and Klawock school districts. She also was a mental health associate with Community Connections in Craig.

Mark

U.S. Sen. Begich’s Office

U.S. Sen. Mark Begich, D-Alaska, added several interns from Alaska at his Washington, D.C. office to serve until May. They are Rafi Bortnick, Olivia Burzynska-Hernandez, Connor Cole, Andres Chovil and Chelsea Marlow. Anchorage office

Leadership reorganization at kpb architects now includes original founders Jeff Koonce and Steve Bettis and in equal partnership Tamás Deák, Michael A. Prozeralik, Richard Reed, and Deanna Wlad. The firm was originally founded by Mark Pfeffer, who will serve as board member emeritus and work full-time as president of Pfeffer Development LLC.

Alaska Airlines

Mark Bocchi was promoted to managing director of sales and community marketing for Alaska Airlines, working in Seattle and Portland, Ore. He previously served as director of passenger and alliance sales for Alaska Airlines.

Architecture/Engineering Marketing Association of Alaska

The Architecture/Engineering Marketing Association of Alaska elected a new board of directors. They are Skip Bourgeois, president; Lisa Dale, president-elect; Becky Morris, vice president; Jessica Taft, secretary; Cheryl Jemar, treasurer; Louis Gire, publicity director; and Andrea Story, elections director.

Totem Ocean Trailer Express Inc.

Stephanie Holthaus joined Totem Ocean Trailer Express Inc. as vice president of sales and customer service. She most recently served as president of Alta Air Logistics. David Kilbourn now serves as vice president of pricing and operations. q

www.akbizmag.com • Alaska Business Monthly • March 2011

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OIL & GAS

Surviving an Oil Spill Alaskans teach southern states how to cope

By Heidi Bohi

The Long Haul

“It’s been 21 years for us, so they need to realize they’re in it for the long haul and they have no way of knowing

30

Photo courtesy of Amanda Johnson, PWSRCAC

T

wenty-two years after the Exxon Valdez oil spill, just the mention of the disaster still triggers an instant recall of black crude oiling the rocky beaches of Prince William Sound, the aerial view of a sheen snaking along the surface of the water, and lifeless sea otters and sea birds left defenseless from the sticky crude.

It’s what could not be captured on film, though, that continues to ripple through Alaska communities: the mental and emotional damage suffered by thousands of injured claimants that even the courts determined is more reprehensible than economic harm.

The court tied the punitive award to this mental and emotional damage on what it called the “entirely predictable massive disruption of lives ... when a giant oil tanker goes astray,” adding that Exxon knowingly put a relapsed alcoholic at the helm of the tanker.

Anxiety, stress, fright, grief, depression, feelings of distress, psychosomatic physical symptoms: these are all common reactions to a traumatic incident by a person or their family who survives an event such as the Exxon Valdez oil spill. So when BP’s Deepwater Horizon rig exploded in April, resulting in the largest spill in U.S. history and the second largest in the world after Lakeview Gusher in California, the five Gulf states affected – Texas, Louisiana, Mississippi, Alabama, Georgia and Florida – turned to Alaska for guidance on how to deal with the human impact while also trying to mitigate impacts to the environment.

Right: Cordova Fisherman Bill Lindow visits with Russel Dardar of Grand Bayou (facing camera) and Mayor Tim Kerner of the Town of Jean Lafitte as Jessica Ravitz of CNN.com and Theresa Vargas of the Washington Post listen in while traveling from Whittier to Cordova on the ferry Chenega.

what’s ahead,” says Linda Robinson, outreach coordinator, Prince William Sound Regional Citizens Advisory Council (PWSRCAC).

As is the case with the Exxon Valdez spill, besides destroying wildlife, killing animals and devastating the local economy, the massive oil spill in the Gulf has already had damaging psychological effects on Gulf Coast residents, much of which is tied to concerns about the future economy of the region and the disappearance of fishing and shrimping jobs that multiple generations of families have relied on. Scientists, researchers and mental health professionals say this is just the beginning of what’s to come. This is compounded by the fact that, since 2004, residents of the Gulf Region have endured other natural disasters, including hurricanes Wilma, Rita, Katrina and Ivan, which rank among the

10 worst along the Atlantic Seaboard.

Dr. Steven Picou, an expert in mental health issues related to oil spills, is worried that, as is the case with Alaska, cities like New Orleans will become a “corrosive community” much like Cordova did, where the town was scarred by a loss of social capital – trust, family, friendships, networks and a sense of belonging within the community, resulting in a rise in domestic violence, depression, and self-isolation and -medicating.

A co-author of the PWSRCAC book “Coping with Technological Disasters,” a guidebook for communities facing the fallout from technological disasters – rather than natural – when the Gulf spill happened, Picou was struck by the similarities experienced by Alaskans in the aftermath of the 1989 Exxon Valdez spill and those in the Gulf Region.

He suggested representatives from the

www.akbizmag.com • Alaska Business Monthly • March 2011

Material Flow & Conveyor Systems Inc.

Storage Racks

Lockers

Photo by Linda Robinson

Pallet Racks New, Used, Surplus Hilman Moving Systems - We move heavy loads.

Gulf of Mexico visitors watch for whales while traveling from Whittier to Cordova on the ferry Chenega. Left to right: Iris Brown Carter, Louisiana Bucket Brigade; Nancy Lena, Machado, La.; Cynthia Sarthou, Gulf Restoration Network; Bill Capo (facing away from camera), WWL TV; Amanda Johnson (on phone) PWSRCAC Rosina Phillipe, Grand Bayou; Kris Peterson, University of New Orleans, CHART; and Russel Dardar, Grand Bayou.

area contact PWSRCAC to learn about Alaska’s experience and get information from individuals and entities on how to prepare for litigation and mental health issues resulting from losing their livelihoods. Although many Alaskans had traveled to the incident command centers to help with the clean up, Robinson says they were so flooded with media and volunteers it was difficult to be effective, and many of the areas were restricted. At the same time, federal agencies prevented access to everyone except BP employees.

Outside Visitors Hosted

As a result, PWSRCAC hosted three groups of visitors, mostly from the Gulf Region, this fall and escorted them around Prince William Sound to meet with like-minded local leaders, groups and organizations that assisted communities during the aftermath of Alaska’s spill. Participants were different in each of the three groups, but included: John Devens, former mayor of Valdez; Rick Steiner, a University of Alaska Fairbanks professor and marine conservation specialist who also specializes in setting up citizen oversight groups worldwide; Prince William Sound Science Center staff; Cordova Chamber of Commerce; Copper River Seafoods; World Wildlife Fund; sociologists;

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Anchorage, AK 99507 They also were given presentations by www.akflow.com Alyeska Pipeline Service Co. and the U.S. Coast Guard, and toured the Valdez hatchery.

Vertical Ad 2.indd 1 12/15/2010 8:10:13 AM Attendees from Outside included church leaders, scientists, mayors, community and business liaisons, fishing organizations, and several media representatives from large outlets, such as The Washington Post and CNN. The most common response among those visiting from the Gulf states, Robinson says, was disbelief and surprise when they learned the effects of the spill in their region would be long-term and it is not possible to say with any certainty how the oil will effect the environment, or how long it will take to repair it. The most common questions asked were: What effects will the spill have on commercial and subsistence fisheries?

Where does dispersed oil go? and How does that effect the water column?

Peer-Listener Program

The combination of not being able to work and not being able to meaningfully contribute to recovery efforts is one of the greatest causes of depression for victims of a technological disaster like the spill in the Gulf. As a result of the Exxon spill, Picou helped

www.akbizmag.com • Alaska Business Monthly • March 2011

31

develop the “peer listener” program that involves working with individuals to help them talk through their concerns and anxieties. Training Gulf Coast visitors in the peer-listener outreach used to help those affected by the Exxon Valdez spill is one of the ways PWSRCAC mentored those on the three trips by offering training, Robinson says, and the organization hopes to train more.

Picou has trained more than 400 peer trainers in the Gulf states.

Although Alaska and the southeast tip of Louisiana are separated by about 4,000 miles, the similarities between the two are greater than most may realize from looking at a map. Both regions are dependent on oil, commercial fishing and tourism. In the event of the Gulf spill, offshore drilling came to a halt, which meant less tax revenues for the parishes – similar to Alaska’s boroughs.

At the same time, the perception that Louisiana’s seafood was tainted and unsafe to eat quickly reached current and potential Gulf seafood customers, causing commercial buyers to cancel orders, resulting in part from widespread consumer fears that residual oil and clean-up dispersants would make them sick. Seafood sales all but ended and while not all of the stocks were actually tainted, the industry says it will take years to recoup from the misperception.

Waters and marshes in the Delta formation were oiled, as was the gulf. All but two fisheries closed in Louisiana.

Although they have since reopened, it is still uncertain whether the seafood is safe to eat. Even stocks that may not have been affected must go through

32

extensive testing before being sold in the marketplace.

Wide Range of Needs

Kristina Peterson, senior researcher for the Center for Hazards Assessment, Response and Technology (CHART) at the University of New Orleans, is known by many as the Mother Jones of Disaster for working with marginalized and at-risk communities following disasters and helping them develop the capacity to be sustainable communities focusing on mitigation, business continuity and planning, resiliency, and community mitigation plans. “It’s about integrating what it takes for a community to be a community,” she says.

When the Gulf crisis happened, she was familiar with the PWSRCAC’s work and knew that the diversity of the

Russel Dardar, fisherman from Grand Bayou tries Kachemak Bay oysters while visiting on the Kenai Peninsula. www.akbizmag.com • Alaska Business Monthly • March 2011

Photo by Linda Robinson

Photo by Linda Robinson

Visitors from the Gulf of Mexico listening to presentations, and discussing related issues at the PWSRCAC office in Valdez.

group’s board of directors and experience would be helpful for connecting stakeholder groups in the south with their counterparts in Alaska. She accompanied those representing parishes from the southeast tip of Louisiana just south of New Orleans: Dulac, Pointeaux-Chenes, Isle de Jean Charles, Grand Bois, Jean LaFitte, Grand Bayou, Lake Catherine, Irish Bayou, Belle Chasse, Bayou Blue, Violet and Grand Isle.

Looking ahead, Peterson says several Gulf states are considering developing an oversight committee modeled on PWSRCAC to address risk issues and there may also be more trips to Alaska this summer so information can continue to be disseminated to affected communities. Like Alaska’s oversight council, they want these groups to reflect the wide range of needs in the region. In the meantime, she says, as Gulf communities continue to have questions, or new issues arise, they can build on the relationships established during the summer trips.

“Diversity is the key to having the kind of discourse it takes to come up with good answers, and to be more aware of potential issues and ways in which to address those,” Peterson says. “We have Alaska’s story to help us learn, so we can respond with eyes open and with more knowledge. Alaska’s RCAC is very astute in terms of what the issues are and it has been very directed with what it needs to achieve to make sure the area is protected.” q

FILM

Alaska Travel Industry Association Updates TV Ads

New ads take advantage of Film Office incentives Photos courtesy of ATIA/ Bradley Reid & Associates

Production crew assembles in front of Mendenhall Glacier in Juneau for the shoot of the new Alaska Travel Industry Association television commercials.

By Tracy Kalytiak

G

azing at a Chugach mountain vista on a sunny June night, Carolyn Gleason sipped a cold beer on the deck of her Wasilla hotel accomodations. Her husband had gone to bed, nursing a cold. Their three grown children had flown home that day after the family’s cruise vacation.

“I was so intrigued by the amount of sunlight not only at our location but to the east, where the sun was shining brightly on the distant snow-covered mountain peaks,” said the Kirkwood, Mo., homemaker. “I was delighting in my beers and noticing how the beer labels were Alaska-themed, one with a Kodiak bear and the others with other pictures. Finally, I realized it was just after 1 a.m. When I stood up and turned around to leave, I was blown away when I saw the sun shining brightly in the western sky. What a happening!”

Gleason savored that Alaska

34

evening so much that she and her husband decided to do more than anticipated before boarding their return flight. They drove to Valdez, stayed in Alaska lodgings, ate in Alaska restaurants and bought gas and snacks and souvenirs from Alaska gas stations and shops before returning to Anchorage’s airport via a ferry trip across Prince William Sound.

The Alaska Travel Industry Association hopes its new 30-second television commercials will lure other travelers, like Gleason, to the state and bring them back again and again in the wake of the recession.

The commercials aired from January through March on seven national cable channels: National Geographic Channel, The Learning Channel (TLC), History Channel, Travel Channel, Weather Channel, Discovery Channel and Fox News.

ATIA, a nonprofit organization that represents more than 1,100 large and small travel-related businesses, markets Alaska as a travel destination and maintains the TravelAlaska.com website for visitors interested in visiting the state.

Anchorage-based Bradley Reid & Associates designed the advertisements and managed shoot production. The spots seek to reinforce Alaska’s brand, “Alaska: Beyond Your Dreams, Within Your Reach.”

Maintaining Visibility

“It’s important for Alaska to maintain its visibility as the economy improves,” said Ron Peck, president and chief operating officer of ATIA, in an ATIA release. “Other destinations are marketing aggressively, and we need to be competitive to keep the industry on a track to recovery to pre-recession levels.”

www.akbizmag.com • Alaska Business Monthly • March 2011

One of the TV spots shows a hiker enjoying the view atop a dizzying sweep of Alaska crags, placid water adorned with slabs of calved glacier ice, the thrill of a zipline ride in a forest, a grinning woman trying her hand at fly fishing, a cruise ship appearing toy-like in a massive vista of smooth sea, islands and snow-seamed peaks.

Videographers, producers, editors, music studio and voice talent shot the high-definition footage last summer – the first time an all-Alaskan crew had created national tourism ads for the state.

Developments in Alaska’s film incentive program and film industry made the all-Alaska shoot possible.

The State’s national television advertising budget rose from $1.22 million in fiscal 2010 to $6.11 million in fiscal 2011, thanks to special funding Governor Sean Parnell proposed.

The Alaska Legislature approved that funding last year.

“The additional funding from the Parnell administration and the Legislature was greatly needed and appreciated. Going into the 2011 legislative session, we’d like to work with the Legislature on a sustained budgeting formula that will allow this level of marketing to continue,” Peck said in an ATIA press release.

ATIA also launched a new website, www.TravelAlaska.com, which went live in July 2010. It features interactive maps, multiple navigational pathways and upgraded trip-planning tools. Visits to the consumer website, by October, were up 38 percent and click-throughs to ATIA member businesses were up 40 percent.

Ads Entice Visitors

Potential first-time and repeat Alaska visitors from the Lower 48 said the ads blast away aged stereotypes of what Alaska is actually like. “(It) struck me that they provided a vision of the state that was at odds with my preconception about it – that if you wanted to go on vacation there, be prepared for it to be rugged and backwoodsy,” said Suzanne Koziatek, a resident of Belleville, Ill., who has never visited Alaska. “In my defense, my husband had just that sort of vacation in Alaska about 18 years ago

Portage Glacier, south of Anchorage on the way to the Whittier tunnel, is showcased in the Alaska Travel Industry Association’s new television commercials.

– hiking in the wilderness, carrying a rifle along for the bears, slathered head to toe in protective stuff against the mosquitoes. Might be enticing to people who want some wilderness in their vacation – but only so much.”

Scott Westerman, of Heber Springs, Ark., says he, too, likes the ads. Westerman and his companion visited Alaska in 2002.

“The cinematography was amazing,” Westerman said of the spots. “I also enjoyed seeing people. I think a lot of folks don’t yearn to go to Alaska because they think it is desolate and lonely, albeit amazingly beautiful.

Overall, both spots were beautiful and happy and made me want to return.”

Julie Wilson, a high school English teacher from Derby, Kansas, says the “This Year” TV spot shows how Alaska is unique from all the other states.

“It plays on my sense of wonder and adventure for something different, unique, wholesome and historic with a little touch of the ‘days of yore’ added in for the emotional appeal,” Wilson wrote.

Kathy Dunn, ATIA’s marketing director, said a research firm in October surveyed 1,542 people, nationwide, about travel advertisements they remembered seeing recently. Alaska ranked 10th. In January, Dunn said, interviews after the commercials aired showed Alaska moved up to sixth place, behind Las Vegas, Florida, Mexico, Hawaii and Walt Disney World.

“Those are some pretty big brands ahead of us,” Dunn said. “We saw a rise in just about every metric.”

Dunn said the organization’s previous commercials were shot five or six years ago.

“Back in 2005, there weren’t many ziplining types of activities,” she said.

“There were new products in the market we hadn’t captured images of.”

And, Dunn said, communities evolve. It’s important for tourism marketers to give an accurate depiction of key changes – one example being the transformation of Ketchikan’s waterfront.

“Communities take pride in who they are, how they present themselves,” Dunn said. “We update images, help promote those communities in the way they want to be presented.” q

Directing one of four new Alaska Travel Industry Association television commercials in front of Mendenhall Glacier in Juneau. www.akbizmag.com • Alaska Business Monthly • March 2011

35

MAR

6

Alaska This Month

By Nancy Pounds

Photo courtesy of ACVB/Photo by Farrar Photography

Ski Race Caps Nordic Season

Tour of Anchorage Draws Nearly 2,000 Racers Skiers glide along world-class Nordic ski trails in Anchorage, Alaska, during the Tour of Anchorage – a premier ski marathon and tradition for Nordic skiers of all abilities.

W

ith weary arms and leaden legs, the skier crests the last hill and emerges into Kincaid Park stadium.

He has raced many miles on Anchorage’s wooded ski and bike trails since starting this morning. Now, the finish line is in sight. Friends and family members cheer the finishers over that last hump inside the stadium. A peppy announcer calls out names of finishers, who cross the line amid exhaustion and exultation.

Nearly 1,800 competitors will line up for this year’s Tour of Anchorage on March 6, marking the event’s 24th year.

They have trained months for the race, which traverses world-class ski trails on the Hillside and at Kincaid, with flatland sojourns on groomed bike trails offering Mount McKinley views from the Coastal Trail.

The Tour is the nation’s second-largest cross-country ski race behind the American Birkebeiner in Hayward, Wis., which draws nearly 8,000 racers.

“The Tour of Anchorage culminates the cross-country skiing season in Anchorage,” said race director PJ Hill. “It is the one race in Anchorage every skier points toward and trains for.”

Racers choose from various distances, which all finish at Kincaid Park. The 25-kilometer classical and freestyle races start at Alaska Pacific University (APU), and 40k and 50k races begin at Service High School.

36

Organizers added the APU start this year to allow more parking space for 25k racers than Russian Jack Park, site of previous years’ race starts, Hill said. The venue change also should alleviate crowding on the trail crossing Northern Lights near East High School, he said.

The race draws high school hotshots, recreational endurance athletes and national-caliber speedsters. About 400 skiers from Fairbanks, the Kenai Peninsula and PalmerWasilla participate, with several others from Southeast and Bush Alaska, according to Hill. Another 100 to 200 skiers from the Lower 48 also participate, and 10 to 15 skiers from foreign countries join the Tour, he said.

“While there are only a few people capable of winning the Tour, there are a thousand races within the race for the Tour,” Hill said. “There are lots of friends racing friends, or people trying to beat their time last year.”

The Tour of Anchorage takes place on Sunday, March 6, the day after the ceremonial Anchorage start of the Iditarod Trail Sled Dog Race. Anchorage Convention & Visitors Bureau officials promote the events together as distinctive of the winter city.

“ACVB enjoys selling what we’ve termed the winter trio – Fur Rondy, Iditarod and the Tour of Anchorage,” said Julie Saupe, ACVB president and chief executive. “Combined, they represent our winter spirit and diversity.”

www.akbizmag.com • Alaska Business Monthly • March 2011

Photo courtesy of ACVB/Photo by Farrar Photography

Organized locally by the Nordic Ski Association of Anchorage, the Tour of Anchorage marathon consists of four cross-country ski races – a 25k classical race and 25k freestyle, 40k and 50k freestyle races. The course begins at various locations across Anchorage, follows groomed trails through spectacular wooded settings along the coast of Cook Inlet, and finishes up at Kincaid Park.

History of the Tour

Tour predecessors were held in the 1980s at Kincaid Park, featuring multiple loops for the 50k race. The first Tour was in 1988, the first winter after completion of the Tony Knowles Coastal Trail. There were 175 skiers that first year for the 25k and 50k race, Hill said.

“Those first few years there was no dedicated ski trail between the ski trails on the Hillside and the trails at the university, so the Tour used the dog-sled racing trails to make that link,” Hill recalled.

Trail-builders spent several years in the 1990s carving out a ski trail on Bureau of Land Management lands and Far North Bicentennial Park, he said. The Tour now uses this trail to connect the races starting at Service High to the Chester Creek and Coastal trails. The Nordic Ski Association of Anchorage built four bridges over creeks in that area, improving the trail system, he said. Once the trails were only groomed for around Tour time, but now trails are prepared throughout the ski season.

In 2002, more than 2,000 racers participated, setting the current Tour record, Hill noted.

The Tour has been cancelled only once in its 24 years –

in 2003, due to an absence of snow, Hill said. The Tour is also the major event and biggest fundraiser for the Nordic Ski Association of Anchorage.

This year organizers have scheduled the post-race award ceremony for Monday evening, the day after the race, at the Bear Tooth Theatre Pub & Grill. In the past, the award ceremony was held Sunday night after the ski race, first as a potluck, then as a spaghetti feed at Service High as the event drew more participants.

Also this year, a podium award ceremony at Kincaid will honor top racers soon after the winners finish.

Hill skied in the first Tour and began serving as race director the next year.

“My main reason for being involved in the Tour is that it is part of the fabric of the community,” Hill said. “It adds to the quality of life in Anchorage, and a lot of people look forward to it.”

Hill pondered his longtime service as race director, then described the moment that always inspires him.

“As the event is winding down on Sunday afternoon, and I look at all the smiles on tired people’s faces at Kincaid Park, it seems worth the effort.” q

www.akbizmag.com • Alaska Business Monthly • March 2011

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March Events Calendar n c h o r a g e • • • • • • • 3/19

• • • • • • •

A

3/4

Anchorage Home Builders Home & Remodeling Show

Anchorage’s only home-remodeling show organized by the residential building industry. Become a home-buying and remodeling expert, view the latest products and services from more than 150 exhibitors. Free seminars. Friday, noon-8p.m.; Saturday, 10 a.m.- 8 p.m.; Sunday, 10 a.m-5 p.m. Sullivan Arena. Contact: 522-3605.

3/5

3/31–4/3 Great Alaska Sportsman Show Iditarod Trail Sled Dog Race Anchorage’s largest annual sports and outdoor show. Has Ceremonial Start everything for the sports and outdoor enthusiast with dem-

The “Last Great Race.” Mushers and 1,000 dogs make the dash toward the Bering Sea coast through our great state.

Come see the pure adrenaline, which takes mushers across 1,100 miles. Start time 10 a.m. downtown at Fourth Avenue and D Street. Contact: 248-MUSH.

3/5

Miner’s and Trapper’s Ball

Highways in the Sky. This year’s salute to Alaska’s Aviators.

Come and celebrate the 61st annual Miner’s and Trapper’s Charity Ball. Men bring your beards to compete in the “Mr. Fur Face Contest,” the Alaska State Championship Beard-andMoustache Contest. This has been a Lions Club fundraiser for 60 years. 7:30 p.m. at the Egan Center. Contact: 248-MUSH.

3/5

Portland Cello Project PCP

A unique band of cellists that number from five to 16.

Classically trained musicians experiment with mainstream music in varied forms. During the course of their epic live show, you might see symphonic fans nodding their heads to orchestral hiphop, children playing cello and local jam band accompanying the group in a late 19th century Russian compositions. Lots of cellos, cellos, cellos. Saturday, 7:30 p.m. Contact: 263-2900.

The Running of the Reindeer

Tie a red scarf around your neck and run downtown city streets during the Pamplona- styled official Fur Rondy event.

Downtown Fourth Avenue and G Street at 4 p.m. Contact: 274-1177.

3/11

Chicago City Limits

3/12

Bean’s Café Empty Bowl Project

New York City’s legendary improv comedy group has thrilled audiences for nearly 30 years with its unique style of sketch comedy, musical theater and audience-inspired improvisations, creating a truly hilarious live performance experience.

They bring a new show called American Idles to the Discovery Theater. Come have a good laugh. Friday at 7:30 p.m. and Saturday at 7 p.m. and 9:30 p.m. Contact: 272-1471.

onstrations clinic, the kids’ fishing pond, laser rifle range, mobile aquatic classroom and more. Times: Thursday, 4 p.m. - 9 p.m.; Friday, noon-9 p.m.; Saturday, 10 a.m.-9 p.m.; Sunday, 10 a.m.-6 p.m. Sullivan Arena and Ben Boeke.

Contact: 562-9911.

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2/22 - 3/27

2011 World Ice Art Championships

a i r b a n k s • • • • • • •

Ice Alaska is in its 22nd year hosting the largest annual ice competitions and exhibition worldwide. This Fairbanks event is a month-long attraction involving 70 teams from all over the world and more than 100 ice artists. Come be one of more than 45,000 visitors from Alaska and all over the world. 10 a.m. to 10 p.m. daily. Contact: 456-1951.

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Mendenhall Glacier Winter Fireside Series “State of Glacier”

Latest information on the glacier’s mass balance, lake temp and depth as measured by the University of Alaska Southeast’s Environmental Science and Geography program faculty, staff and students. UAS’ most valued partners mapped the seasonal terminus changes of Juneau’s favorite glacier and photographed ice-calving events. Friday at Mendenhall Glacier Visitors Center. Free and open to public. Programs begin at 6:30 p.m. and 8 p.m. Contact: 789-0097.

A special event combining the talents and generosity of The Anchorage Clay Arts Guild and some super soups! Thousand of hand-crafted pottery bowls are created for this unique luncheon. Come pick your own bowl, choose your own soup, have some cornbread, sit back eat and be entertained then take home your one-of-a-kind bowl! Contact 297-5620.

3/5

6th Annual Bridal and Prom Show

3/8

The Calder Quartet in Concert

3/12

Enjoy keen musical sensibility and flair of modern composition; four string players of the Calder Quartet redefine the classical ensemble. Performance at 7 p.m. at the Thunder Mountain High School Auditorium. Tickets available at the Juneau Arts & Humanities Council office at 350 Whittier Street, online or at Hearthside Books locations. One performance daily. Contact: 586-2787.

Branford Marsalis

Marsalis from Breaux Bridge, La., is an American saxophonist, composer and bandleader. Primarily known for his work in jazz as the leader of the Branford Marsalis Quartet, he also performs frequently as a soloist with classical ensembles.

Come see the sounds Saturday at 8 p.m. Alaska Center for the Performing Arts, 621 W. Sixth Ave. Contact: 263-2787.

3/14–3/19

March Madness: ASAA State 3/20 - 3/26 Basketball Tournament

Alaska’s boy’s and girl’s annual state basketball tournament will crown two new champions. At the Sullivan Arena. Contact: 563-3723.

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The latest styles for bridal parties and proms with a modestly priced lunch served. Contest and prizes. Time: 10 a.m.

-3 p.m. Juneau Arts & Culture Center. Contact: 321-3094.

65th Gold Medal Basketball Tournament

Teams from throughout Southeast Alaska meet in Juneau for tradition-rich tournament. Legendary rivalries and community pride will produce basketball at its best. Contact: 780-2073.

www.akbizmag.com • Alaska Business Monthly • March 2011

M arch E v e n t s C a l e n d a r P

• • • • • • •

a l m e r • • • • • • •

3/13

Lions Club 44th Annual Gun Show

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Come see more than 300 tables of knives, guns and outdoor gear. Get in on a free chance to win a fishing charter; door prizes, rifle raffle, too! Free parking at the Purple Gate with a free shuttle to Raven Hall. All proceeds support Palmer Lions Club community projects. Food service by Winner’s Circle 4-H Club. Contact: 761-3750.

3/6

a l k e e t n a • • • • • • •

Iditarod ReStart Family Style Supper at the Roadhouse

Iditarod ReStart Family Style Supper at the Roadhouse.

Talkeetna is a great destination after you’ve seen the musher’s officially off in Willow. Enjoy a single-seating evening meal, followed by a themed slide presentation. The next morning you can catch a flight out to a remote check- point and see how the race is REALLY run.

3/19

Oosik Classic Weekend

The seventh skiing of the Oosik Classic Nordic Ski Event in Talkeetna. A full day of ski events is followed by a banquet and dance for race participants. Rooms book early, so be sure to make plans soon. Contact the chamber: 733-2330.

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3/4

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t

k

a

• • • • • • •

Fourth Annual Sitka Arti Gras

A Music & Arts Festival on the edge of the Last Great Alaskan Wilderness. Regional artists and musicians get together with workshops, live music, Sitka Spring Gallery Walk and Wearable Art Show www.artigras.info Contact: 747-6790.

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3/25-4/10

V

a l d e z • • • • • • •

Tailgate Alaska at Thompson Pass

Join the 16-day festival and two-day ski snowboard contest.

Snow science education, side events, live concerts, daily barbeque garden parties throughout the duration. Festival is open to the public, but limited to 500 participants. All participants expected to know how to use a beacon, shovel, and probe and have basic backcountry knowledge. Contact: mediakinevel@gmail.com.

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3/5 & 3/6

a s i l l a • • • • • • •

Iditarod Arts & Crafts Bazaar

Valley Artist’s Guild Nancy display artwork and crafts from Alaska. Contact: Howes or Dee: 892-7111.

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3/6

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i l l o w • • • • • • •

Iditarod Sled Dog Race The Last Great Race

Officially kicks off on March 6, with the restart taking place at Willow Lake. Come and root on your favorite mushers. Sit and watch Lance Mackey leave the starting line, on his quest for a fifth consecutive title! Let’s see if he can do it. Contact: 248-MUSH. q

www.akbizmag.com • Alaska Business Monthly • March 2011

39

OIL & GAS

Photos by Judy Patrick Photography

Providing fuel to Alaskans and beyond The old Valdez Refinery before it caught fire in 2008 and was rebuilt in 2009. Operating since early 1993, the Petro Star Valdez Refinery is the newest refinery in the U.S. and built to strict environmental standards.

By Mike Bradner

S

ince 1968, Alaskans have prided themselves in being able to make their own fuel in refineries built in the state, using Alaska-produced crude oil and employing Alaskans.

The refineries have their challenges but many of these have been overcome, and the companies continue to invest in the plants.

Heating oil and diesel for Yukon River villages is made in Flint Hills Resources’ refinery in North Pole, near Fairbanks, and much of the jet fuel used at Anchorage’s international airport, a hub for international cargo airlines, is made by Flint Hills and shipped by rail to Anchorage.

Tesoro Petroleum’s refinery at Nikiski, near Kenai, supplies the bulk of the state’s gasoline, ships jet fuel to Anchorage’s airport and is the only supplier of

40

ultra-low sulfur diesel, which meet new U.S. Environmental Protection Agency rules for on-road trucks and off-road mobile equipment.

Petro Star, a subsidiary of Alaskanowned Arctic Slope Regional Corp., owns and operates two small refineries, one near North Pole in Interior Alaska and one near Valdez, which supply jet fuel to military bases and a variety of other products to commercial customers.

Flint Hills Resources, based in Wichita, Kan., has refineries in Alaska, Minnesota and Texas. Flint Hills is a subsidiary of Koch Industries. It purchased the refinery from Williams Alaska Petroleum Co. and assumed ownership and operational responsibility in April 2004.

The refinery has a crude-oil processing capacity of about 220,000 barrels per day. The refinery produces

several petroleum products including gasoline, jet fuel, heating oil and diesel, and asphalt. About 60 percent of the refinery’s output has traditionally been sold to the aviation market. When it was operating at full capacity, Flint Hills shipped fuel to Anchorage, annually loading and unloading about 25,000 rail cars.

Bulk-fuel tanks operated by Flint Hills in Anchorage can store more than 700,000 barrels of products and a pipeline extending half a mile to the Port of Anchorage allows for the loading of products on vessels.

Tesoro is headquartered in San Antonio, Texas, and operates refineries in several states including Alaska, Washington state and Hawaii. The refinery at Nikiski has a capacity of producing 72,000 barrels per day and

www.akbizmag.com • Alaska Business Monthly • March 2011

makes a variety of products including gasoline, jet fuel and diesel. Like Flint Hills, the company maintains bulkstorage tanks in Anchorage and supplies them with a pipeline from the Nikiski refinery to Anchorage.

Tesoro also operates retail gasoline outlets in Alaska under its own name. In 2008 Tesoro operated 31 company-owned convenience stores and retail outlets, and worked with 58 independent dealers operating under the Tesoro brand.

Hard Road

The state’s refining industry has had its ups and downs over the years. Now, 40 years after the refinery near Kenai was first built and began operating, and almost 34 years after Interior Alaska got its plant near Fairbanks, the state’s refineries face new sets of challenges. These plants were built in 40-year-old economic and regulatory environments that have changed dramatically. Their challenge is to adapt to the changing conditions and operate profitably. So far they are able to do so, but it isn’t easy.

One example is that the Flint Hills refinery, because of its high operating costs, is no longer the dominant supplier of jet fuel to Anchorage’s airport.

The airlines flying in and out of Anchorage are now importing more jet fuel from overseas and buying less fuel from Flint Hills. The loss of those sales hurts the refinery (one of its processing units is shut down) and the Alaska Railroad has lost a lot of business in shipping fuel to Anchorage, formerly a big money maker for the railroad.

“Flint Hills Resources continues to evaluate restarting Crude Unit 3 with customers. Crude Unit 3 operations will be dependent on demand,” company spokesman Jeff Cook said in a statement.

Flint Hills will be able to get some of these sales back and reopen its third processing unit at some point, but the airline consortium is meanwhile planning to build additional bulk storage for jet fuel in Anchorage that will allow it to continue and even expand jet fuel imports. That means continued competition from overseas refineries for Flint Hill What’s driving up those costs? For

Flint Hills, and for that matter with two other smaller refineries at North Pole and Valdez operated by Petro Star Inc., the main economic challenge is created by lower volumes of crude oil being moved through the trans-Alaska oil pipeline system (TAPS).

Two problems are created by this.

One is the declining temperature of the crude oil shipped from the North Slope and received by the refineries.

Because the oil is cooler than it was these plants heat the oil more to refine it and they must use more oil to do it, which adds costs. One of the long-term hopes is if a natural gas pipeline is built from the Slope, the two Fairbanks-area refineries would be able to substitute less-expensive gas for oil in heating the crude oil and also in providing electricity to the plant.

Cook said crude oil is now coming into the refinery at about 40 degrees Fahrenheit. Fifteen years ago, in the mid-1990s, it came in at 110 degrees and has steadily dropped over time.

“Our energy costs for heating the crude do increase significantly with this kind of temperature drop,” Cook said.

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www.akbizmag.com • Alaska Business Monthly • March 2011

41

The North Pole Refinery.

More Challenges

Declining volumes of oil in the pipeline pose a second challenge to the three TAPS-dependent refineries, however.

These plants take in crude oil, extract parts of the crude needed to make jet fuel, diesel, gasoline and other products, and inject the unused parts of the crude

42

barrel into the pipeline. Since the unused parts of those crude barrels are of lower value – the refineries having extracted and used valuable parts – the effect of injecting this “return oil” back into TAPS is to somewhat devalue the crude oil. That means it sells for less, earning less revenue for the producers and the

State of Alaska. State taxes and royalties are based on the values of the oil sold.

The refineries compensate the producers and State for this loss by paying a fee for injecting the return oil. While this has happened since the refineries began operating, the effect of the return oil on the overall crude oil quality was modest for many years, particularly the 12 years the pipeline operated at or near its capacity of two million barrels a day.

Now, however, the North Slope production has dropped to a third of its former levels, but the refineries’ draw of crude and reinjection of unused crude oil parts have remained more or less constant. That means any degradation effect of the unused crude oil parts in the returned oil has a greater effect on the volumes of oil moving in the pipeline, and the fees the three TAPSdependent refineries pay is higher.

The formula for determining the fee is complex and is based on values assigned to the components of the oil.

There is an effect on the quality of the total TAPS oil, however, and the refineries must compensate the other oil shippers for this.

www.akbizmag.com • Alaska Business Monthly • March 2011

Oil volumes are continuing to drop in TAPS. About 650,000 barrels per day is now moving through the pipeline and the expectation by industry is for this to drop to about 500,000 barrels per day in three to four years. As the decline continues the refineries’ fees will tend to grow higher.

On the other hand, the two Fairbanksarea refineries also create an advantage for the pipeline as the crude temperature falls, Cook pointed out. That is because the residual oil injected back into the pipeline is a lot hotter than the crude oil that was extracted, about 120 degrees in the case of Flint Hills compared with 40 degrees for the crude coming into the plant, he said. That warms up the whole stream of crude, helping keep it mobile inside the TAPS.

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A Good Future, For Some

Despite the problems, Cook is upbeat about Flint Hills’ future. “The refinery is operating very well and we continually make adjustments and improvements to make our operations more efficient.

We continue to hire new people to add to our capability and supplement our excellent staff at the refinery,” he said.

Tesoro’s refinery at Nikiski, near Kenai, faces different challenges. The plant used to be supplied totally from Cook Inlet oil production and was originally designed to process the light crude oil produced from the Inlet. As Inlet production declined it was supplemented

by North Slope oil shuttled by tankers from Valdez, although the Slope crude was a heavier oil that required some adjustments by the refinery.

Tesoro also also had to start importing lighter crude oils from overseas, including Sakhalin in Russia’s Far East, to blend with the heavier Slope oil so the refinery could process it efficiently.

Now Cook Inlet production is down to about 10,000 barrels per day from a peak of over 200,000 barrels per day in the 1970s. While an amount of North Slope oil is coming to Tesoro from Valdez, an increasing share of what the refinery needs must now come from overseas, and from a variety of places.

Recent information on where Tesoro gets its crude was not available but in 2008 the company received about half of its crude supply from the North Slope, about 25 percent from Cook www.akbizmag.com • Alaska Business Monthly • March 2011

43

A tanker truck of fuel pulls into a Tesoro station.

Inlet and was importing about 25 percent of its need.

The company has had some challenges in getting North Slope crude oil in recent years, and that is another consequence of the decline in North Slope production. The major North Slope producing companies, BP, ConocoPhillips and ExxonMobil, own the bulk of the oil production from the Slope. Since these companies have their own refineries on the West Coast they want to supply those plants with their own oil.

The crude oil still available to an independent refineries like Tesoro’s is from the independent producers that produce

44

only a small part of the oil production on the Slope. These are companies which don’t own their own refineries. They include Anadarko Petroleum Corp., which owns 20 percent of the Alpine field and its production, and Pioneer Natural Resources, which operates the small Ooguruk field.

There is about to be a third independent producer, Eni Oil and Gas, which was to start producing its small Nikaitchuq field in early January, which will give the refineries another potential supplier. Flint Hills is not as dependent on the independent producing companies because the needs for its refinery

near Fairbanks are met through a longterm contract to buy State-owned royalty crude oil. This has created a different set of problems in the past over valuations of the royalty oil, however.

Tesoro also has a problem with its residual oil, that unused part of the crude oil, but it is different than that of the problem shared by Flint Hills and Petro Star. Those companies can reinject their unused oil back to the refinery, but Tesoro can’t do that. It must try to sell this lower-value “residual” oil where it can.

“About a third of our output is residual oil, which we sometimes have to sell at a loss,” said Kip Knudsen, Tesoro’s Alaska public affairs manager.

New government environmental rules have also had an effect on the refineries, causing them to adjust their plants and make new investments to meet new rules. In some cases the competitive positions of the refineries have been altered as well. Tesoro, for example, made a $70 million investment a few years ago to make ultra-low sulfur diesel to meet new U.S. Environmental Protection Agency rules. The company also made a $70 million investment in 2010 to install facilities to prevent the formation of benzene it fuels. Flint Hills found it could not profitably make the investment, so it purchases ultralow sulfur diesel from Tesoro for its customers’ needs for the fuel, which is now required for engines in trucks moving on highways and mobile offroad equipment.

The concern over the refineries’ future is felt mainly in the communities where they operate, the Kenai Peninsula, Fairbanks and Valdez, because they represent sizeable property tax base for the local municipalities and are also a source of good local jobs. Refineries employ highly-paid professionals. Employees include engineers, chemists, plant operators, firefighters, office workers and safety specialists, computer and maintenance reliability specialists.

Having in-state refineries making fuel from Alaska crude oil isn’t just something for Alaskans to be proud of. Energy security is important, with the world increasingly dangerous. Having the state’s communities and military bases dependent on a long marine supply line from refineries in the Pacific Northwest is not a good position to be in. q

www.akbizmag.com • Alaska Business Monthly • March 2011

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www.akbizmag.com • Alaska Business Monthly • March 2011

45

OIL & GAS

Arctic Poised to Become Next Economic Hub As ice melts, new opportunities, challenges arise for Alaska’s northern communities

By Vanessa Orr

U.S. Coast Guard photo by Petty Officer Patrick Kelley

245 in 2008 to 325 in 2010. Studies of the sea ice show it is declining in both thickness and in the area it covers, opening opportunities for shipping, tourism, gas and oil exploration and more.

According to the U.S. Arctic Research Commission’s Report on Goals and Objectives for Arctic Research 2009-2010, the first comprehensive assessment of Arctic oil and gas deposits, the region accounts for about 13 percent of the world’s undiscovered oil; 30 percent of the world’s undiscovered natural gas; and 20 percent of the world’s undiscovered natural gas liquids. With this kind of payoff lurking beneath the Beaufort and Chukchi Seas, it’s no wonder many countries including the United States are beginning to show an interest in Arctic waters.

With the development of such a remote region, however, come many challenges. The area lacks much of the infrastructure needed to support exploration and the environmental issues that come with it; with the introduction of more people and equipment comes the chance that those who have lived in the area for hundreds of years may lose their ability to live a subsistence lifestyle. “It is definitely a cause for concern,” said North Slope Borough Mayor and Inupiat Eskimo Edward Saggan Itta of the fact that shipping and exploration could have an adverse effect on Arctic wildlife. “As they go, so go we.”

The Canadian Coast Guard Ship Louis S. St-Laurent makes an approach to the U.S. Coast Guard Cutter Healy in the Arctic Ocean Sept. 5, 2009. The two ships are taking part in a multi-year, multi-agency Arctic survey that will help define the Arctic continental shelf.

A

fter a long winter, Alaskans all over the state heave a collective sigh of relief when the ice begins to melt. In the far north, however, melting ice can mean more than just a break from bad weather – it can mean an economic boom.

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September 2007 marked the first time that the famed Northwest Passage, which has been virtually impassable in the past because of thick sea ice, was open water from end-to-end. Each year, the number of vessels crossing the Bering Strait increases – from roughly

Protecting a Way of Life

Global warming is not a political talking point for the people who live in the Arctic – it is something that affects them every day. “Those of us who live up here can tell you that the ice has definitely changed; it is freezing later and thawing earlier, and it is not as thick as it used to be,” said Itta.

“The shipping season on the Bering Sea and Norton Sound waters are growing longer,” agreed Nome Mayor

www.akbizmag.com • Alaska Business Monthly • March 2011

MARITIME TRANSPORTATION SYSTEM

NASA image

Denise Michels. “In 2009, the last barge was in on November 11; the year before that, it was November 10. A decade ago, this was almost unheard of.

“The U.S. Coast Guard Cutter Alex Haley was also at our dock in November and stayed for a couple of days,” she continued. “This is a testament that global warming is happening – we’ve never seen vessels this late in our waters and it’s happening now because there’s no ice. We can see the change.”

Extended shipping seasons and an increase in vessel traffic can positively affect Arctic communities, bringing money and possibly jobs to the area.

According to Michels, the opening of the Northern Sea and Northwest Passage routes has brought more traffic into the Port of Nome. “Two cruise ships stopped in Nome and did crew and passenger changes and we’ve also seen a number of sailboats stop here who are traveling the Northwest Passage for adventure,” she said. “People are coming into Nome to buy supplies at our stores and to fuel their vessels, which is good for the local economy.”

According to the U.S. Coast Guard,

in 2010, 17 ships traversed the Northwest Passage for adventure travel, up from 12 ships in 2009. The cruise ships Bremen and Hanseatic also brought a total of 348 passengers through the Northwest Passage that same year.

Nome also saw an increase in traffic as a result of offshore leases purchased in the Chukchi and Beaufort Seas by Royal Dutch Shell, seeing an increase from roughly 34 dockings at the Port of Nome in 1990 to 301 dockings in 2009.

Doing our part to keep things moving

in Alaska.

Every day our North Pole refinery processes North Slope crude oil that ends up as jet fuel, gasoline, home heating oil, or asphalt. Each is integral in the day-to-day life of just about every Alaskan. We’re optimistic about Alaska’s future and look forward to continuing to do our part to help keep the state’s economic engines turning.

Alaska

www.akbizmag.com • Alaska Business Monthly • March 2011

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Photo courtesy of North Slope Borough

Edward Saggan Itta Mayor North Slope Borough

“We do have concerns,” said Michels. “Thank goodness nothing has happened, but what do we do if a vessel can’t move under its own power?

The Coast Guard does the best they can do with the limited resources they have, but it’s a lot of ocean to cover. If anything happens, they

are five hours away via helicopter and three hours away with a C-130.

With the increase in vessel traffic, we would like to see the Coast Guard have more of a presence here.”

Mayor Itta is also concerned about how increased vessel traffic will affect the Arctic environment.

“As more freight is shipped over the Northwest Passage between Europe and Asia or the East Coast and Asia, our overriding concern is what effect this will have on our lifestyle,” he said.

“Increased shipping could pose a risk to the seals, whales, waterfowl and fish that we depend on, as well as increase air and water pollution and possibly divert seasonal migration routes.

“We’re doing everything we can to mitigate these issues, including paying close attention to studies and reports such as the Arctic marine reports put together by the Arctic Council that relate to possible impacts,” he added.

Another concern according to both Itta and Michels is the lack of proper infrastructure in the Arctic to deal with increased vessel traffic. “The city of Nome needs to have the in-

frastructure and response capability to accommodate both private- and government-sector ocean vessels,” said Michels. The city hopes to extend its current causeway from -22 MLLW to -50 MLLW in order to accommodate vessels with large drafts, including those needed to respond to emergencies and monitor environmental concerns. The city is currently encouraging the U.S. Army Corps of Engineers to complete a study to this end, as the project will require a large investment from both the State and federal governments and the private sector.

Ensuring Safety and Sovereignty

With so much at stake, Arctic nations including Russia, Canada, Denmark, Norway and the U.S, and even nonArctic nations such as China and South Korea have been showing an increased interest in the Arctic region.

“In 2010, a 1,000-foot ship carrying 70,000 metric tons of gas condensate traveled over the top of Russia from the Murmansk area to the Far East through the Bering Strait,” explained Rear

ONE MILLION HOURS

SAFETY MATTERS EIGHT YEARS WORKING SAFE

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www.akbizmag.com • Alaska Business Monthly • March 2011

Admiral Christopher Colvin, commander of the 17th Coast Guard District. “In the next year, Russia expects another half-dozen of these vessels and a larger amount of ships carrying industrial supplies to travel that route.”

A Swedish tug, the Tor Viking, also traveled from Dutch Harbor to Europe over the Northern Sea Route in December 2010, which was previously unheard of at that time of year.

To deal with increased vessel traffic, the 17th Coast Guard District spends several weeks each summer on its “Arctic Crossroads” mission, operating out of different parts of the Arctic, determining what resources will or won’t work in each area.

“It’s hard to operate small boats on the northern coast of Alaska, for example, because you have to put into the water without a crane, and launching from the beach is difficult,” said Colvin.

“HF (high-frequency) communications don’t work well, though short-range VHFs work okay. There’s no deep water port available, and no hangars available to house a C-130 overnight. You are almost left with the need to operate

a big ship like an icebreaker, or a ship with an ice-reinforced hull to be able to enforce and enhance the United States’ sovereignty in the Arctic.”

Unfortunately, the Coast Guard only has three icebreakers, two of which are not currently operational.

“There’s no indication that the U.S. intends to build more icebreakers, in contrast to China, who is building the largest nonnuclear icebreaker in the world,” said Colvin. “Russia has 22 icebreakers. Even U.S. scientists contract out with foreign icebreakers operating in the U.S. Arctic, which doesn’t enhance our position of sovereignty.”

As more ships are able to traverse these waters, countries are looking at extending their claims to the area for economic benefit.

“Virtually all of the five nations on the Arctic Ocean have made extended continental shelf claims, and all are signatories of the Law of the Sea except for the U.S.,” said Colvin. “What this means is that they can go beyond the 200-mile Exclusive Economic Zone, or EEZ, to claim up to 350 miles off of their coasts.”

The United Nations Convention on the Law of the Sea (UNCLOS) is an international agreement that defines the rights and responsibilities of nations in their use of the world’s oceans, including the management of natural resources.

“China is currently operating up there on the Chukchi Plateau, just north of the 200-mile EEZ of the United States,” he added. “This is significant because even though China is not an Arctic nation, they are exploring for oil, gas and minerals in waters that if the U.S. ratified the treaty, we would essentially own.”

Alaska’s Congressional delegation has encouraged the U.S. Congress to ratify the Law of the Sea in order to give the country, and the state, more of a voice in how Arctic waters are developed. “We want to make sure that we have a seat at the table when laws and regulations, both national and international, are determined,” said Michels. “The decisions that will be made will affect us directly. The Arctic will be the next economic hub and we need to be prepared.” q

www.akbizmag.com • Alaska Business Monthly • March 2011

49

Towns

in

Transition

By Heidi Bohi

Whittier Awaits

Residential and commercial development

Photo by Lester Lunceford

Construction continues on Whittier’s Shotgun Cove Road leading to a new residential area for single-family homes.

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fter a year of listening to Whittier locals visualize, fantasize and prioritize, the city christened a comprehensive plan designed to result in developments that could transform this picturesque town into a community poised to grow while also improving quality of life for 159 residents who live in the town that was never intended to be more than a military-debarkation point.

When the plan was first worked through six years ago, the resulting consensus was that the community wanted to expand the small boat harbor, develop Shotgun Cove Road that leads to a future residential area with

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single-family homes, and turn the “head of the bay” area – known as the old tank farm – into a development that includes another harbor area with businesses such as boat storage, marine repair and other services that would appeal to both visitors and locals.

More Funding Needed

Although the head of the bay improvement will be the first to have dirt turned this summer, at the same time the community is planning to update the document to determine if the original plan is still pointing in the direction that the community wants to grow, says Whittier Mayor Lester Lunceford, adding

there have been new changes in the community since this plan was drafted, including an influx of new people moving to the community.

“It is important to analyze our progress and be sure we continue to move in the direction the current community wants,” he says.

Since the city adopted the plan, Lunceford has been busy lobbying the Alaska Legislature and the state’s congressional delegation to secure funding for implementing the plan.

To date, his successes include securing $35 million for the port development and $18 million for road construction funding, which are two of the biggest

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projects identified. In the meantime, there have been entrepreneurial discussions about whether to scrap the idea of building a road to Shotgun Cove, and instead purchasing a ferry that would shuttle people between Whittier and the cove. Although it is a feasible idea, Lunceford says, “The city maintains the road project as a priority goal while encouraging private enterprise to explore a shuttle service.”

Two Years to Privatize

When the State gave Whittier 640 acres of land 18 years ago, it was with the stipulation that in 20 years it would be in private hands and be in the process of having a road built to access the Shotgun Cove area just 11 miles east of the current location. Currently, two miles of the Shotgun Cove Road project are near completion, Lunceford says, and the intention is for a new residential and commercial community to be established there to help offset the shortage of housing and year-round economy.

“We are currently working so that the land can be platted, surveyed and sold before all phases of the road project are complete, which is expected to take seven to 10 years, including the permitting process and construction,” Lunceford says.

Historically, housing has been one of the biggest impediments to growth in Whittier. During World War II, the United States Army built a military facility in Whittier called Camp Sullivan. After the war ended, two huge buildings were constructed for housing soldiers. The Hodge Building, today known as Begich Towers, and the Buckner Building, called the “city under one roof,” were the largest buildings in Alaska until the Anchorage cityscape began to take shape. Today, the 14-story Begich Towers condominiums houses nearly all of Whittier’s residents. The remaining 20 percent live in Whittier Manor condominiums, which was built in the early 1950s as rental units for civilian employees. The Buckner Building has been abandoned since 1964 earthquake damage.

Marine-Based Economy

Whittier is known as the western gateway to Prince William Sound for its tourism marine activities that come

from being a year-round ice free port close to Anchorage and the Kenai Peninsula, both large areas that account for a substantial percentage of inbound visitors. As a result, the economy is based mainly on the multiple uses of its port and small-boat harbor facilities, and based on indicators and projections for recreation and the visitor industry, the local economy is positioned to continue to grow in this area.

The primary year-round employer is the City of Whittier, followed by the Alaska Railroad Corp. and the freight industry, which has about 30 percent of the state’s cargo go through Whittier on its way to Anchorage and points farther north. Great Pacific Seafoods has been a steady employer for about 20 years and processed 20 million pounds of fish last year.

The port development project includes improving the existing small boat harbor, which has a 12-year waiting list, and building a new boat harbor at the head of Passage Canal. The project is expected to address short- and long-term commercial and recreational boating needs, promote economic development and lead to future and ongoing transportation infrastructure improvements.

As businesses expand and new enterprises come to the community, the population is expected to increase slowly at first in response to the higher number of visitors. As developments such as fast ferry service, the head of the bay and Shotgun Cove come online, along with increased tourism, industrial development and more cruise ships docking in Whittier, this growth is expected to increase and bring along with it inevitable impacts such as an increased demand for services and activities generated by improved road access and development.

Population Growth Expected

At the same time, a measurable growth in employment opportunities is expected to result in more families with children, people with vacation homes, and seasonal workers in the tourism and fishing industries moving into Whittier.

Although the year-round population is about 150 residents, for half of the year the population swells to more

than 1,000 when seasonal workers come from various places to work in the fishing and visitor industries. Between the summer day cruises Whittier is known for and being a port of call for ocean-going cruise lines – there will be 53 dockings this year – more than 700,000 people come through the city each year. As is the case with many coastal communities, Lunceford says, “We struggle with figuring out how to accommodate this large influx on a small footprint of property with limited resources and infrastructure.”

Of these travelers, Lunceford says 10 percent are independent travelers who are not tied to the cruise ship itineraries. Although he’d like to see more than that, until Shotgun Cove becomes a reality, it is about all the current infrastructure can handle.

Once there is more opportunity for housing and new businesses, though, Lunceford says, Whittier is perfectly positioned to attract hotels and resorts, inns, lodges and high-end restaurants that all want to capitalize on the Alaska experience.

“We constantly have people calling from all over the world wanting to know when there will be residential and commercial property for sale,” Lunceford says When the Anton Anderson Memorial Tunnel was opened to vehicle traffic in 2000, the $100 million revamp of North America’s longest railroadhighway tunnel was expected to draw thousands of Alaskans who wanted to access Prince William Sound through Whittier. Although it did not bring the economic impact the community was bracing itself for, Lunceford says, when paired with the new road and harbor projects, the community can maximize that investment so the community has the pieces in place it needs to build an economic base.

Although there are always those who want Whittier to stay the way it is, Lunceford says he believes this is due to the fact it is such a small community with strong feelings to keep development to a minimum and people don’t want big changes. No pun intended, but he says, “To survive as a city, people must be open to new ideas and move forward to prevent tunnel vision.” q

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R e g i o n a l R e vi e w

By Tracy Barbour

Bristol Bay Region, Home to the World’s Largest Sockeye Salmon Fishery

May be home to huge mining operation South Naknek and Aleknagik. Many of these communities are villages with fewer than 200 residents.

The Bristol Bay Region is appropriately named after the largest bay in the southern part of the Bering Sea. Bristol Bay is about 250 miles long and 180 miles wide at its mouth. It is fed by a number of rivers: Cinder, Egegik, Igushik, Kvichak, Meshik, Nushagak, Naknek, Togiak and Ugashik. The Bristol Bay watershed represents one of the richest fishing grounds in the world.

Bristol Bay is home to the world’s largest sockeye salmon fishery. It also has an abundance of chum, silver and king salmon, as well as herring and crab.

Bristol Bay’s salmon catches represents a huge chunk of the state’s fish harvest. The region’s salmon harvest in 2009 comprised 26 percent of the total pounds harvested by the state, according to Alaska Department of Labor Economist Mali Abrahamson. In terms of sockeye salmon, the region harvested

Dillingham at a Glance Population: 2,500 (permanent residents) Location: About 320 air miles southwest of Anchorage Main Industries: Fishing, government, seafood processing, services, tourism Government Structure: Council-manager form of government Tax Base: 10 percent hotel/motel tax, 6 percent sales tax and a property tax (13 mills) Hospital: Bristol Bay Area Health Corp.

Schools: Dillingham’s school district is comprised of one elementary and one middle/high school which together serve 520 students. University of Alaska has a Bristol Bay Campus in Dillingham.

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182 million pounds in 2009, compared to 257 million pounds for the state. The 2009 herring harvest for Bristol Bay, incidentally, was 34 million pounds.

Bristol Bay Economy

The remoteness of the Bristol Bay region has a significant impact on its economy. With few roads, travel into the region is mainly by air and barge, which translates into a higher cost of living.

The main industries of the Bristol Bay Region include commercial and sport fishing, government, seafood processing and services. Trade, transportation and utilities are also key economic drivers.

With its rural location, the Bristol Bay Region has a distinctly cash-subsistence economy. The six- to eight-week fishing season generates an influx of cash over a short period of time. This is supported by a subsistence way of life that depends on moose, caribou, fish, small game, berries and other natural resources. “You just don’t see that kind of (cash-subsistence) lifestyle in very many places,” Abrahamson says.

Photo courtesy of Bristol Bay Native Corp.

L

ocated about 320 miles southwest of Anchorage, the Bristol Bay Region is one of the most sparsely populated parts of the state.

The remote region encompasses 43,000 square miles and is home to slightly more than 7,200 residents. Its vast expanse rivals the size of the state of Ohio.

The Bristol Bay Region is made up of the Bristol Bay Borough, Lake and Peninsula Borough and Dillingham Census Area. It includes more than a dozen communities that have been inhabited for thousands of years. Alaska Natives make up about 70 percent of the region’s population and include Yupik Eskimos, Athabascans and Aleuts.

The three largest communities in the area are Dillingham, King Salmon and Naknek. Smaller communities situated along the region’s coastline and rivers include: Togiak, which is known for its rich herring harvests, Egegik, Manokotak, New Stuyahok, Newhalen, Nondalton, Port Heiden,

Jason Metrokin, president and CEO of Bristol Bay Native Corp.

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Subsistence harvests in Bristol Bay are among the highest in the state, according to the Alaska Department of Fish and Game. The typical household there harvests several thousand pounds of fish for subsistence, in addition to hundreds of pounds of game meat and plants. Subsistence foods are critical because they help to offset the region’s higher cost of living. In Dillingham, for example, the cost of heating oil was $4.41 per gallon in January 2010, compared to $3.18 for Juneau.

Despite the higher costs, Bristol Bay is seeing an expansion of tourism in the region. The number of visitors to Lake Clark, for instance, has been steadily growing, Abrahamson says. Bristol Bay offers a variety of attractions. It contains several national parks, preserves, National Wildlife Refuges, State lands and miles and miles of rivers. A major attraction is Katmai National Park and Preserve, which receives more than 55,000 visitors annually.

There is also a growing interest in the development of natural resources in Bristol Bay. The proposed Pebble Mine project near Nondalton, Newhalen and Iliamna would result in the largest open-pit gold and copper mine in North America. In addition, a Bureau of Land Management is proposing to open more than a million acres in and around the Bristol Bay watershed to hard-rock mining.

Employment in the Region

In terms of employment, fishing is the largest employer in the region. However, because of the changing prices and biology of commercial fishing, it lends some uncertainty to the area’s economy.

The total “harvesting work force” for Bristol Bay for 2009 was 9,385, according to Abrahamson. This figure, she points out, is not equivalent to employees. Instead, it represents the individual number of permits sold plus the number of crew members needed to fish those permits.

The second-largest employment sector in Bristol Bay is local government, which had 1,110 jobs in 2009. These positions primarily relate to health care, school districts, and village and tribal councils. State and federal government make up a smaller piece, representing 150 jobs in 2009.

As another significant sector, seafood-processing employment averaged 1,400 jobs in 2009. With the seasonality of commercial fishing, the number of workers fluctuated from under 500 at the lowest point in the winter to more than 5,000 in July. “The swing in employment is phenomenal,” Abrahamson says.

“Around 75 percent of that industry is nonresident workers.”

Trendwise, Bristol Bay has experienced a steady increase in full-time employment. The region’s total nonfarm employment – which doesn’t include fish harvesting, military personnel, unpaid family members, nonprofit volunteers or the self employed – was 4,603 in 2008 and 4,671 in 2009, Abrahamson says.

Leisure and hospitality employment also grew in recent years, going from 256 in 2007 to 115 in 2008 and back up to 225 to 2009. Seafood and transportation jobs have also expanded in the region.

Dillingham, the Region’s Hub

Dillingham is the service, transportation and retail center of Bristol Bay. The city’s permanent population hovers around 2,500; but the number of people it serves is actually much greater due to its role as a regional hub. “In the summer, we’re probably serving three times that number,” says Mayor Alice Ruby. “During the winter, we serve twice that many.”

Photo courtesy of City of Dillingham

Dillingham Mayor Alice Ruby

Being a service and retail hub is almost an industry in itself for Dillingham, Ruby says. Many people visit the city for the health care facilities or government agencies headquartered there.

While the population of the Bristol Bay Region has historically grown at a slower rate than the rest of the state, the number of Dillingham residents is increasing. Ruby suspects hard times in the surrounding communities could be a contributing factor. “As folks find it more difficult to live in their home village, they move to Dillingham,” she says. “We’re fortunate in that we have more jobs here.”

Besides jobs, Dillingham also offers residents a diversity of activities and services, such as a large airport and port. Ruby says: “There are a lot of things to do and to be involved in here. Everything is oriented in a positive way toward growth or improving the city.”

Many of the services offered by the city are courtesy of a huge network of volunteers. For example, the local chamber of commerce at one time operated the winter carnival. Volunteers currently run the local museum and the annual carnival known as the Beaver Roundup.

Their efforts are helping to minimize the financial challenges caused by the city’s growing population. “We’re doing better than many other communities, but we have really had to supplement with volunteer groups to do what we can to make sure our community keeps striving,” Ruby says.

The city’s 6 percent sales tax is a vital component to providing services to residents. Revenues are also generated through a 10 percent hotel/motel tax, as well as property taxes. In the near future, fish-tax revenues will play a larger role in the city’s tax base. Dillingham is in the process of working through a petition to annex the fishing district.

Ruby says Dillingham’s economy is struggling, but not as much as it was five years ago. However, in the last several years, there’s been some positive growth in commercial fishing.

Prices have grown, and there has been an expansion in seafood processing businesses. OPAC Seafoods recently completed major upgrades and Peter Pan Seafoods will be doing additional upgrades at its canning facility.

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Dillingham recently finalized a number of construction projects in 2010, making it a busy year for the city. Major projects include the refurbishment of two water storage tanks and the construction of a water-treatment plant. There are also ongoing projects to enhance the harbor, including the erection of a new launching rim and sheet-metal retaining walls to combat erosion.

Projects are also under way to improve the city’s roads, which are mostly gravel. Wood River Road, for example, recently underwent a major upgrade that involved realignment. Paving will take place in the summer.

Much-needed upgrades were also done to the city’s aging elementary and middle/high school buildings. “We had deferred maintenance for so long that the problem had become critical,” Ruby says. “We had to do roof replacement on both of them, structural repair and upgrade a boiler system.”

Dillingham is also focusing on addressing important social issues. As with many rural Alaska communities, alcohol and domestic assault are serious problems. However, Dillingham has various programs to work on resolving these issues. Ruby says: “We’re dealing with generations of alcohol issues. You can’t expect to fix them tomorrow, but, slowly, we are addressing them.”

BBNC Enriching the Region

Bristol Bay Native Corp. (BBNC) represents more than 8,700 shareholders who are Eskimo, Indian and Aleut. One

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Photos courtesy of Bristol Bay Native Corp.

Major Projects and Issues in Dillingham

Bristol Bay Native Corp. subsidiary staff working on site in the Bristol Bay region

of 13 Alaska Native Regional Corporations created under the Alaska Native Claims Settlement Act of 1971, BBNC engages in a variety of initiatives to enrich the lives of its shareholders.

Its investments and services include a stock portfolio, cardlock fueling, corporate services, corrosion inspection, environmental engineering and remediation, oil field and environmental cleanup labor, and government services.

BBNC operates the Bristol Alliance of Companies, a group of Alaska Nativeowned engineering, construction and environmental services companies with offices in Alaska, Washington, Texas

and North Carolina. In 2007, BBNC became a billion-dollar entity, prompting a number of changes to support its growth. For example, BBNC took on a significant restructuring project starting in February 2009. It created four lines of business to manage the 30 companies it currently operates throughout the country and overseas. (The four lines of business are construction, government services, oil field services and petroleum.) “It was really to streamline governance, to streamline management and to increase some efficiencies,” explains Jason Metrokin, president and CEO of Bristol Bay Native Corp. “It

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helps save costs for the parent corporation, which allows us to give more back to our shareholders.”

The restructuring is indeed helping BBNC maintain its level of revenue growth, as well as increase its bottom line.

In fiscal years 2008 and 2009, BBNC saw increasing levels of revenue, but its bottom line was not strong, Metrokin says. Revenues for 2008 and 2009 were approximately $1.3 billion and $1.4 billion, respectively. Net earnings for both years were just more than $5 million.

However, in 2010, the corporation generated $1.38 billion in revenue with net earnings under $32 million. “We had our second-strongest year from a financial perspective,” Metrokin says.

“We’re seeing a similar trend for 2011, compared to 2010. We think that 2011 will be our best year.”

Metrokin also attributes BBNC’s financial success to recent modifications to its investment policy. The corporation – which had previously favored an equity-based approach – has diversified its investment strategy.

BBNC focuses on profitability and providing sustainable benefits to its shareholders. This includes dividend payments and educational benefits.

The BBNC Education Foundation has given more than 2,100 shareholders more than $2.2 million in scholarships for both higher and vocational education. Recently, BBNC surveyed shareholders about the prospect of providing a special benefit to elder shareholders.

A final decision will be made about the issue in the coming months.

BBNC is also concerned with various initiatives that affect Bristol Bay as a whole. A primary issue is the proposed Pebble Mine project. Metrokin says BBNC is a strong proponent of responsible resource development, but the mine would negatively impact the region. “We feel the risks are too great, compared to the potential benefits,” he says.

Another important issue for BBNC is the overall direction of the Bristol Bay region. Therefore, the corporation is taking part in a regionwide-visioning project that will help determine some of the priorities of the area going forward. “It will take about 18 months to complete, and we’re about halfway through,” Metrokin says. q www.akbizmag.com • Alaska Business Monthly • March 2011

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TELECOMMUNICATIONS

Connecting Southwest Alaska

GCI’s TERRA-SW hybrid network

Image courtesy of GCI

By Heidi Bohi

TERRA-SW project map.

C

ompared to the other communities in Bush Alaska, AlexAnna Salmon thought the Village of Igiugig was technologically advanced.

Then she saw what the rest of the world had at their fingertips.

“I was happy that Internet opened up new ways to do business until I went Outside and realized that if something goes wrong there, they do not have to wait four days to be back online,” she says. “Time is money and when Internet or the phone goes out, we’re waiting, dead on the ground.”

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As the acting administrator for the Igiugig Village Council, Salmon says compromised IT service resulting from inadequate infrastructure makes it difficult for the community to participate in the modern economy, or access global information resources critical for running the community’s only government entity and subsidiary businesses – critical revenue streams.

Local governments rely heavily on federal grants that have shifted most of their reporting requirements and project work online. During standard

quarterly reporting periods, Salmon says she often has to work from three different Internet systems available in the community to meet deadlines, turning a 15-minute task into a three-hour exercise. It’s not uncommon for her to file progress reports at 1 a.m. when there are fewer people using the limited bandwidth out of Igiugig to the rest of the world.

Compromised Connectivity

Besides limiting the availability of affordable, sufficient Internet access in

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the region, Southwest Alaska’s broadband deficiencies – one of several rural regions that struggle with access – also mean other communication links such as phone and television are delivered over high cost, high latency satellite conditions that result in inconsistent connectivity and long delays. Service for residential, government and business users is severely compromised leaving communities unable to participate in the modern economy, or access global information resources. It is estimated that nearly 150 hospitals, clinics and schools, along with public safety agencies, cannot meet community needs because of the lack of access to dependable high-speed connectivity.

There is a simple explanation for the limitations in Southwest Alaska’s network: the communities are connected by satellites 22,000 miles above the equator, which causes delays incompatible with the high speed computer applications that are becoming more and more in demand as the region’s customers look to telecommunications to deploy sophisticated applications for providing public health care and services, education and safety. Satellite technology is also prohibitively expensive, cannot be repaired after it is launched, and has a limited life and capacity. In 2007, GCI invested $93 million in satellites that have a life expectancy of 12 to 14 years.

Better System

Conversely, a microwave and fiber optic system has a life of about 50 years and it is much less expensive to make upgrades and add new capacity to, Martin Cary, Broadband Services Vice President and General Manager for GCI says. “The objective is to get as many of the rural towns we serve off of the satellite system and onto the ground,” Cary says, adding that it is the only way the company will be able to procure capacity fast enough to keep up with customer demand. “When the average user in a rural community wants to access online resources, the experience should be similar to being in an urban center.”

To keep pace with the region’s demand and growth, GCI is building on its 16-year investment in rural Alaska with TERRA-SW, a hybrid fiber-micro-

wave network that connects 65 villages throughout Southwest Alaska to each other, existing Alaska fiber networks, and to the global Internet. The acronym TERRA stands for Terrestrial for Every Rural Region in Alaska and came about when GCI executives plotted their vision on a map of the state and realized that in addition to the Southwest Region, the company hopes to eventually modernize its service areas by shifting from satellite technology to the microwave-fiber optic infrastructure.

Broadband Stimulus

The $88 million project, expected to be completed ahead of schedule as early as 2011, came as a direct result of the $7.2 billion of broadband stimulus funds given as loans and grants to improve rural broadband networks, encourage Internet use, and upgrade PC centers at community colleges and libraries across the country. Half of the money is a grant from the USDA Rural Utilities Service and The American Recovery and Reinvestment Act and the other half is an investment by GCI in the form of a $44 million loan to United Utilities Inc. (UUI), a wholly owned subsidiary of GCI, which is Alaska’s largest telecommunications company.

The first ever high-speed fiber optic and microwave connection to Southwest Alaska will extend terrestrial broadband services to 65 communities in the Bristol Bay and Yukon Kuskokwim Delta sub-regions, along with more than 9,000 households, businesses, and several public and non-profit entities such as regional health corporations, school districts, and Alaska Native organizations. It includes nine fiber segments, totaling 290 miles of submarine and land-based cable; seven cable-landing stations; and 14 new microwave towers, which collectively are capable of supporting multiple voice, data, and Internet providers.

The potential contribution to the region’s economic development is one of the most significant impacts of TERRA-SW. Many of the communities in the region, especially in the YukonKuskokwim Delta, are among the poorest in the nation, with more than 30 percent of the 25,000 residents who have cash incomes well below the federal poverty threshold. Although fish,

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furs and crafts are exported from the region, the value of these exports has little impact on the economy. Population out-migration due to lack of jobs is a growing concern and economists say that one of the ways to decelerate this trend is by locals starting businesses and relying less on state and federal money.

Documenting Success

Once TERRA-SW comes online, GCI hopes to work with the University of Alaska Anchorage Institute of Social and Economic Research to document some of the economic successes they expect to result.

“The economic development piece of this project is what excites me most because it is going to open up so many new opportunities,” says GCI Rural Broadband Development Director Krag Johnsen. “This is one of the largest economic development projects in the state’s history. Without broadband, rural communities are going to get left behind. This brings them up to par with urban areas and helps create a better quality of life for those living in Southwest Alaska.”

In addition to the improved Internet connectivity, the high-speed backbone that provides a direct, land-based connection to Anchorage will also carry voice communication. Cell phone antennas, which will be installed on the newly built TERRA-SW towers in communities are one of the project’s primary assets and will increase cell phone reach and penetration in all the communities, Johnsen says. Besides increasing safety for locals, especially during subsistence fishing and hunting seasons, improved cell coverage and reliability will also contribute to economic development.

For business entities like the Igiugig Village Council reliable cell phone service is important for intra communications. As the largest employer in the community, it owns and runs the electric, water and sewer utilities, along with a contracting company. Many of the village council’s employees are in Anchorage and Homer, and because of the required travel need to have constant communication with fellow employees in the field for survey work and the barge transport business. Ironi-

cally, Salmon says, despite cell phones locals continue to rely on CB radios for communicating because there is currently not one provider that can meet all of the council’s needs.

Like so many in Alaska’s villages, Ulric Ulroan does whatever it takes to make a living. In addition to being the mayor of Chevak, a village of about 765 in the Yukon Kuskokwim Delta, he is the father of six children and teaches and coaches basketball at the high school. During the summer months he operates Chevak Bird and Culture Tours to supplement his income, hosting birders who come to site varieties including the Spectacled Eider, Emperor Geese, Sabine’s Gull, Black Turnstone and Yellow Wagtail.

Staying Connected

As is the case with Salmon from Igiugig, for conducting city business it is critical that he stay connected with federal and state agencies, and organizations such as the Alaska Municipal League.

During the birding season, guests book tours using internet and email, and once

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www.akbizmag.com • Alaska Business Monthly • March 2011

Photos courtesy of GCI

Fiber optic testing being conducted in Igiugig in January.

in Chevak stay at a remote camp that is 10 miles away from the village, so cell service is needed in case of an emergency. And, as is the case with teenagers everywhere, cell phones are part of the youth culture and an important tool for coordinating team practice and travel.

“Cell phones are my main way of staying connected with the world,” he says of clients that come from Australia, the United Kingdom and the Netherlands and make bookings using any combination of his web site, email and the phone. “Staying connected is very important – it’s everything for my business,” he says, adding that slow

and inconsistent connectivity makes it “almost not worth having.”

With the advent of TERRA-SW, he says, it will be much easier to grow his personal business, and take care of city and school business. “It’s about time we had this kind of technology in the bush,” he says.

Far-Reaching Improvements

In addition to improving safety in the Southwest Region, both education and health care will also greatly benefit, Cary says. TERRA-SW will enable schools to use online resources for both K-12 students and teachers including

lesson plans, forums for sharing ideas and opinions, and tools that support innovations in teaching and learning at all levels, including special education. It will also allow students to participate in virtual and interactive classroom activities, field trips, and museums.

Telemedicine, which relies on advanced telecommunications to increase access to health care in remote areas, will also greatly benefit from TERRA-SW, GCI executives say.

In addition to transmitting medical records via private health networks, improved, high-speed connections will enable technicians to send x-rays from a remote clinic to specialists in Anchorage, or Outside, just minutes after the images are taken of a patient.

“It will enhance the care available to patients in remote villages, and equip medical providers throughout the region with more to do their jobs effectively,” Cary says. “Bringing highspeed, low-latency technology into these locations and knowing the impact on schools, health care, and just folks who want to be connected from home q is going to be huge.”

Fast-Tracking TERRA-SW Phased Funding for TERRA-NW

G

By Heidi Bohi

CI is fast-tracking its TERRA-SW project, with hopes the 65 villages in the Southwest Region will benefit from the historical development as early as this year. This project was funded by an $88 million loan and grant from the Rural Utilities Service as part of the Stimulus Act. In the second round of Stimulus Funding GCI applied for $154 million for TERRA-NW, the sister telecommunications upgrade to TERRA-SW that would have covered 80,000 square miles across the Norton Sound and Northwest Arctic sub-regions and delivered end-to-end terrestrial broadband service to about 4,000 households and 300 businesses in 20 villages in the Norton Sound and Kotzebue Sound areas of the state.

Unfortunately TERRA-NW did not receive stimulus funding, and now GCI says it will have to build it in smaller pieces to make it financially feasible. A grant proposal recently submitted to the Regulatory Commission of Alaska, requesting funding through its Broadband Internet Access Grant Program, lays the development out in three phases starting in 2012. Phase I would build from Grayling to Unalakleet. Phase II extends from Unalakleet over to Nome and includes Shaktoolik. Phase II brings in St. Michael, Stebbins, Elim, Golovin and White Mountain.

Although there are fewer communities along the TERRA-NW route, because the distances between villages are longer than those for the Southwest piece, it will require more remote locations to be built, making the per-village cost higher. At the same time, because the TERRASW project is now under construction, several cost and schedule efficiencies can be realized when the northwest extension goes through.

Although funding sources are still uncertain, GCI continues to evaluate programs and partnerships that make these projects viable for the telecommunications company, GCI Broadband Services Vice President and General Manager Martin Cary says. It anticipates substantial capital investments over the course of the next seven years and finding funding partners for the remaining work.

Like TERRA-SW, this companion project will establish a multi-generational communication solution for the vast region and expand communications options for all users, supporting public and private economic development, improving critical telemedicine and distance learning services, and enhancing operations for nonprofits, and government and tribal entities.

“Alaska is the only place we do business, and we plan to continue to invest in the state,” Cary says. “TERRA-NW is the next logical investment.”

GCI is also looking at other corridors where it would make sense to implement telecommunications technologies similar to the TERRA projects, including one that lies in the area between Prudhoe Bay and Barrow. Although it is not on the company’s immediate horizon, Cary says there is a lot of communication traffic in and out of Barrow and the Barrow Arctic Science Consortium also makes it an interesting location. www.akbizmag.com • Alaska Business Monthly • March 2011

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FINANCIAL SERVICES

Alaska Credit Union Evolution

Employee-serving nonprofits have become full-service community financial institutions

By Tracy Kalytiak

Photo courtesy of Credit Union 1

Credit Union 1’s Mountain View branch opened its doors last June and includes a police substation, community Internet access, utility payment drop boxes, and a community room that is used to hold community group meetings and financial education classes.

M

att Sims first opened an account at a credit union more than 13 years ago, following the example of a friend and his own wife, who has belonged to a credit union almost all her life.

Now, in the wake of the country’s recent financial woes, Sims thinks his decision was a wise one.

“I see the national turmoil as a leveling that has been a long time coming,” said Sims, an Anchorage resident who now belongs to Credit Union 1. “Because our government does not use wise principles when it comes to money …

I have no confidence in our country’s financial future. Credit unions seem to be a solid way of taking care of our money in the short-term, with other

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investment ideas being more long-term.”

A growing number of Alaskans, like Sims, are turning to credit unions for such things as car loans, home loans and higher interest rates on certificates of deposit.

Thirteen credit unions serve members in Alaska, including Alaska USA, Denali Alaskan, Credit Union 1, Matanuska Valley, Northern Skies, True North, Alaska Airlines/Horizon Air Employees, Alaska District Engineers, ALPS, City of Fairbanks, Military and Civilian, Spirit of Alaska and Tongass.

Charters Evolved

The most prominent credit unions in Alaska were originally chartered to serve groups of employees and evolved

into entities that served others in the community as well.

Several characteristics distinguish credit unions from banks. Banks are for-profit entities run for the benefit of their stockholders, while credit unions serve their members and boards of directors elected by members run the establishments.

“The way the credit union is formed, its structure, it is there to provide as much value-add back to its members,” said Dan McCue, senior vice president of corporate administration for Alaska USA Federal Credit Union.

The credit union chose to diversify as a way of weathering any financial squalls that came along – particularly in states such as Alaska that are heavily

www.akbizmag.com • Alaska Business Monthly • March 2011

not the service it provides. (A credit union is) not a for-profit structure, not a stock-held company.”

Photo courtesy of Credit Union 1

Historic Cooperatives

Credit Union 1 President and CEO Leslie Ellis giving the Credit Union 1 “No. 1 sign” at the grand opening celebration of the first financial institution in Mountain View in more than 20 years last June.

dependant on one industry. Having members in three states rather than just one seemed prudent, McCue said.

Alaska USA now serves 411,000 members in Alaska, California and Washington state, with assets of $4.4 billion, as of Nov. 30, 2010. “(Credit unions) are very conservative in how they invest,” McCue says.

“Typically, their members are loyal to them and pay back their loans, so there are lower delinquency rates. People don’t want to be one of the members that causes losses to the credit union.”

Originally, credit unions offered savings accounts and loans. Then they moved into offering checking accounts, individual retirement accounts, money market accounts and mortgages, as well as credit and debit cards.

“That came from the membership, asking, ‘Why can’t we have those products; I don’t want to go outside (the credit union),’“ McCue said. “Each one required a different kind of regulatory authority through congressional action. They evolved from these little mom and pops, small little financial providers to more complex financial providers.”

Credit unions, McCue said, have tax-exempt status.

“Banks say: ‘You provide the same service, why don’t you pay tax?’” McCue said. “The structure of the organization is what defines its tax status,

Credit unions began proliferating in the U.S. after President Franklin D. Roosevelt signed the Federal Credit Union Act into law in 1934. The law’s purpose was to make credit available through a national system of nonprofit, cooperative credit unions.

Alaska USA FCU and Matanuska Valley FCU were among the credit unions in Alaska that received federal charters in 1948. Alaska USA’s original membership consisted of civil service employees stationed in Alaska. Matanuska Valley FCU was originally chartered to serve employees of the old Matanuska Maid Creamery based in Palmer.

“Until the early 1970s, it was really run as truly a volunteer organization that had an elected board of directors, a credit committee that viewed credit requests and a supervisory committee that did auditing,” said Al Strawn, CEO of Matanuska Valley FCU. “Then they hired their first full-time manager and began to build a small staff. That started a period of real growth.”

Strawn began working for the credit union in 1975, at a time when there were only three employees and between $1 million and $2 million in assets.

“It was really small,” Strawn said.

“The year before I came, they actually had all their account records on ledger cards. You had to pull out ledger cards and calculate interest on loan payments by hand.”

The credit union was originally just a place to come borrow money, Strawn said, until the late 1970s, when Congress authorized credit unions to offer sharedraft checking accounts.

In the early 1980s, MVFCU’s charter was expanded to Matanuska Electric Association’s service area, which expanded the scope of the credit union to Eagle River.

Services expanded even more after credit unions received authority in the 1980s to offer mortgage lending.

MVFCU now operates eight community offices, in Palmer, Wasilla, Eagle River and traditionally underserved areas like Willow, Sunshine, Big

Lake and Meadow Lakes. The credit union has about 33,000 members, 125 employees and $342 million in assets.

It will be opening its ninth office this month once construction of the new Palmer Carrs store is finished. Another community office could also open this year in the Knik-Goose Bay area of Mat-Su, Strawn said.

Cooperation among cooperatives is important, Strawn said, which is why MVFCU has been managing a credit union in Sitka, ALPS FCU. “They had called and said there was a chance the CEO would be leaving,” Strawn said.

ALPS’ board of directors requested MVFCU’s assistance and received it.

“It would be unthinkable in the banking world to do this,” Strawn said.

“We didn’t do it to acquire them, we did it just because it was the right thing to do. We were compensated for assisting them.”

Local-Based Institutions

Strawn said most credit unions in the state have been fortunate, and that Matanuska Valley FCU has made it through the last couple of years with substantial growth and no earnings problems.

Strawn said MVFCU decided in early 2008 as the mortgage markets began to unwind and the financial crisis began to become obvious nationwide that there were a substantial number of local properties owned by members with a good credit history, a good capacity to repay the loan and lots of equity in their home that for various reasons didn’t meet the changing standards for secondary markets that were largely being controlled by Fannie Mae and Freddie Mac. “Let’s say there’s a dentist with good income, maybe 50 percent equity in the home, but he has an oversized airplane hangar next to his house,” Strawn said.

“Fannie Mae, Freddie Mac standards would not accept that collateral because it didn’t fit their matrix that they have” for rules regarding such things as comparable sales within a certain geographic distance. Those rules are critical since they affect people’s ability to borrow.

“What we did, we made the decision to begin to portfolio a much larger number of fixed-rate mortgages in our balance sheet where we formerly would

www.akbizmag.com • Alaska Business Monthly • March 2011

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Photo by George Lochner/Matanuska Valley Federal Credit Union

Eight modern yet welcoming Community Offices (branches) that often include mileposts, fireplaces and hot coffee serve more than 33,000 MVFCU members. A ninth Community Office is soon to open at the new Palmer CARRS Safeway store.

have sold them to the secondary market,” Strawn said. “It’s allowed us to keep a continuous flow of capital available in our community for nonconforming real estate. I think it’s been very valuable to the Valley to have that source of capital.”

Strawn added that the credit union has taken on some fixed-rate assets that it normally probably wouldn’t have because rates are so low.

“But we’ve been able to offset it with changing our excess investments into more of adjustable-rate instruments to offset that risk,” he said. “It really was a demonstration of how valuable it is to have a local-based institution when those financial markets were in disarray.”

Alaska USA, Matanuska Valley and all but one of the other credit unions in Alaska possess federal charters.

State-Chartered CU1

Credit Union 1 is the only credit union in the state that operates with a state charter. That change occurred in 1982, after Alaska School Employees Federal Credit Union converted to a state charter and became Frontier Alaska Credit Union. FedAlaska FCU then merged into Frontier Alaska in 1995 and the entity’s name changed to Credit Union 1. (North

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County Credit Union then merged into Credit Union 1 in 2004.) The Alaska Division of Banking and Securities regulates Credit Union 1’s operations.

When CEO Leslie Ellis first went to work for Credit Union 1’s predecessor in 1983, the credit union had 18,000 members and $60 million in assets. Now, Credit Union 1 has 61,500 members, employs 265 people, projects $47.3 million in revenue for 2010, has $745 million in assets and operates 15 branches – including branches in Mountain View and West High School.

The credit union will be moving its Nome office this year.

“We’re expanding our Nome operations,” Ellis said. “We’ve outgrown the one we have.”

Credit Union 1 acquired the Nome branch in late 2003, in a merger. It’s since doubled in membership, and the location is too small to support the business that occurs there, Ellis said.

All credit unions in the state offer such things as online banking, debit and credit cards and other services, Ellis said.

Credit Union 1 doesn’t delve into the commercial business line of services, she said, choosing instead to concentrate on serving consumers who have either no credit or banged-up credit.

“We provide some financial education to them,” Ellis said. “Our price point appeals to people because it’s generally lower cost and because we have products and particularly loan programs directed toward people who can’t get a loan elsewhere and we work with people on an individual basis, that attracts people to our credit union.”

Ellis said all credit unions do some sort of social outreach, offering financial education and other community assistance.

“What might set ours apart is we have made a concerted effort to work with that segment of the market and we have developed programs that are very specific with their intent to do that,” she said, adding that Credit Union 1 recently opened a branch in the previously “unbanked” community of Mountain View.

“What people are looking for now is the safety and comfort of dealing with a local financial institution, people they know,” Ellis said. “Because of the economic uncertainty and the financial services meltdown, people are really looking to make sure that where they do business is safe, that they can rely on it. There’s a trust factor and this is turning people inward toward local q financial institutions.”

www.akbizmag.com • Alaska Business Monthly • March 2011

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FINANCE

Agricultural Revolving Loan Fund Running Dry

Photos courtesy of the Alaska Division of Agriculture

Obtaining loans for equipment upgrades may be more difficult for farms if the ARLF dissolves.

Could Alaska face a land without agriculture?

By Deborah Jeanne Sergeant

I

f things don’t change soon, the State-run Agricultural Revolving Loan Fund (ARLF) will be shuttered. Although other programs and lenders exist, nixing the 58-year-old ARLF will decrease funding available to an already precarious agricultural industry.

Banks generally do not lend to farms because in case of default, the land may be used only for farming, rendering it nearly valueless. Alaska farmers use the three main lending institutions in the state: Agricultural Revolving Loan Fund (ARLF), a Staterun program: U.S. Department of Agriculture Farm Services Agency (FSA),

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a program operated by the federal government; and (AARC), a private, nonprofit lender.

In an industry accustomed to relying upon credit for supplies and equipment upgrades until the harvest or slaughter, cash has been especially tight during the downturn.

“In the last few years, our funds have diminished,” said Candy Easley, loan officer with ARLF. “Unless it’s recapitalized, there won’t be enough funds.”

The Missing Link

Losing ARLF is like kicking out one leg from a three-legged stool.

“Each program serves a different

need and we cross-participate with each other,” Easley explained.

Established in 1953, ARLF, as a revolving loan fund, focuses on development. Many of its loans are larger loans for funding a new farm that’s clearing land, operations that add a processing plant for its goods or some other largescale venture. ARLF caps its loans at $1 million.

FSA is more geared toward beginning farmers. Because they lack collateral, obtaining a standard bank loan to start their ag business is next to impossible. FSA also serves people with credit issues or other problems that impede their ability to get a traditional loan.

www.akbizmag.com • Alaska Business Monthly • March 2011

AARC is the most conservative of the three ag lenders because of the amount of funds they possess. Its highqualifications standards make it tougher for obtaining a loan.

AARC loan officer Steve Gallagher confirmed the agency will continue to lend to farmers despite the credit crunch.

“We’re increasing our funds by partnering with Farm Service Agency’s funds so we don’t run out,” he said.

“They used to be the ‘lender of last resort’ and now they’re the ‘lender of first opportunity’ because of the financial crisis in the Lower 48.”

Three to Completion

Easley believes because farms rarely need only one kind of loan, it’s important to the industry that all three ag lenders are well-funded. For example, a farm may need a FSA loan to buy dairy cattle, an ARLF loan for adding a creamery and milking equipment and an AARC loan for building a farmhouse.

Once a farm has been established, it make operate for decades, depending upon farm credit, to cover operating expenses and to replace and upgrade equipment as it wears out or as the farm expands. They will need to buy seed, feed, fuel and other supplies they cannot afford until the harvest comes in.

“It’s a fragile lending scenario,” Easley said. “We work together and there’s not hundreds and hundreds of farms. It’s a big state with a small ag community.”

Dwindling Funds

The funds have dwindled because ARLF was set up to revolve, but it hasn’t. It has not received general funding since 1986 and $12 million total has been siphoned from the coffers to supply the Alaska Division of Agriculture’s operating expenses since 2004.

As for ARFL, it’s been living on its hump, selling off its assets. The organization has less than $5 million left and generates only $.5 million in interest based upon its portfolio. Easley said it takes $1 million to operate, so farmers will have only $4 million to borrow in 2011.

“That’s not enough money to revolve when you’re loaning approximately

$2.5 million in new loans,” Easley said. “There’s not enough money, so depending upon the amount of loans taken out, that’s going to be the factor, and depending upon if no loans going bad. In a year, we won’t have that $2.5 million to loan out.”

The Alaska Board of Agriculture and Conservation is lobbying for support from the Legislature to recapitalize ARFL. “Whether it happens or the conditions under which it happens I don’t know,” Easley said. “We’re at risk for not being able to provide development funds or operating funds within the next year.”

She estimates with an average farm purchase of $300,000 to $500,000, ARFL will be able to fund about four before the funds dry up.

Slow Death

Twenty years ago, ARFL employed 15; for the past seven years, Easley has worked alone.

“If the State wants to promote the development of agriculture and maintain the existing level of agriculture, then they really need to recapitalize and reaffirm their support to finance ag in this state,” Easley said. “I think that before they fund it, they need to decide the goals.”

Amy Pettit, Alaska Department of Agriculture development specialist on the Food Policy Council in Palmer, said that the increase in small-scale production indicates a growing opportunity for farmers, fueled by “people becoming more interested and concerned with how it was grown where and how it got to them,” she said.

In 2005, the Department of Agriculture recognized 13 farmer’s markets.

By 2010, the number had risen to 29.

“Endless Opportunities’

“There could be more and more farmers could be utilizing the facilities available and if there were more facilities, we could use more farmers. We could use more farmers in Alaska. There’s endless opportunity.”

Previously from Kansas, Pettit recalls her former state’s number of listed farmers: 44,000. Alaska’s 680 farms is very low, especially considering the state’s size.

Here are the differences and similarities among Alaska’s agricultural lenders: Alaska Rural Rehabilitation Corporation – Variable rate ARRC offers conservative financing with a focus on moderate operating loans, chattel loans and farm land purchase financing. Current interest rates are varied 5 percent to 9 percent, determined by applicant’s credit and collateral and no loan fees with terms of up to 20 years. The majority of the loans are closed at the 5 percent. Their rates are adjustable every two years with no cap.

USDA Farm Services Agency – Fixed rate FSA offers financing if other credit is unavailable with some program loan funds targeted specifically for disasters, beginning farmers and socially disadvantaged farmers.

Farm Credit Services – Variable rate Farm Credit Services offers conservative financing with FSA guarantees and has only made a few agricultural loans in Alaska over the years. Their interest rates are variable rates with a cap and presently range 3.85 percent to 8.3 percent and loan fees from no fee to 2 percent with a maximum 20-year term. Borrowers may be eligible for 0.5 percent to 0.7 percent annual interest refund. There may be prepayment penalties.

Commercial Fishing & Agriculture Bank – Variable rate CFAB has had no agricultural loan activity in years. Their loan programs are primarily for the fishing and tourism industries. Their variable rates are not competitive for agricultural loans at 7.25 percent to 8.5 percent and 1 percent loan fee with a maximum 20-year term.

Agricultural Revolving Loan Fund – Fixed rate The ARLF currently offers 3 percent short-term; one-year, 4 percent intermediate term up to sever years and 4.5 percent long-term up to 30 years.

www.akbizmag.com • Alaska Business Monthly • March 2011

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The output of Alaska’s farms is low also. Only 320 of Alaska farms are making more than $10,000 per year.

“They’re supplementing their income with non-farm work,” Pettit said.

“It’s a budding industry.”

But unless the industry can obtain sufficient funding, it will stagnate. Bryce Wrigley, president of Alaska Farm Bureau, operates Wrigley Farms in Delta Junction, where he raises 1,000 acres of barley.

“I think that ARLF, the primary lender of the state, needs to be recapitalized,” he said. “Dump $10 million in there. Their policies should change so any operation expenses of the Department of Ag should come out of the general fund not the ARLF loan fund.”

Wrigley fears for the future not only of Alaska’s farmers, but also the state’s food supply.

“We’re going to allow our capability to produce our own food slip away from us and that’s not going to be recoverable,” he said. “It’s estimated that the average farmer feeds 153 people apiece.

That’s good productivity. But when you consider a 300 million population and 2 million farmers, we’re barely making enough food for our nation.”

He compared America’s reliance upon other nations for oil with the possibility of depending upon them for a majority of our food.

“I remember the oil embargo lines in the ’70s,” he said. “Suppose we have to wait in lines at the grocery stores for food?”

Should the state’s food supply lines become interrupted with a major catastrophe, “we would be in a world of hurt,” he said. “We’re trying to put in place those growth mechanisms to cover ourselves in the case of emergency. We can grow those things that would result in a diet that would preserve life.”

Infrastructure to process, market and distribute those goods is also a part of the ag picture in Alaska.

“We don’t have a miller in the state and flour is basic,” Wrigley said.

“Our challenge maybe isn’t so much the credit crunch, although that could change. Our challenge is in putting the raw product we can grow into the hands of the consumers with adequate processing and distribution marketing.” q

www.akbizmag.com • Alaska Business Monthly • March 2011

ENVIRONMENTAL

Photo courtesy of TestAmerica

TestAmerica employee working in laboratory of the full-service analytical regulatory compliance testing provider.

Air, Water and Soil Quality Control Environmental services companies help protect environment, investments

By Vanessa Orr

S

tarting a building, remodeling or remediation project in Alaska can be a major undertaking, limited by the weather, the length of construction seasons and the remoteness of many work sites. One other consideration all companies need to consider is the effect such a project will have on Alaska’s environment.

To this end, a number of companies provide air, water and soil quality-control services to ensure not only that Alaska’s environment and its residents remain protected, but also that companies considering making major investments in

such projects know the types of risks that they are taking. “The industry is always looking for better data – not just to protect the environment, but to assure the regulatory need or requirement,” said Mike Priebe, account executive, TestAmerica.

The Red Dog Mine, for example, is subject to roughly 162 permits, agreements and bodies of regulatory requirements it must meet in order to operate. Many of these requirements include collecting environmental samples, making environmental observations and writing reports, all of which require the expertise of

scientists and analysts in the environmental field. Scientific findings are often also audited to ensure the results that are being provided are accurate.

“There are all kinds of auditing processes in place, ranging from external audits to receive accreditation to internal audits to ensure quality control,” Priebe said, who has worked in the environmental industry for the last 20 years. “There are also thirdparty auditors who take command of analytical programs for clients, as well as State and federal audits. It’s really quite elaborate.”

www.akbizmag.com • Alaska Business Monthly • March 2011

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Inside and Out

While a good portion of environmental monitoring takes place at contaminated sites or on lands owned by oil, gas and mining companies, some companies provide these types of services even closer to home.

“We mainly deal with asbestos, lead in paint, polychlorinated biphenyls (PCBs), mold and indoor air quality, most of which relate to building renovations,” said Bob French, principalin-charge for EHS-Alaska Inc. “Right now, we’re working on a lot of energy

conservation projects created through stimulus funds; for example, for clients changing old fluorescent fixtures to energy efficient fixtures. Many of the older fixtures have mercury in the fluorescent tubes and PCB ballasts.”

According to French, before any renovations can be done to public or commercial buildings older than 1980, OSHA and EPA require an asbestos survey to be performed. “The laws are less stringent for lead-containing materials, though they have gotten stricter in the last year concerning child-occupied

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While some businesses are less concerned with meeting environmental requirements than others, it is often in a business owner’s best interests to have these surveys done. facilities,” he said. The law also requires that those who are doing energy retrofits in single-family homes and who are planning to replace old doors and windows must find out if there is leadbased paint on the products that are being removed.

“Using a nondestructive testing machine for paints, we can take instantaneous readings,” said French. “We can also take samples of different materials at a site and when we get the results back from the lab, tell an owner exactly what is in his or her building.”

EHS-Alaska also performs testing after the fact, such as when a child is diagnosed with lead poisoning. “We can do wipe samples and lead analyses of a child’s environment to determine what caused the changes in his or her blood lead levels,” French said.

EHS-Alaska staff, who are required to have federally mandated training, have worked on a number of notable projects, including the renovation of the Ted Stevens Anchorage International Airport, which took five years. They also have worked in the majority of commercial buildings in the area, including the University of Alaska, the Anchorage and Mat-Su School districts and Air Force, Army, Navy and Coast Guard bases all over the state.

While some businesses are less concerned with meeting environmental requirements than others, it is often in a business owner’s best interests to have

www.akbizmag.com • Alaska Business Monthly • March 2011

these surveys done. “More and more building owners are getting fined for ignoring these requirements; it’s a highly regulated area,” French said. “It’s also important because if it isn’t done and a contractor finds hazardous materials, it can result in big change orders.

It actually provides cost protection for a business owner to know what’s in a building before renovation.

“Very few buildings built before 1995 do not have some kinds of issues with hazardous materials,” he added.

“In fact, you can go out today and buy products containing asbestos and leadbased paint and legally install it. People think that newer buildings, like those built after 1980, are clean and that they don’t have to worry about it, but that’s typically not the case.”

Analytical Testing

TestAmerica is the largest full-service analytical regulatory compliance testing provider in the nation. The company moved into the Anchorage area six years ago after purchasing North Creek Analytical, and now provides access to a vast amount of laboratory resources for clients.

“In Alaska, we work with consulting and engineering firms, corporations, and State and federal agencies including the Department of Defense (DoD), among others, providing testing for anything that requires or does not require regulatory oversight,” Priebe said. “We also provide remote logistical support for samples in Alaska; it’s always a priority to preserve the integrity of samples.”

According to Priebe, Alaska has many unique challenges when it comes to making sure that clients’ needs are met. “There are so many things to consider from the remoteness of a test site, to the weather, to the short season in which clients can accomplish projects,” he said. “Very often, what happens in the lab is driving the timeline on a client’s project. Clients are also confronted with analytical delays due to unforeseen circumstances within the laboratory due to sample matrix. But the laboratory’s first priority is to ensure the result’s validity.”

As technology has changed, so has the way that environmental services companies do business. “There is a lot www.akbizmag.com • Alaska Business Monthly • March 2011

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Monitoring & Characterization

SLR Alaska is a multimedia environmental services firm, and the leading air monitoring and air characterization firm in Alaska. The company monitors for all pollutants of interest to the EPA, as well as meteorological monitoring in support of baseline studies.

“We also focus on the characterization and cleanup of contaminated sites and do baseline monitoring for new projects, determining soil and water quality,” said Brian Hoefler, SLR Alaska manager. “We do a lot of work on spills and contaminated sites, helping to characterize the area and create a remediation plan. We also manage the whole remediation process.”

While the majority of SLR Alaska’s business is focused on the commercial sector, the company does a significant amount of work for State, local and federal agencies. Based out of the United Kingdom, SLR has offices around the globe.

“For many years, our largest client in Alaska has been BP,” Hoefler said. “We also run large operations for the U.S. Air Force and the Pebble Partnership, and do a lot of work in the utility sector for clients such as Chugach Electric,

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Photo courtesy of SLR Alaska

Meteorological monitoring station at remote Alaska project site.

Anchorage Municipal Light and Power and Doyon Utilities in the Interior. We do a lot of mining work as well.”

Hoefler, who owned an environmental firm in Alaska for 15 years before being bought out by SLR in 2010, said the merging of the two firms greatly benefits Alaska clients. “Today, clients get integrated services on air, soil and water, which benefits them in terms of efficiencies,” he said. “For example, when you need to do air and water quality monitoring at a remote location, most of your costs to collect data revolve around mobilization to the field.

SLR Alaska can provide a company with one technician who is cross-trained to do both things.

“We also have a lot of knowledge about how to do business in Alaska at remote locations, like on the Chukchi Sea coast or the Beaufort Sea coast,” he added. “We know how to get the job done at 40 degrees below.”

Since Hoefler has been working in the industry, he has seen a change in the way that information is processed. “Our clients have had a focus on environmental matters for many years, but I do think that there is a lot more visibility now,” he said. “For as long as I’ve been working in the industry in Alaska – I began in 1991 in the post-Exxon Valdez aftermath – there has been a large environmental focus in the state. Clients consistently

emphasize the importance of mitigating and avoiding impacts to the environment whenever possible.

“There is, however, a lot more out there in the public eye about what companies are doing,” he continued.

“I see companies having a lot more engagement with stakeholders, and being more forthcoming than before about what is being done behind the scenes. Before, the public wasn’t always aware of how much was being done. I think it’s a good thing – when there’s more visibility and stakeholder engagement it brings people together q to make the project better.”

Photo courtesy of SLR Alaska

more regulatory focus on lab procedures than there was 20 years ago,” Priebe said. “The industry is looking at analytical data a lot closer, and the laboratory process has evolved to a more empirical approach.”

TestAmerica provides a number of services including analytical testing of contaminated site investigation, monitoring and remediation; water and wastewater discharge; groundwater monitoring; emergency response and more. “We do a lot of testing on the North Slope and for the pipeline, as well as throughout Alaska utilizing mobile lab services,” Priebe said.

No matter where testing is done, TestAmerica has a standardized national format to which everyone in the company must conform. “This is extremely important because every step matters,” Priebe said. “From the time that the sample is taken and put in the cooler to the time that is unpacked and tested, you have to make sure that nothing is missed. One mistake can make the data questionable.”

Remote monitoring site.

www.akbizmag.com • Alaska Business Monthly • March 2011

ENVIRONMENTAL

Sustainable Shopping Environmentally friendly stores spring up in Anchorage

Photo courtesy of Kim Stalder/Circular

By Jody Ellis-Knapp

nce primarily associated with heavy-duty environmentalists and naturalists, the movement to re-use and recycle has become a big part of everyday life. Our society has collectively become more aware of environmental issues, and recycling is now a mainstream, accepted practice.

Even here in Alaska, where environmental issues are a hot button and people can be extreme on both sides, recycling is something everyone seems to work toward. That effort also makes its way into the retail market, with an influx of boutique style shops that place a special focus on environmentally conscious purchases and recycled goods. These shops have managed to make their own little niche in Anchorage, enjoying a level of success one might not have thought possible in the last frontier.

Circular

Opening in 2007, Circular was one of the first of its kind in Anchorage. Owner Kim Stalder had no retail background, but as a self-admitted “recycling fanatic” she was tired of trying to find environmentally friendly, sustainable products when she shopped.

“It was very difficult to find environmentally friendly products without searching through an entire store,” she says. “Even then, it was hard to really know if the products were manufactured in an environmentally sustainable manner.”

Working in the grant-writing industry for 30 years, Stalder was ready to move in a different direction. She says the idea for Circular literally “woke her up at 4 in the morning” and she wrote up her business plan that day.

Circular’s philosophy is clearly depicted in the store’s tagline, “Love Your Choices.”

Photo by Jody Ellis-Knapp

O

Circular belts made from recycled materials.

GrassRoots Assistant Manager Katie Alley holding telephone wire bowl.

“It really boils down to that,” said Stalder. “To me, it means loving the item you buy and loving the fact of making an environmentally responsible decision in purchasing it. Our customers can purchase beautiful items they love, while also feeling good about promoting environmental sustainability.”

The store, located on 6th Avenue, carries a variety of goods made from recycled materials, from jewelry created from tin cans to wallets made from old ties. There are purses made from old tires, fashionable as any designer line and incredibly durable. Stalder carries clothing lines as well, most of which are made from bamboo or organic cotton.

“I found artists and product lines for my store through extensive research,” she says. “I tried to locate high-quality products made from recycled materials. Over time, I’ve been able to weed out products that didn’t really meet my

expectations, focusing on the wonderful products we carry now.”

Circular also supports local art, with Stalder carrying products created by several Alaskan artists. “We carry furniture from Avenue 7 Furniture, consisting of gorgeous refinished furniture that is very affordable. We also carry jewelry make from recycled bike parts, created by local artist Alana Whelan, as well as jewelry, headbands and hats made by artist Joni Marie.” In addition, Circular supports artists by participating in Anchorage’s First Friday events.

Response from consumers has been positive, yet mixed, states Stalder. “I had to make the decision to begin carrying items that were not entirely eco. I realized that I had to expand my product lines to attract a broader range of customers. While I always seek out environmentally friendly products and try to find eco items within the lines I

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Photo by Jody Ellis-Knapp

Bella Boutique.

carry, I also seek out products that are timeless and high-quality.”

Stalder plans to continue to grow her business and increase name awareness in 2011, with new lines being introduced into the store, one of which includes a clothing line from Spain.

“The stores continues to evolve as a result of feedback from our customers and our own journey to create something unique, helping people make choices they love,” she adds.

GrassRoots

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Located just a few doors down from REI, GrassRoots Fair Trade Store carries some of the most unique, ecofriendly items in Anchorage. Opened in October 2008 by Jill Dean and her daughter, Liz, the store carries items, both recycled and eco-friendly, certified by the Fair Trade Federation or World Fair Trade Organization. Fair Trade is a system of trading partnerships that work with disadvantaged artisans and farmers to market their goods to consumers. This helps increase their sales prices and encourages sustainable, ecologically sound development.

Assistant manager Katie Alley, who has worked for GrassRoots since 2009, says she and Jill Dean both have a “passion for Fair Trade.” With one of Fair Trades main principles being to follow as many environmentally sustainable practices as possible, the store carries a wide variety of recycled goods. These

include recycled telephone wire bowls from South Africa, recycled poster dishes from Vietnam, earrings created from recycled saris and stationary created from re-purposed elephant dung from elephant orphanages in Sri Lanka.

“People love the elephant dung paper items,” says Alley. “They think it’s a really neat concept.” Other items in the store are all Fair Trade and include foodstuffs, kitchenware, home décor, jewelry and gift items.

The store itself keeps its mission of generating healthy, sustainable development and environmentally sustainable practices at the forefront, with display items that come from recycled or re-purposed furniture, VOC paints (volatile organic compounds) on the walls and the original concrete floors.

Alley says that consumer response has been encouraging since the store’s inception.

“People in Anchorage and those visiting from other parts of Alaska have increasingly shown their desire to make purchasing and consuming decisions that are locally and globally just,” she says. “We’ve definitely seen an increase in people being conscious of how they spend their money, and who care about how their consumer habits affect both the environment and producers.”

Bella Boutique

The word Bella means “beautiful” and that seems to be a big part of owner Annie Ciszak Pazar’s philosophy.

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Located at 2601 Spenard Road, Pazar’s focus on bringing one-of-akind, handcrafted items to Anchorage shoppers has resulted in a shop that is fashionable and functional, with a definite leaning toward environmentally friendly products. As a jewelry designer, Pazar started out with the intent to open a small independent jewelry shop. That idea grew to include all handcrafted items that could be considered an accessory.

Bella carries many lines made from recycled goods. These include hair accessories created from vintage fabrics, jewelry made from skateboard parts, and totes made from recycled plastic bags.

“When people make things by hand, it’s an easy decision to use as many second hand and recycled components as possible,” said Pazar. “I am more likely to purchase something if I know it’s a one-of-a-kind creation.”

Bella’s best-selling recycled product has been a line of belts made from recycled bicycle tires. “There are a variety of treads to choose from, and they are outrageously durable. These

have been very popular with the cycling community.”

While Pazar does not always have customers specifically asking for recycled items, she feels the recycled component becomes a big selling point once they are made aware of the history of certain pieces.

Pazar cites the public’s reception of Bella in Anchorage as “amazing.” “We are a very community-minded city and people know that they have the power to directly impact their local community by shopping locally.

“Bella gives you the double-whammy of not only supporting a local business, but also the artists and people who sell their wares here, giving you a good feeling about your purchase. The introduction of more quality recycled products is fantastic, as it seems like for a few years purchasing recycled items was more about raising one’s social status than global consciousness. I am very excited to see where the recycled movement will go next.”

Whether one’s purchase is about being environmentally conscious, thinking about local economy, or just wanting

something beautiful, recycled goods are a great way to enjoy a guilt-free shopping spree. With so many choices now available in Anchorage, there is no reason and no excuse not to get out there and add a little “green” to the economy. q

For more information and timeless treasures, check out:

Circular

320 W 5th Ave., Suite 132 Anchorage AK 99501 907-274-2472 www.circularstore.com

GrassRoots

1300 W. Northern Lights Blvd.

Anchorage AK 99503 907-929-5835 www.grassrootsfairtrade.com

Bella Boutique 2601 Spenard Road Anchorage AK 99503 907-644-4989 www.shop-bella.com

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NATIVE BUSINESS

Native Corporations Diversify, Reap Rewards Not even recession holds them down

As the clouds from the recession slowly lift, a silver lining shines out.

It’s a buyers market, for those companies in the position to take advantage of the opportunities.

Photos courtesy of NANA Regional Corporation/ Chris Arend

A view of Red Dog in the evening. NANA Regional Corp. and Teck Alaska have developed more than a mine in Northwest Alaska, they’ve developed a partnership that works for NANA shareholders and all Alaska. In 2010, NANA received $146.3 million in net proceeds from the mine. Of this amount, $82 million was distributed to other Alaska Native corporations pursuant to the 7(i) sharing provision of ANCSA.

By Julie Stricker

M

any of Alaska’s Native corporations are on the hunt for opportunities. In the past decade, the corporations have grown, strengthened their core businesses and diversified. In fiscal years 2009 and 2010, the corporations brought in billions of dollars in revenue and posted strong profits. Now they are looking ahead, cautiously.

Buy Now

“It’s a good time to be buying businesses,” said Jim Jager, spokesman for Anchorage-based Cook Inlet Region Inc., noting the real estate market is still soft in the Lower 48 states.

The corporation’s diverse businesses focus on Alaska businesses, energy and real estate. CIRI touts its ability to “team with strong partners that have the capability and incentive to make joint ventures succeed,” CEO Margie Brown said in a letter to CIRI shareholders.

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CIRI’s investment strategy tempers projects expected to produce near-term income, such as the 2009 acquisition of environmental remediation, project management and construction services provider North Wind Inc., with longerrange projects, such as the Stone Horn Ridge underground coal-gasification project. It’s a hard-earned lesson taught by years of boom-and-bust investments – and a lesson that Alaska’s Native corporations have taken to heart.

History Lesson

The corporations were formed by the 1971 Alaska Native Claims Settlement Act. Under ANCSA, the 12 regional and more than 200 village corporations divided 44 million acres of land and $962.5 million and were given two mandates: to provide for shareholders financially and to support their social and cultural heritage.

It’s the second part of the mandate

that drives a large part of the corporations’ business strategies. In general, the corporations look at three main components when buying companies: revenue and growth potential, compatibility with current holdings and the ability to create jobs for shareholders.

Corporations also evaluate whether a company will enhance its stewardship of traditional values.

The partnership is most frequently cited as an example of best meeting those goals is NANA Regional Corp. and Teck Alaska Corp., which operate the giant Red Dog zinc and lead mine in northwest Alaska.

“Red Dog is important to NANA,” NANA President Marie Greene says.

“It is more than just a mine – it has become a way of life and has provided hope for the future for many of our shareholders.”

More than half of Red Dog’s work force is made up of NANA shareholders.

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Additionally, the corporation distributes millions of dollars of revenue from the mine to the other regional corporations annually, under ANCSA’s 7(i) revenue-sharing provision.

Resource development can be a double-edged sword, however.

Just Say ‘No’

In Southwest Alaska, a massive copper and gold mine and offshore drilling for gas and oil, could bring much-needed jobs and infrastructure to the remote region, supporters say. Opponents say the development could devastate Bering Sea fisheries, the economic mainstay of the region for centuries.

Bristol Bay Native Corp., the Dillingham-based regional corporation, has voiced its opposition to both offshore drilling and the development of Pebble Mine. The corporation took a big hit in the recession, with its investment portfolio losing about a third of its value in 2009. A strong year for its construction subsidiary kept the corporation in the black. But a year later, it was the investment portfolio that rebounded, offsetting losses from

a port facility subsidiary CCI Inc. built in Iraq.

Besides construction operations, BBNC also runs a Washington-based fuel distribution business, owns oilfield services companies, and has several government-contracting subsidiaries, some operating under Small Business Administration 8(a) preferences and some that are seeking contracts in the competitive market.

In fiscal year 2010, BBNC posted a $32 million net profit, the second highest in its history. It owns subsurface rights on about 3 million acres in the region and is actively looking for investments there, mostly in tourism and fisheries.

Resource Development Great for Some

Developing its most abundant resource is a priority for the Aleut Corp. With a land base stretched along a stormy, rain-drenched string of remote Alaska islands, The Aleut Corp. is turning what would seem to be its biggest obstacles – its location and notorious weather – into opportunity.

“We’re certainly always looking for opportunities to expand,” said CEO David Gillespie.

The corporation wants to export water from Adak Island to China and other emerging Asian markets within easy shipping distance of the island located 1,200 miles southwest of Anchorage.

They plan to partner with an asyet-unnamed export firm to sell water wholesale in bulk containers, which would be bottled in China, where demand is rising fast.

The corporation wants to grow “organically,” Gillespie said, focusing on its strengths and finding natural outlets for what it already does well.

The corporation is looking to take advantage of its strategic location, which is expected to see more traffic as the Arctic ice sheets retreat. It hopes to be able to expand its Adak tank farm and use its expertise to provide port services and spill response in the Aleutians.

It is also looking for opportunities in government contracting through its subsidiary Aleut Management Services.

RESPONSIBLE DEVELOPMENT

Our people. Our land. Our companies.

Enriching our Native way of life.

Learn more. View Responsible Development, a video showcasing BBNC’s land and resource vision at www.bbnc.net.

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The Haul Road at Red Dog.

Beyond 8(a)s

The Aleut Corp., like the other Alaska Native regional corporations and many village corporations, has companies working under the Small Business Administration’s 8(a) program, which federal-contracting preferences to minority and disadvantaged corporations. The Aleut Corp. was a leader in 8(a) contracting, but has largely moved its operations beyond the program. “(SBA) 8(a) represents a fairly small

component of our portfolio,” Gillespie said. “It’s an important component – it gave us our start.”

Another division, Aleut Industrial Services focuses on non-government industrial products and services. In 2009, it acquired Alaska Instrument Co., an Anchorage-based firm specializing in industrial instruments.

C&H Testing Services, a Californiabased service company specializing in oil and gas well-testing services,

was acquired a few weeks later.

They are also looking at some natural resource possibilities near Sand Point, where TAC owns the subsurface rights to the Pyramid porphyry copper-gold prospect. In summer of 2010, Full Metals Minerals and joint-venture partner Antofagasta Minerals started “a very preliminary minerals exploration,” at the site, Gillespie said.

“While it is certainly not our primary focus, we’re certainly interested in opportunities,” Gillespie said. “There are some very significant metals out in the Aleutians around the Sand Point area.”

However, the corporation has no plans to rush anything into production.

“I want to caution everyone that we won’t be developing any mines until we can do it safely and can protect the environmental and archaeological assets there,” he said.

Ahtna Develops Natural Resources

Glennallen-based Ahtna Corp. is actively looking for partners to boost resource development in the region.

A drilling rig is exploring for natural gas and Ahtna signed an agreement with Raven Gold Alaska for mineral exploration on Ahtna land. The agreement covers about 75,000 acres over six years. If gold prices remain high, Ahtna hopes to reap significant royalties. Any mine development would include hiring preferences for Ahtna shareholders and family members.

Kodiak-based Koniag Corp. is also diversifying its holdings, buying Alaska-based stainless steel fabrication firm Dowland-Bach in 2009. Koniag’s business strategy is focused on diversifying its risks. It has made significant investments in commercial real estate, investment securities and in a number of operating companies.

Diversification

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“As we look ahead, Koniag is seeking ways to protect the significant business investments we’ve made and provide good financial returns and job opportunities for our shareholders,” Koniag CEO Will Anderson said in a letter to shareholders.

NANA recently invested in a venture that could bring spotlights to Alaska. www.akbizmag.com • Alaska Business Monthly • March 2011

In September 2010, NANA Development Corp., announced it was teaming up with Evergreen Films to bring more movie and television projects to Alaska. The partnership aims to bring revenue and jobs to the state.

“Our goal is to deliver significant benefits to our shareholders from this investment,” Helvi Sandvik, president of NANA Development Corp., said in a press release. “We are excited about being involved on the front end of the development of a new industry in Alaska.”

CIRI remains focused on one of its core businesses, real estate, but is taking a different tack on its approach.

A decade ago, Anchorage-based Cook Inlet Regional Inc. was building upscale resorts and business parks. It was a lucrative, but very uneven business, Jager, CIRI’s spokesman said.

During the construction and initial opening phases, expenses were high and revenue lean. The big payoff didn’t come until years later.

Jager noted that CIRI has had a history of very successful investments, “but it has been lumpy success.”

For instance, to develop a hotel

would require three or four years for the project to be built and start up before it would start generating significant revenue. Then when the market is good, you could sell the business park or hotel and bring in a large amount of cash.

“You have a couple of lean years followed by a big year,” he said.

“That makes planning difficult. We’re molding our business model to bring in a more steady income over the long-term.”

What Happens When Economy Tanks?

When the economy tanked in 2009, CIRI was holding on to some real estate investments and had to take one of two options: sell at the bottom and take a big loss or sit on the investments and hope their market value came back in time.

CIRI chose to sell, Jager said, predicting when the market came back, it would return in a different shape.

Events are bearing that prediction out.

That is behind the mind-set to its partnership with Weidner, which manages apartment rentals.

“You get your rents every month and you’re pretty confident how much money you’ll get,” Jager said. “It will help smooth out our income bumps.”

That’s also the reasoning between CIRI’s participation in developing Tikahtnu Commons. CIRI Land Development Co. and partner Browman Development Co. built the retail and entertainment center on 95 acres in Anchorage. The major construction phase is done, although a few more major tenants are expected to move in, and bring in a steady income stream.

Also, because of the losses CIRI sustained by selling at the low end of the market, it was able to re-file its taxes and recoup about $20 million, which it could then reinvest.

CIRI has an ongoing stream of smaller acquisitions, such as an LED lighting company, which is in line with its other holdings in the clean-energy and real estate sectors, Jager said. CIRI is looking at investments in companies that either produce clean energy or reduce energy usage.

“They’re investments we expect to grow,” he added. q

One People

One Region

One Future

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TRANSPORTATION

Alaska’s Time-Sensitive Freight Important air cargo industry segment

Photo by Azimuth Adventure Photography/www.azimuthadventure.com

By Tracy Barbour

Torque Zubeck, managing director of Alaska Air Cargo.

P

erhaps nowhere else in the United States is the delivery of air cargo more vital than in Alaska, where 82 percent of the communities are virtually roadless and accessible only by air or water. Many Alaska communities – especially those in the Western and Interior regions – depend on air travel for everything from emergencies to family visits to shipments of food, supplies and other cargo.

Time-sensitive freight is a significant segment of the air cargo industry in Alaska. Air cargo carriers transport a wide variety of goods quickly throughout the state.

“Unless you’re shipping as general freight, most of the time when people ship by air it’s time-sensitive,” said Torque Zubeck, managing director of Alaska Air Cargo.

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Alaska Air Cargo ships about 130 million pounds of cargo a year. That includes freight and mail. Headquartered in Seattle, the airline also works with freight forwarders and couriers to ship a wide assortment of items.

‘Everything under the sun’

“If you walk through our warehouse, you can see just about everything under the sun that needs to move out in the Alaska community,” Zubeck said. “This includes medical tests, seafood, groceries, parts for fishing vessels and equipment needed to keep generators running.”

Animals are among the airline’s most unusual freight. Its PetStreak Animal Express service has transported dogs for the Iditarod Trail Sled Dog Race, birds for the Alaska Raptor Center and even horses.

“We think we’re one of the best carriers in the country as far as handling animals,” Zubeck said. “There are people who are assigned to make sure the animals make the transfer properly. We take a lot of care with them.”

Memphis-based FedEx Express ships an array of time-sensitive items through its Anchorage Hub at the Ted Stevens Anchorage International Airport. Typical FedEx freight includes medical shipments such as heart valves needed for surgery and other medical items with a designated shelf life, according to Connie Carter, managing director for FedEx’s Alaska operations.

Consumer electronics, car parts, legal/ financial documents and seafood are also common cargo.

“Large seafood customers utilize our services to get their product to the Lower 48 during the summer as well as the holiday season,” Carter says. “FedEx is a great option to get their product to market before it spoils or goes bad.”

FedEx has shipped seals, horses, black bear and even sea lions to the Alaska Sea Life Center. It is the world’s largest airline in terms of freight tons flown and second-largest in terms of fleet size.

The variety of timed-sensitive freight also runs the gamut at Northern Air Cargo (NAC). The airline flies items to 15 locations, including Prudhoe Bay and Red Dog Mine. Many of its expedited shipments contain oil and gas equipment, construction materials and perishables like fresh produce, meat and seafood. NAC uses a chill or freezer to keep items from spoiling in transit. And as an extra precaution, perishables are the last cargo to be loaded onto the aircraft.

Using a fleet of four 737 aircraft and a network of operators, NAC can move almost anything across the

www.akbizmag.com • Alaska Business Monthly • March 2011

Photo courtesy of Alaska DOT&PF

Alaska DOT&PF Deputy Commissioner of Aviation Steve Hatter.

state, according to Director of Sales Mark Liland.

“We move hazardous materials, dynamite – just about anything that will fit in the aircraft door,” Liland says.

Importance of Aviation in Alaska

In Alaska, the movement of people and goods by air is fundamental to the state, says Deputy Commissioner of Aviation Steve Hatter. “Aviation is the lifeblood of Alaska,” he said.

Not only does Alaska’s air cargo industry impact people on a personal level, but it supports the various industries that drive the state’s economy, including oil and gas, government, fishing and health care. Hatter says 1.5 million tons of air freight moves within Alaska annually, and the amount of air freight per person in Alaska is 40 times the U.S. average.

In addition to serving as a critical transporter of goods, the Alaska International Airport System – comprised of the airports in Anchorage and Fairbanks – is a vital facilitator of trade between North America and Asia. The reason: Alaska is equidistant between Tokyo and New York City, making it an important gateway for international cargo. Freighters often carry maximum

Service at the speed of flight.

Put time on your side. Businesses rely on Alaska Air Cargo’s GoldStreak® Package Express service for one simple reason: There is no better way to ship time-sensitive documents that need to be there today or tomorrow – guaranteed. From drop-off to pick-up, Alaska Air Cargo employees like Gina can ensure your shipments make the next flight out and arrive when and where they’re needed.

Trust your time-sensitive shipping to Alaska Air Cargo.

TM

OVER 80 NORth AmERicA DEstiNAtiONs

i

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Photo courtesy of Alaska DOT&PF

Aerial view of Bethel Airport’s new parallel runway completed in 2009. The Bethel Airport is Alaska’s second-busiest cargo airport, serving 56 villages in the Yukon-Kuskokwim Delta and enabling air travel for 300,000 passengers annually.

cargo payloads and refuel in Alaska.

In 2008, 5 percent of the value of all U.S. international cargo or $41 billion worth of merchandise passed through the Anchorage International Airport, according to the 2010 Alaska Airports and Aviation Annual Report.

Alaska’s aviation system is the largest such system in North America.

Alaska has 255 State-owned airports: 172 gravel strips, 46 paved, 36 seaplane bases and one heliport. The largest aircraft in the world can land at Alaska’s two international airports.

The Alaska aviation industry has a significant impact on the state’s economy. It is the state’s fifth-largest employer, generating 10 percent of all jobs in Alaska. Aviation-industry employment creates about 47,000 “on-site” and “off-site” jobs statewide. “Aviation is an enabler to commerce,” Hatter said.

Moving Freight Quickly

Alaska’s aviation system is supported by 304 commercial airline operators.

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Of those, about 250 handle timesensitive freight. These carriers utilize their resources in various ways to transport air cargo swiftly into and throughout Alaska, Hatter says.

Take FedEx Express, for example.

About 80 percent of FedEx Express’ business is international. In Alaska, FedEx uses the strategic positioning of its 500,000-square-foot Anchorage Hub to connect customers to more than 220 countries and territories on six continents, Carter says.

“Anchorage is located 9.5 hours (flight time) from 90 percent of the industrialized world, and FedEx has been able to capitalize on the unique connectivity capability in Anchorage,” Carter said. “Driven by its convenient access to the global market, we are the perfect solution for all shippers and all shipping needs.”

In terms of its domestic volume, FedEx ships freight to Alaska from four different hubs: Memphis, Indiana, Oakland and Newark. Which hub processes

the cargo depends on the shipment’s origin. For example, packages being shipped from California to Alaska are picked up by couriers in California, processed at the Oakland Hub and flown to Anchorage.

The packages arrive at the Anchorage Hub between 6:30 and 7:30 every morning. They’re scanned, sorted and processed, and then trucked to places like Eagle River, Wasilla, Seward and Valdez. Feeders or small planes dispatch the packages to primary markets: Kenai, Fairbanks, Kodiak, Homer, Juneau, Sitka and Ketchikan.

FedEx’s network of feeders, vendors and employees handle about 11,000 packages daily and serve every zip code in Alaska. The Anchorage Hub has about 1,400 employees involved in operations, clearance and support functions. “The Hub operation allows us to optimize our ability to get freight into the state more expeditiously,” Carter said. “Because the domestic freight moves on designated export lanes

www.akbizmag.com • Alaska Business Monthly • March 2011

(international flights), it also gives us flexibility and service reliability on any given day.”

For Alaska Air Cargo, Seattle is a major shipping point for cargo being transferred to Alaska. Freight is processed at the carrier’s Anchorage warehouse – the company’s largest warehouse by volume. The items are weighed, packaged in unitizedcargo-requirement containers known as “igloos” and loaded onto aircraft for delivery.

Alaska Air Cargo ships items to 20 communities in Alaska using an aircraft fleet that includes 737-200 Combis that can be quickly reconfigurable according to the cargo and passenger loads of each flight. The airline also employs freight forwarders like Lynden International and Commodity Forwarders Inc. “It’s all about moving products for businesses and meeting the needs of our customers,” Zubeck said.

In Alaska, Zubeck says, the biggest challenge to making shipments is the weather. “When you can’t get in, it means someone may not have milk at the grocery store.”

However, Alaska Air Cargo has invested heavily in technology to ensure timely deliveries. The airline has developed its own required navigation performance – a type of GPS system that’s integrated with airport equipment – which allows its aircraft to fly at a lower-than-normal altitude. “This enables us to more consistently get into communities when nobody else can, and we can do it safely,” Zubeck said.

Time-Sensitive Service Options

Alaska’s air cargo carriers have a wide range of shipping services. Alaska Air Cargo, for instance, offers GoldStreak Package Express and Priority Air Freight. GoldStreak packages – which have to be less than 100 pounds – are guaranteed to leave on the next scheduled flight out in Alaska. “In most markets, we can guarantee same-day delivery with GoldStreak,” Zubeck said.

The delivery time for priority freight is based on when the package is tendered, its size and its destination. Customers can pre-book shipments for a specific delivery time through the airline’s cargo control center in Seattle or tender items at its Anchorage warehouse.

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“Era is an outstanding partner,” michelle says. “they can respond within an hour to meet our needs — few community partners can meet a demand like that.” see for yourself why Alaskans like michelle put their trust in Era Alaska, proudly serving nearly 100 communities statewide.

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www.akbizmag.com • Alaska Business Monthly • March 2011

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Alaska Air Cargo uses a system called Cargo Spot to book and track freight. Customers can log onto the airline’s website to easily track shipments.

Larger customers can take advantage of personalized tracking services.

“If there’s a weather or mechanical situation that will delay their package, we notify them by phone, email or however the customer prefers,” Zubeck said.

NAC, which specializes in moving oversized items, also offers priority shipping for time-sensitive cargo. The service comes with a next-flight guarantee and is available on all scheduled flights. Priority freight can be placed on scheduled flights to King Salmon two days of the week. Flights go out to Bethel Monday through Saturday.

Customers can also choose one of NAC’s priority-shipping options for small packages. With NAC-PAC, for instance, envelopes weighing one to three pounds and bags up to 30 pounds can be sent at a low rate. NAC also offers a “reroute” service for select regular flights for items weighing at least 25,000 pounds. In addition, open slots are available for charters, depending on aircraft availability.

“We can put a charter together in a couple of hours,” Liland said.

FedEx has an extensive portfolio of services available in Alaska. Its niche product is overnight delivery. This service delivers packages to 80 percent of the Alaska population by the next business day. Deliveries to remote areas of Alaska can be made within two or three business days.

First Overnight is FedEx’s premier offering. Available with a money-back, guarantee, it delivers packages to designated zip codes in Anchorage by 9 a.m. every day – including Saturday. Priority Overnight is another option. The service guarantees overnight delivery by noon to most primary markets, which www.akbizmag.com • Alaska Business Monthly • March 2011

Photo courtesy of Alaska Air Cargo/ Chris Arend Photography

Alaska Air Cargo employee Brian Bartolome.

include Fairbanks and Kenai, and by 4:30 p.m. to most other communities.

FedEx uses Bluetooth technology that provides real-time package tracking. Each time a package is handled, it receives a scan that designates its location in the journey, Carter says.

The location of the package is instantly downloaded to the company’s mainframe, so customers can always know where their item is in the process.

“Customers often know that their package is on the courier van for delivery before it gets delivered because of the IT advantage we offer,” Carter said. “You could say we are just as much an information company as a service company with the cutting-edge technology we use to track and trace every customer shipment.”

the most recent such report available.

The airport’s employment represents about 7 percent of all wage and salary jobs in Anchorage and 9 percent of total payroll. Including the off-site jobs generated by airport businesses making purchases and workers spending their earnings within the community, the airport’s total economic significance equates to about 18,400 jobs with a payroll of $850 million.

In addition to investing in the Anchorage airport, Alaska recently completed a new runway at the Bethel

Airport. Alaska’s second-busiest cargo airport, the Bethel Airport serves 56 villages in the Yukon-Kuskokwim Delta.

It enables air travel for 300,000 passengers annually.

Parrott, who recently met with air cargo carriers in Asia, says he is optimistic about Alaska’s cargo industry as a whole. “We anticipate the cargo operations in Alaska will continue to thrive due to our geography and our regulatory environment. We look forward to continuing the growth in this q important industry.”

State Improving Airports

In the past decade, the State of Alaska has invested more than $750 million to enhance its international airports. The airport in Anchorage, for example, has repaved surfaces and made other upgrades to be able to accommodate aircraft of all types and sizes, according to Anchorage Airport Manager John Parrott.

The airport also has a number of rehabilitation projects under way. One of them is the extension of runway 07 Right to the west by 1,500 feet.

“It will make it more convenient for aircraft that are landing,” Parrott said.

“It will allow them to get to their parking places a few minutes earlier, which will translate in less congestion, fuel savings and less noise.”

The runway extension project should be completed next summer, Parrott says.

Ted Stevens Anchorage International Airport is a major component of Alaska’s air cargo industry. It is North America’s No. 2 airport by weight of cargo handled. The airport doesn’t track the amount of time-sensitive freight it handles, but air cargo represents 70 percent of its revenue, Parrott says.

The 4,700-acre airport is also an important economic contributor to the state. It is responsible for more than 10,200 average full-time equivalent jobs or a payroll of $562 million annually, according to the September 2007 Ted Stevens Anchorage International Airport Economic Significance study,

Baby needs a diaper. Now. There are certain things families in Alaska simply can’t do without. That’s why smart retailers count on TOTE for twice-weekly service to deliver eggs, milk and other necessities. Our roll-on/roll-off vessels allow us to load and unload your stuff super fast. Goods arrive fresh. You save money. Customers are happy.

Next time, ship with the people who know Alaska best. Because when you run out of the items your customers need most, things can get pretty ugly.

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Ripe

for

Redevelopment

By Gail West

Revitalizing the Knik Arm Power Plant Southcentral energy benefit

Photo Credit: Ward Wells, Ward Wells Collection; Anchorage Museum

Anchorage’s Knik Arm power plant has recently qualified for the National Historic Register. Developer Marc Marlow and two partners are moving forward with plans to put the power plant into production again.

O

ur history in Anchorage is short, but it still includes a few places qualified for the National Historic Register. One of those, the Knik Arm Power Plant, today sits apparently

84

abandoned on the shores of Ship Creek in the middle of the railroad yard. The building’s owner is KAPP LLC (the Alaska Railroad owns the land it sits on), and KAPP’s principles are work-

ing diligently to put the building back into service and to make the energy it produces as “green” as possible.

The plant was built of concrete and steel in the early 1950s by the Alaska

www.akbizmag.com • Alaska Business Monthly • March 2011

“Now, though, that complacency is being challenged with the growing scarcity of available, low-cost natural gas.”

– Marc Marlow, Partner KAPP LLC Railroad. Chugach Electric purchased it, with help from the U.S. Rural Electrification Administration, in 1959.

The plant originally produced 9,500 kilowatts of electricity by burning coal, which arrived by train from the Jonesville Mine near Sutton. The railroad used the electricity to power its buildings and operations, and the steam heated the railroad’s roundhouse and shops. Some of that steam was later used to help heat the old Alaska Native Service hospital on Third Avenue and the old federal building on Fourth Avenue.

With the discovery, and subsequent widespread use, of natural gas and the inefficiency of the old boilers, however, KAPP fell into disuse.

“Natural gas was less expensive at the time than coal,” said Marc Marlow, one of the current partners in KAPP LLC. “Chugach burned natural gas to turn the steam turbine from about 1967 to 1985 when the plant was decommissioned.”

Marlow says because of the perceived plentiful natural gas and its low price, not to mention the expense of purchasing new machinery, utilities have been somewhat complacent about keeping up with new technology. Now, though, that complacency is being challenged with the growing scarcity of available, low-cost natural gas.

“Today, utilities are burning the precious reserves we know exist,” Marlow said. “Our average heat rate (a measure of efficiency) in the Anchorage area is about twice that of the Lower 48, or about half as efficient. Since utilities have continued using the old technology, Southcentral rate payers are paying rates that continue to rise.”

Lowering Rate Increases

According to Marlow, nearly all of the current machinery utilities use to produce power will be replaced with www.akbizmag.com • Alaska Business Monthly • March 2011

85

more modern, cleaner, more efficient technology within the next seven years.

That could mean the utilities serving Southcentral must seek funding to purchase those new turbines – likely incurring new debt. That would mean rate payers would see additional increases in their utility bills to cover the higher fuel costs and the amortization of the plants’ capital costs.

Marlow and his partners, Randy Hobbs and Randy Kaer, hope to alleviate some of those rate increases by putting KAPP back into production and

selling less expensive, cleaner energy to Southcentral utilities. Energy produced

by KAPP could then help lower the overall costs of producing electricity and help lower rate-payers’ costs.

The Public Utility Regulatory Policies Act of 1978 required utilities to purchase energy created by a power station that simultaneously generates both electricity and heat and add it into the electrical grid. If KAPP produces such power, they will be able to find customers to buy it.

Getting KAPP from its current status to production, however, is a long road

replete with potholes. Marlow and his partners know that, and are taking a variety of steps to raise the funds needed for the project.

“The plant is eligible for the historic register,” Marlow said, “and that makes historic tax credits available to investors. There’s also a provision in the IRS code that says if you put in a combined heat and power plant and are harvesting the heat to do useful work, we can borrow money at the same rate as a public utility.

“That would mean that we could be more nimble and borrow money on better terms,” he added.

Marlow said he hopes to harvest the heat from the new power plant to heat buildings in downtown Anchorage.

Combining Heat and Power

86

“We’re located right in the middle of the highest concentrated heat load,” he said, “and the most efficient way to produce electricity is to combine heat and power. Of the natural gas that goes into a power plant, 50 percent goes into electricity and the other 50 percent is waste heat that the utilities simply vent to the atmosphere. If you can use the heat, you can increase the thermal efficiency – 75 percent doing useful things and only 25 percent into the atmosphere. That’s as good as it’s going to get.”

Marlow and his partners have talked with the Alaska Railroad Corp. about purchasing heat from the plant, and, according to Jim Kubitz, vice president of real estate and facilities for the railroad, they’re interested.

“We have agreed conceptually to purchase waste heat from the power generation to heat the shops,” Kubitz said. “That is how the shops were heated in the past and the utilidors are still in place.

“The railroad was looking at building a new car shop someday, and that (KAPP’s site) might be a location, but that plan has been put on longterm hold. If the KAPP building can be renovated and used in a modern, high-tech application, which will bring dependable heat back to our shops at the railroad and generate electricity more efficiently, it would be a win-win for everyone,” Kubitz said.

Other potential users of the waste www.akbizmag.com • Alaska Business Monthly • March 2011

“As we’re about to embark on replacing these old assets, we might as well do it in a way that utilizes fuel in the most efficient way possible.”

– Marc Marlow, Partner KAPP LLC heat still sit atop the hill south of the railroad yards – much of downtown Anchorage. Buyers of electricity, if KAPP goes back into production, could include Matanuska Electric Association.

market is there, and that would make almost any power plant economic. There aren’t many options for power production – heat and light are not optional in Alaska.”

On the road to bringing KAPP back into production, Marlow is currently in discussions with one of the Alaska Native corporations in Southcentral to participate in restoring the plant to its useful status.

“We plan to start off small with 10 to 16 megawatts of generation, so we can have the budget to restore the building

and reestablish the property,” Marlow said. “Then we’ll make the balance of the building available for expansion to replace a percentage of old assets with more modern, efficient assets. Chugach is burning about 25 billion cubic feet of natural gas per year. If they could be burning half that fuel, that represents a huge savings. If you can, at the same time, heat buildings, that’s good stewardship. As we’re about to embark on replacing these old assets, we might as well do it in a way that utilizes fuel in the most efficient way possible.” q

MEA Possible Partner

“There’s no formal agreement now,” said Joe Griffith, general manager of MEA. “We do have a precedent agreement that says if Marc meets certain requirements, then we would begin to negotiate a contract.”

Precedent agreements are common in the oil and gas industry, Griffith added.

“Basically, it’s a handshake deal to do a deal.”

Griffith said he’d worked with Marlow off and on for about 15 years, and is happy to provide advice.

“If he can turn it into business, that’s fine,” Griffith said.

MEA is one of the state’s largest electric utilities, covering approximately 10,000 square miles – 100 miles north to south and 100 miles east to west, according to Griffith.

“Of course, it’s not all populated,” he said, “but it does make us one of the largest land-area distribution co-ops in the United States. We have about 57,000 customers and about 4,000 miles of line. We do cover a lot of real estate.”

Providing power to that grid can be problematic, particularly so when MEA’s contract to buy power from Chugach Electric Association expires in four years.

“Starting Jan. 1, 2015, we have to be able to provide all our own power,” Griffith said. “I’m in the process of putting together a power plan to do just that. To the degree that what Marc proposes can fold into that, it’s good for him, good for us and good for the railroad. Marc has some tough shoals to go through, but I think it’s entirely doable. The technology is there, the www.akbizmag.com • Alaska Business Monthly • March 2011

87

BUILDING ALASKA SPECIAL SECTION

Spinell Homes Inc. Challenges are there, but company doing well

By Stephanie Jaeger

Photo by Kris Swanson

Spinell Homes offers many interior finish options from standard to high-end custom.

S

pinell Homes Inc. is Alaska’s largest homebuilder. Established in 1987, this home construction company has built almost 3,000 homes in the past two-and-a-half decades. Previously owned and operated by Chuck Spinelli and his wife, Jackie, the business is now shared with his son, Andre, and his daughter, Lauren.

The average house currently built

by Spinell Homes is 1,900 square feet and costs approximately $300,000.

They also build much larger and more expensive custom homes, as well as condominiums. In recent years, they have constructed some commercial buildings, including a strip mall on Dimond, a condominium storage unit called Garage Town, and a day care and two office buildings in the Mat-Su Valley. They completed two high-end condos in Girdwood, each selling for $680,000. Spinell Homes builds homes year-round and always has 45 to 50 projects going, although building is slower and more difficult in the winter.

Spinell Homes was the first builder

88

in the state to offer a 10-year structural warranty, which has become a standard in the industry.

Spinell has 21 employees, but subcontracts most of the work out. “Most of the subs we work with have been with us since I was a kid,” says Andre. “That’s about 20-plus years. This helps streamline the work and keeps the quality consistent.”

Land Shortages

In the next five years, one of the problems with the construction of new homes in the Anchorage Bowl will be a shortage of land suitable for the construction of family homes. Andre estimates there are only about 200 developed single-family sites available in the Anchorage area. In a normal market, this is about a year’s supply. In spite of this, Spinell is building about the same number of homes each year as in the past. They recently finished a condominium project in Anchorage called Hearthstone Condominiums located on Lake Otis and 80th Avenue.

“We are paying the closing costs for the first five buyers. These homes start at $250,000 and have three bedrooms, two baths and two-car garages,” Chuck says. Spinell Homes has also expanded into building more in the Mat-Su Valley and Girdwood.

Sales Decline, Then Rise

Both Chuck and Andre agree the recession has adversely affected their business. “In 2005, we had our biggest year,” Andre says. “We closed on 218 houses. In 2006, this fell to 137; in 2007, to 72; and in 2008 and 2009, to 69 both years. This past year, 2010, we are back up to 74. We are hoping to start creeping up out of this in 2011.”

Chuck explains the drop in new home purchases was not because of any recession in Alaska: “The whole banking collapse, the national consciousness held it back.”

The state continues to do well.

Alaska has gained people, and the oil and commercial fishing industries have prospered.

www.akbizmag.com • Alaska Business Monthly • March 2011

Photo by Kris Swanson

“But the housing sector has been hit by the banking thing,” Chuck adds. “The banks just tied everyone in knots. They eliminated speculative building. Now building has to be pre-sold. The market was down and the demand down.” In the past year, the banking problems have slowly begun to improve. Currently not many banks are willing to lend the amount of money needed for the cost of the business done by Spinell Homes. They have recently begun to work with Northrim Bank instead of other Lower 48-based banks they previously used. Local banks’ lending policies are more in line with Alaska’s local market conditions.

“We didn’t have a large amount of bad mortgages, bad loans,” Andre explains. “Buyer confidence became connected to the national media. We didn’t have an excessive amount of housing foreclosures. The cost of housing has held the line. Or there has been a slight increase. Now the supply of houses is low, the demand hasn’t crept back up. We are hoping to see this again. There are very few houses on the market, if you look on the Multiple Listing Service – the list of homes available for sale in this area.”

Spinell Homes has been the recipient of many awards. Management is proudest of its “Award for Excellence” given by the Anchorage Better Business Bureau. Readers of the Anchorage Daily News voted them the “Best Home Builder in Alaska.” They have also received several Golden Hammer Awards and the 2010 Builder of the Year Award from the Anchorage Builders Association.

When asked if he planned to retire, Chuck says, “If things had stayed the way they were in 2005, I’d be retired.”

Now, instead of retirement, he and his wife spend a week to 10 days every month in the winter in Desert Palm, Calif., to take a break from the cold.

Custom Spinell Home built in downtown Anchorage.

National Association of Home Builders and led to his chairmanship of the Cold Climate Housing Research Center Southcentral research advisory committee. He is most proud of his five-star-plus energy-efficient houses.

Chuck’s daughter, Lauren, graduated with a degree in education from the University of Redlands. Immediately after graduation, she told her father she wasn’t interested in working in his business. She was planning to become a teacher. After doing some

substitute teaching and trying to work in other areas, she returned to join the family company where she had grown up hearing and learning about construction. She directs marketing and sales, and meets with every customer before home construction begins.

“Lauren is very good with the details customers are interested in, better than I am,” Chuck says. “I hope my children and their children decide to work in the business and the company continues to build homes for generations.” q

Second Generation

Chuck Spinelli’s son, Andre, works as the design and development manager and also serves as president of the Anchorage Home Builders Association.

His dedication to energy conservation has earned him the title of Certified Green Builder Professional from the www.akbizmag.com • Alaska Business Monthly • March 2011

89

2011 CONSTRUCTION DIRECTORY

Construction

GENERAL CONTRACTORS

Company Top Executive Estab.

Company

Top Executive

Alaska Interstate Construction LLC (AIC) 301 W. Northern Lights Blvd, Ste. 600 Anchorage, AK 99503 Phone: 907-562-2792 Fax: 907-562-4179

Steve Percy, Pres.

Alaska Mechanical Inc. 8540 Dimond D Cir. Anchorage, AK 99515-1938 Phone: 907-349-8502 Fax: 907-349-1324

Larry Buss, Pres.

Alaska Quality Builders PO Box 674 Willow, AK 99688 Phone: 907-495-6200 Fax: 907-495-6200

Karrol A Johnson, Pres.

American Mechanical Inc. 3203 Peger Rd Fairbanks, AK 99709 Phone: 907-479-5754 Fax: 907-479-5771

Dennis L. Michel, Pres.

ASRC Energy Services Inc. 3900 C St., Ste. 701 Anchorage, AK 99503 Phone: 907-339-6200 Fax: 907-339-6212

Jeff Kinneeveauk, Pres./CEO

Brechan Enterprises Inc. 2705 Mill Bay Rd. Kodiak, AK 99615 Phone: 907-486-3215 Fax: 907-486-4889

Michael R. Martin, Pres.

Brice Inc. 1577 C St., Ste. 303 Anchorage, AK 99507 Phone: 907-277-2002 Fax: 907-277-2003

Sam Robert Brice, Pres.

Bristol Construction Services LLC 111 W. 16th Ave., Third Floor Anchorage, AK 99501 Phone: 907-563-0013 Fax: 907-563-6713

David O'Donnell, Gen. Mgr., Civil

Bristol Design Build Services LLC 111 W. 16th Ave., Third Floor Anchorage, AK 99501 Phone: 907-563-0013 Fax: 907-563-6713

Benjamin English, Gen. Mgr., Vertical

Building Hope Construction LLC 43335 K-Beach Rd. #14 Soldotna, AK 99669 Phone: 907-260-8041 Fax: 907-262-7144

Mark Hill, CEO

CDF General Contractors Inc. PO Box 211586 Anchorage, AK 99508 Phone: 907-337-7600 Fax: 907-272-2209

Gary Murphy, Pres.

Chugach Alaska Corp.

3800 Centerpoint Dr., Ste. 601 Anchorage, AK 99503-4396 Phone: 907-563-8866 Fax: 907-563-8402

Ed Herndon, CEO

Criterion General Inc. 2820 Commercial Dr. Anchorage, AK 99501 Phone: 907-277-3200 Fax: 907-272-8544

Dave DeRoberts, Pres.

Davis Constructors & Engineers Inc. 740 Bonanza Ave. Anchorage, AK 99518 Phone: 907-562-2336 Fax: 907-561-3620

Josh Pepperd, Pres.

Dirtworks Inc. 3255 S. Old Glenn Hwy. Palmer, AK 99645 Phone: 907-745-3671 Fax: 907-745-3672 Door Systems of Alaska Inc. 18727 Old Glenn Hwy. Chugiak, AK 99567 Phone: 907-688-3367 Fax: 907-688-3378

90

AK Empls.

Services

AK Estab. Empls.

Services

1987

650

Roads; facility pads and foundation; ice construction; roads, pads and islands; oiling, bollards, thermosiphones and VSMs; piping and utilities; equip

1975

75

General contractors.

1994

3

New residential and commercial construction, additions, remodels, garages, shops, saunas, insurance losses, custom homes and don't forget landscaping. "We Build Dreams"

1982

25

General contractor: industrial and commercial buildings; multifamily housing; mechanical-water, sewer, oil and gas pipelines, plumbing, heating, welding; carpentry; painting; excavation; heavy and civil engineering construction.

info@aicllc.com www.aicllc.com

www.amialaska.com

akqual@mtaonline.net www.alaskaqualitybuilders.com

info@american-ak.com www.american-ak.com 1985

info@asrcenergy.com www.asrcenergy.com

2,865 From the earliest regulatory stage through exploration, drilling support, engineering, fabrication, construction, project management, operations and maintenance and field abandonment, AES delivers excellence in every aspect of oil field service and industrial facilities development.

1954

90

General contractor specializing in site work, asphalt, concrete, general carpentry and metal buildings.

1961

15

Remote Arctic heavy civil construction, marine/barging, environmental remediation and quarry operations.

2003

52

Heavy construction, utilities, site restoration and development, civil construction and range development and construction. ANC 8(a).

2005

80

Design build construction and facilities construction. Design build construction management and vertical construction services. ANC 8(a).

2009

1

Residential construction for the Central Kenai Peninsula.

1983

3

Tenant improvements, commercial, residential, renovation and repair of damaged buildings, new construction, commercial, elevator installation and general contracting.

1971

886

Chugach Alaska Services Inc., a wholly-owned subsidiary of CAC, provides: Commercial Construction, Personnel Services, Service Commitment and Safety.

1992

75

Commercial building construction.

1976

150

Commercial construction and design-build.

Scott Johnson, Pres.

1989

6

Excavation contractor.

Beth Bergh, Owner

2000

12

Commercial and industrial doors, rolling doors, grilles, shutter. Fire-rated rolling door and accordion fire-rated side folding partitions. Flat wall partitions. Dock equipment. Hangar doors. Blast-resistant doors.

www.brechanenterprises.com

albab@briceinc.com www.bricecompanies.com

info@bristol-companies.com www.bcs.bristol-companies.com

info@bristol-companies.com www.bdbs.bristol-companies.com

bhc@aecak.org

cdfinc@alaska.net

bwelty@chugach-ak.com www.chugach-ak.com

traciel@criteriongeneral.com www.criteriongeneral.com

admin@davisconstructors.com www.davisconstructors.com

www.doorsystemsak.com

www.akbizmag.com • Alaska Business Monthly • March 2011

2011 CONSTRUCTION DIRECTORY

Construction

GENERAL CONTRACTORS

Company Top Executive Estab.

Company

Top Executive

Golden Heart Construction PO Box 72728 Fairbanks, AK 99707-2728 Phone: 907-458-9193 Fax: 907-458-9173

Craig Robinson, Pres.

Granite Construction Co. 11471 Lang St. Anchorage, AK 99515 Phone: 907-344-2593 Fax: 907-522-1270

Joe Spink, Regional Mgr.

Grayling Construction Corp.

7133 Arctic Blvd., # 2 Anchorage, AK 99518 Phone: 907-344-5733 Fax: 907-522-1637

Cody Lee, Co-Owner

Jay-Brant General Contractors 460 Grubstake Ave. Homer, AK 99603 Phone: 907-235-8400 Fax: 907-235-8731

C. Jay R. Brant, Principals

K & W Interiors 9300 Old Seward Hwy. Anchorage, AK 99515 Phone: 907-344-3080 Fax: 907-344-9862

Dale Kaercher, Pres.

K-C Corp.

2964 Commercial Dr. Anchorage, AK 99501 Phone: 907-258-2425 Fax: 907-278-8018

Byron Kohfield, Pres.

Kiewit Building Group Inc. 1577 C St., Ste. 101 Anchorage, AK 99501-5127 Phone: 907-222-9350 Fax: 907-222-9380

Kevin Welker, Sr. VP/AK Area Mgr.

AK Empls.

Services

AK Estab. Empls.

Services

1982

6

Commercial remodel and new construction.

1922

350

1997

7

General contractor, design/build, residential and commercial remodeling.

1983

25

Public works, military and commercial construction.

1985

15

K&W Interiors is a family owned business serving Alaska for over 25 years. We are a full service company with Alaska's largest showroom for all types of flooring and cabinetry.

We are a licensed, bonded, and insured general contractor and we do the it all from design to install.

1986

30

General contracting commercial/industrial . Specializing in light gage metal framing, sheetrock, taping, painting and specialty coatings.

1949

100

Commercial and industrial building projects throughout Alaska. State, federal, local government and health care.

craig@goldenheartconstruction.net

info@gcinc.com www.graniteconstruction.com

Public and private heavy civil and design-build, construction aggregates, recycled base, warm and hot mix asphalt, road construction, bridges, piling, and sitework.

www.graylingconstruction.Com

cjay@jaybrant.com jaybrant.com

knwinteriors@alaska.net www.k-winteriors.com

bkohfield@kccorporation.com

kbgalaska@kiewit.com www.kiewit.com/building

www.akbizmag.com • Alaska Business Monthly • March 2011

91

2011 CONSTRUCTION DIRECTORY

Construction

GENERAL CONTRACTORS

Company Top Executive Estab.

Company

Top Executive

Knik Construction Co. Inc. 6441 S. Airpark Pl. Anchorage, AK 99502-1809 Phone: 907-245-1865 Fax: 907-245-1744

Steve Jansen, Pres.

KUK Construction LLC 360 W. Benson Blvd., Ste. 302 Anchorage, AK 99503 Phone: 907-562-8708 Fax: 907-562-8751

Tom Tyler, Gen. Mgr.

Loken Construction LLC 5425 Cope St. #B Anchorage, AK 99518 Phone: 907-868-8880 Fax: 907-563-8881

Tyler Loken, Pres.

Neeser Construction Inc. 2501 Blueberry Rd., Ste.100 Anchorage, AK 99503 Phone: 907-276-1058 Fax: 907-276-8533

Jerry Neeser, Pres.

North Country Builders of Alaska 440 S. Denali St. Wasilla, AK 99654 Phone: 907-373-7060 Fax: 907-373-7061

Thomas Smith, Pres.

Northern Dame Construction PO Box 871131 Wasilla, AK 99867 Phone: 907-376-9607 Fax: 907-373-4704

Doris Coy, Owner

Northland Wood Products 1510 E. 68th Ave. Anchorage, AK 99507 Phone: 907-452-4000 Fax: 907-452-1391

James Enochs, Anchorage Mgr.

Osborne Construction Co. 3701 Braddock St. Fairbanks, AK 99701 Phone: 907-451-0079 Fax: 907-451-1146

George Osborne, Pres.

Pacific Pile & Marine 602B East Whitney Road Anchorage, AK 99501 Phone: 907-276-3873 Fax: 206-774-5958

Wil Clark, Managing Partner

Paug-Vik Development Corp.

PO Box 429 Naknek, AK 99633 Phone: 907-258-1345 Fax: 907-222-5423

Maurice Labrecque, Gen. Mgr.

PCL Construction Services Inc. 1400 W. Benson Blvd., Ste. 510 Anchorage, AK 99503 Phone: 907-243-7252 Fax: 907-272-1905

H. Scott Ivany, Construction Mgr.

Price Gregory International 301 W. Northern Lights Blvd., Ste. 300 Anchorage, AK 99503 Phone: 907-278-4400 Fax: 907-278-3255

David Matthews, VP, AK Area Mgr.

Pruhs Construction 2193 Viking Dr. Anchorage, AK 99501 Phone: 907-279-1020 Fax: 907-279-1028

Dana Pruhs, CEO

R H Development LLC PO Box 32403 Juneau, AK 99803 Phone: 907-790-4146 Fax: 907-790-4147

Richard A Harris, Managing Member

Ridge Contracting Inc. PO Box 240121 Anchorage, AK 99524 Phone: 907-222-7518 Fax: 907-272-2290

Drew V. McLaughlin, Pres.

Roger Hickel Contracting Inc. 11001 Calaska Cir. Anchorage, AK 99515 Phone: 907-279-1400 Fax: 907-279-1405

Mike Shaw, Pres.

92

AK Empls.

Services

AK Estab. Empls.

Services

1973

70

Knik Construction is a general heavy construction company specializing in remote-site projects. Knikﾃ不 experience includes heavy construction, road building, asphalt paving, foamed asphalt treated bases, airport construction and reconstruction, excavation, crushing and transportation.

1999

39

Provides pre-construction, construction and construction management services for government and commercial clients. KUK personnel have extensive experience with Job Order and Task Order contracts and a broad range of international experience.

2002

14

Light commercial and residential framing and steel siding, general contracting, and boom truck services.

1975

268

General contracting firm.

1998

6

Commercial and residential general contractor for new, remodel and all phases of construction.

1992

15

Excavation, site development, subdivision roads, clearing, septics and traffic control services.

1965

20

Building supplier. Produce WWPA-graded surfaced lumber, rough lumber, large timber and house logs. Stocks materials to fulfill all building needs from the foundation piers to the roof screws.

1987

173

General contractor focusing on design/build housing, commercial, industrial, civil and military projects for state and federal agencies.

2008

100

Pacific Pile & Marine specializes in marine construction, pile driving, dredging, and heavy civil structures. Pacific is dedicated to safety and quality. In addition to performing hard bid public works Pacific excels at meeting the unique needs of our private and design build clients.

1996

7

General contracting and environmental services.

1903

21

Buildings: Civil infrastructure, Heavy industrial. The PCL family of companies has a century-long tradition of excellence, hard work and a can-do attitude. They are construction leaders in buildings, civil infrastructure and heavy industrial markets.

1974

250

Pipeline, power, heavy industrial construction, EPC and consulting services.

Infrastructure construction services provider.

1958

150

Heavy Civil contractor, roads, airports, underground utilities, telecomunications.

1992

5

Residential and light commercial construction and development. All aspects of construction and development. Certified green professional and member of SEBIA.

2000

10

Heavy civil, road construction, fuel system installation and removal, contaminated sites clean up and remediation, demolition, underground construction, and remote work throughout Alaska.

1995

75

General contractor - commercial and road work.

information@lynden.com www.lynden.com/knik/

kukinfo@olgoonik.com www.kukconstruction.com

info@lokenconstructionak.com www.lokenconstructionak.com

jerry_neeser@neeserinc.com www.neeserinc.com

tsmith@northcountrybuilders.com www.northcountrybuilders.com

doris@northerndame.com

northlandwood@acsalaska.net northlandwood.com

occ@osborne.cc www.osborne.cc

jasond@pacificpile.com www.pacificpile.com

pdcnaknek.com

lpgire@pcl.com www.pcl.com

dmatthews@pricegregory.com www.pricegregory.com

dana@pruhscorp.com www.pruhscorp.com

info@rhdalaska.com www.rhdalaska.com

drew@ridgecontracting.org www.ridgecontracting.org

contact@rogerhicklecontracting.com www.rogerhickelcontracting.com

www.akbizmag.com 窶｢ Alaska Business Monthly 窶｢ March 2011

2011 CONSTRUCTION DIRECTORY

Construction

GENERAL CONTRACTORS

Company Top Executive Estab.

Company

Top Executive

Spinell Homes Inc. 1900 W. Northern Lights Blvd., Ste. 200 Anchorage, AK 99517 Phone: 907-344-5678 Fax: 907-344-1976

Charles Spinelli, Pres.

STG Incorporated 11820 S. Gambell St. Anchorage, AK 99515 Phone: 907-644-4664 Fax: 907-644-4666

James St. George, Pres.

Tunista Construction LLC 745 W. 4th Ave., Suite 306 Anchorage, AK 99501 Phone: 907-644-6311 Fax: 907-646-2244

Josh Herren, Pres.

UIC Construction LLC 6700 Arctic Spur Rd. Anchorage, AK 99518 Phone: 907-762-0100 Fax: 907-762-0131

Jim Cehula, Gen. Mgr.

UNIT Company 620 E. Whitney Rd. Anchorage, AK 99501 Phone: 907-349-6666 Fax: 907-522-3464

Michael J. Fall, Pres.

Watterson Construction Co. 6500 Interstate Cir. Anchorage, AK 99518 Phone: 907-563-7441 Fax: 907-563-7222

Bill Watterson, Pres.

AK Empls.

Services

AK Estab. Empls.

Services

1987

25

New home and light commercial construction.

1991

60

Renewable energy systems, tower construction, power generation and distribution facilities, pile foundations and bulk-fuel systems.

2009

3

We are a commercial general contractor that offers vertical and civil construction, design-build, remote Alaska projects, and construction management. Our bonding and support from Calista Corporation allows us to do small or large projects. We will act as prime or subcontract as well.

1978

30

Remote site vertical and civil construction.

1977

75

Commercial general contractor.

1981

90

General building contractor.

spinell@spinellhomes.com www.spinellhomes.com

info@stgincorporated.com www.stgincorporated.com

rgluth@tunistaconstruction.com www.tunistaconstruction.com

cehula@ukpik.com www.ukpik.com

info@unitcompany.com www.unitcompany.com

info@wattersonsconstruction.com www.wattersonconstruction.com

©The Valdez Museum and Historical Archive

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www.pafak.com 800.426.9940 Anchorage 336.2567 Fairbanks 452.7971 Kenai 262.6137 Kodiak 486.8501 www.akbizmag.com • Alaska Business Monthly • March 2011

93

2011 CONSTRUCTION DIRECTORY

Construction

ELECTRICAL CONTRACTORS

Top Executive Company Top Executive Estab.

AK AK Empls.

Services Estab. Empls.

Services

Company

Anchor Electric 5362 Commercial Blvd.

Juneau, AK 99801 Phone: 907-780-3690 Fax:907-780-3692

Bill Shattenberg, Owner

Bright Electric 1410 Richardson Hwy. North Pole, AK 99705 Phone: 907-479-3321 Fax:907-488-5033

Paul Koop, Owner/Pres.

City Electric Inc. 819 Orca St. Anchorage, AK 99501 Phone: 907-272-4531 Fax:907-264-6491

Gabriel Marian, Pres.

Ever Electric Inc. 5351 Commercial Blvd.

Juneau, AK 99801 Phone: 907-780-2280 Fax:907-780-2288

Jerry Gabor, Pres.

Fullford Electric 303 E. Van Horn Rd. Fairbanks, AK 99701 Phone: 907-456-7356 Fax:907-456-7288

Michael J Fullford, Pres.

Power & Light Inc. 7721 Schoon St., # 1 Anchorage, AK 99518 Phone: 907-522-5678 Fax:907-349-5678

Todd Houston, Pres.

Raven Electric Inc. 8015 Schoon St. Anchorage, AK 99518 Phone: 907-349-9668 Fax:907-522-3995

Art Stemen, Manager

STG Incorporated 11820 S. Gambell St. Anchorage, AK 99515 Phone: 907-644-4664 Fax:907-644-4666

James St. George, Pres.

The Superior Group Inc. PO Box 230387 Anchorage, AK 99523 Phone: 907-344-5011 Fax:907-344-5094

Michael Blake, Pres./Gen. Mgr.

Construction

1982

14

Industrial and commercial electrical wiring.

1992

10

Full-service electrical provider.

1946

125

Electrical and communications contracting NAICS; 237130, 238210.

1995

11

Electrical Contractors

1975

58

FEI is a full service electrical and communications contractor.

2004

12

Commercial, residential and industrial electrical installations. Automation, audio, video, CCTV security systems, fire detection and controls.

1978

38

Full service electrical company, residential commercial, industrial and generators.

1991

60

Renewable energy systems, tower construction, power generation and distribution facilities, pile foundations and bulk-fuel systems.

1964

218

Full service mechanical, HVAC, plumbing, electrical and maintenance contractor.

sue@anchoralaska.com www.anchoralaska.com

bsi@alaska.net

gabrielm@cityelectricinc.com www.cityelectricinc.com

ever@gci.net

mike@fullfordelectric.com

toddhouston@alaska.net www.Powerandlight.Biz

www.ravenelectricinc.com

info@stgincorporated.com www.stgincorporated.com

tmentzer@superiorpnh.com www.superiorpnh.com

MECHANICAL CONTRACTORS

Company Top Estab.

Company TopExecutive Executive Estab.

Air Temp Alaska 5406 Lake Otis Pkwy.

Anchorage, AK 99507 Phone: 907-349-4503 Fax: 907-344-1230

Dana Bertolini, Pres.

Altrol Inc 2295 Van Horn Rd. Fairbanks, AK 99701 Phone: 907-452-8680 Fax: 907-452-6778

David A. Bridges, Pres./Gen. Mgr.

Arctic Refrigeration & A/C 720 W. 58th Ave., Ste. J Anchorage, AK 99518 Phone: 907-562-8856 Fax: 907-562-8857

Bobby Gordon, Pres./Owner

Behrends Mechanical Inc 1782 Anka St. Juneau, AK 99801 Phone: 907-780-6766 Fax: 907-780-6063

Richard Behrends, Pres.

Circle Plumbing & Heating Inc 2317 Raspberry Rd Anchorage, AK 99502 Phone: 907-243-2171 Fax: 907-248-6135

Ken Embley, Pres.

Eayrs Plumbing & Heating 1208 Lake Shore Dr. Homer, AK 99603 Phone: 907-235-2333 Fax: 907-235-3866

Steve Eayrs, Owner

94

AK AK Empls.

Services Empls.

Services

1991

12

Service, repair and maintenance of commercial and residential heating and air conditioning systems; airflow, ventilation, controls and trouble-shooting.

1982

36

Heating, ventilation, air conditioning, sheet metal and refrigeration contractor and service company.

1991

21

Sales, service and installation of commercial refrigeration equipment and HVAC. Refrigeration contractor.

1994

12

Mechanical contractors.

1971

32

Commercial and residential plumbing and heating repairs and new construction.

1990

14

Boiler systems, radiant heat, renewable energy components, including solar, HRV systems, complete plumbing needs, commercial and residential, new construction and remodel.

www.airtempalaska.com

dave@altrolinc.com www.altrolinc.com

arcticrefrigeration@acsalaska.net www.arcticrefrigeration.biz

behrendsmech@gci.net www.behrendsmech.com

circle@alaska.net www.circleplumbingandheating.com

www.eayrsplumbingandheating.com

www.akbizmag.com • Alaska Business Monthly • March 2011

2011 CONSTRUCTION DIRECTORY

Construction

MECHANICAL CONTRACTORS

Company Top Executive Estab.

AK Empls.

Services

AK Estab. Empls.

Company

Top Executive

Industrial Service Corp.

2017 S. Cushman St. Fairbanks, AK 99701 Phone: 907-456-7663 Fax: 907-452-2824

W.C. Simmons, Owner

1966

8

Mechanical contractor.

Klebs Heating & Air 1107 E. 72nd Ave. Anchorage, AK 99518 Phone: 907-365-2500 Fax: 907-365-2540

Gary Klebs, Pres./CEO

1986

85

HVAC, Hydronic Heat, Lennox dealer, sheet metal shop, commercial-residential service, commercial-residential plumbing, commercial-residential duct cleaning, commercial new construction & renovation. Residential heating system retrofits. Indoor air quality systems.

Schmolck Mechanical Contractors Inc. PO Box 3084 Sitka, AK 99835 Phone: 907-563-2242 Fax: 907-563-6139

Gary Smith, VP

1927

35

Mechanical contracting - HVAC, piping and plumbing.

The Superior Group Inc. PO Box 230387 Anchorage, AK 99523 Phone: 907-344-5011 Fax: 907-344-5094

Michael Blake, Pres./Gen. Mgr.

1964

218

Full service mechanical, HVAC, plumbing, electrical and maintenance contractor.

Construction

info@klebsheating.com www.klebsheating.com

Services

gary@schmolckmechanical.com www.schmolckmechanical.com

tmentzer@superiorpnh.com www.superiorpnh.com

SPECIALTY CONTRACTORS

AK

AK Company TopExecutive Executive Estab. Empls.

Empls.

Services Company Top Estab.

Services 4c Improvements 2633 Kelsan Cir. Anchorage, AK 99508 Phone: 907-727-5269 Fax: 907-345-0682

Michael E. Bennett, Owner/Pres.

Active Inspection & Energy LLC 529 South Knik St. Wasilla, AK 99654 Phone: 907-376-0402 Fax: 907-376-0492

Carol J. Perkins, Owner

Alaska Concrete Casting 5761 Concrete Way Juneau, AK 99801 Phone: 907-780-4225 Fax: 907-780-4230

Dave Hanna, Proprietor

Alaska Countertops Inc. 122 W. 92nd Ave. Anchorage, AK 99515 Phone: 907-561-9299 Fax: 907-561-9298

John Anderson, Pres.

Alaska Crane Ltd. 11900 S. Gambell St. Anchorage, AK 99515 Phone: 907-522-9004 Fax: 907-522-9047

James St. George, Pres.

Alaska Elevator Co Sales & Service 1220 E. 68th Ave, Suite 104 Anchorage, AK 99518 Phone: 907-561-3100 Fax: 907-569-2515

Gerry Farnich, Pres.

Harvey Borchardt

Alaska Premier Closets LLC 301 E. Ship Creek Ave. Anchorage, AK 99501 Phone: 907-278-2288 Fax: 907-278-2330

Luis Suarez, Owner/Partner

Arctic Refrigeration & A/C 720 W. 58th Ave., Ste. J Anchorage, AK 99518 Phone: 907-562-8856 Fax: 907-562-8857

Bobby Gordon, Pres./Owner

Aurora Glass 1025 Orca St., # N5 Anchorage, AK 99501 Phone: 907-277-1058 Fax: 907-274-2509

Anthony D. DeLucia, Owner

Cabinet Fever Inc. 4551 Fairbanks St., #C Anchorage, AK 99503 Phone: 907-349-4871 Fax: 907-349-4891

Kurt Vincent Echols, Pres.

Capitol Glass/Northerm Windows 2300 E. 63rd Ave. Anchorage, AK 99507 Phone: 907-272-4433 Fax: 907-272-3747

Walt Murphy, Gen. Mgr.

1983

1

Complete remodeling - kitchen, baths, office, reconfigure room structure, etc.

2001

3

Residential inspections and energy ratings. Commercial inspections soon to come.

2004

4

Full service precast concrete supplier, furnishing utility, traffic and retaining wall products as well as custom casting, building panels and foundation systems. Rebar fabrication and supply house stocking 20' and 40' bar in #2 through # 10 bar. Detailing, bending and cage tying services

1996

18

Furnish only or fabrication and installation of laminate, solid surface, quartz, and granite countertops, sills, tub/shower surrounds, fire place hearth/mantle.

2001

4

Crane services and heavy lifting.

1998

5

We sell, install and service home elevators, some commercial elevators, stair-lifts, wheelchair-lifts, dumbwaiters, and conveyors throughout the state of Alaska

2003

7

Alaska Premier Closets provides residential and commercial custom storage solutions.

1991

21

Sales, service and installation of commercial refrigeration equipment and HVAC. Refrigeration contractor.

1991

4

Glass repair and replacement, windows and doors, all types, shower doors and mirrors.

1999

7

Commercial and residential custom cabinet shop producing high-end custom kitchen cabinets, counter tops and installation as well as custom furniture, entertainment centers, reception desks, medical, dental and retail casework, store fixtures. Also carry two lines manufactured residential cabinets.

1951

47

Manufacturer of high quality vinyl windows, insulated glass units. Commercial aluminum, Skylites, shower doors. All types of glass replacement. Sliding patio doors, Garden Terrace door systems. Loewen window dealer.

jamiemb@acsalaska.net

office@activeinspections.net www.activeinspections.net

alaskaconcretecasting@gci.net

www.alaskacountertops.com

akcrane@gci.net www.alaskacraneltd.com

alaskaelevator@gci.net

alaskapremierclosets@alaska.net www.akclosets.com

arcticrefrigeration@acsalaska.net www.arcticrefrigeration.biz

auroraglass@acsalaska.net auroraglassak@acsalaska.net

sales@cabinetfever.net www.cabinetfever.net

www.cgnw.com

www.akbizmag.com • Alaska Business Monthly • March 2011

95

2011 CONSTRUCTION DIRECTORY

Construction

SPECIALTY CONTRACTORS

Company Top Executive Estab.

Company

Top Executive

CCI Industrial Services, LLC 111 West 16th Avenue, Ste. 100 B Anchorage, AK 99501 Phone: 907-258-5755 Fax: 907-770-9452

Ben Schoffmann, Pres./CEO

City Electric Inc. 819 Orca St. Anchorage, AK 99501 Phone: 907-272-4531 Fax: 907-264-6491

Gabriel Marian, Pres.

Denali Crane Inspection LLC PO Box 92291 Anchorage, AK 99509 Phone: 907-245-0261 Fax: 907-276-0608

AK Empls.

Services

AK Estab. Empls.

Services

1988

120

Asbestos and lead surveys and abatement; specialty coatings and sandblasting; corrosion under insulation refurbishment; oil spill response; tank and vessel cleaning; hazardous waste removal; operations, maintenance and construction; biodegradable cleaning solutions.

1946

125

Electrical and communications contracting NAICS; 237130, 238210.

Darren Folkers, Pres.

2008

2

Crane inspections, load testing, dielectric testing of bucket trucks and hotsticks, technical training.

Door Systems of Alaska Inc. 18727 Old Glenn Hwy. Chugiak, AK 99567 Phone: 907-688-3367 Fax: 907-688-3378

Beth Bergh, Owner

2000

12

Commercial and industrial doors, rolling doors, grilles, shutter. Fire-rated rolling door and accordion fire-rated side folding partitions. Flat wall partitions. Dock equipment. Hangar doors. Blast-resistant doors.

Glacier Painting & Decorating 7721 Schoon St., # 4 Anchorage, AK 99518 Phone: 907-344-8988 Fax: 907-344-3302

Horace Byes Sr.

1985

5

Taping and painting.

Granite City Alaska 10901 Mausel St., # 103 Eagle River, AK 99577 Phone: 907-694-6900 Fax: 907-694-6912

Barry Anderson, VP

2005

10

Fabrication and installation of granite, quartz, solid surface countertops.

Hawk Consultants LLC 670 W. Fireweed Ln. Anchorage, AK 99503 Phone: 907-278-1877 Fax: 907-278-1889

Maynard Tapp, Managing Member

1985

80

Consulting services, project control, management, cost engineers, QA/QC consultants, maintenance coordinators, supervision/project coordinators.

K & W Interiors 9300 Old Seward Hwy. Anchorage, AK 99515 Phone: 907-344-3080 Fax: 907-344-9862

Dale Kaercher, Pres.

1985

15

K&W Interiors is a family owned business serving Alaska for over 25 years. We are a full service company with Alaska's largest showroom for all types of flooring and cabinetry.

We are a licensed, bonded, and insured general contractor and we do the it all from design to install.

KUK Construction LLC 360 W. Benson Blvd., Ste. 302 Anchorage, AK 99503 Phone: 907-562-8708 Fax: 907-562-8751

Tom Tyler, Gen. Mgr.

1999

39

Provides pre-construction, construction and construction management services for government and commercial clients. KUK personnel have extensive experience with Job Order and Task Order contracts and a broad range of international experience.

Magic Metals Inc. 530 E. Steel Loop Palmer, AK 99645 Phone: 907-746-7800 Fax: 907-746-7802

Joan Tolstrup, Pres.

1990

6

Magic Metals Inc. manufactures a variety of roofing and architectural metal products as well as custom trim and accessories. We are open to retail and wholesale customers and offer great customer service and quick turn around. Perforation on panels and trim is available.

NANA Pacific LLC 3150 C St., Ste. 250 Anchorage, AK 99503-3980 Phone: 907-257-1700 Fax: 907-561-2991

Joe B. Mathis, Pres.

2001

180

Homeland security, emergency response services, interoperable communications, operations center support, logistical services

Northern Dame Construction PO Box 871131 Wasilla, AK 99867 Phone: 907-376-9607 Fax: 907-373-4704

Doris Coy, Owner

1992

15

Excavation, site development, subdivision roads, clearing, septics and traffic control services.

Olgoonik Specialty Contractors LLC 360 W. Benson Blvd., Ste. 302 Anchorage, AK 99503 Phone: 907-562-8712 Fax: 907-562-8751

Marty Miksch, Pres.

2006

30

Provides pre-construction, construction and construction management services for government and commercial clients. OSC has proven success with SABER, Job Order and Task Order Contracts, and is U.S. General Services Administration MATOC contractor.

Prestige Stone & Tile 11221 Olive Ln. Anchorage, AK 99515 Phone: 907-929-2523 Fax: 907-349-0164

Michael James Russo, Pres.

2006

5

Granite, marble, limestone, travertine and quartz countertops.

Refrigeration & Food Equipment Inc. 1901 W Tudor Rd. Anchorage, AK 99517 Phone: 907-248-2525 Fax: 907-243-6709

Dave Agosti, VP

1965

8

Sales & service for commercial restaurant & refrigeration equipment; subcontracting for commercial kitchens & exhaust hood systems; parts & repair service for restaurant equip., scientific refrigeration equipment; installation of commercial kitchen exhaust hood systems and stainless steel equipment.

Ridge Contracting Inc. PO Box 240121 Anchorage, AK 99524 Phone: 907-222-7518 Fax: 907-272-2290

Drew V. McLaughlin, Pres.

2000

10

Heavy civil, road construction, fuel system installation and removal, contaminated sites clean up and remediation, demolition, underground construction, and remote work throughout Alaska.

96

info@CCIindustrial.com www.cciindustrial.com

gabrielm@cityelectricinc.com www.cityelectricinc.com

www.doorsystemsak.com

glacierpd@ak.net www.glacierpaintingakla.com

gc2@mtaonline.net

info@hawkpros.com www.hawkpros.com

knwinteriors@alaska.net www.k-winteriors.com

kukinfo@olgoonik.com www.kukconstruction.com

magicmetals@mtaonline.net www.magicmetalsinc.com

info@nanapacific.com www.nanapacific.com

doris@northerndame.com

mmiksch@olgoonik.com www.olgoonik.com

prestigestone@alaska.net www.prestigestonetile.com

salesrfei@gci.net www.refrigerationfoodequip.com

drew@ridgecontracting.org www.ridgecontracting.org

www.akbizmag.com • Alaska Business Monthly • March 2011

2011 CONSTRUCTION DIRECTORY

Construction

SPECIALTY CONTRACTORS

Company Top Executive Estab.

Company

Top Executive

Rizzo & Co. 1115 Whitney Rd. Anchorage, AK 99501 Phone: 907-522-9855 Fax: 907-522-9856

Valerie A. Rizzo, Principal Designer

Southeast Interiors 3721 Sanders St. Juneau, AK 99801 Phone: 907-789-0480 Fax: 907-789-9480

Albert Christensen, Pres.

STG Incorporated 11820 S. Gambell St. Anchorage, AK 99515 Phone: 907-644-4664 Fax: 907-644-4666

James St. George, Pres.

Washington Crane & Hoist 1200 E. 76th Ave. Anchorage, AK 99518 Phone: 907-336-6661 Fax: 907-336-6667

Mike Currie, VP

Construction

AK Empls.

Services

AK Estab. Empls.

Services

1996

5

1981

515

Drywall finishing, painting and wallcoverings.

1991

60

Renewable energy systems, tower construction, power generation and distribution facilities, pile foundations and bulk-fuel systems.

1975

30

Crane builders, crane design, new crane sales, new hoist sales, lifting equipment design and sales. material handling solutions for industry, hoists, job cranes, work stations, chain falls, lever hoists, crane upgrades, crane maintenance, crane inspection, crane repair, hoist repair, crane parts.

rizzo@gci.net www.kitchensbyrizzo.com

Custom kitchen design service and sales. Retail showroom for Woodmode, Omega, Pacificcrest and Woodland cabinets, Wolf and Sub-zero appliances, plumbing and granite.

sei@alaska.net

info@stgincorporated.com www.stgincorporated.com

www.washingtoncrane.com

COMMERCIAL/INDUSTRIAL SUPPLIERS

Company TopExecutive Executive Estab.

Company Top Estab.

Alaska Concrete Casting 5761 Concrete Way Juneau, AK 99801 Phone: 907-780-4225 Fax: 907-780-4230

Dave Hanna, Proprietor

Alaska Hearth Products 8600 Airport Blvd.

Juneau, AK 99801 Phone: 907-789-1332 Fax: 907-789-5132

Larry Traeger, Owner

Altrol Inc 2295 Van Horn Rd. Fairbanks, AK 99701 Phone: 907-452-8680 Fax: 907-452-6778

David A. Bridges, Pres./Gen. Mgr.

Architectural Supply Co. Inc. 3699 Springer St. Anchorage, AK 99503 Phone: 907-561-1919 Fax: 907-562-5540

AK AK Empls.

Services Empls.

Services

2004

4

Full service precast concrete supplier, furnishing utility, traffic and retaining wall products as well as custom casting, building panels and foundation systems. Rebar fabrication and supply house stocking 20' and 40' bar in #2 through # 10 bar. Detailing, bending and cage tying services

1984

6

Retail and service of pellet, wood, gas, oil stoves and inserts. Pellet fuel.

1982

36

Heating, ventilation, air conditioning, sheet metal and refrigeration contractor and service company.

Jennifer Mattingly, AHC, Pres.

1977

7

Supplier of Division 8 & 10 - commercial doors, frames, hardware, toilet partitions and toilet accessories.

Arctic Controls Inc. 1120 E. 5th Ave. Anchorage, AK 99501 Phone: 907-277-7555 Fax: 907-277-9295

Scott Allan Stewart, Pres.

1985

4

Arctic Controls Inc. is Alaska's leading expert in valves, flow meters, actuators, instrumentation, and process controls for commercial oil, gas, and water management.

Providing professional expertise for all commercial applications and can assist you with estimates and recommendations.

ATCO Structures & Logistics Ltd. 425 G St. Anchorage, AK 99501 Phone: 907-677-6983 Fax: 907-677-6984

Harry Wilmot, Pres./COO

1947

2

ATCO Structures & Logistics offers complete infrastructure solutions to customers worldwide, including remote work force housing, portable offices and trailers, innovative modular facilities, construction, site support services, operations support, catering and noise reduction technologies.

Aurora Construction Supply Inc. PO Box 83569 Fairbanks, AK 99708 Phone: 907-452-4463 Fax: 907-456-3414

R L "Dick" Engebretson, Pres.

1978

2

Specialty items in Division 10.

Aurora Glass 1025 Orca St., # N5 Anchorage, AK 99501 Phone: 907-277-1058 Fax: 907-274-2509

Anthony D. DeLucia, Owner

1991

4

Glass repair and replacement, windows and doors, all types, shower doors and mirrors.

Cabinet Fever Inc. 4551 Fairbanks St., #C Anchorage, AK 99503 Phone: 907-349-4871 Fax: 907-349-4891

Kurt Vincent Echols, Pres.

1999

7

Commercial and residential custom cabinet shop producing high-end custom kitchen cabinets, counter tops and installation as well as custom furniture, entertainment centers, reception desks, medical, dental and retail casework, store fixtures. Also carry two lines manufactured residential cabinets.

Capitol Glass/Northerm Windows 2300 E. 63rd Ave. Anchorage, AK 99507 Phone: 907-272-4433 Fax: 907-272-3747

Walt Murphy, Gen. Mgr.

1951

47

Manufacturer of high quality vinyl windows, insulated glass units. Commercial aluminum, Skylites, shower doors. All types of glass replacement. Sliding patio doors, Garden Terrace door systems. Loewen window dealer.

Dibble Creek Rock 34481 North Fork Rd. Anchor Point, AK 99556 Phone: 907-235-7126 Fax: 907-235-0682

Cheryl Shafer

1984

12

We own a portable crushing plant and crush material in the bush. At our home plant on the Kenai Peninsula in Anchor Point besides crushing gravel we also operate a wash plant and produce washed gravel products and also own a batch plant and furnish ready mix.

alaskaconcretecasting@gci.net

ahp@gci.net www.alaskahearthproducts.com

dave@altrolinc.com www.altrolinc.com

customerservice@arcticcouriers.com www.arcticcontrols.com

atco@atcosl.com www.atcosl.com

aurorasupply@gci.net

auroraglass@acsalaska.net auroraglassak@acsalaska.net

sales@cabinetfever.net www.cabinetfever.net

www.cgnw.com

cheryl@dibblecreekrock.com dibblecreekrock.com

www.akbizmag.com • Alaska Business Monthly • March 2011

97

2011 CONSTRUCTION DIRECTORY

Construction

COMMERCIAL/INDUSTRIAL SUPPLIERS

Company Top Executive Estab.

Company

Top Executive

Door Systems of Alaska Inc. 18727 Old Glenn Hwy. Chugiak, AK 99567 Phone: 907-688-3367 Fax: 907-688-3378

Beth Bergh, Owner

Doors/Windows 43961 Kalifornsky Beach Rd., # C Soldotna, AK 99669 Phone: 907-262-9151 Fax: 907-262-6433

AK Empls.

Services

AK Estab. Empls.

Services

2000

12

Commercial and industrial doors, rolling doors, grilles, shutter. Fire-rated rolling door and accordion fire-rated side folding partitions. Flat wall partitions. Dock equipment. Hangar doors. Blast-resistant doors.

John Straume, Pres.

1979

13

Commercial storefront, commercial overhead doors, Kawneer and commercial hardware.

Hayden Electric Motors Inc. 4191 Old Seward Hwy. Anchorage, AK 99503 Phone: 907-561-1073 Fax: 907-561-5867

Roger Saunders, VP/Gen. Mgr.

1959

12

Sales, service and rewinding of electric motors and generators and associated equipment. On-site service calls. Re-Certification of explosion-proof motors.

Magic Metals Inc. 530 E. Steel Loop Palmer, AK 99645 Phone: 907-746-7800 Fax: 907-746-7802

Joan Tolstrup, Pres.

1990

6

Magic Metals Inc. manufactures a variety of roofing and architectural metal products as well as custom trim and accessories. We are open to retail and wholesale customers and offer great customer service and quick turn around. Perforation on panels and trim is available.

Motion Industries (Anchorage) 611 E. International Airport Rd. Anchorage, AK 99518 Phone: 907-563-5565 Fax: 907-563-5536

Chris Ransom, Anchorage Mgr.

2007

3

A leading distributor of industrial maintenance, repair and operation (MRO) replacement parts (more than 4.1 million parts) including bearings, power transmission components, hydraulic & pneumatic components, hydraulic & industrial hose, industrial supplies, material handling, process pumps & more.

Prestige Stone & Tile 11221 Olive Ln. Anchorage, AK 99515 Phone: 907-929-2523 Fax: 907-349-0164

Michael James Russo, Pres.

2006

5

Granite, marble, limestone, travertine and quartz countertops.

Rizzo & Co. 1115 Whitney Rd. Anchorage, AK 99501 Phone: 907-522-9855 Fax: 907-522-9856

Valerie A. Rizzo, Principal Designer

1996

5

Custom kitchen design service and sales. Retail showroom for Woodmode, Omega, Pacificcrest and Woodland cabinets, Wolf and Sub-zero appliances, plumbing and granite.

Spenard Builders Supply Inc. 810 K St., Ste. 200 Anchorage, AK 99501 Phone: 907-261-9120 Fax: 907-261-9142

Ed Waite, Pres.

1952

750

Thermo-Kool of Alaska Inc. PO Box 220567 Anchorage, AK 99522 Phone: 907-376-3644 Fax: 907-373-2758

Dick Divelbiss

1977

9

Manufacture cellulose insulation, hydroseed mulch, animal bedding and absorbents.

US Bearings & Drives/Motion Industries 1895 Van Horn Rd., Unit A Fairbanks, AK 99701 Phone: 907-452-4488 Fax: 907-456-8840

Brad DeWeese, Fairbanks Mgr.

1970

3

A leading industrial maintenance, repair, and operation (MRO) replacement parts distributor (more than 4.1 million parts) including bearings, power transmission components, electrical, hydraulic & pneumatic components, hydraulic & industrial hose, industrial supplies, material handling, and more.

Valley Sawmill 10600 Cordova St. Anchorage, AK 99515 Phone: 907-563-3436 Fax: 907-522-3980

Greg Bell

1979

5

Mill heavy timbers, house logs, rough lumber.

Waste Management 310 K St., Ste. 200 Anchorage, AK 99501 Phone: 907-264-6784 Fax: 907-264-6602

Mike Holzschuh, Alaska Manager

1969

1

Hazardous and nonhazardous waste disposal, project management, complete logistical oversight, complete U.S. and Canadian manifesting, rail transportation, over-the-road transportation, marine transportation and turnkey remedial services.

Construction

www.doorsystemsak.com

www.hayden-ak.Com

magicmetals@mtaonline.net www.magicmetalsinc.com

www.motionindustries.com

prestigestone@alaska.net www.prestigestonetile.com

rizzo@gci.net www.kitchensbyrizzo.com

info@sbsalaska.com www.sbsalaska.com

sales@thermo-koolofalaska.com www.thermo-koolofalaska.com

www.motionindustries.com

www.valleysawmill.com

mholzschuh@wm.com www.wm.com

HEAVY EQUIPMENT DEALERS

Company TopExecutive Executive Estab.

Company Top Estab.

Airport Equipment Rentals 5904 Old Airport Rd. Fairbanks, AK 99709 Phone: 907-456-2000 Fax: 907-457-7609

Jerry Sadler, Owner/Pres.

Brice Equipment LLC (Volvo Rents) 1725 Badger Road North Pole, AK 99705 Phone: 907-452-2512 Fax: 907-452-5018

Matthew Brice, Pres.

Cold Spot Rentals Inc. 310 Birch Hill Rd. Fairbanks, AK 99712 Phone: 907-457-3226 Fax: 907-457-4546

Connie Dubay, Pres./CEO

98

Provides a full line of building materials and home-improvement products to fill the needs of residential and commercial contractors, remodelers and homeowners.

1985

AK AK Empls.

Services Empls.

Services 105

Sell, rent, service heavy construction equipment.

aerinc4@alaska.net www.aer-inc.net 2006

Equipment Rental: snowblower (loader mounted), loaders, skid steers, articulated trucks, generators (6.6 - 800 kw), compressors, light plants, logsplitters, excavators, trailers, service trucks and heaters.

matthew.brice@volvorents.com www.bricecompanies.com

mdubay@coldspotrentals.com www.coldspotrentals.com

1983

7

Everything from small hand tools to heavy equipment. Tools for auto, carpentry, plumbing, electrical, concrete, drywall, painting, lawn care and farm. Equipment for excavation, compaction and trenching. Tilt and drop deck trailers, car trailers, utility trailers.

www.akbizmag.com • Alaska Business Monthly • March 2011

2011 CONSTRUCTION DIRECTORY

Construction

HEAVY EQUIPMENT DEALERS

Company Top Executive Estab.

Company

Top Executive

Construction Machinery Industrial LLC 5400 Homer Dr. Anchorage, AK 99518 Phone: 907-563-3822 Fax: 907-563-1381

Ken Gerondale, Pres./CEO

Craig Taylor Equipment 733 E. Whitney Rd. Anchorage, AK 99501 Phone: 907-276-5050 Fax: 907-276-0889

Lonnie Parker, Pres.

Delta Leasing LLC 4040 B St., Ste. 200 Anchorage, AK 99503 Phone: 907-771-1300 Fax: 907-771-1380

Tom Corkran, CEO

Motion Industries (Anchorage) 611 E. International Airport Rd. Anchorage, AK 99518 Phone: 907-563-5565 Fax: 907-563-5536

Chris Ransom, Anchorage Mgr.

N C Machinery Co./CAT Rental Store 6450 Arctic Blvd.

Anchorage, AK 99518 Phone: 907-786-7500 Fax: 907-786-7580

John J. Harnish, Pres./CEO

Trailercraft Inc., Freightliner of Alaska 1301 E. 64th Ave. Anchorage, AK 99518-1908 Phone: 907-563-3238 Fax: 907-562-6963

Lee McKenzie, Pres./Owner

US Bearings & Drives/Motion Industries 1895 Van Horn Rd., Unit A Fairbanks, AK 99701 Phone: 907-452-4488 Fax: 907-456-8840

Brad DeWeese, Fairbanks Mgr.

Washington Crane & Hoist 1200 E. 76th Ave. Anchorage, AK 99518 Phone: 907-336-6661 Fax: 907-336-6667

Mike Currie, VP

Yukon Equipment Inc. 2020 E. Third Ave. Anchorage, AK 99501 Phone: 907-277-1541 Fax: 907-258-0169

Morry Hollowell, Pres.

AK Empls.

Services

AK Estab. Empls.

Services

1985

94

Sells, rents and services heavy equipment.

1954

55

Factory authorized dealer for: Komatsu construction and mining, Bobcat loaders and excavators, John Deere commercial and lawn tractors, Dynapac compaction rollers, Fecom land clearing attachments and carriers. Providing sales, parts and service.

2002

21

Equipment leasing company.

2007

3

A leading distributor of industrial maintenance, repair and operation (MRO) replacement parts (more than 4.1 million parts) including bearings, power transmission components, hydraulic & pneumatic components, hydraulic & industrial hose, industrial supplies, material handling, process pumps & more.

www.cmiak.com

anc.sales@craigtaylorequipment.com www.craigtaylorequipment.com

info@deltaleasing.net www.deltaleasing.net

www.motionindustries.com 1926

sfield@ncmachinery.com www.ncmachinery.com

1,000 Caterpillar machine sales, parts, service and rental. Caterpillar engines for marine, power generation, truck petroleum and industrial applications. Sales and rental of Caterpillar and other preferred brands of rental equipment and construction supplies.

1969

45

Freightliner distributor, parts, sales and service for all transport equipment.

1970

3

A leading industrial maintenance, repair, and operation (MRO) replacement parts distributor (more than 4.1 million parts) including bearings, power transmission components, electrical, hydraulic & pneumatic components, hydraulic & industrial hose, industrial supplies, material handling, and more.

1975

30

Crane builders, crane design, new crane sales, new hoist sales, lifting equipment design and sales. material handling solutions for industry, hoists, job cranes, work stations, chain falls, lever hoists, crane upgrades, crane maintenance, crane inspection, crane repair, hoist repair, crane parts.

1945

31

Case, Trail King, Elgin, Vactor, Oshkosh, Etnyre, Monroe, Trackless, Bomag, Thawzall, Snow Dragon. sales, service, parts, rental and lease equipment.

sales@trailercraft.com www.trailercraft.com

www.motionindustries.com

www.washingtoncrane.com

info@yukoneq.com yukoneq.com

Alaska Construction Industry Facts • The total value of construction spending for 2011 in Alaska will be about $7.1 billion, up 4 percent over last year.

• Wage and salary employment in the construction industry will continue the slow decline that began in 2006, but the level remains above the long-term average for the industry.

• Excluding the oil and gas sector – which accounts for 41 percent of the total – construction spending will be $4.2 billion – up 5 percent from 2010 • Private-sector construction spending will be up 6 percent from 2010, to $4.5 billion, in spite of the expected slow growth in the overall Alaska economy.

• Oil and gas sector spending will be about $2.9 billion, up 3 percent.

• Spending will increase in the utility and hospitals’ categories, but will decline in residential and other commercial categories.

• Public construction spending will be up 1 percent to $2.7 billion, due to the large FY2011 State capital budget.

The main infusion of cash from the American Recovery and Reinvestment Act (ARRA) has worked its way through the system, and federal spending overall has declined.

• Uncertainty ins particularly significant in the forecast this year, especially in the oil and gas sector – in spite of high oil prices.

Source: Alaska’s Construction Spending: 2011 Forecast, Annual Report for the Construction Industry Progress Fund and the Associated General Contractors of Alaska, by Scott Goldsmith and Mary Killorin Institute of Social and Economic Research University of Alaska Anchorage, www.agcak.org/2011constructionforecast.pdf and www.iser.uaa.alaska.edu/Publications/2011constructionforecast.pdf www.akbizmag.com • Alaska Business Monthly • March 2011

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BUILDING ALASKA SPECIAL SECTION

Winter Construction in Alaska

Cold hampers some projects, helps others

By Louise Freeman

Photo courtesy of Neeser Construction

The Norton Sound Regional Hospital project in Nome, currently being built by Neeser Construction.

Y

ear in and year out, come November, winter descends on the far north, bringing some construction projects to a halt, but more often, forcing construction companies to adapt to the changing weather conditions. For construction companies in Alaska, winter is a reality that has to be worked around.

“You have to be flexible,” said Sam Robert Brice, president of Brice Inc. of Fairbanks, which does heavy civil engineering. “You can’t fight mother nature.”

Come on Cold!

Unlike many construction companies in the state, Brice actually welcomes the cold weather. Brice, which is owned by Calista Corp., works on many projects requiring the building of ice roads and bridges to provide access to project work sites from gravel pits that may be miles away across the tundra or a river or lake.

Last winter they hauled 50,00060,000 yards of rock for the Huslia airport improvement project. They built an ice bridge across the Koyukuk River, and an ice and snow road to the mountain top from Huslia to the rock pit on the mountain.

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“The colder the better for us,” said Brice.

Work only stops when it gets dangerous because wind or blizzard conditions create a visibility problem to get people back to camp. The equipment must be kept running around-the-clock to keep it warm, so there are two 10-12 hour shifts per day.

Building an ice bridge involves drilling a hole in the ice of a river or lake and flooding a section of it repeatedly to build up the ice to a thickness of approximately four feet, which is needed to support a dump truck full of gravel.

The only part of the construction project that exposes the workers to cold weather is the actual drilling of the hole in the ice and installing the pump.

A pickup truck is usually onsite for them to warm up in. If they are working in a roadless area, the laborers have to get back to camp by snowmachine before they can warm themselves. Most of the rest of the project is done using heavy equipment with enclosed cabs that keep the workers comfortable.

In the last few years, Brice’s projects have become easier and less expensive through the use of Google Earth and GPS. “The new technology really revolutionized ice road construction.

It is a tremendous help,” Brice said.

Instead of having to go miles away to a water source, they can now pinpoint the location of a nearby pothole lake, get a permit, and access that water. It saves time and fuel costs.

Then There’s the Slowdown

Unlike Brice, whose company thrives on wintertime projects, many in the construction business in Alaska regard the winter as more of a detriment that slows worker productivity, adds the cost of heating and lighting the worksite, and causes equipment failure.

Concrete, plastics, glues, primers, and many chemicals and compounds are also affected by cold temperatures. One recent development in the industry is the use of additives to concrete that allow it to cure at a lower temperature.

For some construction projects, the answer to dealing with winter weather is to construct the building inside a tent or air-supported structure, although it increases costs considerably.

“A lot of effort and money are spent on keeping a job going through the winter,” said Jim Stonebraker, project manager at Neeser Construction.

“It’s expensive. We’ve tried domes and air-supported structures, but they

www.akbizmag.com • Alaska Business Monthly • March 2011

don’t always make economic sense.”

Neeser is currently building a $90 million, three-story hospital in Nome for the Indian Health Service.

Now most projects, such as the Norton Sound Regional Hospital, are planned so the exterior shell is finished before the onset of the worst weather. Inside work – including the installation of electrical systems, air ducts and plumbing – can continue throughout the winter.

Sometimes a building will be partially tented by using a “bubble” made of a layer of Visqueen dropped off the roof and secured at the sides.

The infusion of warm air from a heater below keeps the bubble inflated and the workers warm. The cost of running the heaters is often exorbitant, with the local price of diesel at $5 a gallon or more. When Neeser built the dormitories at Fort Wainwright several years ago, their costs for diesel for the heaters ran to $7,000 a day.

Heat for Workers

Lighting during the short days is another considerable expense in the wintertime. Even if the building is enclosed, the outside of the building must be lighted so workers can move around safely. Safer heaters are one of the improvements making a big difference in wintertime construction.

“In the old days many contractors used to use direct-fired construction heaters,” said Stonebraker. “There were reports of workers feeling nauseous or dizzy from the build up of carbon monoxide. We’re talking 30 years ago.”

Now builders use indirect-fired heaters, which remain outside and send hot air into the building through ductwork so that no gases build up inside the structure. The temperature can be better monitored and controlled with the newer heaters.

“In the old days, we just blew in as much heat as we could. Now the temporary heating systems are thermostatically controlled to maintain heat at 40-50 degrees or warmer, depending on the specific requirements of the work under way,” said Stonebraker.

Studies show workers’ productivity falls by about 1 percent for each degree below 35 Fahrenheit. Working in a heated, enclosed building improves more than just worker productivity. www.akbizmag.com • Alaska Business Monthly • March 2011

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Photos by Craig Baker, Brice Inc.

To build an ice bridge across the Selawik River, a worker augurs a hole in the ice in the Selawik River and installs a pump to flood a 200 to 300-foot wide swathe of ice. Once the water has frozen, the process is repeated over a two-week period, slowly thickening the ice—layer by layer—to at least 48 inches.

“Nowadays, high-end construction has a trend to a high degree of climate control and monitoring,” said Stonebraker. “The old days were rough and ready. It results in better quality construction when you work under climatecontrolled conditions.”

Another improvement in the industry that reduces the time workers are

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exposed to cold weather is the increased use of pre-assembled components that snap together. But inevitably, on a winter project, there will come a time when laborers – such as iron workers or carpenters or roofers – have to work outside.

There are many precautions taken to ensure workers are kept safe and warm. Stonebraker praised the recent

Brice Inc. built an ice and snow road through marshes and forest areas and an ice bridge across the Koyukuk River to move gravel from a gravel pit to the Huslia airport. In the summer of 2010, they completed the $5.9 million project by crushing the gravel and laying it down on the runway. www.akbizmag.com • Alaska Business Monthly • March 2011

advances in personal protective equipment, even clothing with synthetic fabrics or as smart wool, and the invention of catalytic pocket heaters.

“It makes it easier to work in the cold than it ever used to be. We used to think we were doing something heroic, now it’s fairly routine, although the guys are still working hard in some pretty extreme conditions out there.”

“We really have to ride hard on our employees to take extra fall protection precautions -- guardrails, harnesses, ropes, and we make them wear cleats as much as possible,” said Brent Eaton, president of E/P Roofing Inc. in Anchorage. “Productivity goes way down. We spend a lot of the time dealing with snow, ice, and cold equipment and materials. Everything becomes slower in winter, including you and me.”

Workers are usually slowed down by the weight and bulk of their winter clothing. Construction companies routinely practice the buddy system, having employees work together in pairs so they can keep an eye out for each other in case one of them runs into trouble with anything – including extreme cold – that could compromise his or her safety. Brice makes sure its workers at remote sites keep in touch by radio so they always know who is where.

Associated Builders and Contractors of Alaska Inc. (ABC) provides training for apprentices, including safety training. ABC is a non-union trade association that represents a network of individual builders and contractors, including those working in plumbing, electrical, carpentry, sheet metal and other areas.

“Safety is a top priority for us,” said Suzanne Armstrong, CEO of ABC, “and it is an extra consideration in winter.” The number of companies doing winter construction is “a little bit slower this year, with some businesses laying people off,” Armstrong added.

Like many contractors in Alaska, E/P Roofing does not make as much money in winter, partly because they cannot recoup their added winter construction costs. “We’re happy to have business in winter to keep the guys working,” said Eaton. “You eat it just to keep busy.” q www.akbizmag.com • Alaska Business Monthly • March 2011

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BUILDING ALASKA SPECIAL SECTION

Heavy Equipment Sales Trending Up

Mining projects sustain trade in soft construction market Photos by Jack E. Phelps

New Caterpillar construction equipment awaiting projects and work in N C Machinery’s Anchorage yard.

By Jack E. Phelps

I

t is no secret the United States is in the midst of a recession. This was recognized by Congress when, in February 2009, it enacted the American Recovery and Reinvestment Act (ARRA), which attempted to pump $787 billion into the economy. Of that amount, more than $100 billion was directed toward infrastructure spending; $27.5 billion intended for highway and bridge construction, $1.5 billion for surface transportation discretionary grants, and $1.1 billion for airport improvements.

Some statistics, including unemployment figures, suggest that Alaska has suffered less effect from the recession than many other parts of the country.

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Experts speculate this is, in part, due to the fiscal health of Alaska’s State government, and to some extent, Alaska’s relatively localized, distinct economy, isolated from the rest of the country.

The U.S. military’s significant presence and the relative stability of Alaska’s major industry, oil, have also mitigated the effect in Alaska of the general recession.

Unemployment Still High

Be that as it may, it cannot be said that Alaska is completely unaffected.

In November 2010, the official unemployment rate in Alaska stood at 8 percent (seasonally adjusted). While this is lower than the comparable national rate of 9.8 percent, it is also significantly

higher than the mere 6 percent rate enjoyed by the state in the spring of 2006.

In fact, from 2001 through 2008, mean unemployment was less than 7 percent, including the high year of 2003, when it pushed close to 8 percent. Clearly, Alaska is feeling some of the pain of the national recession. One would naturally expect this to be reflected across most, if not all, sectors of the economy, and not the least in the construction sector and its associated industry, retail sales of heavy equipment.

Yet despite what most industry officials describe as a “very soft” construction market in Alaska, sales of heavy equipment have continued to grow over the past three years.

www.akbizmag.com • Alaska Business Monthly • March 2011

Construction Machinery Industrial (CMI) owner, Ken Gerondale, says, “Our sales were up 10 percent in 2010 over 2009.” Gerondale anticipates a similar increase in 2011. This positive trend is due mainly to growth in hard rock mining, which is emerging as the boom sector of Alaska’s economy at the beginning of the century’s second decade.

Alaska Miners Association Executive Directory Steve Borell stated, in 2010, 24 different mining projects each pumped more than $1 million into the economy. “Greens Creek has two or three different expansion projects going, Kensington moved into production, and the Pebble Project has been very active,” Borell said.

In addition, he said International Power Hill’s Livengood exploration project is one that has not received a lot of press, but is large and was active in 2010.

Mining Market Well

Even when mining companies are not starting new projects or expanding existing mines, they provide a continuing market for new equipment.

N C Machinery sells, rents and repairs Caterpillar equipment at its Anchorage location on Arctic Boulevard.

Mining is tough on machines. Digging up and moving rocks is hard work and often the equipment is running around the clock. Shovels and trucks and drills wear out.

“We take good stuff and make

junk out of it over time,” Borell says.

There is, therefore, an ongoing, continuous market for repairs and for replacement machines, even without new projects. Moreover, there are at least two large hard-rock mineral

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projects and two large coal-mining projects in the works.

The well-known Pebble prospect, consisting of copper, gold, molybdenum and other minerals, is already accounting for significant economic activity in the Bristol Bay region and could become one of the largest mining operations in the world. In the Calista Region on the Kuskokwim River near the village of Crooked Creek, Donlin Creek is another promising project. One industry official believes Donlin has an 80 percent chance of going forward and will initially account for as much as $500 million in equipment purchases.

The Chuitna coal project across Cook Inlet from Anchorage is expected to release its draft Supplemental Environmental Impact Statement in the first quarter of 2011. Depending on the findings and on permit issues, the project could be a mine within the next few years and will likely create demand for equipment during the development stage. Also, Usibelli Coal Mine Inc, is in the decision process for opening its Wishbone Hill project near Sutton, with a deci-

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sion likely to come within the next year.

“Each of these projects would involve the purchase of large, surface mining equipment,” Borell says. While such purchases would not likely take place in 2011, they illustrate what N C Machinery’s Jay Reardon meant when he referred to mining as “a dynamic industry” in Alaska. Mining is leading the way in new equipment purchases, and probably will continue to do so well into the future.

Oil Patch Impacts

That is not to discount the continued importance of the oil patch, where significant activity continues to take place.

“Oil was good for us in 2010,” Gerondale says, “and we expect it to be about the same this year.”

But the qualifier: most of the equipment purchases by oil field service companies are now for replacement equipment, not for expansion of existing fleets. This reflects the declining level of activity on the North Slope, including a 12 percent drop in new infield development wells and a 14 percent drop overall in well completions

between 2007 and 2009, stated an official with one of the major companies.

Logging Days Gone

At one time, Alaska’s logging industry was also a major purchaser of heavy equipment, but those days passed, beginning with the loss of the two pulp mills in the 1990s. With harvest in the Tongass National Forest down to virtually nothing, the only activities of any magnitude are on Alaska Native corporation land and most of that work is being done by two or three companies. At present, Gerondale says, “we still have a little bit of logging business on Afognak and in Ketchikan, but it is not what it used to be. Logging is all but done.” In fact, CMI’s Ketchikan store is the only heavy equipment retailer still open in the former logging industry capital.

Mat-Su Construction Sluggish

In the Mat-Su area, the construction boom of the first half of the decade is long gone and the sector remains sluggish. This has affected equipment sales, both in the new and used markets. According to Charlie Armstrong,

www.akbizmag.com • Alaska Business Monthly • March 2011

owner of Fubar Equipment in Wasilla, sales of used equipment have been slow for two years now. Fubar repairs and sells used heavy machinery and trucks. “The repair side of the shop is still busy,” Armstrong says, “but customers are very slow to pay these days, a sign of tough times,” at least for the small businesses that make up most of Fubar’s clientele.

Ritchie Brothers, the Vancouverbased, world’s largest auctioneer of heavy equipment, has held auctions in Palmer, in each of the past three years. Participation and bid prices in Alaska in 2010 were both lower than they have been for many years, according to a representative who did not wish to be identified, and the company does not have an auction scheduled for Alaska in 2011. Ritchie Brothers’ Anchorage phone number has been disconnected. According to the company’s website, the downtrend in Alaska reflects a trend in equipment auctions worldwide, with the number of consignors, registered bidders and gross auction proceeds all showing declines against 2009.

Potential for Recovery

While the general construction market for equipment has been weak for the past few years, there remains potential for recovery. Associated General Contractors of Alaska Executive Director John MacKinnon points to the $259 million in highway and aviation money for Alaska made available in the federal stimulus package two years ago. While ARRA money was intended to be used immediately, and much of it went to pay for “mill and fill” projects, some remains in the pipeline for the coming season and will combine with $315 million in bond issues overwhelmingly approved by Alaska voters. “That money will hit the street this year,” MacKinnon says.

In addition, Congress has failed to pass new appropriations measures for the past two sessions, instead passing continuing resolutions holding spending at 2009 levels. As a result, MacKinnon says, “federal highway spending is at the top of its game.” How much of this will end up funding purchases of new equipment is anybody’s guess, but some will flow that direction.

Outside Equipment

One factor that may be working to limit equipment purchases by construction companies is the general slowdown in construction in other parts of the country. Larger companies working in Alaska also have operations in the Pacific Northwest or other places in the continental U.S. Some equipment that would be occupied by jobs in the Lower 48 during a healthy economy is finding its way to Alaska. This may be offsetting some purchases that might otherwise be made here, MacKinnon says.

“Civil construction activities remain high,” he says, “but it is very competitive.” Some jobs that previously would have received four or five bids, are now getting 10 or 12, he added.

Overall, Alaska equipment sellers expect a continuation of the current, gradual uptrend in purchases of new equipment, provided federal highway money continues to fund major projects, and provided the several new, large mining projects don’t run into regulatory hurdles and delays. q

www.akbizmag.com • Alaska Business Monthly • March 2011

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BUILDING ALASKA SPECIAL SECTION

‘ Top of its Game’

State’s construction sector will be busy in 2011

By Jack E. Phelps

©2011 Dmitry Kalinovsky

F

orecasted work in the Alaska construction industry indicates reversal of the 2009 economic contraction, which began in 2010, will continue to fade into history in 2011.

Most industry experts expect the coming construction season to be a good one for Alaskans. Expected construc-

108

tion expenditures are up 4 percent overall, even while private spending on commercial and residential building construction and public spending on airports and seaports will likely decline.

All this is detailed in the new report, “2011 Alaska Construction Spending Forecast” (hereafter, “AGC Forecast”),

released by the Alaska General Contractors (AGC) in early February.

AGC Executive Director John MacKinnon says, “For all practical purposes, spending will be the same as last year. It has been relatively flat now for five years, after increasing for the previous 20 years.”

www.akbizmag.com • Alaska Business Monthly • March 2011

Good News, Even if Flat

While this doesn’t sound great on the surface, the numbers do show a slight uptrend. MacKinnon says expected spending for 2011 is up 3 percent over last year’s actual spending. According to the AGC Forecast, overall spending will be $7.1 billion, including nearly $3 billion in the oil and gas sector, which accounts for 41 percent of total private spending. That works out to an increase of 5 percent in the non-oil and gas segment.

More significantly, private spending will increase by 6 percent over 2010, accounting for 63 percent of total construction spending.

Public spending by the State government will get a boost this year, due to the $315 million transportation bond issue approved by voters last year.

“That bond issue was overwhelmingly supported by Alaska voters,” MacKinnon says, “which shows that Alaskans strongly support transportation infrastructure in Alaska.”

A 5 percent decline in federal spending on highways is expected because, according to the AGC Forecast, “a large share of highway transportation funding comes as a formula grant from the federal government through the Safe, Accountable, Flexible, Efficient Transportation Equity Act – A Legacy for Users (SAFETEA-LU). But that program expired in 2009 and has not yet been reauthorized by Congress.”

Good Break

The timing of the increase in State of Alaska spending is providential also because the amount of money remaining available from the American Recovery and Reinvestment Act (ARRA) is considerably smaller than it was in 2010.

So, while showing an overall reduction over the previous year, combined State and federal highway spending in 2011 should reach $530 million, still a significant amount.

All of this is obviously good news for those who work in the construction trades, but it also truly heralds good things for the Alaska economy generally. Spending by the construction sector finds its way, through wages, purchases of goods and services, and local taxes, into the general economy.

Many small, local businesses and

professional services benefit from a robust construction sector in Alaska.

Oil patch construction spending should reach nearly $3 billion in 2011, and industry officials point to two independent companies as contributing significantly to that amount. Pioneer and Eni are moving toward production on their Oooguruk and Nikaitchuq projects, respectively, and spending on those two efforts will be robust.

The Nikaitchuq field is expected to go into production during 2011.

Health Care Thrives

In the health care field, private funding will be up 38 percent over 2010 levels, the largest single segment increase. Neeser Construction’s Senior Project Manager, George Tuckness, says Neeser expects to begin work on the design-build medical facility in the Mat-Su Valley for the Southcentral Foundation, a health-care nonprofit organization organized under the tribal authority of Cook Inlet Region Inc. The contract has been awarded and construction should begin in the spring.

Neeser Construction also is continuing work on construction of a hospital in Nome. “We expect all the work to be complete and the new hospital commissioned and operating by November of 2012.”

Of course wind is a major factor in the harsh Nome environment and “you can’t work outdoors on many days in the winter,” Tuckness explains, “But the building is already fully enclosed and inside work has continued through this winter.”

Logistics for a major project in Nome are also a major obstacle to be overcome by companies working in the far northwest region of Alaska.

“You can only get freight on the barge from mid-June to early September,” Tuckness says, “so you have to plan your logistics to stockpile materials and keep them available on site throughout the long winter.”

National Defense on Rise

One element of the publicly funded construction sector showing an increase this year across the country, including Alaska, is national defense. The DOD construction budget in Alaska is up 1 percent in 2011, accounting for an

www.akbizmag.com • Alaska Business Monthly • March 2011

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estimated $555 million. A significant portion will be spent on housing and other building construction projects at Joint Base Elmendorf-Richardson, where the Corps of Engineers has several projects in the works, including housing and aircraft hanger construction, according to AGC’s MacKinnon.

Former ABM Contractor of the Year, Anchorage-based Unit Company, is a major contractor with the Corps for work on the Joint Base.

The mining sector is expected to spend more than $300 million in 2011, but only one actual construction project of appreciable size is expected to proceed. According to Steve Borell, executive director of the Alaska Miners Association, construction of other major mining projects, such as the Donlin Creek gold, Pebble polymetallic, Wishbone Hill coal and Chuitna coal projects are one or more years in the future. However, the Red Dog zinc-silver mine in the Northwest Arctic has a major expansion project planned for 2011, which will allow it to tap into the Aqqaluk deposit and extend mine life for several years, according to mine officials.

Commercial Spending Down

One construction segment showing effects of the economic recession is in commercial building construction. This segment consists of such projects as retail and office buildings, hotels and warehouses. According to the AGC Forecast, “there are no new large projects – such as new high-rise office towers or shopping centers – planned for this year.” As a result, this segment shows an anticipated spending decline of 21 percent in 2011.

Residential construction spending also will continue the spending decline that began in 2007. 2011 spending will be 4 percent less than it was in 2010.

While this is not good news, it is significantly less than the reduction of this sector being experienced in other parts of the United States.

Beats Other Odds

“Relative to the rest of the country, we are still doing pretty well,” MacKinnon observes.

Spending on major State-funded civil works projects will contribute

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heavily to construction activity in 2011.

Two of these are in the Southcentral region of the state: the new state crime laboratory in Anchorage, and the new medium-security prison near Goose Creek, in the Mat-Su Borough.

Neeser Construction has the contracts on both these projects and expects to complete work on the Goose Creek correctional facility five months ahead of schedule.

“The prison is getting pretty far along,” says Tuckness, “and we will probably finish all work by September 2011.” Work has continued throughout the winter, and the widely reported problems with the water source (which was not part of the Neeser contract) have been resolved and will not delay completion.

The new state crime lab building is enclosed and work has continued during the winter months. Construction will continue throughout 2011 and completion is expected by June 2012, according to Tuckness.

Even though available highway construction money is less than it was in 2010, spending will reach more than $500 million, enough to fund several large projects. Among these is completion of Phase 1 of the Trunk Road realignment and expansion in the Mat-Su Borough. Phase 1 runs from the Parks Highway to the Palmer-Wasilla Highway and includes a roundabout and realigned access to the Mat-Su Regional Hospital. According to DOTPF, the project is being constructed by Scarsella Brothers Construction and the stretch is expected to be open to traffic in the spring. The roundabout and hospital

access was completed late last season.

Phase 2, from the Palmer-Wasilla Highway to Palmer Fishhook Road has not yet been given a green light.

A major player in Alaska highway construction is Granite Construction Corp., a nationwide company whose stock is listed on the New York Stock Exchange. In April 2008, it completed a merger with the former Wilder Corp., an employee-owned company that had completed many highway projects in the state. Granite continues the Wilder legacy by bidding on and completing highway projects each year.

Current Granite projects include efforts funded by federal, State and municipal governments throughout the state, as well as privately funded activities. Mike Miller, Granite Construction spokesman, says the company will have crews working on the Dalton Highway this year, as well as several projects in the Anchorage Bowl. “We have the repaving contract for the New Seward Highway, from Potter Marsh to Dowling Road.”

In addition, Miller says, “we have some municipal work to finish up from last year on the ‘berry streets’ near Dimond High School, and some combined city and State work at Lake Hood on bank stabilization. We will, of course, be bidding on additional projects with DOTPF as they come up.” Granite will also be completing subdivision in Eagle River for a private developer.

The continued availability of high levels of federal highway money remains unclear in the future, experts say.

For the past two years, highway spending has been funded under Continuing Resolutions passed by Congress, which keep spending flat with the previous year. However, the government is revising the formula grant program and when Congress approves it, experts expect it to shift the funding emphasis toward public transportation. Under this scenario, “Alaska might receive a smaller share” of available highway dollars, according to the AGC Forecast.

Nonetheless, for the 2011 construction season, highway construction will be a major factor in the overall solid performance of Alaska’s general contracting sector. As MacKinnon puts it, “Alaska is still at the top of its game.” q

www.akbizmag.com • Alaska Business Monthly • March 2011

UAA SCHOOL OF ENGINEERING UAA IS AN EEO/AA EMPLOYER AND EDUCATIONAL INSTITUTION.

Geomatics – Surveying and Mapping UAA Geomatics graduates play a key role in filling high-demand jobs in Alaska. Graduating from the only accredited ABET Geomatics program in Alaska, UAA Geomatics students find employment as surveyors, land managers, photogrammetrists or cartographers in a wide variety of fields from oil production to road and city planning.

Geomatics includes: surveying, remote sensing, Geographic Information Systems (GIS), Global Positioning Systems (GPS) and other related forms of earth and ocean mapping.

Engineering Alaska’s Future Today

www.uaa.alaska.edu/schoolofengineering • (907) 786-1900

BUILDING ALASKA SPECIAL SECTION

Photo courtesy of Trailboss Solutions, Anchorage

Whether it’s completing a custom kitchen or other construction-related job, Trailboss Solutions has plenty of qualified help available, thanks to many factors impacting Alaska’s economy.

Plenty of Applicants in Construction Industry

By Deborah Jeanne Sergeant

F

ive years ago, Alaska was hurting for entry-level and skilled construction industry workers for several reasons. As construction boomed in the state, demand for these workers grew stronger; however, years of fewer and fewer new workers entering the industry also began taking its toll on the construction labor pool.

The 1990s kicked off the Age of the Internet. As more kids became more interested in technology and less drawn to building trades, many high schools

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had eliminated their shop classes by the 2000s.

“As a country, we’ve made a shift from those hands-on trades,” said Mike Houston, vice president of sales and marketing for OPTI Staffing Group in Anchorage. “There’s not as much interest because there’s not as much emphasis on that as a career position.

“The emphasis is on technology and white-collar type of things. Blue-collar trades aren’t emphasized so there aren’t

as many people interested in it. These are viable and profitable careers and have great career satisfaction. It doesn’t seem like there’s that kind of focus.”

Crystal Ball

Five years ago, many forecasters feared baby boomers retiring from the construction industry would not be replaced by the afore-mentioned youth who were drawn away from construction-related trades to technology and other white-collar sectors.

www.akbizmag.com • Alaska Business Monthly • March 2011

In 2006, the Alaska Department of Labor and Workforce Development estimated more than 40 percent of the work force over age 45 could retire within a decade. Statistically, it looked like not enough youngsters were entering the construction trades to fill the gap. But the economic downturn helped the construction trade retain workers.

“People’s 401ks dried up and they said, ‘Why retire?’” said John MacKinnon, executive director of Associated General Contractors of Alaska. “I don’t believe a lot of these retirements are happening so that fear isn’t materializing to the extent we thought of.”

The boomers’ work ethic also surprised statisticians. It seems that a great number of baby boomers simply like their work and would rather keep busy doing something they enjoy. They are a whole different breed of retirees, who are not content to put their feet up, especially if they have worked in a trade where they are accustomed to working with their hands and keeping active.

Fortunately, the boomers’ desire to keep working and industry experts’ steps to address the need forestalled a full-blown industry-wide employment crisis.

One example of how the industry is solving the problem is Alaska Construction Academy, which was formed

in Anchorage in 2006 as a pilot project of Associated General Contractors of Alaska, Anchorage Home Builders Association, Anchorage School District, Alaska Works Partnership, Inc., Alaska Department of Labor & Workforce Development and Cook Inlet Tribal Council.

Funding Helps

Additional funding approved by thenGov. Sarah Palin in 2007 allowed the pilot project to become a multi-branch program now serving several communities: Fairbanks, Juneau, Kenai Peninsula, Ketchikan, Mat-Su, Bethel Region, Kodiak Region and Nome Region.

“Our kids were coming out of high school with no idea how to use hand tools and no sense about safety that is critical to our industry,” said Kathleen Castle, executive director of Alaska Construction Academy. “We are trying to get word out to employers. A person would have to stay with training or do an apprenticeship to get their skills up to the level to be a long-term employee.

We do tool identification, safety, training on using hand tools.”

The academy is working to reduce the rate of out-of-state construction workers from 20 percent to 10 percent, the goal of the Alaska Department of Labor and Workforce Development. Castle estimates to accomplish that goal, several thousand new employees will need training each year. Part of the way the academy succeeds is through reinstating school shop programs to generate interest in hands-on trades.

“Overall, we have found about 70 percent of our students end up in jobs,” Castle said.

She can’t be certain exactly how many are in construction-related jobs, however, because someone working as maintenance personnel at a hospital would appear as a health care worker in employment data. Or someone working as a welder on a farm might be classified as a farm worker. But academy graduates are working in much-needed hands-on trades – and that’s what’s important.

MacKinnon also attributes the adequate number of construction industry workers to work force development.

Architects · Engineers · Surveyors Meet all your design needs in one place.

Photo courtesy of OPTI Staffing Group, Anchorage

800.668.8919 w w w.designalaska.com

Mike Houston is vice president of sales and marketing for OPTI Staffing Group in Anchorage. www.akbizmag.com • Alaska Business Monthly • March 2011

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Photo courtesy of Neeser Construction, Anchorage

Gary Donnelly has experienced little difficulty in finding construction workers at Neeser Construction.

Promoting Careers

“We’ve a lot of effort into promoting these are good careers that pay well,” he said. “I think we’ve seen an uptick of people entering the industry. We spend hundreds of thousands of dollars in education and public relations.

They’re all professional, skilled, wellpaying jobs.”

Part of the effort is reaching out to schools to help students learn about construction trades and help educators reinstate shop classes. Reaching out to adult learners to broaden their skill set has also helped semi-skilled laborers to become highly skilled through career information, educational opportunities, mentoring and apprenticeship programs.

Offering scholarships and incentives to college students has helped increase the number of engineers and

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construction managers, as has offering industry-appropriate classes in math and science to high school students.

The Alaska Department of Labor also has increased the number of vocational instructors.

MacKinnon hopes to decrease the number of out-of-state construction employees and “increase local hires in every industry spectrum.

“I think what we’ve done has filled the gap and alleviated a lot of these fears,” he added. “People don’t perceive a plumber poorly anymore.

These are good paying careers. I don’t believe people look down on these jobs as they used to.”

The effect is good news for people like Scott Allen, general manager of Trailboss Solutions in Anchorage.

“We currently are not having problems finding qualified applicants for

any of the skilled or management positions that we have offered,” he said.

Heading North

The economy improved availability of qualified applicants. Because the high unemployment rates in the Lower 48, many applicants have turned north for work.

“Highly qualified, successful individuals are moving to Alaska to look for work,” Allen said. “We have recently hired two very well qualified, highly motivated transplants from California and Colorado who had always wanted to live in Alaska and took advantage of the downturn in the economy to make the move.”

Gary Donnelly, project administrator with Neeser Construction Inc. in Anchorage has observed the trend.

“We haven’t seen an emigration of

www.akbizmag.com • Alaska Business Monthly • March 2011

quality personnel going to seek work elsewhere,” he said. “Conversely, we have yet to have a really significant influx of workers from depressed areas of the country. The labor market is stable.”

Although it seems as though displaced workers in other industries might turn to construction as a second option, that’s a career path Houston has not observed.

“A lot of times, there might be someone with a business degree who will go back to get an MBA but not go to a trade school to be a welder and start at the bottom of the pay scale,” he said.

“That’s a tough sell, but any emphasis we can put in education whether displaced workers, or young people beginning their education, will be beneficial.”

Learning Curve

Switching to a construction trade represents a huge learning curve for most people. Finding new workers to fill the gaps or experienced construction workers is the usual course. At OPTI, Houston’s team is usually able to place construction workers quickly.

“A good welder, pipe fitter or electrician: we will have that person placed

“We maintain a resume file and are able to be selective for any open professional positions. There are good people out there.”

– Gary Donnelly Project Administrator Neeser Construction Inc. within a week because we’re proactively recruiting all the time,” he said.

One branch of Alaska Executive Search (AES) in Anchorage hires for the construction trades. Michelle Stewart, professional search consultant for AES, confirmed finding qualified help for construction projects has not been hard.

“With the current market and projects going on, there’s a sufficient amount of people,” she said. “If we have some new projects, we may need to look out of state.”

Bob Bulmer, who co-owns AES with wife Anne, said that being in business for 34 years helps them “know a lot of people. From there, we get sources and

consequently we have a large bank of resources and we generate names of candidates for positions.”

Donnelly said that his firm receives several resumes or inquiries for professional positions monthly.

“We maintain a resume file and are able to be selective for any open professional positions,” he said. “There are good people out there.”

The only positions Donnelly struggles to fill are positions in quality control and safety management.

“Neeser is working on a program to address this,” he said.

Allen finds it somewhat tough to fill openings for experienced estimators and project managers, lead carpenters and superintendents. Usually, wordof-mouth advertising and postings on Craigslist.com help his firm find employees.

As the economy continues to rebound and construction work picks up again, Alaska’s educators and recruiters will need to continue to show young people the value and satisfaction of construction industry careers and foster interest in them. q

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Mike Landry, President 1.800.257.7726 www.spanalaska.com www.akbizmag.com • Alaska Business Monthly • March 2011

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OIL & GAS OP-ED

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Why ANWR?

Is there really any oil there?

Q

uestions about ANWR have been in Alaska and national news for years. Congress fails to act to open the refuge for oil exploration because of misconceptions and the controversy still goes on today. Perhaps now because of interest in the long-awaited TransAlaskan-Canadian Natural Gas Line to the Lower 48, some progress might be made on ANWR. We all know the Arctic National Wildlife Refuge encompasses the traditional homelands and subsistence areas of Inupiaq Eskimos of the Arctic coast, and most of us are aware of the wildlife that live there. But what about the petroleum potential of ANWR and more specifically the 1002 Area?

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Misconceptions

Part of the problem involves the misconception all of the Arctic National Wildlife Refuge will be explored and possibly developed if oil is found in the exploration phase. The national press has not adequately explained only part of ANWR will be explored or developed: a narrow strip of land along the Arctic Ocean known as the 1002 Area.

ANWR contains huge mountains and crystal-clear lakes and plentiful wildlife that live in the vast expanse of the 19.2 million acres that constitute the refuge. The 1002 Area, on the other hand, consists of a flat tundra and lakecovered area that contains the Native

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By Irven F. Palmer Jr.

village of Kaktovik near Barter Island and has an area of just 1.5 million acres or roughly 7.7 percent of the total refuge. Therefore, 92.3 percent, or most of ANWR, will not be disturbed during any exploration or development that might happen if ANWR is opened for those activities.

Another misconception is the people who live in Alaska don’t want to open ANWR for exploration or development. Nothing could be further from the truth. Most Alaskans, regardless of whether they live in the cities or the villages, are strongly in favor of opening ANWR. Congress apparently just listens to those environmental groups who lobby them by stating that they are “helping Alaskans save ANWR.” In addition, those people who live on the North Slope of Alaska, the Inupiaq Eskimos, of the village of Kaktovik near Barter Island, who would be closest to any exploration or development, are strongly in favor of opening ANWR. In fact, the past president of Arctic Slope Regional Corp. (ASRC), Jacob Adams, stated as early as 1986 that “It is our judgment that we can have balanced and carefully regulated oil development on our lands in ANWR and in the Coastal Plain which will preserve the environment and the wildlife resources of ANWR and still benefit our people and the nation.”

Another misconception is that any exploration or development could

severely impact the Porcupine and Central Caribou herds that migrate through the area. One has only to drive along the road system on the North Slope to see the caribou have habituated to the easy walking along he road system and on the windy higher areas – finding an escape from the pesky mosquitoes.

In fact, back during the days of commercial whaling in the 1890s when the whaling fleet was wintered in at Herschel Island in the Beaufort Sea, Native hunters were hired to hunt the caribou for a meat supply for the wintered-in whalers. Those hunters nearly killed all the caribou. It took a few years after commercial whaling ceased, but in just a few years the caribou herd was as strong as ever. Opening ANWR will not adversely affect the caribou.

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Petroleum Potential

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Oilmen know it takes three basic things to generate, accumulate and trap petroleum.

These three things are “source rocks,” to generate the oil, “reservoir rocks” to hold the oil, and some kind of “trap” to keep the oil in a recoverable deposit.

Kerogen-rich shale and mudstone are common source rock types. Sandstone and limestone are common reservoir rocks if they have the right combination of porosity (pore spaces) and permeability, (the connections between the pore spaces to allow oil movement).

Traps for containing the oil are mainly

www.akbizmag.com • Alaska Business Monthly • March 2011

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of two types, either structural, like an anticline, or convex upward sequence of rock strata, or strata against a fault, or stratigraphic, like when rock composition changes from shale to sandstone.

Back in 1980, Congress mandated that geophysical, geological and biological studies of the Coastal Plain of ANWR (the 1002 Area) be made to determine the petroleum potential of the area. The Alaska National Interest Lands Conservation Act or (ANILCA) Contained a section called Title X or the Section 1002(h), so that is where the name “1002 AREA” came from.

The government agencies involved in these studies were: The U.S. Geological Survey (USGS), The Alaska Department of Geological and Geophysical Surveys (DGGS), The U.S. Bureau of Land Management (BLM), and the U.S. Fish and Wildlife Service. The latter agency is the manager of the refuge.

Subsequently geophysical and geological surveys were conducted within the refuge to determine if any petroleum traps could be detected in the subsurface of the rock strata within the refuge. Examination and study of the seismic records from the geophysical survey revealed there are indeed several structures that could hold large quantities of oil and gas. Using those seismic records and extrapolating geological parameters into those structures, estimates were made as to the quantity of oil that might be present.

Over the years, those resource estimates have been updated several times by different groups of USGS, BLM and DGGS scientists. The most common method of displaying information is by using a range of values. The studies of the coastal plain of ANWR indicate that the area may contain between .08 to 26.52 billion barrels of oil (DGGS) or 4.8 to 29.4 billion barrels of oil (USGS) from in-place resources.

Using advanced oil recovery methods that are available today, ANWR could provide a 30- to 60-year reliable supply of oil to the United States.

Since most of the studies involving quantity of oil that might be present in the coastal plain of ANWR are derived from the seismic data, and some discussion of the subsurface structures

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have been made available to the general public, it seems prudent that the public should also have full disclosure of the petroleum source rock potential within ANWR.

all that means is that the laboratory was determining the organic carbon content, the visual kerogen content and hydrocarbon content measured in parts per million.

Petroleum geologists generally agree that a threshold level exceeding 300 parts per million (ppm) are indicative of a good petroleum source rock.

Within ANWR’ s 1002 Area total extracts ranged from 0 to 10,965 ppm and averaged 602 ppm. Analysis of the hydrocarbons shows about an even split between paraffin-naphthene and aromatic constituents. Organic carbon ranged from 0.42 percent to 12.41 percent and averaged 3.07 percent. The extracts and total organic carbon content averages are impressive sourcerock values and compare favorably with some of the major oil-producing basins in the world.

The data show conclusively that good to excellent quality mature source rocks exist in the Arctic National Wildlife Refuge. Furthermore, it is highly probable that the same source rock formations or their equivalents could have generated hydrocarbons in the offshore area north of the refuge or that hydrocarbons generated within the refuge could have migrated to high structural positions both onshore and offshore.

So now you know why oilmen and the U.S. Department of Energy are exited about the petroleum potential of ANWR. Now more than ever all Americans should be concerned about why the government is not moving to open ANWR for exploration that just might help bring America closer to energy independence.

It remains for Congress to balance the other natural resources there against the nation’s need for transportation fuel.

Given that the long-awaited gas pipeline to the Lower 48 states just might be under construction soon, it seems prudent that exploration in ANWR be allowed so in the event of major gas discoveries, gas could go south in that pipeline.

The business community in Alaska, especially the oil and gas industry, have their fingers crossed in hopes that a gas pipeline to the Lower 48 will be built soon. Business leaders should also be pushing hard to open ANWR. q

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ANWR Petroleum Source Rock Potential

Little, if anything, has been written about the source rock potential within ANWR. Old news accounts have discussed the oil seeps along the Beaufort coast far to the west of ANWR, so it was common knowledge that the North Slope Province had indeed generated oil and that it was quite possible that some of that oil was to the east of Prudhoe Bay Field and may extend into ANWR. In 1979 the USGS and the DGGS conducted a joint stratigraphic-geochemical field project within ANWR. The data that resulted from that study project was published as a State of Alaska, DGGS, Geologic Report 76 in 1980. Reports of this nature have limited circulation, and are mainly just read by the scientific community and others charged with natural resource management. The general public seldom even knows a study has been made and if so, the results of the study.

We will never know if major oil or gas deposits exist within the 1002 Area of ANWR until a few of the best prospects within the 1002 Area are drilled. That will not happen until Congress gives the OK to lease. Then the company or companies gaining the leases will conduct more definitive seismic surveys to try to pinpoint the best place to drill to test the underlying geological formations.

What can Alaskans and all Americans do to get Congress to open ANWR to exploration so we can see if there really is any oil or gas there?

Petroleum geochemists routinely test rock samples for a variety of parameters that will tell them the source rock potential of a geological province.

The USGS-DGGS study of ANWR samples were collected from rock outcrops at places like North Katakturuk River and Jago River within the 1002 Area. A total of 81 samples were processed for C15plus soxhlet extraction and deasphaltening, visual kerogen assessment, thermal alteration index, and gas chromatographic analysis. What

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Alaska Trends

By William Cox Alaska Trends, an outline of significant statewide statistics, is provided by the University of Alaska Center for Economic Development.

National State Budget Shortfalls –

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Alaska Performs Well

ince the economic recession began in December 2007, many Americans have kept a close eye on the economy, watching and waiting for any signs of improvement. Many private sector jobs were affected by the decline in demand and tightening credit markets, which squeezed those organizations already susceptible to failure or struggling within their industry.

However, during recessions it always appears as if the government and governmental jobs are more stable and nearly unfazed by the overall economy and its cyclic modulations. This may be partially due to the primary revenue source – taxes, and the lag between the time the recession begins and when budgetary changes can be implemented.

However, despite this common belief regarding the greater stability of the public sector, it seems no sector in the economy has escaped the depth of the recession. After three years of economic upheaval it has become increasingly apparent individual states and the federal government also have been affected.

As the federal government cannot technically go bankrupt due to its ability to print money through the Treasury Department, individual states present the most revealing picture of the recession’s economic toll on government.

The graph shows the number of states experiencing budget shortfalls in each fiscal year 2009 through 2012, grouped by the amount of shortfall experienced as a percentage of individual states’ budgets.

By comparison to the Lower 48 states and Hawaii, the State of Alaska fared relatively well. Alaska’s budget shortfall in U.S. dollars and as a percentage of the State budget was $360 million (6.8 percent) in 2009 and $1.3 q billion (28.9 percent) in 2010.

Source: The Henry J. Kaiser Family Foundation http://www.statehealthfacts.org

Alaska Trends has been brought to you this month courtesy of American Marine/Penco

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Alaska Trends Indicator

Units

Period

Latest Report Period

Previous Report Period (revised)

Year Ago Period

GENERAL Personal Income – Alaska US $ 3rd Q10 31,373 31,264 30,284 Personal Income – United States US $ 3rd Q10 12,590,671 12,506,616 12,156,914 Consumer Prices – Anchorage 1982-1984 = 100 2nd H10 195.46 194.83 190.032 Consumer Prices – United States 1982-1984 = 100 2nd H10 218.58 217.54 215.935 Bankruptcies Alaska Total Number Filed November 73 95 85 Anchorage Total Number Filed November 54 74 41 Fairbanks Total Number Filed November 13 11 13

Year Over Year Change

3.60% 3.57% 2.85% 1.22% -14.12% 31.71% 0.00%

EMPLOYMENT Alaska Thousands November 332.79 333.75 330.06 0.83% Anchorage & Mat-Su Thousands November 187.68 186.49 186.69 0.53% Fairbanks Thousands November 43.66 43.43 43.11 1.26% Southeast Thousands November 35.24 36.08 34.94 0.86% Gulf Coast Thousands November 34.20 34.69 33.38 2.47% Sectoral Distribution – Alaska Total Nonfarm Thousands November 315.6 318.8 311.8 1.22% Goods Producing

Thousands November 38.3 43.0 38.5 -0.52% Services Providing Thousands November 277.3 275.8 273.3 1.46% Mining and Logging Thousands November 14.6 14.5 14.7 -0.68% Mining

Thousands November 14.4 14.0 14.5 -0.69% Oil & Gas Thousands November 12.0 12.1 12.3 -2.44% Construction

Thousands November 14.4 16.9 14.7 -2.04% Manufacturing

Thousands November 9.3 11.6 9.1 2.20% Seafood Processing Thousands November 4.7 6.2 4.9 -4.08% Trade/Transportation/Utilities Thousands November 62.1 61.1 61.6 0.81% Wholesale Trade Thousands November 5.9 6.0 6.1 -3.28% Retail Trade

Thousands November 36.2 34.7 35.8 1.12% Food & Beverage Stores Thousands November 6.1 5.9 6.2 -1.61% General Merchandise Stores Thousands November 10.4 9.9 10.3 0.97% Trans/Warehouse/Utilities Thousands November 20.0 20.4 19.7 1.52% Air Transportation Thousands November 5.4 5.5 6.0 -10.00% Truck Transportation Thousands November 3.0 3.0 3.0 0.00% Information

Thousands November 6.2 6.3 6.5 -4.62% Telecommunications Thousands November 4.1 4.3 4.3 -4.65% Financial Activities Thousands November 14.4 15.2 14.3 0.70% Professional & Business Svcs Thousands November 26.0 25.2 24.7 5.26% Educational & Health Services Thousands November 42.3 42.0 39.6 6.82% Health Care Thousands November 30.7 30.4 28.5 7.72% Leisure & Hospitality Thousands November 29.0 27.9 29.1 -0.34% Accommodation

Thousands November 6.4 6.2 6.0 6.67% Food Svcs & Drinking Places Thousands November 18.9 18.0 18.5 2.16% Other Services

Thousands November 11.2 11.7 11.4 -1.75% Government

Thousands November 86.1 86.4 86.1 0.00% Federal Government Thousands November 16.4 16.5 16.4 0.00% State Government Thousands November 26.4 26.4 26.2 0.76% State Education Thousands November 8.2 8.2 8.2 0.00% Local Government Thousands November 43.3 43.5 43.5 -0.46% Local Education Thousands November 25.0 25.0 24.9 0.40% Tribal Government1 Thousands November 3.6 3.9 3.5 2.86% Labor Force Alaska Thousands November 361.29 360.77 359.16 0.59% Anchorage & Mat-Su Thousands November 201.80 200.08 201.03 0.38% Fairbanks Thousands November 46.91 46.49 46.53 0.81% Southeast Thousands November 38.32 38.95 38.11 0.55% Gulf Coast Thousands November 37.98 38.11 37.41 1.52%

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Sponsored

Indicator

Units

by

American Marine/Penco

Period

Latest Report Period

Previous Report Period (revised)

Year Ago Period

Year Over Year Change

Unemployment Rate Alaska Percent November 7.9 7.5 8.1 -2.47% Anchorage & Mat-Su Percent November 7 6.8 7.1 -1.41% Fairbanks Percent November 6.9 6.6 7.3 -5.48% Southeast Percent November 8 7.3 8.3 -3.61% Gulf Coast Percent November 9.9 9 10.8 -8.33% United States Percent November 9.3 9 9.4 -1.06% PETROLEUM/MINING Crude Oil Production – Alaska Millions of Barrels November 18.19 19.17 19.87 -8.45% Natural Gas Field Production – Alaska Billions of Cubic Ft. November 11.66 11.02 12.40 -5.95% ANS West Cost Average Spot Price $ per Barrel November 83.93 82.41 76.52 9.68% Hughes Rig Count Alaska Active Rigs November 7 6 8 -12.50% United States Active Rigs November 1683 1668 1107 52.03% Gold Prices $ Per Troy Oz. November 1,370.84 1,342.61 1,126.58 21.68% Silver Prices $ Per Troy Oz. November 2654.09 2339.33 1782.13 48.93% Zinc Prices Per Pound November No Data 1.19 1.10 REAL ESTATE Anchorage Building Permit Valuations Total Millions of $ November 12.80 92.21 11.15 14.75% Residential Millions of $ November 2.94 5.95 5.36 -45.21% Commercial Millions of $ November 9.86 86.26 5.79 70.34% Deeds of Trust Recorded Anchorage – Recording District Total Deeds November 1270 1166 893 42.22% Fairbanks – Recording District Total Deeds November No Data No Data 312 VISITOR INDUSTRY Total Air Passenger Traffic – Anchorage Thousands November 338.47 368.69 317.39 6.64% Total Air Passenger Traffic – Fairbanks Thousands November 64.84 75.11 67.90 -4.51% ALASKA PERMANENT FUND Equity Millions of $ November 37,002.60 37,287.90 34,037.10 8.71% Assets Millions of $ November 37,405.40 37,740.50 34,171.20 9.46% Net Income Millions of $ November 117.8 174.8 62.1 89.69% Net Income – Year to Date Millions of $ November ($353.5) $892.0 $911.2 -138.79% Marketable Debt Securities Millions of $ November -142.8 44.7 78.5 -281.91% Real Estate Investments Millions of $ November 20.5 43.7 6.9 197.10% Preferred and Common Stock Millions of $ November (299.2) 651.2 739.8 -140.44% BANKING (excludes interstate branches) Total Bank Assets – Alaska Millions of $ 3rd Q10 2,068.99 2,068.99 1,964.14 5.34% Cash & Balances Due Millions of $ 3rd Q10 37.35 37.35 41.17 -9.28% Securities Millions of $ 3rd Q10 131.40 131.40 116.19 13.09% Net Loans and Leases Millions of $ 3rd Q10 1,110.96 1,110.96 1,167.14 -4.81% Other Real Estate Owned Millions of $ 3rd Q10 15.76 15.76 11.78 33.70% Total Liabilities Millions of $ 3rd Q10 1,823.80 1,823.80 1,734.68 5.14% Total Bank Deposits – Alaska Millions of $ 3rd Q10 1,785.53 1,785.53 1,702.13 4.90% Noninterest-bearing deposits Millions of $ 3rd Q10 479.89 479.89 447.46 7.25% Interest- bearing deposits Millions of $ 3rd Q10 1,305.64 1,305.64 1,254.67 4.06% FOREIGN TRADE Value of the Dollar In Japanese Yen Yen November 82.45 81.86 89.24 -7.61% In Canadian Dollars Canadian $ November 1.01 1.02 1.06 -4.74% In British Pounds Pounds November 0.63 0.63 0.60 3.78% In European Monetary Unit Euro November 0.73 0.72 0.67 8.80% In Chinese Yuan Yuan November 6.65 6.67 6.83 -2.57% Data compiled by University of Alaska Center for Economic Development.

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Advertisers Index Alaska Communications . . . . . . . . . . . . . . . . . 28, 29 Alaska Air Cargo . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Alaska Commercial Fishing & Agricultural . . . . . . . 66 Alaska Growth Capital . . . . . . . . . . . . . . . . . . . . . . 17 Alaska Rubber & Supply Inc. . . . . . . . . . . . . . . . . 105 Alaska Telecommunications . . . . . . . . . . . . . . . . . . 55 Alaska Traffic Co. . . . . . . . . . . . . . . . . . . . . . . . . . 109 Alaska USA Federal Credit Union . . . . . . . . . . . . . 63 Alutiiq Oilfield Solutions LLC . . . . . . . . . . . . . 42, 103 American Fast Freight . . . . . . . . . . . . . . . . . . . . . . 82 American Marine/PENCO . . . . . . . . . . . . . . . . . . 119 Amerigas Propane . . . . . . . . . . . . . . . . . . . . . . . . . 45 Anchorage Opera . . . . . . . . . . . . . . . . . . . . . . . . . .39 Arctic Fox Steel Buildings . . . . . . . . . . . . . . . . . . . 43 Arctic Office Products (Machines) . . . . . . . . . . . . . 85 Arctic Slope Telephone Association . . . . . . . . . . . 101 ASRC Energy Services . . . . . . . . . . . . . . . . . . . . . 49 AT&T Alascom . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Azimuth Adventure Photography . . . . . . . . . . . . . . 72 B2 Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Bowhead Transport Co. . . . . . . . . . . . . . . . . . . . . 107 Bristol Bay Native Corp. . . . . . . . . . . . . . . . . . . . . . 75 Calista Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 CareNet Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Carlile Transportation Systems . . . . . . . . . . . . . . . 23 Chris Arend Photography . . . . . . . . . . . . . . . . . . . 122

122

Cloud49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Construction Machinery Industrial LLC . . . . . . . . 123 Credit Union 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Crowley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Cruz Construction Inc. . . . . . . . . . . . . . . . . . . . . . . 41 Cultural Resource Consultants LLC . . . . . . . . . . . .68 Davis Constructors & Engineers Inc. . . . . . . . . . . . 91 Design Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 Dowland-Bach Corp. . . . . . . . . . . . . . . . . . . . . . . . 43 EDC Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Emerald Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 ERA Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 First National Bank Alaska . . . . . . . . . . . . . . . . . . . . 5 Flint Hills Resources . . . . . . . . . . . . . . . . . . . . . . . 47 GCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33, 48 Great Originals Inc. . . . . . . . . . . . . . . . . . . . . . . . . 42 Green Star Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Holmes Weddle & Barcott . . . . . . . . . . . . . . . . . . . 89 Inn At Whittier . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Judy Patrick Photography . . . . . . . . . . . . . . . . . . . 58 Lynden Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Material Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 MT Housing Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 106 NANA Regional Corp. . . . . . . . . . . . . . . . . . . . . . . 77 NCB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Neeser Construction Inc. . . . . . . . . . . . . . . . . . . 118

Northern Air Cargo . . . . . . . . . . . . . . . . . . . . . 26, 27 Northrim Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Northwest Ironworkers Employers Association . . . . . . . . . . . . . . . . . . . . . . . . . . . .113 Pacific Alaska Freightways . . . . . . . . . . . . . . . . . . . 93 Pacific Pile & Marine . . . . . . . . . . . . . . . . . . . 8, 9, 10 Parker, Smith & Feek . . . . . . . . . . . . . . . . . . . . . . . . 3 Pen Air . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Polar Supply Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Rosie’s’ Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Ryan Air . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Span Alaska Consolidators . . . . . . . . . . . . . . . . . 115 Spenard Builders Supply . . . . . . . . . . . . . . . . . . . . 87 Stellar Designs Inc. . . . . . . . . . . . . . . . . . . . . . . . . 45 Sullivan’s of Alaska Inc. . . . . . . . . . . . . . . . . . . . . . 39 Superstar Pastry Design . . . . . . . . . . . . . . . . . . . . 45 TDX Tanadgusix Corp. . . . . . . . . . . . . . . . . . . . . . 102 Test America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 The Growth Company . . . . . . . . . . . . . . . . . . . . . . 21 Totem Ocean Trailer Express . . . . . . . . . . . . . . . . . 83 TrailerCraft Inc /Freightliner of Alaska . . . . . . . . . 103 UNIT COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . 101 University of Alaska Anchorage/ Engineering . . . 111 Washington Crane and Hoist . . . . . . . . . . . . . . . . . 21 Waste Management . . . . . . . . . . . . . . . . . . . . . . . . 69 Wells Fargo Bank NA . . . . . . . . . . . . . . . . . . . . . . 124

www.akbizmag.com • Alaska Business Monthly • March 2011

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