OCTOBER 2010 by Alaska Business

October 2010

Still Growing Strong

$4.95

OCTOBER 2010 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 . . . . . . . . . . . . . . . . 44 Events Calendar . . . . . . . . . . . . 48 Market Squares . . . . . . . . . . . . . 81 Alaska Trends . . . . . . . . . . . . . . 159 Ad Index . . . . . . . . . . . . . . . . . . 162

ABOUT THE COVER Alaska Business Monthly ranks the Top 49 businesses owned and operated by Alaskans based on gross revenue, for the 26th year. Graphic illustration by Andrew Johnson.

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

ARTICLES (cont’d.)

CUSTOMER SERVICE View From the Top Chanda Mines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Top Tips from Anchorage’s Top Restaurants . . . . . . . . . . 34

Co-Owner, Bagoy’s Florist By Peg Stomierowski

Ideas for running any business successfully By Deborah Sergeant

HR Matters ALTERNATIVE ENERGY Nose Rings, Frayed Cuffs and Cleavage . . . . . . . . 29 Burning Used Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 By Lynne Curry Clean Burn technology gaining popularity

Alaska This Month By Louise Freeman World Music Festival Set for Oct. 9 . . . . . . . . . . . . . 46 Performers spotlight cultures of Alaska and beyond FINANCE By Nancy Pounds Anchorage Businessman Helps Alleviate Third World Poverty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Legal Speak From Litigation to Mandatory Arbitration . . . . . . . 98 Micro loans give hope and change lives The shift in employment dispute resolution By Jeff Waller

By Lois Gilbert

IN MEMORIUM Towns in Transition Palmer and Wasilla. . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Ted Stevens Reflection . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 There settled a stillness across the land By Peg Stomierowski

Mat-Su towns forge ahead By Heidi Bohi

Regional Review OIL & GAS The Kenai Peninsula . . . . . . . . . . . . . . . . . . . . . . . . . 121 NPR-A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 A haven for retirees By Mike Bradner

By Tracy Barbour ARTICLES

ARTICLES

OIL & GAS Developing the Pipeline Work Force . . . . . . . . . . . . . . . . 106

TECHNOLOGY Training workers for the gas line New Virtual Technologies . . . . . . . . . . . . . . . . . . . . . . . . . 12 By Mike Bradner Helping to enhance business operations By Tracy Barbour

OIL & GAS TECHNOLOGY TAPS Philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 Alaska Companies Opt for Deltek . . . . . . . . . . . . . . . . . . . 20 ‘Tackling issues before they become problems’ Project-focused enterprises management By Julie Stricker

By Heidi Bohi

Still attracting customers in tough economic times By Vanessa Orr

By Heather A. Resz

OIL & GAS RETAIL North Slope Propane Project. . . . . . . . . . . . . . . . . . . . . . 114 Alaska Malls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 ANGDA, private investors want to extract and truck it to Fairbanks TOURISM ECONOMY PFD Economic Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Alaska Travel Industry Summer Review. . . . . . . . . . . . . 124 Consumer spending anticipated By Heidi Bohi

Spotty gains in some areas of state By Peg Stomierowski

www.akbizmag.com • Alaska Business Monthly • October 2010

(continued on page 6)

SE OP CT TE OM BB EE R R2 0 21 00 10 TA B L E O F C O N T E N T S

TOURISM O IL & GAS Hotel Business: and and DownBP forRestart 2010. . . . . . . . . . . . . 128 Savant Alaska, Up ASRC Loss of cruise ships Badami Plant . . to. .Alaska . . . . .reason . . . . for . . .decline . . . . . . . . . . . . . . . 48

HEALTH & MEDICINE OPINION Corrections Health ‘Obama . . . . photo . 149 In July’sInsurance “Latest CellProfessional and Satellite on Phones,” theCare’ HTC Hero

MINING SERVICES Saving Red Dog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 Fleet Salesthe. .Aqqaluk . . . . . .Deposit . . . . . . . . . . . . . . . . . . . . . . . . . 56 Transitioning

HUMAN RESOURCES In April’s “An Alaska Olympics?” the 2009 and 2010 U.S. Cross 150 Client Retention . . . . . . . . . held . . . .in. Anchorage . . . . . . . . . at. .Kincaid . . . . . .Park Country Ski Championships

CRANSPORTATION ONSTRUCTION T 61 Federal Government Air Cargo Mission .Construction . . . . . . . . . . in . . Alaska . . . . . . .. .. .. .. ....... .133

Ohosted PINIONthree U.S. (FIS) National Alpine Ski Championships over the latterEconomy, part of thisThe decade. For Alaska’s Future is Now . . . . . . . . . . 153

TECHNOLOGY CONSTRUCTION SIDEBAR Mobile Applications . . . . . . . . . . . . . . . . . . . . . . . . . 66 U.S.Army Corps Getting more doneofonEngineers, the go. ByAlaska Tracy Barbour Real Estate Division. . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 Managing estate instruments and about 2 million acres of land H EALTH500 & real MEDICINE By Heather A. Resz Avante Medical Center . . . . . . . . . . . . . . . . . . . . . . . 71 CONSTRUCTION Integrating naturopathic and traditional medicine. By Jody Ellis-Knapp Understanding Construction Economics . . . . . . . . . . . 138

FISHERIES Alaskans Mentor Gulf States. . . . . . . . . . . . . . . . . . . . . 154

By Barbara Saunders flow testing begins. By Heather A. Resz Two wells completed,

State contracts By Mary Edmundsstreamline process. By Tracy Kalytiak

U.S. ArmylifeCorps of in Engineers to spend billion from 2010-2012 Making better rural Alaska. Bynearly Julie $2 Stricker By Heather A. Resz

Government’s role in industry stabilization

Steps success by the Nordic Skiing Association of Anchorage weretoco-hosted By Deborah Jeanne Sergeant and the Municipality of Anchorage, not Alyeska Resort, which

By Betsy Lawer

The fine art of post-spill seafood marketing By Heidi Bohi

SPECIAL SECTION Top 49ers Still Growing Strong

▼

H ByEALTH Gail West& MEDICINE Winter Recreation . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 MANUFACTURING An hour a day keeps obesity away. By Peg Stomierowski Industrial Manufacturing. . . . . . . . . . . . . . . . . . . . . . . . 142

‘Legislation comes at an inopportune time’Systems was incorrectly supplied by Alaska Communications By David Frazier identified and credited on page 68.

Modest economic sector growing By Peg Stomierowski

MANUFACTURING Promoting Alaska-Made Products . . . . . . . . . . . . . . . . 144

PAGE

Stability and growth key to these Alaska-owned and -operated companies By Debbie Cutler

2010 Top 49ers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Top 49ers Listed Alphabetically . . . . . . . . . . . . . . . . 79

Nurturing commercial connections By Peg Stomierowski

Top 49ers Listed by Business Classification . . . . . . 80

HEALTH & MEDICINE The Affordable Care Act . . . . . . . . . . . . . . . . . . . . . . . . 146

Rebalancing act proves successful By Tracy Kalytiak

Alaska businesses prepare for health care reform By Vanessa Orr

Be A Part of Alaska Business Monthly’s Future Tell us how we rate. Tell us what you want from us. How does Alaska Business Monthly rate? We want your ideas and your feedback. Take the 10-minute online survey at www.akbizmag.com and be a part of the future of your magazine. All information will be confidential. Your participation is greatly appreciated.

Cook Inlet Regional Inc.. . . . . . . . . . . . . . . . . . . . . . . 82

Era Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Getting excited for the future By Tracy Kalytiak

The Kuskokwim Corp. . . . . . . . . . . . . . . . . . . . . . . . . 90 Diversifying investments proves lucrative By Tracy Kalytiak

Three Bears Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Moving forward for 30 years By Tracy Kalytiak

CORRECTION An oil and gas article on page 82 of the August issue, “High Taxes, Expensive Exploration, Delayed Development: Man-made obstacles may close trans-Alaska oil pipeline by 2014,” was inaccurately subtitled. “There is absolutely no evidence in our studies and available data that suggests the pipeline will close in four years. Our concerns regarding declining throughput are more focused on years further out,” Alyeska Pipeline Service Co. officials said. ABM regrets the error.

www.akbizmag.com • Alaska Business Monthly • October 2010

F Volume 26, Number 10 Published by Alaska Business Publishing Co. Anchorage, Alaska Vern C. McCorkle, Publisher 1991~2009

EDITORIAL STAFF Managing Editor Associate Editor Art Director Art Production Graphic Design Photo Consultant Contributing Photographers

Debbie Cutler Susan Harrington Candy Johnson Linda Shogren Janyce Nolan Goe Graphics & Design Chris Arend Judy Patrick Azimuth Adventure Photography

BUSINESS STAFF President National Sales Mgr. Account Mgr. Account Mgr. Traffic Coordinator Accountant

Jim Martin Charles Bell John Page Anne Campbell Elaine Collins Mary Schreckenghost

501 W. Northern Lights Boulevard, Suite 100 Anchorage, Alaska 99503 (907) 276-4373 Outside Anchorage: 1-800-770-4373 Fax: (907) 279-2900 www.akbizmag.com Editorial e-mail: editor@akbizmag.com Advertising e-mail: materials@akbizmag.com 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, ©2010, Alaska Business Publishing Co. All rights reserved. Subscription Rates: $39.95 a year. Single issues $3.95 each; $4.95 for October. Back issues $5 each. Send subscription orders and address changes to the Circulation Department, Alaska Business Monthly, P.O. Box 241288, Anchorage, AK 99524. Please supply both old and new addresses and allow six weeks for change. Manuscripts: Send query letter or manuscripts to the Editor. Alaska Business Monthly is not responsible for unsolicited materials. Photocopies: Where necessary, permission is granted by the copyright owner for libraries and others registered with Copyright Clearance Center to photocopy any article herein for $1.35 per copy. Send payments to CCC, 27 Congress Street, Salem, MA 01970. Copying done for other than personal or internal reference use without the expressed permission of Alaska Business Monthly is prohibited. Address requests for specific permission to the Editor, Alaska Business Monthly. Online: Alaska Business Monthly is available online from Data Courier and online from Thomson Gale. Microfilm: Alaska Business Monthly is available on microfilm from University Microfilms International, 300 North Zeeb Rd., Ann Arbor, MI 48106.

ROM

THE

ITOR

A Bridge to Somewhere Debbie Cutler

hey call the proposed 8,200-foot, $687 million Knik Arm Crossing a Bridge to Nowhere, but in actuality it’s a bridge to Alaska’s future. At a recent Senate Transportation Committee overview of the project, about a half dozen or more presenters spoke in favor of the project and what it means to the state. In attendance was Michael Foster, chair of the Knik Arm Bridge and Toll Authority; Andrew Niemiec, KABATA’s executive director; and KABATA Chief Financial Officer Kevin Hemenway. Also testifying were former Gov. Bill Sheffield of the Port of Anchorage, three members of the Alaska Trucking Association (Aves Thompson, executive director; Lisa Marquiss, president; George Lowery, secretary-treasurer/also Tote Alaska director), and the Department of Transportation & Public Facilities Commissioner Frank Richards. “Governor Sheffield said it best when he said, ‘Let’s grow up,’” said Marquiss, who is also regulatory compliance director for Carlile Transportation Systems. “It’s a bridge to growth and opportunity.” It’s not that Alaska doesn’t have bridges – there are about 850 statewide, but this one is unique as it will allow a second corridor from Anchorage north to connect the municipality with the Matanuska-Susitna Borough. Currently, the Glenn Highway is the only way to get to Eagle River, Palmer, Wasilla and other northern communities. If an earthquake or natural disaster blocked the four-to-six lane highway, then these communities would be cut off from the rest of the state, except for barge and the up-and-coming Knik Arm ferry. KABATA was established by the Alaska Legislature to “develop, stimulate and advance the economic welfare of the state and further the development of public transportation systems in the vicinity of the Upper Cook Inlet,” said Foster. It will also make access easier for vehicles, trucks and perhaps, eventually, trains to access Interior Alaska, saving truckers and private drivers millions of dollars over its first 10 years of operation. Truck freight savings to the Interior is estimated at $326 million, and pocketbook savings for Alaska drivers is estimated at $303 million. The toll bridge ($5 each way for passenger vehicles) will provide 5,000 construction-related jobs and 5,000 indirect support services positions. It also comes with environmental benefits, reducing carbon emissions by nearly 2 million metric tons in the first 10 years. “It’s not in competition with Anchorage,” said Foster. “It’s a win-win for both communities.” The Mat-Su is in the top 1 percent of fastest growing counties in the U.S. and combined communities represent 54 percent of Alaska’s population, according to a July 1, 2009, population estimate done by the U.S. Census Bureau. By 2030, Anchorage will see about 362,000 individuals, up from 2009’s 286,174, and the Mat-Su will have a 50 percent growth to 170,000 residents up from 88,379, according to studies. “Population (growth) is one of the big deciding factors for the project,” said Foster. “And people will save a lot of money.” “It’s a big project, it will take a lot of doing, a lot of effort,” said Sheffield. “Bridge support has been in existence since I arrived here in 1953.” Not only will it support the transportation sector, but also major state development projects such as natural resource development and the natural gas pipeline. With 56 percent statewide public support, according to a Dittman Statewide Survey of 1,000 Alaskans, construction is projected to be completed on the three-lane bridge (with a four-lane foundation) in 2015 after a three-to-five-year construction period. According to KABATA’s report, yet to be done is a biological opinion, record of decision, finalized project delivery method, complete procurement, commercial and financial close, notice to proceed and acquire right-of-way. – Debbie Cutler Managing Editor

www.akbizmag.com • Alaska Business Monthly • October 2010

INSIDE ALASKA BUSINESS Training Facility Expands

orthern Industrial Training expanded its campus earlier this year, adding an 8,000-square-foot facility to train welders and a conference and training facility. The campus is located on the Palmer-Wasilla Highway. Construction began in July on the welding building. It features 12 welding stations for certified welding and testing programs. NIT officials planned to expand pipefitting, roustabout, electrical, carpentry and mechanics courses once construction was completed. Students participate in classroom courses at the campus, too. The new conference and training facility is also available to host company meetings and training sessions. The 1,600-square-foot facility has three 60-inch TVs, audio/visual functions with laptop connections for multimedia presentations, and can accommodate up to 40 tables and 80 chairs. A kitchen is adjacent to the training room. ■

NANA Subsidiary, Lockheed Martin Bid on Contract

ANA Development Corp. and Lockheed Martin have signed a partnership to compete for the U.S. Missile Defense Agency’s GroundBased Midcourse Defense Development and Sustainment Contract. The contract is due to be awarded in 2011. Work would be performed at Fort Greely, Alaska; Huntsville, Ala.; Eareckson Air Station, Alaska; Vandenberg Air Force Base, Calif.; and Schriever Air Force Base, Colo.

The contract calls for development, manufacturing, test, training, operations support and sustainment support. NANA Development would provide logistics, engineering and supply support for the contract. NANA Development is a subsidiary of NANA Regional Corp. NANA’s Sivuniq and Akima Logistic Services will work together to provide logistics management, engineering and supply support services at Fort Greely, Alaska and in Huntsville, Ala. “Our NANA companies will draw upon our expertise as the Fort Greely base operations support contractor for the Army in providing consistent and transparent integrated logistics support for GMD in partnership with Lockheed Martin,” said Helvi Sandvik, president of NANA Development. NANA companies have been in residence working to develop and support Fort Greely for the past seven years. ■

Alaska Air Tests Technology

laska Airlines demonstrated in a test flight over Puget Sound procedures that burned less fuel and reduced emissions by 35 percent compared to a regular landing. The flight was part of Alaska Air Group’s Greener Skies project at Seattle-Tacoma International Airport focused on using satellite-based guidance technology pioneered by Alaska Airlines to fly more efficient landing procedures that will reduce environmental impacts in the region. The Seattle-based airline, in cooperation with the Port of Seattle, Boeing and other airlines serving Sea-Tac, is seeking Federal Aviation

COMPILED BY NANCY POUNDS Administration approval for the procedures, which could be used by all properly equipped carriers at Sea-Tac. Alaska Airlines began testing on the project last summer and has flown two other test flights. Representatives from Alaska Airlines, Boeing, the FAA and the Port of Seattle participated in the most recent demonstration to observe the level of flight path precision and fuel consumption on eight landing approaches in a Boeing 737-700. With a landing weight similar to a typical passenger flight, the shorter and more efficient approaches reduced carbon emissions and saved 400 pounds of fuel per approach. The test flight used satellite guidance technology called Required Navigation Performance to fly more direct, continuous descent approaches. Alaska Airlines estimates the new procedures at Sea-Tac will cut fuel consumption by 2.1 million gallons annually and reduce carbon emissions by 22,000 metric tons. They will also reduce noise for an estimated 750,000 people living below the affected flight corridor. Planning and testing of the procedures will continue this year and will be integrated into Alaska Airlines and sister carrier Horizon Air’s commercial operations at Sea-Tac pending FAA approval. ■

Chamber Offers Benefit Plan

he Alaska State Chamber of Commerce and The Foraker Group are offering a health care benefit program for chamber members. The Foraker Group Benefit Plan also aims to may make health insurance available to

www.akbizmag.com • Alaska Business Monthly • October 2010

INSIDE ALASKA BUSINESS companies previously unable to purchase it for employees. Companies enrolling in The Foraker Group Benefit Plan are required to pay 75 percent or more of the health care insurance premiums for enrolled employees. Employers may select from three plans, two of which are qualified High-Deductible Health Plans with a Health Savings Account. Employers are required to participate in a one-day training session to learn how to create a wellness program for their organization. Enrolled employees will be eligible to participate in an online Health Risk Assessment and may qualify for health coaching. The assessment and health coaching are funded by the Rasmussen Foundation, which will subsidize this initiative through 2011. ■

Teens Build Trail in Anchorage

outh crews, funded by the Legislature and state organizations, built a trail this summer linking the Anchorage Senior Center to the Chester Creek Greenbelt. Youth Employment in Parks built the trail to allow older Alaskans and others safely access city bike trails. Youth Employment in Parks is a program of the Anchorage Park Foundation, the Anchorage Parks & Recreation Department and Alaska Youth for Environmental Action, a program of the National Wildlife Federation. Each summer YEP teenagers complete park improvement projects offer free recreation programs. YEP teens learned job skills during trail building. Professional trail-builders from Alaska Trails provided technical assistance. Additional major groups providing funding

include the Rasmuson Foundation, the Municipality of Anchorage, the U.S. Fish & Wildlife Service, the U.S. Forest Service, the Atwood Foundation and the Alaska State Council on the Arts. ■

Carlile Marks 30th Year

arlile Transportation marked its 30th anniversary this year. Special events were held in late summer at the Anchorage terminal to honor the milestone. Brothers Harry and John McDonald, who grew up in Seward, founded Carlile Enterprises in 1980. Their first contracts included hauling urea from the Kenai Peninsula to the Matanuska-Susitna Valley and delivering milk from the valley to Anchorage. Linda Leary and Karl Hoenack later joined the company and became coowners. Leary was appointed president in 2008. Harry McDonald is chief executive, and John McDonald oversees all the Carlile shops and equipment maintenance. Carlile employs almost 600 people, including 110 people in Tacoma, Wash. Carlile terminals serve Alaska from Anchorage; Fairbanks; Kenai; Kodiak; Prudhoe Bay/Deadhorse; Seward; Tacoma; Twin Cities, Minn.; Houston, Texas; and Edmonton, Alberta, Canada. ■

Juneau Hospital Adds CT Scanners

artlett Regional Hospital in Juneau has purchased two Siemens computerized tomography scanners to replace an existing machine. Hospital radiologists and medical staff spent

about a year researching before deciding to spend about $2.7 million to purchase the CT scanners. One scanner will serve as the primary CT scanner, and the other will serve as a backup machine and allow for service expansion. Original plans called for acquiring just one scanner, but hospital leaders believe two CT scanners would provide improved patient care. Plans call for the scanners to be installed and operational by early 2011. Bartlett Regional used $1.3 million in federal funds designated toward the purchase of one of the scanners. ■

Bristol Design Honored for Safety Role

ristol Design Build Services LLC was accepted into the Occupational Health and Safety Administration’s Voluntary Protection Program. The recognition honors Bristol Design’s dedication to safety. The acceptance in the program is based on the company’s role as prime contractor in developing a Tactical Equipment Maintenance facility for the U.S. Army Corps of Engineers on Fort Lewis, Wash. ■

Providence Earns Award

rovidence Alaska Medical Center was honored for its efforts promoting The American Heart Association/ American Stroke Association’s Get with the Guidelines program. Providence and 814 other hospitals were featured in an advertisement in the “America’s Best Hospitals” issue of the July issue

www.akbizmag.com • Alaska Business Monthly • October 2010

INSIDE ALASKA BUSINESS of US News & World Report. Hospitals received 961 awards for achievement in coronary artery disease, stroke and/ or heart failure treatment. Providence received a Silver Performance Achievement Award in the heart-failure category.

Alaska Corps Earns Award

he U.S. Army Corps of Engineers Alaska District received the Secretary of the Army Award for Environmental Restoration. The Alaska District’s Formerly Used Defense Sites program received the highest honor in the field of environmental science and sustainability given by the Army for investigation of formerly used military sites on Tanaga and Ogliuga Islands in the Aleutian Islands. The uninhabited islands are 65 miles southwest of Adak and 1,350 miles southwest of Anchorage. Alaska District employees searched for environmental contaminants, unexploded ordnance and buried munitions dating back to World War II. Workers, including the Corps’ contractor, overcame challenges on the project, including walking miles on uneven terrain and using many transportation modes, from barge to helicopter. ■

LifeFlight Lands Accreditation

i f e F l i g h t , A l a s k a Re g i o n a l Hospital’s critical care air ambulance program, has received a three-year accreditation from the Commission on Accreditation of Medical Transport Systems. LifeFlight in Anchorage first received similar accreditation in the voluntary program in 1997. Accreditation included a

three-day site visit plus reviews of LifeFlight’s patient safety procedures, communication, staff education, flight service safety and maintenance. LifeFlight provides fixed-wing services statewide, to the Lower 48 and internationally. Due to its proximity to Merrill Field in Anchorage, Alaska Regional is the only nonmilitary hospital in Alaska where fixedwing aircraft can taxi to the hospital doors, speeding patients’ journey to the facility. ■

Alaska Structures Opens Afghanistan Office

nchorage-based Alaska Structures opened an office in Kabul, Afghanistan, in August. The office is located in Kabul Green Village Compound, near the Supreme Road in Kabul. The new location is strategically located so the company can provide support military efforts in the Middle East. Last year Alaska Structures provided more than 5,000 shelters and 5,000 Alaska Environmental Control Units to U.S. and NATO forces in Afghanistan. “The strategic location of this office, as well as the addition of key personnel, allows us to better serve our extensive government and military customers,” said Gerrit Boyle, executive vice president of government programs. ■

Museum Debuts Warhol Exhibit

he Andy Warhol exhibit opening Nov. 5 at the Anchorage Museum will be the first display of the artist’s work in the state, museum officials

said. The 5,000-square-foot exhibit, “Andy Warhol: Manufactured,” will run through Jan. 30. It features Warhol’s photographs, silk-screens and films, about 90 original pieces, including those for the Campbell’ Soup series and the 25-foot-wide hot pink “The Last Supper.” The exhibit has interactive features, including a station where visitors can photograph themselves in 1960s fashion, hands-on art activities for children, and a reading area stocked with children’s books illustrated by Warhol. To create this exhibition, the Anchorage Museum and Anchorage curator Julie Decker collaborated with The Andy Warhol Museum, Pittsburgh, and private collectors internationally. ■

Koniag Acquires California Firm

oniag Inc. has acquired a Los Angeles company specializing in software designed to produce schematics of electrical and hydraulic systems for the military. The new subsidiary is now called Digitized Schematic Solutions LLC. The acquisition of Tools for Decision Group electronic information division took place July 1. TFD Group provides software, consultation, database management and training for the Defense Department. DSS will continue to operate from its offices in Los Angeles. The new Koniag subsidiary will complement the products of XMCO Inc., a Koniag Development Corp. subsidiary based in Warren, Mich. XMCO writes and produces technical manuals for military heavy equipment and vehicles. ❑

www.akbizmag.com • Alaska Business Monthly • October 2010

VIEW

FROM THE

TOP

COMPILED BY PEG STOMIEROWSKI

Chanda Mines

Co-Owner, Bagoy’s Florist W

ith several sites in Anchorage, Bagoy’s Florist has sustained itself in an emotionbased business where trust, flexibility and quality matter. Chanda Mines, with her husband Randy, began managing the store in 1991, as her parents had done for a dozen years before them. The couple purchased it in 1994, and happily report that business has more than doubled in the years since they took ownership. Bagoy’s began in the family home in 1922; memorably, it survived the devastation of the 1964 earthquake.

Train, Train, Train Bagoy’s is the original florist in Alaska, and we have never stopped working hard to have a trustful business relationship with our neighbors. Our goal is to provide a high quality, beautifully designed, affordable product, with our reliable staff readily available and delivery offered seven days a week. Training makes the difference, and we concentrate on customer satisfaction and product quality, backed by our “best in the state” guarantee. Flower Daze Valentine’s, Mother’s Day and Christmas top our sales charts. All are predictably hectic, and keeping good records helps. Flower sales have been recession-proof because people will continue in hard times to seek ways to feel good. During previous and current economic downturns, business does slow down, but life continues to have seasons both of celebration and of sorrow. Flowers are always beautiful, a perfect fit, appreciated by all. Competition We don’t try to compete with box stores – they offer a quick-grab product, and we love to see people enjoying flowers anywhere, even in the grocery store. Our focus is on providing full service for those who want to be represented in a heartfelt, lasting and professional way, with outstanding, artful designs. We also have monthly walk-in specials and Friday two-for-one deals. 24/7 Edge Online ordering is available 24/7. Online sales continue to be a major focus. On the other hand, measuring growth can be difficult because many customers shop our website and then call in to receive greater detail and personal attention. Growth Drivers Growth for Bagoy’s lies in our delivery and online segments, and also our customization capacity. Everyone is so busy today that they want to work with a florist whom they can trust to do the job as they would themselves. Our computer system, coupled with the compassion our employees have for our customers, helps us keep reliable records of what regular customers prefer. A floral gift purchase from Bagoy’s can happen in as little as two minutes – and who doesn’t have two minutes to touch someone’s heart?

Marketing Pillars Community involvement, commitment, special events and all traditional media forms. We want to always remind people we are here and ready to help them enjoy life! ❑

Family Ties The Bagoy name represents a strong legacy in our community. Each of us respects that. A major focus of our business has been to give back, and to continue to help build our community through charitable works. Bagoy’s has enjoyed serving generations of loyal customers, and more generations can expect to enjoy the beauty of flowers through our commitment to business strength.

Chanda Mines

www.akbizmag.com w ww.akbizmag.com • Alaska Business Month Monthly • October 2010

TECHNOLOGY

Helping to enhance business operations BY TRACY BARBOUR

Photo courtesy of Nu-Solutions Consulting LLC

irtualization is one of today’s hottest information technology trends, fostering the development of virtual 3D worlds, virtual computer hardware and software, and virtual office space. Among the newest virtual technologies being leveraged by Alaska businesses is Second Life. A virtual 3D environment, Second Life mimics much of what happens in the real world. Second Life users, known as “residents,” can socialize, conduct commerce and connect in a surreal way. And just like in the real world, Second Life has an economy where residents can buy and sell services and virtual goods to one another in a free market. Services include working in stores, creating custom content and providing other personal services. Virtual goods range from land, buildings and vehicles to clothing, jewelry and works of art. Second Life, created by Linden Lab, is the leading virtual world development platform for the creation of virtual goods and 3D spaces used by individuals, artists, corporations, governments, academic institutions and nonprofits. Home to millions of residents, Second Life is attracting a new wave of artists who are using the platform to create and promote their work. Alaska artists are using the Second Life gallery developed by the Rasmuson Founda-

Nu-Solutions Consulting LLC Owner Partrick Lovelace.

tion to expose their art to an international audience. “A lot of artists live and work in rural communities that have low access to broadband,” says Cassandra Stalzer, the foundation’s communications manager. “We built the gallery as a way to display some of the work by artists that we funded through our individual artist initiatives.” The artists don’t have to pay anything to have their work exhibited in the gallery. The high-tech space is all

part of the private foundation’s efforts to promote a better life for Alaskans. The gallery contains four floors of art representing a variety of works from Alaskans. “You don’t have to limit the art to visual art.” Stalzer says. “We’ve incorporated literary, filmmaking and music. It’s a very interesting and inspiring environment.” Artists who want to expand their presence in Second Life can create animated “avatars” to interact with other residents in business, events,

www.akbizmag.com • Alaska Business Monthly • October 2010

role-playing communities and chat and hot spots. Avatars – like the ones depicted in James Cameron’s movie “Avatar” and the animated TV show “Avatar: The Last Airbender” – are digital personas that can be created to resemble a real person or an alternate identity. Artists can purchase unique clothing, hair and fashion accessories in resident-owned shops to completely customize their avatar within Second Life’s virtual realm.

POPULAR VIRTUAL TECHNOLOGIES Alaska organizations are increasingly employing virtual technologies like Second Life to conduct business more efficiently, productively and cost effectively. Virtualization is the creation of an artificial (rather than actual) version of something – such as Second Life’s virtual world. As a more technical example, operating system virtualization involves using software to allow a piece of hardware to run multiple operating system images at the same time. This, thereby, makes it possible for one computer system to function as multiple “virtual” systems. The virtualization of operating systems got its start on mainframes and has been around for decades. In recent years, the adoption of virtual technology has rapidly accelerated – ushering in cost-saving virtual cloud services that are available on demand via the Web from a third party. Today, virtualization is pervasive throughout the business world, says Todd Clark, president of Anchoragebased DenaliTEK Inc. But interestingly, virtual technology isn’t something that most end users will notice, Clark says. It’s designed to work behind the scene to provide economies of scale unavailable with traditional technology. “For example, if you have a piece of hardware that could support e-mail for 1,000 people, it wouldn’t make sense to have 20 separate servers,” Clark explains. “Virtualization is a way of leveraging one piece of hardware.” Some of the most common virtual technologies involve network, storage and server resources. Network virtualization, for instance, entails combining hardware and software network resources and network functionality into a single, software-based

administrative entity – a virtual network. It allows every subscriber access to all the resources on the network from a single computer. Network virtualization helps IT administrators simplify the complex and tedious process of managing multiple computers that share information across wired or wireless technology. It increases efficiency and productivity by enabling files, images, programs and folders to be centrally managed from a single physical site. In terms of technical benefits, virtualization optimizes

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www.akbizmag.com • Alaska Business Monthly • October 2010

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like IBM and Cisco Systems to small Web-based providers. Implementing virtualization typically costs more than using individual traditional services, according to Clark. Therefore, it may be less economically feasible for small companies to virtualize severs on their own. In Alaska, many small businesses are embracing Microsoft server services, Clark says. Microsoft Virtual Server facilitates the creation of virtual machines on the Windows XP, Windows Vista and Windows Server 2003 operating systems.

SOFTWARE/HARDWARE AS A SERVICE Software as a service (SaaS) is another type of virtual technology being utilized by Alaska businesses. SaaS is an application that is hosted on a remote server and accessed through the Internet. Therefore, the information isn’t downloaded to the user’s computer, and no licensing fee is required. Users simply pay a subscription fee to access the software for as long as they need it. E-mail is perhaps the most prevalent example of SaaS. With this solution, vendors host the e-mail programs, logic and data in a central location and users access the data and software over the Web. Companies can capitalize on Web-based e-mail to minimize the cost of purchasing, maintaining and upgrading an e-mail server. They can use Microftsoft Hotmail and Google

www.akbizmag.com • Alaska Business Monthly • October 2010

Photo by Adam Hill

DenaliTEK employee Adam Hill in front of a server rack at a client’s location.

G-mail for free or pay a low fee for subscription-based services. In addition to the lower costs, SaaS users can avoid the hassle of having to store e-mail software on their own computer. Nor do they have to worry about backing up the data associated with the software. That’s the responsibility of the SaaS provider. Microsoft SharePoint is another popular SaaS option. The software platform is designed to make it easier for people to communicate, collaborate and work together. Users can access the software through their browser to perform a variety of functions, including set websites, manage documents and publish reports. SharePoint gives employees a dedicated work space where they can access information that can help them improve their productivity and efficiency, as well as make better decisions. Alaska businesses are also using Oracle Primavera platform for virtual communication and collaboration, according to Patrick Lovelace, the owner of Nu-Solutions Consulting LLC, an Anchorage-based Primavera partner. The system allows employees to access information in real-time from any location. “For most of our clients in Alaska, remote access to the project information is crucial to execute any size

www.akbizmag.com • Alaska Business Monthly • October 2010

project in a timely matter,” he says. “The Oracle Primavera solution provides the means for limited resources to get more done in a shorter amount of time.” Lovelace says Oracle Primavera is popular with Alaska businesses in the architecture, construction, engineering, utility, mining, and oil and gas industries. They’re using Oracle Universal Content Management for online document management, Oracle AutoVue for design collaboration, Oracle Contract Management for constructiondocument management and Oracle Primavera P6 Project Management for scheduling and planning. Hardware as a service also is affording Alaska organizations an opportunity to leverage virtual technology. This option, for instance, could be ideal for a medium-size company needing to provide an accounting system to multiple locations. Let’s say a business is headquartered in Alaska and has five locations across the United States. The company could build a data center to make the accounting system available to each of its locations, or rent server hardware maintained by an independent data center. This would enable the company to minimize capital expenses, plus receive a better solution for their overall needs. “That data center would have better functionality, bandwidth and facilities than they could afford on their own,” Clark says. Alaska businesses are also trending toward using hardware and software as service solutions to meet their accountingand relationship-management needs. However, some companies may squirm at the thought of storing sensitive financial or client information with a remote data center. They dislike the idea of not having direct control over their information and are concerned about the safety of their data. However, data security shouldn’t be a major issue, according to Clark. “I would much rather have my data secured at a data center, than have it in my office on an unsecured cable modem,” he says. He adds that if companies don’t maintain their hardware, it places them at greater risk for hacker attacks. “You feel like your data is safer in your own office, but if you’re not going to maintain

it, it’s much safer in a data center.” Clark emphasizes that data centers specialize in securing information as a core competency. So they’re more apt to spend time and money implementing the latest technology to safeguard their clients’ information. Therefore, businesses shouldn’t allow “perceived” risks to prevent them from capitalizing on virtual technologies. “I think companies that aren’t embracing virtualization and software as a service today will look back in a few years and wish they had.”

IMPACT OF VIRTUAL TECHNOLOGIES Virtual technologies are literally changing the way individuals and organizations conduct business in Alaska. The Second Life gallery, for instance, gives artists and other residents a chance to create, construct and experiment in a fantasy world with no physical limitations. Whatever they can envision, they can create in Second Life. “We’ve seen things like conference centers constructed inside tulips,” Stalzer says. “That audience was appealing to us.”

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www.akbizmag.com • Alaska Business Monthly • October 2010

The Rasmuson Foundation is using the digital gallery as a platform to test new ideas, theories and approaches. The gallery is built on virtual real estate that is owned and donated by the University of Alaska Fairbanks. The foundation has spent $5,000 to $6,000 to operate the gallery, according to Stalzer. That’s a fairly small – but important – investment for the organization, which awards about $20 million annually to help improve the quality of life in Alaska. “Our continued investment in Second Life is based on our belief that virtual worlds will become more and more familiar with people,” Stalzer says. Second Life is changing the way companies are conducting practical functions, such as meetings, trainings and other events. The 3D environment adds a richer, more dynamic dimension to teleconferences and Webinars. Instead of simply viewing or listening to a presentation, attendees of virtual meetings can interact directly with the other participants. They can even give a virtual nudge to the person next to them to indicate they agree with a point

the speaker has made. “It’s definitely a better experience,” Stalzer said. Virtual technology is also altering the way more traditional companies are doing business. For example, Lovelace says, 3D and 4D technologies allow users to more clearly convey project details. “In the past, spreadsheets and bar charts were used to communicate project plans in e-mails,” he says. “This left much to the imagination of the individuals analyzing the reports. Now with the use of Oracle Primavera and Synchro, you can virtually build and plan the most simple to complex projects in a matter of hours with the ability to change or modify the plan on the fly.” Lovelace adds that being able to communicate and collaborate in real time is priceless, particularly with remote employees. Having information at the fingertips of all the team members provides faster turnaround times, results in fewer errors, uses less overhead and gets companies paid faster. It also pays off in intangible ways. Lovelace explains: “One of the greatest benefits I have seen is from the people working

in the field or remote offices. When they have the feeling of being a direct contributor to the decisions being made in a project, instead of finding out about changes late in the game, this increases morale and the working relationship between the team members.” Virtualization is also reducing companies’ need to make capital purchases, according to Clark of DenaliTEK. “For example, five years ago our clients would purchase an e-mail server,” he says. “We would install it and maintain it. That would involve capital costs, maintenance and replacement costs. Now with virtual cloud services, you can purchase the use of an e-mail system that has more functionality, better security and a low monthly charge.” Virtualization is slowly transforming business operations at DenaliTEK. The company resells cloud servers that enable its clients to capitalize on e-mail services hosted by Microsoft. “What we’ve done is we’ve remodeled our business on embracing these cloud services,” Clark said. “It’s exciting, but it’s been necessary. If we didn’t change our business, we would be left behind.”

www.akbizmag.com • Alaska Business Monthly • October 2010

“I would much rather have my data secured at a data center, than have it in my office on an unsecured cable modem.” — Todd Clark President DenaliTEK Inc. Technology generally means all the ways by which firms create value for their constituents, which includes human knowledge, physical equipment, processing systems and work methods. In keeping with this definition, Virtual Office Suite is using virtual technology to help businesses change their approach to meeting their administrative needs. The Anchorage company, a division of Midtown Executive Office Suite, provides virtual office space for clients whenever they’re physically away from their office suite. That includes doing whatever it takes to facilitate clients’ business, including fielding phone calls, opening mail and transmitting faxes. “I am really a full-time secretary or receptionist for clients that are on the move,” says Sharon Kelly, the owner of Virtual Office Suite. “They get a full-time office on a part-time basis.” While the concept of virtual office space is quite common in the Lower 48, it’s fairly new to Alaska businesses, according to Kelly. Virtual Office Suite has about 20 clients, many of which work out of Prudhoe Bay. Some are international companies that perform work throughout the state, making a virtual office an important resource. “When they’re not here, their office is handled for them over the Internet or phone,” Kelly says. “We are here virtually all the time.” ❑

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TECHNOLOGY

Image courtesy of Design Alaska

Rendering of the barracks at Fort Wainwright by Design Alaska, a Fairbanks architecture, engineering and surveying company that has used Deltek’s software to help manage its projects for more than a decade.

Alaska Companies Opt for Deltek Project-focused enterprise management BY JULIE STRICKER

kitchen knife can be used to drive screws into a wall, but it’s not very efficient. A card catalog will keep information organized, but it’s a labor-intensive and inflexible database long replaced by computers. Even the beloved networking tool of the 1980s, the Rolodex, has been bypassed by social media. Changing times require new tools. Many Alaska businesses have turned to government contracting in the past decade. They needed a way to find, manage and operate complex, multilayered projects that require rigid adherence to ever-changing government regulations and oversight. There’s a tool for that, too, created by a Virginia-based company called Deltek (Nasdaq: PROJ).

GOVERNMENT CONTRACTING NICHE Deltek, founded in 1983, has created a broad suite of software designed for project-focused businesses. It is the leading provider of enterprise management software and has more than 12,000 clients around the world, including 88 of the top 100 government contractors, according to an independent survey by Washington Technology. Those top 100 contractors, led by Lockheed Martin, secured nearly $130 billion in contracts last year. Deltek reported $265.8 million in revenue in 2009. A half dozen of the top 100 are Alaska Native corporations: Arctic Slope Regional Corp., NANA Regional Corp., Eyak Technology LLC, Chenega Corp., Chugach Alaska Corp. and Alutiiq LLC. Dozens of

other companies in Alaska involved in contracting, construction, architecture and other project-oriented businesses also use Deltek software, says Patrick Smith, senior director for public relations and analyst relations for Deltek. Its suite of products is specifically geared to such projects. “That really separates us in the marketplace,” Smith says. “We’re really tied to the services and knowledge economy.” Its strongest Alaska niche is in government contracting, which has grown exponentially in the past decade. Corporate officials visit the state frequently and hold an annual Deltek convention with a specific focus on Alaska Native businesses. “We’ve made an investment into the

www.akbizmag.com • Alaska Business Monthly • October 2010

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community to be more than just a technology provider, and the community has responded,” says Jim Rogers, vice president of GovCon Market Management for Deltek.

THINKING GLOBALLY The software is designed to encompass the life cycle of a project, from helping clients finding bid opportunities all the way through to project completion and auditing. It includes forms for reports and analytics to allow clients to track progress on projects. It also tracks the

revenue and costs associated with a project, giving clients visibility into how each project is performing. The software is frequently updated to support specific requirements for government projects. The company frequently acquires other technology that can be incorporated into the suite. For instance, the recently released Deltek Mobile Time, a BlackBerry-enabled application for Deltek Time Collection users, allows project leaders to view, record, update, submit and approve labor activity from their smart phone.

In July, Deltek bought Denmark-based Maconomy A/S, which provides services to advertising, public relations, accounting and consulting firms. That acquisition increases its base in Europe and offers a springboard to growth in Asia, says Kevin Parker, Deltek’s president and chief executive. “It’s a moving target,” Rogers says of keeping up with technology. “We’ve been at it for over 20 years.”

ACTING LOCALLY In Alaska, the focus is on government contracting. The Tatitlek Corp., the village corporation for the tiny Prince William Sound community, has seen strong growth in the past three years because of government contracting. Tatitlek specializes in battlefield simulation and military training support, but also oversees projects in construction, manufacturing, food service, logistics, foreign culture and language training services and property management. The corporation, with annual revenues of about $115 million, is working on about 35 different projects, according to Daewon Kim, business applications project manager. The corporation went live with the Deltek software in July. It makes sense, says Kim, “We are a government-contracting company,” he says, and Deltek’s product is a government-contracting product. “They have a good thing understanding the ANCs, and they have adequate resources to understand government contracting,” Kim says. Rogers says Alaska is an important market for Deltek. “It’s a strategic alliance,” he says. “We’ve grown along with the ANCs for the past couple of years.” Deltek also hosts govWin, an online community dedicated to solving common business problems for government contractors. Rogers calls it the “LinkedIn of government contracting.” GovWin includes more than 10,000 individual members who can team up and share information about government contracts. If one group needs a particular skill to complete a contract, it can post a notice and get a match, sometimes within hours. “It’s really flattening the world of government contracting,” Rogers says.

www.akbizmag.com • Alaska Business Monthly • October 2010

LONG-TERM USE Government contractors aren’t the only market for Deltek in Alaska. Other project-oriented businesses, such as architecture, also are clients. Design Alaska, an architecture, engineering and surveying company founded in 1957 in Fairbanks, has used Deltek’s customer-relation management (CRM and proposals) and accounting software for more than a decade, actually starting with the original software that Deltek later bought out. Design Alaska won a recent contract to build a new barracks at Fort Wainwright, and was the lead on such Fairbanks landmarks as Doyon Plaza and the Chena River Convention Center. Marilyn Fye, who maintains the database at Design Alaska, says the company uses Deltek as a repository to keep information up to date on its various projects and clients. “The software is so extensive that you can pretty much do anything you need to,” Fye says. Besides its accounting and human resources applications, Design Alaska uses Deltek’s Vision database functions when bidding on contracts. They can group the data by area, for instance, if they need to pull out all of their work on Eielson Air Force Base or the University of Alaska Fairbanks. “It’s easy to look in one place and find all the information,” she says. “The database is only as useful as the information you put in, but it’s very flexible.” Fye says Deltek’s widespread presence in Alaska has been a boon. There are online user forums and an Alaska user group for Deltek. Fye leads the the Alaska Vision users group and said she expected it to be a small group when she first became involved. “Their presence in Alaska is stronger than you would expect,” she says. “We thought we were about the only Deltek users in Fairbanks.” But then she started seeing the names of other architectural firms and businesses that use Deltek and realized the strong networking potential was enormous. “We’ve been using the product for a very long time and don’t expect to change,” Fye says. “It’s very well supported.” ❑

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RETAIL

Alaska Malls

Regal Cinemas Tikahtnu Stadium 16 and IMAX opened in June at Tikahtnu Commons in Anchorage.

Still attracting customers in tough economic times BY VANESSA ORR

While the mall’s busiest time is around the holidays, the back-to-school season is comparable. “Because we’re a publicly traded company, I can’t provide numbers, but I will say that we’re seeing a general increase in traffic now compared to last year,” she added. Established in 1987, the Anchorage 5th Avenue Mall was purchased by Simon Property Group in 1994. Tenants include anchor stores JCPenney and Nordstrom, as well as Coach, The Body Shop, Gap, Banana Republic and Ben Bridge Jewelers. To attract customers to the 499,000-square-foot mall, Kaser-Lee says that mall staff constantly provide unique events to bring traffic in. “We held a back-to-school fashion show that enabled our retailers to showcase different looks that customers could then go in and purchase,” she explained. “We also offer

www.akbizmag.com • Alaska Business Monthly • October 2010

n this turbulent economy, many people are choosing to save money instead of spending it, and retailers are reacting to this trend by putting off ideas of expansion or moving into new markets. Still, malls in Alaska have been able to keep their doors open, not only by marketing heavily to retailers outside of the state, but by finding unique ways to communicate to and encourage prospective customers. According to Maegan Kaser-Lee, director of mall marketing at the Anchorage 5th Avenue Mall, the recent back-to-school season bodes well for those in the retail industry. “This year, we’ve been very excited about the level of traffic we’ve seen – we saw a lot of customers in the mall for back-to-school sales and events,” she said. “We’re encouraged by this; it’s a very good thing for our retailers.”

Shop Smarter Savings online and at every entrance to our facility, so that customers know what’s going on inside the mall.” One of the newest ways that malls are attracting customers is through the use of social media sites such as Facebook and Twitter. “These sites are great because they allow us to hear directly from our customers and to see what they want,” explained Kaser-Lee. “For example, one of the questions we ask is ‘what new stores do you want to see?’ We also continually post events and get feedback from customers about their experiences.” In June, a mall Facebook page was launched which gained 700 fans in one month. “We were surprised by the response we got – the numbers are great for the size of our market,” Kaser-Lee said. “The sites are also really helpful in letting us respond to customer problems and questions; they help us provide better customer service.”

As for attracting retailers, the Anchorage 5th Avenue Mall is in the envious position of not having much empty space available. â&#x20AC;&#x153;Occasionally tenants change out, but new tenants move in fairly rapidly,â&#x20AC;? Kaser-Lee said. â&#x20AC;&#x153;While that space is empty, we allow our retailers to put up special displays for a short period of time.â&#x20AC;? While mall staff works locally to encourage new businesses to consider the mall as a location, Simon Property Group has national representatives that work to attract the latest names and fashions to the Anchorage area. In southeast Alaska, the Nugget Mall has been attracting shoppers from the capital city and surrounding areas for more than 35 years. Located in Juneau, the 140,000-square-foot mall is anchored by a Jo-Ann store and features 25 shops and restaurants. â&#x20AC;&#x153;We have lost a few tenants over the past few years and do have vacant spaces to fill, which I understand is pretty much the norm around the country,â&#x20AC;? said Bud Jaeger, onsite property manager. â&#x20AC;&#x153;I have no idea of numbers, but traffic wise, weâ&#x20AC;&#x2122;ve held pretty steady

over the last year. Weâ&#x20AC;&#x2122;re in a good, central location in Juneau, and there are still opportunities here. â&#x20AC;&#x153;We have a very steady economy in Juneau and unemployment has historically been lower than the national average, so we havenâ&#x20AC;&#x2122;t seen any big swings up or down,â&#x20AC;? he added. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a stable place to do business.â&#x20AC;? To attract customers to the Nugget Mall, its marketing department holds events nearly every weekend, ranging from arts and crafts shows, to electric utility information booths, to college and school fairs. The Nugget Mall benefits from being in the hub city for Southeast, so it attracts shoppers from many of the areaâ&#x20AC;&#x2122;s surrounding villages and communities. â&#x20AC;&#x153;Locals are aware that the mall is here and that there is space available, so most of our retailer marketing is done out-of-state,â&#x20AC;? explained Jaeger. â&#x20AC;&#x153;We contact the major chains, but most stores really wanting to enter this market contact us, and have already done demographic and other surveys. â&#x20AC;&#x153;Most retailers are looking for markets of 50,000 to 100,000 people, but in

Juneau, we have a population of 31,000 plus a small number of residents in surrounding areas,â&#x20AC;? he added. â&#x20AC;&#x153;That number usually makes up their minds.â&#x20AC;? While the economy has held steady in Juneau, Jaeger says that retailers have been affected by the number of big box stores that have moved into the city in the past 20 years. â&#x20AC;&#x153;When you have Fred Meyer, Costco and Wal-Mart move into an area, it affects the smaller businesses more than anyone else,â&#x20AC;? he said. â&#x20AC;&#x153;Every store in the mall has felt the effect.â&#x20AC;? As for the lack of expansion in the retail sector, Jaeger considers the bigger picture. â&#x20AC;&#x153;I understand that bank deposits are up and growing, which leads me to believe that people are saving more money; I think that many people are waiting to see what the federal government does,â&#x20AC;? he said. â&#x20AC;&#x153;There are some big issues on the table, including increasing taxes and health care reform, which will affect small businesses and their employees.â&#x20AC;? Despite the economic ups and downs of the past couple of years, Tikahtnu Commons, Anchorageâ&#x20AC;&#x2122;s newest retail and entertainment center, is successfully

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CIRI and California-based retail developer Browman Development Co. broke ground in 2007 to start developing Tikahtnu Commons on 95 acres of CIRI land in northeast Anchorage. When completed, Tikahtnu Commons is expected to include 950,000 square feet and cost more than $100 million.

attracting both retailers and customers. “Right now, we’re a little past twothirds built out and still on our original construction schedule,” explained Jim Jager, director of corporate communi-

cations for CIRI. CIRI Land Development Co. (CLDC) and its partner Browman Development Co. are developing the 95-acre, $150 million to $175 million center.

“To date, we have constructed two sets of shop buildings, which are very close to being fully occupied,” Jager said. “We are currently marketing to restaurants, and have one additional

www.akbizmag.com • Alaska Business Monthly • October 2010

restaurant space under construction now for Red Robin.” According to Jager, most anchor stores are now in place, which include Lowe’s, Target and Kohl’s. Junior anchors also in place include Best Buy and Sports Authority, and a new PetSmart is under construction. “Most of the development has been completed on the west side of mall, so we’re now shifting to the east side stores,” Jager said. When completed, Tikahtnu Commons will house 12 to 15 major retail stores and 60 to 75 businesses. The center is also home to Regal Cinemas, a 16-screen, 72,000-square-foot theater that holds more than 3,000 seats and Alaska’s first IMAX screen. Despite economic uncertainty, leasing has gone well at the new development. “It’s a complicated picture; the nationwide economy has clearly been challenged, which has raised some issues with retailers,” Jager said. “We spoke to several restaurants that were part of national chains, and they looked at Anchorage and agreed that it was a great market. But they just aren’t opening stores now – not because they don’t like Anchorage, but because they simply aren’t expanding. On the other hand, the stores that have opened up have performed very well.” According to Jager, the Alaska market is a big draw for many retailers. “The retail numbers in Alaska are quite strong; when you look at the national charts, we typically rank among the lowest number of square feet of retail per capita in the country. This is attractive to retailers because it means that Alaska is underserved in terms of retail footage. “Anchorage is also the hub for the entire state and as an extreme tourist destination; people stay here, shop and eat out. If things were in balance, there would be more square feet of shopping, retail and restaurants than there is, but since there isn’t, it’s a very good opportunity.” Other factors lending themselves to attracting retailers: Anchorage boasts a higher average revenue rate per square foot of retail space and a high “retail leakage” rate. Retail leakage occurs when members of a community spend money outside that community, for example, by traveling to Seattle to shop or shopping online. “If we can satisfy those shopping

needs in-state, that’s what we would rather do,” Jager said. The challenge, as with many things in Alaska, is logistics. “Trying to stock a store in Anchorage is difficult; lots of department stores restock within 24 to 36 hours, which up here is pretty tough,” Jager said. “To fly products in is expensive, and while there is some trucking, most items come via barge. Since there are only two barges a week, your inventory turnaround time goes from 36 hours to a week or so. This isn’t a big deal if you’re

selling a car, but it’s a problem with high-end groceries or products with a short shelf-life.” According to Jager, final construction on Tikahtnu Commons will depend on what tenants commit to the site. “We’re very happy with the progress being made, and we’re also pleased that it’s become a popular project in town,” he said. “Not only does it benefit Anchorage shoppers, but it provides northeast Anchorage with new jobs and helps other businesses through increased traffic.” ❑

www.akbizmag.com • Alaska Business Monthly • October 2010

H R M AT T E R S

BY LYNNE CURRY

even months ago, you hired a cracker-jack marketer who quickly proved herself indispensable. “Jackie” had a way of connecting with people, accessing the media and describing the value of your organization in ways that lead to a dramatic increase in revenue. You don’t want to lose Jackie, but she’s just started wearing a nose ring. She thinks it’s attractive, but you consider it off-putting to a sizeable number of potential clients. You encouraged one of your long-term employees to use his annual leave because you worried he was burning out. “Bill” spent two weeks surfing off Baja California and returned relaxed. Although you enjoy the new at-ease Bill, you’re concerned he now thinks it okay to wear flip flops and rumpled jeans with frayed cuffs to client meetings. Because “Gloria” hopes to find a guy, she dresses in an edgy, provocative manner. You catch other employees looking at Gloria’s cleavage and wish she’d realize how much shows when she bends over. What right does an employer have to tell an employee how to dress? Can an employee get away with telling an employee he or she needs to go home and change clothes? If you employ workers who push boundaries in how they dress at work, a dress code and a frank discussion may help. Employers may institute and enforce a dress code if it has a sound business basis and doesn’t discriminate against an individual based on race, culture, age, sex, national origin or religion. The best dress codes give employees clear, easy-to-follow standards and make ample allowance for individual preferences. Employers can

set different standards for different jobs or sections of their company as long as they base their differing standards on sound business reasons and avoid discrimination based on sex, race, religion, age, culture or national origin. For example, many employers set stricter standards for employees having regular customer contact. If your company’s dress code differentiates between male and female employees or discriminates against those of different races, religions or national origin, watch out. Courts have ruled against codes requiring female employees to wear dresses while allowing male employees to wear slacks. Similarly, courts have ruled that companies that ask male employees to wear neckties or cut their hair short must ask female employees to wear business attire and meet strict hair-grooming standards. Employers also need to allow those who wear turbans or saris for religious or cultural reasons to do so unless the garments create a safety hazard around equipment. If you supervise employees who “just don’t get it,” you can’t assume they will agree with you concerning what “appropriate” and “professional” mean. Your code may need to specifically rule out flip-flops, torn pants, sweat suits, the observable lack of undergarments and shorts. When an employee grieved a Southern Bell Telephone and Telegraph Co. dress code that prohibited telephone collectors from wearing shorts, Southern Bell won their arbitration. Alternatively, although a dress code makes handling touchy situations easier, your company may not need a dress code. If most of your

Nose Rings, Frayed Cuffs and Cleavage

Lynne Curry

company’s employees dress appropriately, perhaps all the manager needs to do is talk frankly with the one employee who dresses provocatively or unprofessionally. In other words, can you simply ask Bill to keep his vacation-born ease, but return to pressed slacks when meeting clients? If Jackie’s nose ring means a lot to her, she may resist removing it. Instead, you could ask her to cover it at work with a small bandage. Without making a big deal of it could you let Gloria know you she occasionally shows more than she wants to and resolve the situation discretely? Do y o u s u p e r v i s e e m p l o y ees who dress in ways that give pause? Consider a dress code – or a ❑ frank talk. About the Author Lynne Curry, Ph.D., SPHR, runs a management-consulting practice in Anchorage, The Growth Company Inc. Through her five-person company, she offers individual consulting to managers and employees, as well as management, employee and board training, strategic planning, team-building.

www.akbizmag.com • Alaska Business Monthly • October 2010

ECONOMY

PFD Economic Impact

Consumer spending anticipated NEXT EXIT

BY HEIDI BOHI

ree money. There are economists and financial analysts who will tell you that, of course, there’s no such thing. But they’d be hard pressed to convince any Alaskan who’s ever received the annual Alaska Permanent Fund Dividend (PFD) check of that. Every September when the governor announces how much the annual payment is going to be for every man, woman and child who qualifies, everyone shares that twinge of happiness that comes from knowing they’re getting something for doing absolutely nothing. “Isn’t Alaska the state where everyone gets paid just to live there?” Outsiders ask this question as if every year each Alaskan gets to stand in a money booth and grab as much as they can until the fan quits blowing.

MINI ECONOMIC BOOM But in the grand scheme of things, when you consider the impact on personal income, the PFD is not really that much money. Last year, Gov. Sean Parnell announced the 2009 check was going to be $1,305. That was modest in comparison to former Gov. Sarah Palin’s announcement in 2008 – $2,069, plus a one-time $1,200 Alaska Resource Rebate tacked on – making the annual cash influx higher than ever that year. For the past 29 years the payment has gone up and down based on the five-year average of the fund’s performance, varying widely depending on the stock market and other factors that influence the fund portfolio. Checks usually vary between $600 and $1,500, or $900 and

$1,800 when adjusted for inflation. When the PFD begins to hit banks and financial institutions in early October, whether it’s spent on a luxury item, or it goes to a family pot that will be used for bigger purchases or paying household bills, the consumer impact on Alaska’s economy is nothing short of a mini economic boom. Spending generated by PFD automatic deposits starts to be felt in every cash register in every corner of the state. In 2009, $875 million was calculated for transfer from the fund to the State Revenue Department Permanent Fund Dividend Division, and after $55 million in adjustments for residual funds, designated State expenses and the cost of operating the PFD, $820 million was available for payout to the 628,499 successful applicants. The fund is invested primarily in stocks, bonds and real estate. In addition to the money it makes from these investments, the Alaska Constitution requires 25 percent of all mineral royalties received be deposited into the fund, along with 50 percent of royalties from certain petroleum fields. Deposits of more than $14 billion from mineral royalties, legal settlements and other State legislative appropriations have gone into the fund since 1977. Between the first checks in 1982 and last year’s 2009 PFD,

$17.5 billion has been paid out in dividend checks. As of Sept. 3, the Alaska Permanent Fund was worth more than $35 billion. “This really demonstrates the wisdom of creating the fund as a way of converting a non-renewable natural resource into a renewable financial resource,” says Laura Achee, director of communications at the Alaska Permanent Fund Corp.

MARKETING TO THE PFD Vacations, plane tickets, cars, snow machines, fur coats, credit card debt, heating bills, boats, golf clubs, computers, furniture, mattresses, puppies, plastic surgery, dental work, diamonds, college, skis, early Christmas shopping, late school shopping, or just a nice evening out – this is the short list of what Alaskans spend all or part of their annual check on, as businesses statewide ramp up to be first in line to get in on the windfall by announcing sales, promotions and special events. There is no shortage to what lengths businesses will go to get their hands on PFDs – they’ll even accept an IOU. In the past, Marten Martensen, Continental Auto Owner/Dealer, says he would “jump on” the PFD promotions in August and September along with his competition and hundreds of other businesses across the state. Even if he

www.akbizmag.com • Alaska Business Monthly • October 2010

didn’t know the amount of the check, his dealerships accepted a promissory note, allowing the customer to walk away with a vehicle if they promised to write him a check when the PFD was issued. “October was the biggest month of the year, but then the car industry changed,” he says. As the economy began to spiral down, credit was loose, he says, and dealers were sending cars off the lot with no down payment required and zero percent financing. “The PFD was no longer a factor and I didn’t see it drawing anyone in. I asked myself ‘Why are we spending the money on all this hype when we’re not seeing the return?’” When Alaskans received the $2,069 PFD along with the $1,200 energy rebate check in 2008, and at the same time 7,300 CIRI shareholders received high fourth-quarter dividends, Martensen says the impact was huge, but after that the bottom fell out. Now he guides his company dealerships away from PFD sales, which during the April to October stretch would cost him about $25,000 in ad development and placement. The 12-hour days during the sales blitz were also wearing his sales staff out. In the end, he says, backing away from PFD season has resulted in an overall increase in sales.

SPENDING STUDY “The Alaska Permanent Fund Dividend: A Case Study in Implementation of a Basic Income Guarantee,” presented at the 13th Basic Income Earth Network Congress this year at the University of Sao Paulo, Brazil, and authored by Scott Goldsmith, economics professor, University of Alaska Anchorage Institute of Social and Economic Research, included information about how and when Alaskans spend the PFD. Goldsmith’s study indicated – from asking Alaskans how they spend their PFD and studying the pattern of receipts at retail outlets in communities statewide – that consumer purchases tend to concentrate around the time when checks arrive. He found one reason for this is it provides some recipients with the liquidity necessary to buy an expensive

consumer durable that provides consumption benefits that last a long time, such as appliances and snow machines. A second reason purchases are concentrated during the dividend distribution season is that businesses compete for a share of the dividend dollars through advertising campaigns, sales and other types of special offers. Goldsmith included in the study results from an informal survey conducted by the Alaska Permanent Fund Corp. in 1994 that found three-quarters of respondents planned to save half or more of their dividend, which included reducing their level of debt. One reason there may be more savings out of dividend income than other sources is that it comes in a lump sum once a year, which might influence some recipients to save it who would not otherwise do so. Goldsmith also found another important economic effect of the PFD is the stable flow of cash it provides for rural Alaska where per capita money incomes are among the lowest in the U.S. and non-government sources of income are variable and uncertain. In some census areas, the PFD now directly accounts for more than 10 percent of personal income. At the same time, he wrote, how the dividend is spent is not differentiated by region, but by income. Lower-income individuals tend to have less access to credit and cash on hand. “The dividend gives them a little cushion and makes it easier to purchase a big-ticket item,” Goldsmith says. “Higher income folks do not have that constraint so are less likely to spend on a big ticket item and more likely to save.”

FINANCIAL MARKETS POSITIVE Historically, banks and financial institutions have advertised some of their best CD rates, seeing that as a good fit because it is savings tied to a particular timeframe. Here, too, the economy may have taken its toll, says Blythe Campbell, senior vice president and marketing and communications manager for Northrim Bank. Because interest rates are so low for CDS, the cost of having a promotional campaign may not be worth the return on the investment. At the same time, as part of Alaskans’ “flight to safety,” people became more

concerned about whether their money was FDIC insured than what the interest rate was. There has also been the tendency to take money out of the stock market and put it in the bank instead, simply because they feel like they can keep an eye on it. Aside from that, she says she has not seen a big difference in what Alaskans do with their checks and the PFD season continues to positively impact her industry. “As people spend it, banks make money in very simple ways,” she says, adding that she sees Northrim and others make loans against the PFD, and on a smaller scale they make money on debit card fees. Despite the fund’s economic impact on consumer spending, Goldsmith says the significance of the annual windfall is less about how it contributes to personal income. “It’s the $900 million that is important,” he says referring to the collective amount of money that goes into the Alaska economy. “When I think of benefits of the dividend, I do not think about jobs produced or aggregate income generated for the macro economy,” Goldsmith says. “It is more important how individuals and households have benefited. We could get an increase in jobs and income by spending state money to have people dig holes and fill them in, but I would not say that was a benefit.” At some point, he says, he would like to see studies conducted that look at what extent the dividend is acting like a population magnet, in terms of migration and birth rate. Another valuable study would analyze how the dividend has resulted in benefiting or empowering people. Has it helped anyone to start a business that has put someone on a new career path? Has it given someone an ownership stake in society that has made them feel more secure? Has it allowed someone to take a chance on something they otherwise would not have? Has it reduced rates of suicide and spousal abuse? “These are things that go beyond simply what did people go out and buy at Costco,” Goldsmith says. “These questions should be of interest to Alaskans and Alaska policy makers as they think about the future of the fund.” ❑

www.akbizmag.com • Alaska Business Monthly • October 2010

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CUSTOMER SERVICE

Top Tips from Anchorage’s Top Restaurants

Photo courtesy of Ginger

Offering Pacific Rim cuisine helps Ginger stand out from other restaurants in Anchorage.

Ideas for running any business successfully BY DEBORAH JEANNE SERGEANT

urviving in today’s economy takes a special approach for anyone operating a restaurant. It’s a tough industry. The cost of supplies and other overhead has increased. Many people watching their budgets more closely now consider dining out a luxury. Even travelers have such a wide array of options that winning their business is difficult, especially when a negative online review quickly tarnishes a restaurant’s good reputation. When restaurants thrive, it’s no accident. Their owners have learned and applied basic principles of business success. We recently spoke with the owners and management of several top restaurants in Anchorage who shared their business acumen.

TAKE CARE OF YOUR CLIENTS. Focus on their needs throughout the entire interaction, paying attention to each detail. “It starts with a greeting when they make a phone call to make a

reservation,” said Jack Amon, co-owner of Marx Brothers Café. “We greet them at the door. Once they sit down, we take care of them right away. We put bread and olives on the table right away and then take their dining order. We let them sample some wines before purchasing.” Amon has co-owned Marx Brothers with Van Hale for 31 years and has been in the restaurant industry for 35 years. Find out what your clients want through feedback cards, surveys or market research and provide it. And always follow the Golden Rule.

SERVE CLIENTS CONSISTENTLY. Chef Al Levinsohn of Kincaid Grill has been in the restaurant business since 1977 and has owned the restaurant since 2003. He attributes his success to consistency. “They should know what to expect when they come in,” he said. “They should know the quality of product that they will receive. Keep it at that level.”

Checklists and other quality control measures can help you maintain consistency.

EXCEED CLIENTS’ EXPECTATIONS. The company culture at Simon & Seafort’s in Anchorage is all about going the extra step. “I think there’s a difference between providing an adequate experience and going above and beyond and creating a memorable experience,” said Bridget Tatalias, who has been with the restaurant since 1993 and now serves as general manager. “People expect adequate.” The reservation desk asks customers making reservation if it’s a special occasion. Those celebrating an anniversary may find rose petals scattered on their table. If it’s a birthday, curled ribbon adorns the place setting. The manager visits any first-time customers at their table to make sure everything is just right. “There’s a focus on the guest … and a high level of pride and professionalism in how we work,” Tatalias said. “I grew up in

www.akbizmag.com • Alaska Business Monthly • October 2010

a family owned and operated restaurant. There’s a high level of pride in that culture. I was very happy to find Simon’s.” Remind your employees to do what they can to improve your customers’ experience. They may surprise you with how responsive they become to customers’ needs and wants.

how I get that response from people, ‘Thanks for getting right back with me.’” If you lose phone messages, let e-mail gather cobwebs and forget to perform those irregular little tasks that need to get done, a smart phone may be the key for keeping your life better organized.

GET PERSONAL.

Despite your best efforts, you’ll goof once in a while. It’s inevitable. But customers can forgive an occasional flub if you respond right. “We try to take care of it right away,” Amon said. “We’re here to please the customer and if they don’t like an entree, we pick it up and ask them whatever else they like.” Instead of blame-casting, minimizing the client’s complaint, or coming up with excuses, fix it. Fast. And then ask if your fix suits your client. If you don’t follow these steps, it’s certain that more people will find out. “I check reviews every day on different travel websites,” said Matt Gill, owner of the three-year-old Ginger restaurant. “You’re not going to please everybody, but if they have a bad experience, take

CORRECT YOUR MISTAKES. “We’ve developed relationships with our guests,” Tatalias said. “This is a place that has been a part of people’s lives. Yesterday, I had an individual who said he started dining at Simon’s when he was six. He brought his prom dates for years. As he got into the dating years, whether it was happy hour or for a special occasion, he came here.” Don’t let relationships stay strictly businesslike. When you become friends with clients, it’s easy to win repeat sales.

FOLLOW THROUGH. Levinsohn likes to stay organized to best meet his clients’ needs. “Return phone calls and get back to clients,” he said. “Make them comfortable that they’re in good hands. It’s amazing

it to heart to correct any negative experience, no matter how small it may seem. “View your criticism as constructive and as a training tool for the staff so nothing like this will happen in the future. I try to go above and beyond to fix. I think people have a reaction to that better than restaurants where they say, ‘I’ll take it into account.’ It’s like a brush-off. You want to make sure they feel their voices are heard.” Gill has been in the restaurant industry for 20 years. “We empower our crew to be proactive and sincere in addressing (a problem) situation,” Tatalias said. “Sometimes they can handle it on their own. If it elevates, there’s always a manager on hand.” Recently a repeat customer discovered a hair in his food – a terrible blunder for a restaurant – but the experience was unlike his previous good visits to Simon’s. “I said I appreciated it and followed up with the kitchen,” Tatalias said. “But because it didn’t meet our quality level, I removed it from his bill. It demonstrates to the guest how we approach achieving that level of consistency. We develop even better relationships and

www.akbizmag.com • Alaska Business Monthly • October 2010

connections when we go through some sort of bumpy road. It always feels good to turn it around.”

a constant student of my profession.” No matter what industry you’re in and how long you’ve been in, there’s always room to learn more about it.

STAY UP-TO-DATE. Especially in a slow economy, clients will be more motivated to spend if you can offer them something new periodically, either in product or service. “Our menus change quite a bit,” Amon said. “There are few that have been on the menu for the past 34 years – only about three of them. People love it. We’ve always tried to be innovative and come up with new things. We approach our staff that we want to be on the cuttingedge of food. Tastes change and you have to be able to adapt to the world around you. It’s not the same and you have to do things to stay fresh.” Never feel like you’ve perfected what you offer clients. You can always learn more about your industry, your service or product or business in general. “Be a student of your profession,” Gill said. I’m always watching food shows. When I’m out of town, I’m always checking out other restaurants to see how others are doing things. I’m

BE DIFFERENT, YET APPEALING. Standing out from the crowd makes patronizing your business a desirable experience because clients feel like they’re getting more for their money or a unique experience. “Stay relevant within the industry,” Gill said. “We’ve done that, especially since our cuisine is Pacific Rim. We’ve taken on a niche that previously wasn’t in Anchorage. It sets us apart from the competition.” Being different doesn’t mean getting out of touch with what customers want. In fact, it means just the opposite. Stand out by providing the product(s) or service(s) no one else does or in a unique way.

TAKE CARE OF YOUR EMPLOYEES. It sounds like a cliché, but your employees are your most valuable resource. “I have a key staff I don’t have to constantly monitor,” Levinsohn said. “Having the right team below you is

the number one thing because without them, nothing else happens. It is of the utmost importance.” To keep staff on board, Scott Selman, owner of Club Paris since 1999, advises, “Invest in them. Treat them as people instead of a number. Business is not only about money, but also it’s about relationships. “I’m always available for my employees, not necessarily for just work-related issues. I treat them how I would like to be treated. And I would say I emphasize their good points. I lead by example.” Selman has been in the industry 34 years. Even if your employees never see any of your customers, they still talk to other people about your company. And to draw and retain top talent, you have to treat people right. “(The staff members) are the ones that make us famous,” Amon said. Solicit and listen to your employees’ input. They may not have the best solutions to problems, but often they’re more aware of day-to-day issues that can hamper your company’s success. ❑

www.akbizmag.com • Alaska Business Monthly • October 2010

ALTERNATIVE ENERGY

Burning Used Oil Photo courtesy of Clean Burn

Clean Burn technology gaining popularity BY LOUISE FREEMAN

t a time when heating oil costs are high, it makes sense for businesses with large heating bills to look into alternatives such as buying a heater or boiler that burns used oil. Although these units are commonly known as “waste oil heaters,” dealers such as David and Nancy Shaw of Nenana Heating Services in Nenana prefer to use the more accurate term “used oil heaters.” Used oil can be bought for about twothirds the price of new oil and some businesses even collect and burn used cooking oil from restaurants. Buying a used oil heater or boiler, however, makes the most sense for businesses that generate their own oil. According to EPA regulations, if you generate it, you can legally burn it on-site. Businesses will save both on heating costs and the cost of hauling away and disposing of the used oil. There is also the added benefit to the environment of recycling on-site and eliminating the chance of a spill while transporting the oil. “It’s turning a waste product into heat, just like you recycle newspapers,” David Shaw said. According to Shaw, they have sold heaters and boilers statewide, from Bethel to Ketchikan. Their customers include oil lubes, auto dealerships, construction companies, gold mines, such as Fort Knox, and other types of businesses that use large quantities of crankcase oil, hydraulic fluid or automatic transmission fluid. On average, 500 gallons of used oil per year is the minimum needed for an 18- to 36-month payback.

Hot Water Boilers. Clean Burn offers the industry’s only coil tube boilers engineered from the ground up to burn used oil.

Nenana Heating Services is the only dealer in Alaska for Clean Burn technology. Clean Burn, founded in 1979 and based in Pennsylvania, has 80,000 heating units in use throughout the world, which annually burn 120 million gallons of used oil. “Clean Burn is an exciting company, always researching and improving, and I’m proud to be part of them,” says Shaw, who has been selling Clean Burn units since 1986. Nenana Heating Services uses three Clean Burn furnaces to heat their own two shops. Nancy Shaw’s greenhouse is also heated with 50 percent waste oil. The company sells both hot air furnaces and closed-loop boilers. The boilers heat water for use in baseboard heaters and in-floor heating. The furnaces sold by Nenana Heating Services have been used for heating everything from a 5,000-square-foot shop at FS & G Aggregate, to an indoor riding arena at Camp Li-Wa (both in Fairbanks).

The units do require more maintenance than a regular furnace or boiler. “We haven’t had any problems,” says Charlie Chausse of FS & G Aggregate. The maintenance required consists of cleaning them, and it takes a minimal amount of time. “Maintenance has been fairly simple. When we clean them it takes about one hour,” says David Goff of Camp Li-Wa, part of Victory Ministries of Alaska. As a nonprofit organization, Camp Li-Wa relies on donations of used oil; Goff said that it has been getting harder to find sources of free used oil in Fairbanks because used oil heaters have become so popular that many businesses are burning all the used oil they generate. Nenana Heating Services sells mostly through word-of-mouth and they have many repeat customers. “It’s fun to sell something that people aren’t mad at you for selling to them,” said Shaw. “We make friends, not enemies.” ❑

www.akbizmag.com • Alaska Business Monthly • October 2010

FINANCE

Microloans give hope and change lives BY LOIS GILBERT

Photo by Robin Saidman

hen Eric McCallum, president of Arctic Wire Rope and Supply, planned his retirement, he wanted to give something back. “I was suffering from ‘tormented arrogance,’” McCallum said. “I was tormented a lot about some of the major problems on the planet, and I was arrogant enough to think I could do something about them.” McCallum decided to become one of the founding guarantors of MicroCredit Enterprises (MCE). Without philanthropy or government grants, and with a tiny staff, MCE has guaranteed more than $20 million in international microloans. Microloans are tiny loans made to Third World villagers who lack the collateral for traditional loans. A group of village women, sometimes as few as four or five, more often eight to 10, guarantees a loan, which one woman

Microloan Origins

Muhammed Yunus, an economics professor, refined microloans as a result of the 1974 Bangladesh famine. Outraged after discovering moneylenders received exclusive rights to all a woman produced at the price they chose for a dollar loan, Yunus spent $27 to rescue nearby village women from debt slavery. They repaid him promptly, and he started Grameen (Village) Bank. Yunus and Grameen Bank received the 2006 Nobel Peace Prize. In his acceptance speech, Younas told how 7 million poor people had received $6 billion in loans, with a 99 percent repayment rate. He added that 97 percent of the borrowers were women, more than 640,000 houses had been built, and 58 percent of his borrowers no longer lived in poverty. Yunus urged countries to fight terrorism not just by military means, but by alleviating poverty.

MicroCredit Mi C dit E Enterprises t i reaches h th the mostt iimpoverished i h d women around d th the world, ld helping them to build small businesses to sustain their families.

receives. When the first loan is repaid, typically within three months, the second woman receives her loan, also guaranteed by the group. Peer pressure in the village helps assure repayment. A loan may be used for supplies to grow vegetables or tomatoes, or to buy chickens or a goat to supplement a family’s diet. They also sell the surplus eggs and milk. Some businesses serve markets that haven’t existed in America for a hundred years. Often loans provide the capital to buy items to repackage for the village market. “They are buying a dozen things and

selling them one at a time,” McCallum said. “They don’t have Costcos, and it wouldn’t do them any good if they did, because if you’re living on a dollar a day, you can’t buy a dozen eggs. You can afford maybe one egg.” Other businesses financed by microloans include silk-making, weaving or soap-making. “Poverty is huge, it’s complex, it becomes so overwhelming you just want to turn your back on it,” McCallum said. “If you are living on a dollar a day, you are inherently entrepreneurial. You have to be.”

www.akbizmag.com • Alaska Business Monthly • October 2010

Microloans provide a culturally sensitive way to address poverty. They generally raise family income to about $1.30 a day. Village women meet once a week to make loan payments, giving microfinance institution (MFIs) representatives an opportunity to provide education about business principles and health issues. “Whether your issue is poverty, infant mortality, childhood malnutrition, environment, empowerment of women – microloans can play a role,” McCallum said, noting that microcredit has helped reduce the birth rate. Since loans go directly to the poor, it is more efficient than foreign aid. “It kind of flies under the radar (of corruption) because it’s so ubiquitous and so dispersed. No one’s going to chase someone down for a couple of dollars,” he said. Philanthropy and government grants originally financed microloans, but the high repayment rate has helped MFIs become self-sustaining. Villagers may pay a 35 percent interest rate due to the high cost of servicing the tiny loans and to keep the MFIs solvent, but it’s cheaper than the alternatives. “In the Philipines, the loan sharks charge 1,000 percent for one month,” McCallum said. Women receive most of the loans, because they have proven to be more reliable at repayment. “Boys have a tendency to spend it on themselves – sorry, it’s the truth,” McCallum said. “Women are focused on feeding and educating their families. Business is about taking care of customers, and women are very good at care giving. If I take care of my customers and I take care of my employees, then the business will take care of itself.” Each million dollar guarantee provides about 3,000 loans, and with an average of five members in each recipient family, each guarantee is helping 15,000 people, according to MCE. The company uses the guarantees as collateral to borrow money from commercial banks or foundations, then makes loans of $500,000 to $1 million to qualified MFIs in various countries. The MFIs then make microloans to the villagers. No interest is paid to the guarantors. MCE is a 501(c)(3) nonprofit;

interest covers costs, so fundraising isn’t necessary as it is with most nonprofits. The MFIs make enough interest to cover costs and usually make a modest profit. MCE’s loss risk is 2 percent. If a million dollar loan fails, almost 50 guarantors absorb the loss equally, so each pays out about $20,000. Since the loss is tax deductible, their loss is actually around $13,000. MCE’s goal is to have 100 guarantors. Jonathan C. Lewis, founder and chair of MicroCredit Enterprises, launched the company in 2006 with

seven guarantors. Pro bono executives make up most of the organization, which operates virtually, without “brick and mortar” overhead costs, keeping overhead at 3 percent of loans issued – most nonprofits run at 6 percent to 12 percent overhead. MCE has been invited to the Clinton Global Initiative, a gathering of world leaders from a variety of backgrounds, who meet to “devise practical solutions to global issues through the development of specific and measurable Commitments to Action.”

Thinking of expanding your Alaska business? Talk to Northrim about ﬁnding the shortest distance between where you are – and where you want to be. And we have money to loan. Northrim Bank. For Business.

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www.akbizmag.com • Alaska Business Monthly • October 2010

“We’re in 15 countries on four different continents,” McCallum said. “We don’t want our portfolio all in one country (in case of) a natural disaster, coup or fraud.” McCallum came to Anchorage in 1981 with Jackovich Industrial Supply. He started Arctic Wire Rope and Supply in 1983. Chosen Alaska Manufacturer of the Year in 2006, Arctic Wire provides heavy lift rigging products for construction, mining, the oil and gas industry, and marine needs in Alaska and the Russian Far East. McCallum remains president of the company but has retired from active management. In addition to his work with microloans, McCallum coaches nonprofits in leverage principles, mentors and invests in small business startups, and promotes energy efficiency in business and government using the return on investment approach. Arctic Wire Rope and Supply has worked with the Renewable Energy Alaska Project on commercial energy efficiency. McCallum and his wife, Robin, work with other nonprofits, including Greatland Trust, Planned Parenthood, the Alaska Humane Society and Solace International, which helps orphanages. “I’m told we need microcredit in Alaska, but there are obstacles,” McCallum said. “The market here is more saturated; we can pick between 20 or 30 (competing) items. Plus, a $200 loan to an American business isn’t really going to do anything.” Other microcredit organizations include Kiva and MicroPlace, which accept online investments as low as $25 and $20, respectively, and connect lenders with entrepreneurs. Kiva also has lending teams for specific projects, and all investors can view monthly updates on its website regarding specific loans made. MicroPlace is an online social business owned by eBay where investors select specific entrepreneurs to back. Both businesses offer a way for everyday people to take action to help end global poverty, like McCallum does. “There’s a guy in Guatemala who’s the richest guy in town,” McCallum says. “He bought up the used tires, which are in much worse condition than used tires here, and he patches and repairs them, ❑ then resells them.”

www.akbizmag.com • Alaska Business Monthly • October 2010

RIGHT MOVES

PACIFIC PILE & MARINE

Steve Spencer, PE, joined Pacific Pile and Marine LP as chief engineer following a long-term consulting relationship with the company. Spencer is a registered professional engineer with 20 years S Spencer experience as a geotechnical and structural engineer, specializing in the design and construction of marine, underground and foundation projects. His extensive engineering background will help Pacific Pile & Marine develop greater in-house capability and expand the company’s capacity, most notably regarding design-build efforts. Pacific Pile and Marine is a privately held heavy civil and marine construction firm specializing in logistically complicated projects throughout the Pacific Northwest, Montana and Alaska.

COMPILED BY NANCY POUNDS SOUTHEAST ALASKA REGIONAL HEALTH CONSORTIUM

Dr. Paul Peters joined the SouthEast Alaska Regional Health Consortium Mount Edgecumbe Hospital in Sitka as a radiologist. He most recently worked in private practice in Casper, Wyo. Drs. Mimi and Brian Benjamin were hired at the Ethel Lund Medical Center in Juneau. The couple previously lived and worked in North Carolina. Mimi Benjamin served as a family physician and as a clinical associate professor at Duke University. Brian Benjamin also worked as a family physician in clinics at Duke University and the University of North Carolina Chapel Hill.

AK COMMUNICATIONS & CONSULTING

Alison Knox signed an agreement with Agency MABU, a marketing and advertising agency based in Bismarck, N.D. Knox owns AK Communications & Consulting. The agreement allows the companies to handle projects for Alaska Native firms and federal government agencies.

TELALASKA INC.

Wesley Perkins was hired as Nome area supervisor for TelAlaska Inc. Perkins most recently worked for Nome Public Schools.

Perkins

FIRST NATIONAL BANK ALASKA

ANCHORAGE SCHOOL DISTRICT . Five Anchorage School District middle school teachers and counselors participated in the Sally Ride Science Academy this summer in San Diego: Benjamin Johrendt, Hanshew; Christa Brown, Mears; Cheryl Huber, Ben Colson and Caren Flaten, all from SAVE. Seven Anchorage elementary school teachers were also chosen: Dwane Anderson, Klatt; Traci Caves, Chugach Optional; Ayumi Hattori and Zan Zoske, both from Sand Lake; Mary Herminghaus, Curriculum and Instruction, Science; Robert Stagg, Aquarian Charter School; and Kristina Vlahovich, Chinook. The program aims to promote new strategies to boost interest in science and science careers.

LOUNSBURY & ASSOCIATES

James Hall joined Lounsbury & Associates as a project surveyor. Hall has 12 years of surveying experience, including recent work: high-definition laser scanning of 46 bridges on I-215 in Las Vegas.

Peters

M. Benjamin B. Benjamin

HOTEL CAPTAIN COOK

Bang-On Roulet, the Hotel Captain Cook garden manager, was chosen to compete in the International Fruit and Vegetable Competition in Meaux, France. Roulet, who started as garden manager at the hotel in 2005, specializes in preparing salads, dressings, sushi and other cold foods.

KODIAK CHAMBER COMMERCE

Trevor Brown was hired as executive director of the Kodiak Chamber of Commerce. He has served as the chamber’s economic development specialist since 2007.

Aaron Wilkinson was appointed loan officer for First National Bank Alaska in Soldotna. He started at the bank as a management associate. Mimi Cook was chosen operations supervisor at the Eagle River branch. She was also appointed assistant cashier.

THE MUSCULAR DYSTROPHY ASSOCIATION

Patricia Banks of Wasilla received the Muscular Dystrophy Association’s 2010 Robert Ross Personal Achievement Award for Alaska. Banks, who has Lou Gehrig’s disease, was honored for her work encouraging others with the disease. She also has raised funds for medical research by selling clothing she knitted with materials from her llama and sheep flocks.

THE GROWTH COMPANY INC.

Sara Beckham joined The Growth Company Inc. as an associate. Beckham has four years of experience in human resource consulting.

KEYBANK

Michael Capenos and Christine Ward were promoted to assistant vice presidents of KeyBank in Alaska. Capenos serves as manager of the Fairbanks main branch. Ward is manager of the Wasilla branch.

GEONORTH LLC

Richard Greer joined GeoNorth LLC as a programmer/analyst. Greer recently earned a bachelor’s degree in computer science from the University of Alaska Anchorage.

www.akbizmag.com • Alaska Business Monthly • October 2010

RIGHT MOVES THE INSTITUTE

OF THE

NORTH

Roberta Graham and Mara Kimmel were chosen as senior fellows at The Institute of the North. Graham is chief executive of Graham Group Strategies. Graham also holds the appointment of associate . director for strategic initiatives at the Edward R. Murrow Center for Public Diplomacy at the Fletcher School of Law & Diplomacy/Tufts University. Kimmel is a professor of political science at the University of Alaska Anchorage.

SPONSORED BY NORTHERN AIR CARGO private citizens. Wood, who first came to Fairbanks in 1947, is credited with helping the Eisenhower Administration set aside land that would become Arctic National Wildlife Refuge. Wood co-founded the Alaska Conservation Society and started Alaska’s first ecotourism business, Camp Denali, at Denali National Park and Preserve.

ANCHORAGE CHAMBER COMMERCE

AARP COMMUNITY SERVICE AWARD

Liz Lucas of Juneau received Alaska’s 2010 AARP Andrus Award for Community Service. Lucas helped organize Juneau’s first AARP Day. She also was honored for her work promoting AARP’s programs, Lucas including Driver Safety, Tax-Aide and the Capital City Task Force, a group of volunteer advocates based in Juneau.

THE ALEUT CORP.

STATE FARM

UNIVERSITY OF ALASKA ANCHORAGE

AT&T

Margo McCabe was hired as growth strategist at MSI Communications. McCabe has more than 15 years of strategic-growth experience, helping small and large clients.

James MacInnes joined AT&T as an account manager in Anchorage. MacInnes previously worked as a senior sales engineer at Alaska Communications Systems.

FEDERAL GOVERNMENT

Alice Rarig was appointed to a 24-member federal committee to review health care needs. Rarig is a senior planner with the Department of Health and Social Services. The U.S. Fish and Wildlife Service honored Ginny Wood of Fairbanks with the Service Citizen’s Award. The honor recognizes contributions by

John VonLangen was admitted to practice law in Alaska. VonLangen has been working for Hartig Rhodes Hoge and Lekish for about a year. His prior work includes practicing law in Florida for nine years. Lisa Doehl joined the law firm as an of counsel attorney. She has 15 years of legal experience, mostly with the U.S. Department of the Interior in Alaska and Washington, D.C. David Gillespie was hired as chief executive for The Aleut Corp. His career includes work as chief executive of DAG Associates LLC consulting firm and president and chief executive of New Generation Biofuels Holdings Inc.

Hansen Allen Brenda Hansen was hired as administrative assistant at the Anchorage Chamber of Commerce. Hansen has experience in the tourism and hospitality industry. Beth Allen joined the chamber as membership services and events coordinator. Allen previously worked in commercial and residential real estate in North Carolina.

Talis Colberg was chosen director of the University of Alaska Anchorage’s Mat-Su College. Colberg previously served as mayor of the MatanuskaSusitna Borough.

HARTIG RHODES HOGE AND LEKISH

MSI COMMUNICATIONS

MUNICIPALITY

ANCHORAGE

Z a n e Tr e e s h w a s appointed manager of the Municipality of Anchorage’s ChugiakEagle River Branch Library. Treesh has worked for the library system since 1998 and most recently worked at T Treesh h the Z.J. Loussac Public Library as a reference librarian in adult services.

Dick Randolph of Fairbanks was honored with membership to the Million Dollar Round Table, an association of financial professionals. Randolph is a State Farm agent.

STATE GOVERNMENT

Donald Habeger was appointed director of the State Division of Corporations, Business and Professional Licensing. He most recently worked as a legislative assistant to Rep. Jay, Ramras. Gov. Sean Parnell appointed Susan Bell as commissioner of the Department of Commerce, Community and Economic Development. Bell has been serving as special assistant to Parnell and has worked closely with the department. Parnell appointed Paul A. Roetman to the Kotzebue Superior Court. Roetman most recently served as an assistant district attorney in the Department of Law in Palmer. Parnell also appointed Andrew Guidi to the Anchorage Superior Court. Guidi, of Anchorage, has worked as an attorney at Delaney Wiles Inc. since 1983. Rep. Charisse Millett and Rep. Bryce Edgmon received the David P. Hutchens Public Service Award from the Alaska Power Association. Millett and Edgmon lead the State House Energy Committee. They were honored for their work drafting the State Energy Policy, which was signed into law in June.❑

www.akbizmag.com • Alaska Business Monthly • October 2010

OBE

OCT

ALASKA THIS MONTH

BY NANCY POUNDS

World Music Festival Set for Oct. 9

Photos courtesy of Steven Alvarez

Performers spotlight cultures of Alaska and beyond

Second from left, percussionist and event organizer Steven Alvarez will perform with Dawn Avery, Medicine Dream and Valerie Naranjo’s group Mandara.

owerful, rhythmic drumbeats – across cultures and musical genres – draw attention to the storyteller. Performers will lure audiences with tales from Alaska and around the world in Anchorage this month. The World Music Festival runs from 10 a.m. to 5 p.m. Oct. 9 at the Alaska Native Heritage Center. The free event features performances by groups specializing in music from various cultures, from Africa to indigenous people of North America. Other festival activities include Native drummers and dancers, village site tours, artist demonstrations and art activities for children.

Steven Alvarez of the center developed the festival, which premiered in 2004, to spotlight music from the United States’ indigenous people: Alaska Natives, Native Americans and native Hawaiians. He included international music to recognize Anchorage’s cultural diversity. Alvarez works as director of strategic initiatives and media production. About 1,000 people attend the festival, Alvarez said. The festival has now included international musicians and performers from Senegal, Norway, Denmark, Greenland, Cuba, New Zealand and Peru.

www.akbizmag.com • Alaska Business Monthly • October 2010

Alvarez treasures the chemistry generated at each World Music Festival as Alaskan musicians connect with their international counterparts. â&#x20AC;&#x153;I love the camaraderie that is shared between the performers and the energy that is clearly felt throughout the day,â&#x20AC;? he said. He also enjoys seeing Anchorage residents show their support by attending the event. Valerie Naranjo, a percussionist for â&#x20AC;&#x153;Saturday Night Live,â&#x20AC;? and her band Mandara, will perform music from Africa. Alvarez performed with Naranjo at the 2010 Winter Olympics in Vancouver, British Columbia, Canada, at the Aboriginal Pavilion. Dawn Avery, a singer, pianist and cellist, will debut songs from a new CD, â&#x20AC;&#x153;Behind the Mask.â&#x20AC;? The CD features performances by Alvarez and guitar player Larry Mitchell. Medicine Dream of Anchorage will also perform at the World Music Festival. Alvarez is an accomplished percussionist who performs with contemporary Native American music group Medicine Dream. He also is a vocalist, stage actor and film and stage producer. Alvarez is a champion for Native music. â&#x20AC;&#x153;I think itâ&#x20AC;&#x2122;s a very valuable commodity,â&#x20AC;? he said. He believes Americans should support indigenous performance art, as Alvarez calls it, financially and socially like visual art like paintings. Dancing and singing is a strong part of American culture, just like jewelry and pottery, he said,

Valerie Naranjo, Saturday Night Live percussionist, will be performing at the World Music Festival.

and Broadway show producers secure investors who expect a return on their investment. â&#x20AC;&#x153;What Iâ&#x20AC;&#x2122;d like to see is people investing time and resources so performance art can grow on part with visual art,â&#x20AC;? Alvarez said. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s a lot to be learned from performance art about a culture.â&#x20AC;? â?&#x2018; For more information, visit www.alaskanative.net.

Bed & Breakfast

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www.alaskacapitalinn.com www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ October 2010

O CT OB E R E V E NT S C A LE N D A R • • • • • • •

1 to 3

N C H O R A G E • • • • • • •

Make It Alaskan Festival

Holiday shoppers and art enthusiasts find unique, high-quality and authentic “Made in Alaska” products at The Sullivan Arena, crafted by more than 250 artists during this festive kick-off to a copious Anchorage arts and crafts season. For more information, phone 907-279-0618 or visit www. miafestival.com.

25th Annual Arctic Bazaar

The EOSO Arctic Bazaar is held every fall at Elmendorf Air Force Base. Vendors come from all over Southcentral Alaska to sell their unique and interesting goods. This is the perfect place to find truly Alaska gifts for family and friends in the Lower 48. Proceeds from this bazaar go to scholarships and grants, as well as quality-of-life organizations at Elmendorf and in the surrounding community. For more information, visit www.elmendorfoso.com or e-mail arcticbazaarvendors@ elmendorfoso.com.

14 to 23

Broadway’s Mamma Mia

A mother, a daughter, three possible dads and a trip down the aisle you’ll never forget. Witness the ultimate feel-good show at the Alaska Center for the Performing Arts. For more information, phone 907-263-2787.

Alaska Day

Celebrate Alaska Day with films about the Last Frontier, hands-on science, art activities and a theatrical journey to Russian America. 1 p.m., Anchorage Museum. For more information, phone 907-929-9200 or visit www.anchorage museum.org.

16 to 17

14th Annual Bead Arts Gala

The state’s premier bead event returns to the Anchorage Museum. Meet 50 bead artists from across Alaska and shop their exquisite beadwork and homemade glass beads. This year’s featured artist is Linda Myers, manager of the Alaska Bead Co. Other activities include glass bead-making demonstrations and a make-it, take-it table. For more information, phone 907929-9200 or visit www.anchoragemuseum.org.

Juneteenth Alaska Alcan Highway Jazz and Arts Festival

View beautiful artwork during the opening of Juneteenth Art Exhibit at the Loussac Library, at 1 p.m. Return the same evening at 6 p.m. and enjoy the sounds of smooth Jazz with the Juneteenth Jazz Concert. These events are in celebration and recognition of the African-American Army engineers who built the historic Alcan Highway during World War II. For more information, visit www.juneteenthalaskaalcan.com.

Fall Soirée

“Love & Nature – a duet recital.” Featuring: Kate Egan, soprano, Marlene Bateman, mezzo soprano and Juliana Osinchuk on the piano. For more information, phone 907276-2465 or visit www.anchoragefestivalmusic.com.

www.akbizmag.com • Alaska Business Monthly • October 2010

O CTOBER E VEN TS C A L EN D AR C

â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘

5 to 29

O R D O V A â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘

Ilanka Cultural Center Museum

Preserves and exhibits a collection of prehistoric, historic and contemporary tribal artifacts from the Prince William Sound and Copper River Delta. Open Tuesday through Friday, 10 a.m. to 5 p.m., 110 Nicholoff Way. For information on classes, workshops, or cultural events, contact: anna@ilankacenter.org or phone 907-424-7903.

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A I R B A N K S â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘

18 to 20

First Alaskans Institute Elders Youth Conference

7E PUT (UMPTY $UMPY BACK TOGETHER AGAIN ,ETS SEE HIM CRACK THIS TIME

The conference stimulates dialogue between young people and elders and encourages them to maintain traditional Native values and practices while thriving in the modern world. Carlson Center, 2010 Second Ave. For more information, phone 907677-1700 or visit www.firstalaskans.org.

21 to 22

Alaska Native Arts & Crafts Fair

More than 100 artisans from all over Alaska will be showcasing and selling their finest work. Free admission, Carlson Center, 2010 Second Ave. For more information, phone 907-451-7800 or visit www.nativefederation.org.

â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘

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We Make Pigs Fly.

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Halloween Kidâ&#x20AC;&#x2122;s Carnival

The Alyeska Daylodge offers safe and warm fun for the kids, featuring a haunted house and games. 4 p.m. to 7 p.m. Entry fee: $3 per person or $10 per family. For more information, visit www.alyeskaresort.com.

â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘

10 to 18

I T K A â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘

Alaska Day Festival

The actual transfer ceremony occurred in Sitka when the United States purchased Alaska from Russia in 1867. Celebrations include ceremonies, a period costume ball, dances, dinners, contests, a parade and more. For more information, visit www. alaskadayfestival.org.

â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘

A L D E Z â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘ â&#x20AC;˘

Roadhouse Dinner

Annual fundraiser to benefit the Valdez Museum. Enjoy dinner, entertainment and a silent auction at Valdez Civic Center. For more information, phone 907-835-2764 or visit www.valdez â?&#x2018; museum.org. www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG

Alaska’s Top 49ers: Still Growing Strong Stability and growth key to these Alaskan-owned and -operated companies BY DEBBIE CUTLER MANAGING EDITOR

s I sit in my office on one of the season’s few sunny days, I think about the summer of rain, and also how it poured down in torrents of bad news economically around the world the past few years. Fear is running rampant about the future of the great U.S. and the future of Alaska, especially as oil volume trickles to a third of what it once was, and new developments appear halted by high State taxes, regulations and environmental disasters in other parts of the world, such as the Gulf of Mexico. Yet there is reason to celebrate. Much reason indeed. A headline on the front page of the Anchorage Daily News website states “Alaska’s economy fares better than most.” With unemployment rates at 7.7 percent this summer, we were a good two percentage points below the national average. Usually, we are above the norm due to the seasonal nature of many of our industries. And on KTUU’s website, this same day, there is a report titled “Alaska banks say deposits are on the rise.” Also news for optimism, as is the state’s low foreclosure rate and an increase in mortgage volume. And here at ABM, we have our own good news to share.

Alaska Business Monthly this month recognizes for the 26th consecutive year the Top 49 Alaskan-owned and -operated companies, dubbed the Top 49ers, this year based on 2009 gross revenues. These are companies that are Still Growing Strong. Fantastic news glistens and glitters and gleams from data provided by the corporations as well. ■ Last year three companies topped the $1 billion mark. This year five hold that distinction. ■ To make the Top 49er list last year, a company had to have minimum 2008 gross revenues of $50.5 million. This year the bar has raised to nearly $55 million. The cutoff the year before was $43 million. ■ Total 2009 revenue for the Top 49 companies was $14.5 billion. Last year 2008 gross revenue totals were $13.8 billion. ■ Only 12 of the Top 49ers had revenues of less than $100 million. Last year the number of companies with total gross revenues under $100 million was 14.

OTHER FACTS OF INTEREST

■ Last year 43 percent of the list represented Native corporations. This year it’s nearly 45 percent.

■ Of the 49 companies represented here, 37 saw an increase or no change in revenue from 2008 to 2009. Range of growth went from 0 percent to 619 percent (see related story why CIRI’s revenue jumped so high). Last year 36 saw an increase in revenue. ■ This year 12 companies saw a decrease in revenue, ranging from –5 percent to –30 percent. Last year 13 companies saw a decrease, most of which was less than 10 percent. ■ Arctic Slope Regional Corp. has topped the listing for 16 consecutive years. This year revenues were down from $2.3 billion last year to $1.95 billion for 2009 gross revenues. The reason: (There are actually two.) The fire at its Valdez refinery at the end of 2008 caused a temporary shutdown of that facility, which in turn impacted production. And second, the refining sector is a volatile market and revenue fluctuation tends to follow crude prices. Its revenue in 2008 was unusually high because of the record oil prices that exceeded $140 per barrel, while 2009 was more in line with normal years. ■ The top industries are Native corporations (22, versus 21 last year) and construction companies (seven, same as last year). Services, utilities, transportation

www.akbizmag.com • Alaska Business Monthly • October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG and financial services also make the listing, as do mining and retail. Yes, these are the Top 49ers, Still Growing Strong. And they reflect our economy today. Even Anchorage Mayor Sullivan remains optimistic. The 2010 fiscal plan for Anchorage resulted in a balanced budget, sustainable savings and minimal service reductions, despite some cuts. Still, future years may swing to a different tune if something isn’t done to increase industry and oil and gas development in the state. A statement by Sullivan released Sept. 1, stated he expected a $18 million shortfall in the 2011 budget, despite a potential 3 percent increase in property taxes. What needs to be done to help Alaska’s cities and communities continue to grow? What needs to be done to keep these companies diverse and their worldwide operations strong, despite the recession in the Lower 48? What needs to be done to protect Alaska’s future? Open up offshore waters for development. Support development in ANWR.

Develop the gas pipeline. Keep investing in companies that want to improve the economy by utilizing the state’s great and vast natural resources, as long as they do so in an environmen-

tally friendly manner. Open up NPR-A. Keep our Top 49ers strong, now and into the future. Let’s continue to have metaphorical sunshine over our state, despite the gloom elsewhere. ❑

AIC has built a solid reputation by taking an impossible idea and making it an accomplished reality. With more than 20 years of experience, we specialize in providing innovative concepts and technical solutions to our global clients.

BUILDING ALASKA AIC provides world-class services through our public and private works divisions and has successfully completed large-scale oil and gas and mining projects throughout Alaska. AIC projects around the world represent the ﬁnest in construction methods and practices.

AICLLC.COM AIC, LLC.

6 0 1 W. 5 T H A V E N U E , S U I T E 4 0 0

ANCHORAGE, AK 99501

T: 9 0 7 - 5 6 2 - 2 7 9 2

www.akbizmag.com • Alaska Business Monthly • October 2010

F: 907-562-4179

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Arctic Slope Regional Corp.

Still Growing Strong

PO Box 129 Barrow, AK 99723 Phone: 907-852-8633 Fax: 907-852-5733 www.asrc.com Top Executive: Rex Rock, Pres./CEO

Worldwide Employees .........10,966 Alaska Employees .................4,689 Year Established.....................1972 49er Rank Last Year .....................1

Main Business Energy Services, Petroleum Refining and Marketing

REVENUE (Millions $) 2009.....................................$1,945 2008.....................................$2,297 2007........................................$986 2006.....................................$1,700 2005.....................................$1,587 Change from 2008 ................. -15%

Principal Activities Energy services, petroleum refining and marketing, engineering and construction, government services, resource development, commercial lending, tourism and communications. ASRC also participates in various partnerships, joint ventures and more.

RA N K

Subsidiaries ASRC Energy Services, Petro Star Inc., ASRC Federal Holding Company LLC, ASRC Construction Holding Company, Alaska Growth Capital, SKW/Eskimos Inc., Tundra Tours Inc.

1 Bristol Bay Native Corp.

Still Growing Strong

111 W. 16th Ave., Ste. 400 Anchorage, AK 99501 Phone: 907-278-3602 Fax: 907-276-3924 www.bbnc.net Top Executive: Jason Metrokin, Pres./CEO

Worldwide Employees ...........1,762 Alaska Employees ....................473 Year Established.....................1971 49er Rank Last Year .....................2 REVENUE (Millions $) 2009.....................................$1,392 2008.....................................$1,295 2007........................................$994 2006........................................$762 2005........................................$321 Change from 2008 .................... 7%

Main Business Native Organization Principal Activities Diversified holding company; design services, corporate services, environmental/engineering remedial design services, oil-field services and construction management, environmental/engineering and technical services, IT and more.

Subsidiaries Bristol Environmental and Engineering Services Corp., CCI Inc., SpecPro Inc., Vista International Operations, Petrocard Systems Inc., Bristol Bay Corporate Services, Kakivik Asset Management.

RA N K

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www.akbizmag.com • Alaska Business Monthly • October 2010

2010 ALASKAâ&#x20AC;&#x2122;S TOP 49ERS: STILL GROWING STRONG NANA Regional Corp. Inc.

Still Growing Strong

PO Box 49 Kotzebue, AK 99752 Phone: 907-442-3301 Fax: 907-442-4161 www.nana.com info@nana.com Top Executive: Marie N. Greene, Pres./CEO

Worldwide Employees ...........9,300 Alaska Employees .................3,200 Year Established.....................1972 49er Rank Last Year .....................3 REVENUE (Millions $) 2009.....................................$1,260 2008.....................................$1,176 2007........................................$975 2006........................................$822 2005........................................$527 Change from 2008 .................... 7%

Main Business Alaska Native Corporation

Subsidiaries NANA Development Corp.

Principal Activities Resource development, land management, engineering and construction; information technology and telecommunications; facilities management and logistics; real estate and hotel development.

Noteworthy Events in 2009 NANA Regional Corp. Inc. and Teck Alaska, a division of Teck Resources Ltd., recently announced development of the Aqqaluk Deposit at Red Dog Mine.

Main Business Native Organization

Noteworthy Events in 2009 Nuchek Spirit Camp is held every summer and allows shareholders and their descendants the opportunity to learn traditional subsistence skills, story-telling, crafts and the preservation of their culture.

RA N K

3 Chugach Alaska Corp.

Still Growing Strong

3800 Centerpoint Dr., Ste. 601 Anchorage, AK 99503 Phone: 907-563-8866 Fax: 907-563-8402 www.chugach-ak.com bwelty@chugach-ak.com Top Executive: Ed Herndon, CEO

Worldwide Employees ...........5,500 Alaska Employees ....................886 Year Established.....................1971 49er Rank Last Year .....................4 REVENUE (Millions $) 2009.....................................$1,105 2008........................................$952 2007........................................$941 2006........................................$890 2005........................................$785 Change from 2008 .................. 16%

Principal Activities Government service contracting, construction and construction management, environmental management services, vocational training and job placement, temporary employment services, hazardous material (oil) spill response services and more.

RA N K

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www.SEEKINS.com www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ October 2010

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2010 ALASKAâ&#x20AC;&#x2122;S TOP 49ERS: STILL GROWING STRONG Chenega Corp.

Still Growing Strong

3000 C St., Ste. 301 Anchorage, AK 99503 Phone: 907-277-5706 Fax: 907-277-5700 www.chenega.com chenega@chenegacorp.com Top Executive: Charles W. Totemoff, CEO/Pres.

Worldwide Employees ...........5,500 Alaska Employees ....................330 Year Established.....................1974 49er Rank Last Year .....................5 REVENUE (Millions $) 2009.....................................$1,077 2008........................................$894 2007........................................$768 2006........................................$782 2005........................................$643 Change from 2008 .................. 20%

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Main Business Village Corporation Principal Activities Professional services contracting for the federal government, including information technology, security services, logistics, training, intel and military operations, telecommunication, environmental services and health-care solutions. Light manufacturing and hotel management.

Noteworthy Events in 2009 Completed corporate-wide consolidation of our ISO 9001.2008 Certification.

Still Growing Strong

Afognak Native Corp./ Alutiiq

215 Mission Rd., Ste. 212 Kodiak, AK 99615 Phone: 907-486-6014 Fax: 907-486-2514 www.alutiiq.com Top Executive: Richard M. Hobbs, Pres./CEO

Worldwide Employees ...........6,133 Alaska Employees ....................203 Year Established.....................1977 49er Rank Last Year .....................7 REVENUE (Millions $) 2009........................................$766 2008........................................$730 2007........................................$516 2006........................................$538 2005........................................$522 Change from 2008 .................... 5%

Main Business Government Contracting Principal Activities Government contracting, construction, logistics support services, IT and technical support services, security and law enforcement, operations and maintenance services, youth training services, oilfield services and leasing.

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Lynden

Still Growing Strong

6641 S. Airpark Pl. Anchorage, AK 99502 Phone: 907-245-1544 Fax: 907-245-1744 www.lynden.com information@lynden.com Top Executive: Jim Jansen, CEO

Worldwide Employees ...........2,164 Alaska Employees ....................698 Year Established.....................1954 49er Rank Last Year .....................6 REVENUE (Millions $) 2009........................................$680 2008........................................$780 2007........................................$740 2006........................................$670 2005........................................$550 Change from 2008 ................. -13%

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Main Business Multi-Modal Transportation & Logistics Principal Activities Lynden capabilities include truckload, less-than-truckload, scheduled and charter barges, scheduled and chartered air freighters, domestic and international forwarding, remote site construction, bulk commodities hauling, hovercraft and multi-modal logistics.

7 The Eyak Corp.

Still Growing Strong

360 W. Benson Blvd., Ste. 210 Anchorage, AK 99503 Phone: 907-334-6971 Fax: 907-334-6973 www.eyakcorp.com info@eyakcorp.com Top Executive: Rod Worl, CEO

Worldwide Employees ..............314 Alaska Employees ......................94 Year Established.....................1973 49er Rank Last Year ...................12 REVENUE (Millions $) 2009........................................$423 2008........................................$282 2007........................................$231 2006..........................................$96 2005..........................................$75 Change from 2008 .................. 50%

Main Business Alaska Native Corporation Principal Activities Investment management, real estate, construction, government contracting and staffing.

Subsidiaries Alaska Marine Lines, Alaska West Express, Bering Marine, Lynden Air Cargo, Lynden International, Lynden Logistics, Knik Construction Co. Inc., Lynden Transport Inc. Noteworthy Events in 2009 Customers can conduct business online with Lynden’s EZ Commerce Center. Customers can request pickups, generate documents, trace shipments, view delivery receipts, download activity reports and receive PDF invoices.

Subsidiaries Eyak Technology LLC, Eyak Development Corp., Eyak Services LLC, Eyak Resources LLC, Cordova Central LLC, NorthTide Group LLC

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Providing Service & Value With over four decades of delivering freight to Alaska Asset Based Comprehensive Web Services Electronic Tracing Professional Drivers Dedicated Customer Service Intra-State Alaska Service Visit www.pafak.com or give us a call at any of our Alaska locations for more information or to schedule a pick up.

Delivering Customized Solutions

Anchorage 336-2567 | Fairbanks 452-7971 | Kenai 262-6137 | Kodiak 486-8501 | Fife 800-426-9940 www.akbizmag.com • Alaska Business Monthly • October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Ukpeagvik Inupiat Corp.

Still Growing Strong

PO Box 890 Barrow, AK 99723 Phone: 907-852-4460 Fax: 907-852-4459 www.ukpik.com info@ukpik.com Top Executive: Forrest “Deano” Olemaun, Pres/CEO

Worldwide Employees ...........1,900 Alaska Employees ....................600 Year Established.....................1973 49er Rank Last Year .....................8 REVENUE (Millions $) 2009........................................$317 2008........................................$334 2007........................................$291 2006........................................$259 2005........................................$267 Change from 2008 ................... -5%

Main Business Village Corporation Principal Activities Architecture, engineering, surveying, construction, regulatory planning, marine transportation, government contracting, vehicle service and insurance.

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Subsidiaries Bowhead Manufacturing, Bowhead Support Group, Bowhead Technical and Professional Services, Bowhead Transport Co., C-Port Marine, Pueo, Rain Proof Roofing, Rockford Corp., Siku Construction, UIC Construction, UIC Developments, UIC Foundation Inc., UIC Real Estate Management, UIC Science, Ukpik, Umialik Insurance Co., UMIAQ, Bowhead Transportation, Bowhead Information Technology Services Inc., C-Port Marine Services

9 Doyon Limited

Still Growing Strong

One Doyon Pl., Ste. 300 Fairbanks, AK 99701 Phone: 907-459-2000 Fax: 907-459-2060 www.doyon.com info@doyon.com Top Executive: Norman L. Phillips, Pres./CEO

Worldwide Employees ...........2,727 Alaska Employees .................1,427 Year Established.....................1972 49er Rank Last Year ...................10 REVENUE (Millions $) 2009........................................$309 2008........................................$296 2007........................................$272 2006........................................$222 2005........................................$172 Change from 2008 .................... 4%

Main Business Please see Principal Activities. Principal Activities Oil-field services, including drilling and pipeline infrastructure construction; government services; security; utility management; natural resource development; facility and food services; remote site support; engineering; construction and tourism.

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www.akbizmag.com • Alaska Business Monthly • October 2010

Subsidiaries Doyon Tourism Inc., Doyon Services Corp., Doyon Properties, Inc., Doyon Development Corp.

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Alaska USA Federal Credit Union

Still Growing Strong

Worldwide Employees ...........1,487 Alaska Employees .................1,298 Year Established.....................1948 49er Rank Last Year .....................9

PO Box 196613 Anchorage, AK 99519 Phone: 907-563-4567 Fax: 907-561-4857 www.alaskausa.org Top Executive: William B. Eckhardt, Pres.

REVENUE (Millions $) 2009........................................$293 2008........................................$312 2007........................................$270 2006........................................$202 2005........................................$171 Change from 2008 ................... -6%

Main Business Financial Services Principal Activities Financial services for consumers and businesses, including deposit, loan, investment, mortgage, insurance and trust services.

Subsidiaries Alaska USA Mortgage Co., Alaska USA Trust Co., Alaska USA Insurance Brokers, Alaska USA Title Agency

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11 Chugach Electric Association Inc.

Still Growing Strong

Worldwide Employees ..................0 Alaska Employees ....................325 Year Established.....................1948 49er Rank Last Year ...................11

5601 Electron Dr. Anchorage, AK 99518 Phone: 907-563-7494 Fax: 907-562-0027 www.chugachelectric.com info@chugachelectric.com Top Executive: Bradley Evans, CEO

REVENUE (Millions $) 2009........................................$291 2008........................................$290 2007........................................$259 2006........................................$268 2005........................................$227 Change from 2008 .................... 1%

Main Business Retail and wholesale electric service within the Railbelt.

Noteworthy Events in 2009 Annual membership meeting and election.

Principal Activities Through superior service, safely provide reliable and competitively priced energy.

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Ŗ ,1+0 the Alaska State Chamber of Commerce “to promote a positive business environment in Alaska.” Ŗ 0'6914- with Alaska’s top business leaders. Ŗ +081.8'/'06 in four major events where you can voice your business’s concerns. Ŗ #&81%#%; in Juneau. With our lobbying staff, we can work together on issues of common interest to protect business interests in Alaska. Ŗ 70+37' advertising opportunities! H

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The State Chamber is where business leaders can get together for frank discussions about the future of Alaska’s economy - from health care to resource development. Understanding how our economy works is critical. – John Shively

YYY CNCUMCEJCODGT EQO www.akbizmag.com • Alaska Business Monthly • October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Cape Fox Corp.

Still Growing Strong

PO Box 8558 Ketchikan, AK 99901 Phone: 907-225-5163 Fax: 907-225-3137 www.capefoxcorp.com akwhite@capefoxcorp.com Top Executive: Michael E. Brown, CEO

Worldwide Employees ..............624 Alaska Employees ....................140 Year Established.....................1973 49er Rank Last Year ...................13 REVENUE (Millions $) 2009........................................$255 2008........................................$224 2007.........................................$60, 2006..........................................$55 2005..........................................$38 Change from 2008 .................. 14%

Main Business Federal Contracting, Hospitality, Real Estate Principal Activities Professional services, information technology, wholesale goods, tourism, hotel services, title and escrow services and retail goods.

Subsidiaries Cape Fox Professional Services, US2, Concentric Methods. Cape Fox Government Services, NAVAR, Ketchikan Title Agency, Cape Fox Lodge, Cape Fox Tours, Cape Fox Shared Services

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13 Ahtna Inc.

Still Growing Strong

PO Box 649 Glennallen, AK 99588 Phone: 907-822-3476 Fax: 907-822-3495 www.ahtna-inc.com rtansy@ahtna.net Top Executive: Ken Johns, Pres./CEO

Worldwide Employees ...........2,004 Alaska Employees ....................397 Year Established.....................1972 49er Rank Last Year ...................16 REVENUE (Millions $) 2009........................................$231 2008........................................$196 2007........................................$100 2006........................................$110 2005..........................................$95 Change from 2008 .................. 18%

Main Business Native Organization Principal Activities Pipeline maintenance, government service contracts, civil and vertical construction, environmental remediation, fuels reduction, demolition, operations and maintenance, information technology services, records management, facilities support and more.

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www.akbizmag.com • Alaska Business Monthly • October 2010

Subsidiaries Ahtna Engineering Services LLC, Ahtna Development Corp., Ahtna Construction & Primary Products Corp., Ahtna Facility Services Inc., Ahtna Enterprises Corp., Ahtna Contractors LLC, Koht’aene Enterprises Co. LLC, Ahtna Support & Training Services LLC, Ahtna Technical Services Inc., Ahtna Government Services Corp.

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG The Wilson Agency LLC 3000 A St., Ste. 400 Anchorage, AK 99503 Phone: 907-277-1616 Fax: 907-274-7011 www.thewilsonagency.com info@thewilsonagenc.com Top Executive: Lon G. Wilson, Pres.

Still Growing Strong

Worldwide Employees ................19 Alaska Employees ......................19 Year Established.....................1964 49er Rank Last Year ...................20 REVENUE (Millions $) 2009........................................$207 2008........................................$160 2007........................................$148 2006........................................$144 2005........................................$112 Change from 2008 .................. 29%

Main Business Employee Benefits, Group Insurance, Wealth Management Principal Activities Strategic benefit consultants for employee benefits and financial services.

Noteworthy Events in 2009 Recipient of Golden Eagles Award by the National Association of Health Underwriters. President Lon Wilson elected Chair of AEDC; VP Jennifer Bundy-Cobb elected president of Anchorage Community Health Center.

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15 Calista Corp.

301 Calista Ct., Ste. A Anchorage, AK 99518 Phone: 907-279-5516 Fax: 907-272-5060 www.calistacorp.com communications@calistacorp.com Top Executive: Matthew Nicolai, Pres./CEO

Still Growing Strong

Worldwide Employees ...........1,285 Alaska Employees ....................348 Year Established.....................1972 49er Rank Last Year ...................14 REVENUE (Millions $) 2009........................................$203 2008........................................$224 2007........................................$138 2006..........................................$94 2005..........................................$57 Change from 2008 ................... -9%

Main Business Alaska Native Corporation Principal Activities Government contracting, remote and camp services, resource development, construction and engineering, real estate, publishing, advertising and media.

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Subsidiaries Brice Inc., Tunista Inc., Tunista Services LLC, Tunista Construction Inc., Tunista Pacific Rim, Yulista Management Services Inc., Yulista Aviation Inc., Y-Tech Services Inc., Chiulista Services Inc., Alaska Telecom Inc., Alaska Newspapers Inc., Camai Printing Co., Solstice Advertising LLC Noteworthy Events in 2009 Acquired Brice Inc., Alaska Newspapers recipient of 10 Alaska Press Club awards and more.

Leading the Way... Delivering Remote Medical Care

www.fairweather.com www.akbizmag.com • Alaska Business Monthly • October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Sealaska Corp.

Still Growing Strong

One Sealaska Plaza, Ste. 400 Juneau, AK 99801 Phone: 907-586-1512 Fax: 907-463-3897 www.sealaska.com webmaster@sealaska.com Top Executive: Chris E. McNeil, Pres./CEO

Worldwide Employees ..............580 Alaska Employees ....................580 Year Established.....................1972 49er Rank Last Year ...................24

Main Business Natural Resources, Services, Diversity Solutions

REVENUE (Millions $) 2009........................................$201 2008........................................$126 2007........................................$194 2006........................................$179 2005........................................$144 Change from 2008 .................. 60%

Principal Activities Forest products and marketing, silviculture, land management, financial investments, prototyping/ fabrication, plastics injection molding/manufacturing, information technology, construction aggregates, environmental remediation, consulting and more.

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Subsidiaries Sealaska Timber Corp., Synergy Systems, Alaska Coastal Aggregates, Sealaska Environmental Services, Nypro Kanaak Guadalajara, Nypro Kanaak Alabama, Nypro Kanaak Iowa, Kingston Environmental, Managed Business Solutions, Sealaska Global Logistics, Sealaska Constructors

Still Growing Strong

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Golden Valley Electric Association Inc. PO Box 71249 Fairbanks, AK 99707 Phone: 907-452-1151 Fax: 907-458-6368 www.gvea.com info@gvea.com Top Executive: Brian Newton, Pres./CEO

Worldwide Employees ..............253 Alaska Employees ....................253 Year Established.....................1946 49er Rank Last Year ...................15 REVENUE (Millions $) 2009........................................$197 2008........................................$214 2007........................................$196 2006........................................$165 2005........................................$117 Change from 2008 ................... -8%

Main Business Generate and Distribute Electricity Principal Activities A member-owned electric cooperative serving 90,000 Interior residents from Cantwell north along the Parks Highway and from Fairbanks south to Alyeska’s Pump Station 9 along the Richardson Highway.

Noteworthy Events in 2009 The North Pole expansion power plant, the most efficient power plant in the Interior.

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.

Pride, respect and diversity guide us, and our business, in all that we do. Delivering excellence in the projects we build, the services we offer, and the jobs we provide.

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

www.akbizmag.com • Alaska Business Monthly • October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Tyonek Native Corp. 1689 C St., Ste. 219 Anchorage, AK 99501 Phone: 907-272-0707 Fax: 907-274-7125 tyonek.com lpeck@tyonek.com Top Executive: Tom Harris, CEO

Still Growing Strong

Worldwide Employees ..............896 Alaska Employees ......................68 Year Established.....................1973 49er Rank Last Year ...................21 REVENUE (Millions $) 2009........................................$171 2008........................................$135 2007..........................................$95 2006............................................$0 2005............................................$0 Change from 2008 .................. 27%

Main Business Village Corporation Principal Activities Tyonek Group, manufacturing and service contractor (SBA 8a), civil construction, oilfield services (Tyonek Construction), private land wildlife management, North Foreland Industrial Park.

Noteworthy Events in 2009 Creation of new city of Nakacheba and development plan for energy and resource development for Cook Inlet Region.

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19 USTravel

999 E. Tudor Rd., Ste. 200 Anchorage, AK 99503 Phone: 907-561-2434 Fax: 907-786-0180 www.ustravel.us info@ustravel.us Top Executive: Mark Eliason, Pres./CEO

Still Growing Strong

Worldwide Employees ..............170 Alaska Employees ......................80 Year Established.....................1978 49er Rank Last Year ...................17 REVENUE (Millions $) 2009........................................$166 2008........................................$192 2007........................................$191 2006........................................$165 2005........................................$135 Change from 2008 ................. -14%

Subsidiaries Tyonek Fabrication, TFAB Manufacturing, Teamcor, Tyonek Services Group, Tyonek Enterprise Development Inc., Alaska Division Inc., Tebughna Preserve (100 percent); Tyonek Contractors Inc. (51 percent); NorthForeland Bardge Landing LLC (60 percent)

Main Business Corporate and Leisure Travel Management Principal Activities Full-service travel management for corporate and leisure customers.

Subsidiaries Doug Fox Travel, Air Fullfilment Services, Visions, Explore Tours, Alaska Exposure Noteworthy Events in 2009 USTravel is now the largest travel management company in the Pacific Northwest, and recently ranked as the 11th largest travel management company in the nation.

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To get to know Alaska, we had to get our feet wet. Since 1975, TOTE has built our transportation business around meeting the unique demands of Alaska. Including its dramatic weather. That’s why our vessels and equipment are specially built to protect your goods, get them to you on time, and exceed your expectations. Because you don’t become Alaska’s premier ocean carrier of freight, food, and household items without knowing your stuff. Talk to us today. It’s cut and dry, TOTE service is Built for Alaska.

WWW.TOTEMOCEAN.COM 800.426.0074

www.akbizmag.com • Alaska Business Monthly • October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Bering Straits Native Corp.

Still Growing Strong

PO Box 1008 Nome, AK 99762 Phone: 907-443-5252 Fax: 907-443-2985 www.beringstraits.com info@beringstraits.com Top Executive: Gail R Schubert, CEO

Worldwide Employees ..............941 Alaska Employees ....................289 Year Established.....................1972 49er Rank Last Year ...................31

Main Business Government Contracting, Construction

REVENUE (Millions $) 2009........................................$162 2008........................................$113 2007..........................................$76 2006............................................$0 2005............................................$0 Change from 2008 .................. 43%

Principal Activities Property management, mining support services, facilities and administration support, construction and electrical subcontractor, information technology, communications, aerospace support services, supply, logistics support and general construction.

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Noteworthy Events in 2009 BSNC subsidiary Inuit Services is partnering with Nesser Construction to build the Nome Hospital.

Still Growing Strong

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First National Bank Alaska PO Box 100720 Anchorage, AK 99510 Phone: 907-777-4362 Fax: 907-777-3406 www.fnbalaska.com customer.service@fnbalaska.com Top Executive: D.H. Cuddy, Pres./Chairman

Worldwide Employees ..............736 Alaska Employees ....................736 Year Established.....................1922 49er Rank Last Year ...................19 REVENUE (Millions $) 2009........................................$156 2008........................................$171 2007........................................$189 2006........................................$180 2005........................................$159 Change from 2008 ................... -8%

Main Business Full-Service Commercial Bank Principal Activities Services include: receiving and lending of money, trust banking, escrow and contract collection, BankCard services and safe deposit box facilities.

www.akbizmag.com • Alaska Business Monthly • October 2010

Noteworthy Events in 2009 First National is recognized by the American Bankers Association as one of only seven banks in the nation for its efforts in reaching out to the underserved.

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Still Growing Strong

Davis Constructors & Engineers Inc. 740 Bonanza Ave. Anchorage, AK 99518 Phone: 907-562-2336 Fax: 907-561-3620 www.davisconstructors.com admin@davisconstructors.com Top Executive: Josh Pepperd, Pres.

Worldwide Employees ..............330 Alaska Employees ....................210 Year Established.....................1976 49er Rank Last Year ...................18

Main Business Commercial Construction and Design-Build

REVENUE (Millions $) 2009........................................$152 2008........................................$178 2007........................................$180 2006........................................$194 2005........................................$134 Change from 2008 ................. -15%

Principal Activities Commercial construction and design-build. Current Projects: Wellness Street (Providence), ELM306 Aeromedical/Mental Health Clinic; ELM301 Weapons Load Training Facility, Tower S Medical Office Building at Providence Health Park.

Worldwide Employees ..............850 Alaska Employees ....................141 Year Established.....................1972 49er Rank Last Year ...................30

Main Business Government Contracting, Oil and Fuel Storage

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Subsidiaries Mass Excavation Inc. Noteworthy Events in 2009 Ranked 347 internationally in ENR’s Top 400. Relay for Life Team Davis raised $95,000.

23 The Aleut Corp.

Still Growing Strong

4000 Old Seward Hwy., Ste. 300 Anchorage, AK 99503 Phone: 907-561-4300 Fax: 907-563-4328 www.aleutcorp.com info@aleutcorp.com Top Executive: David Gillespie, CEO

REVENUE (Millions $) 2009........................................$146 2008........................................$116 2007..........................................$96 2006........................................$120 2005..........................................$96 Change from 2008 .................. 26%

Principal Activities Commercial and residential real estate, government contracting, fuel and port services, gravel operations, water utilities, oil testing instrumentation and testing.

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Subsidiaries Aleut Enterprises LLC, Aleut Management Services, Aleut Real Estate LLC, Alaska Instrument LLC, C&H Testing LLC, Aleut Real Estate LLC, Aleut Enterprise LLC, Aleut Management Services LLC, Midtown Estates Water Utility LLC, Akima Corp. (20 percent) and Ki LLC (25 percent) Noteworthy Events in 2009 President Mack, 40 Under 40 recipient, new subsidiary acquisitions.

Discover real value with Alaska USA Take advantage of customized solutions, fewer fees, and local service. Q Checking, loans, and depository services Q 24/7 online account management Q Business Visa® Check Card Q Insurance, bonds, and employee benefits Q Retirement services Q Investment management Find out what Alaska USA can do for your business. 563-4567 | (800) 525-9094 | www.alaskausa.org

Your savings federally insured to at least $250,000 and backed by the full faith and credit of the United States Government. National Credit Union Administration, a U.S. Government Agency.

www.akbizmag.com • Alaska Business Monthly • October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Still Growing Strong

Alaska Interstate Construction LLC

301 W. Northern Lights Blvd., Ste. 600 Anchorage, AK 99503 Phone: 907-562-2792 Fax: 907-562-4179 www.aicllc.com info@aicllc.com Top Executive: Steve Percy, Pres.

Worldwide Employees ..............650 Alaska Employees ....................650 Year Established.....................1987 49er Rank Last Year ...................28 REVENUE (Millions $) 2009........................................$140 2008........................................$117 2007........................................$126 2006........................................$120 2005..........................................$60 Change from 2008 .................. 20%

Main Business Construction, Mining, Oil and Gas Principal Activities Roads; facility pads and foundation; ice construction: roads, pads and islands; piling, bollards, thermosiphones and VSMs; piping and utilities; equipment maintenance; man-made islands; concrete services; bridges; oilfield support and more.

Subsidiaries Alaska Aggregate Products LLC, Kobuk River/AIC LLC, Deadhorse Maintenance and Operations Noteworthy Events in 2009 Numerous letters of recognition for OSHE excellence, and health safety and environment (HSE) practices.

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25 Olgoonik Corp.

Still Growing Strong

360 W. Benson Blvd., Ste. 302 Anchorage, AK 99503 Phone: 907-562-8728 Fax: 907-562-8751 www.olgoonik.com info@olgoonik.com Top Executive: June Childress, Pres.

Worldwide Employees ..............391 Alaska Employees ......................86 Year Established.....................1973 49er Rank Last Year ...................37 REVENUE (Millions $) 2009........................................$135 2008..........................................$82 2007..........................................$78 2006..........................................$77 2005..........................................$72 Change from 2008 .................. 65%

Main Business Alaska Native Organization Principal Activities Construction, construction management, heavy equipment rental, operations/maintenance, supply chain management, environmental services, oilfield support services, technical security/ information technology services for government agencies and more.

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www.akbizmag.com • Alaska Business Monthly • October 2010

Noteworthy Events in 2009 Olgoonik Specialty Contractors and Olgoonik Technical Services were ISO 9001:2000 certified.

2010 ALASKAâ&#x20AC;&#x2122;S TOP 49ERS: STILL GROWING STRONG Udelhoven Oilfield System Services Inc.

Still Growing Strong

184 E. 53rd Ave. Anchorage, AK 99518 Phone: 907-344-1577 Fax: 907-344-5817 www.udelhoven.com rfrontde@udelhoven.com Top Executive: Jim Udelhoven, CEO

Worldwide Employees ..............585 Alaska Employees ....................536 Year Established.....................1970 49er Rank Last Year ...................27

Main Business Oilfield Services, Construction Management, Electrical and Mechanical System Installation

REVENUE (Millions $) 2009........................................$132 2008........................................$124 2007........................................$107 2006..........................................$92 2005..........................................$76 Change from 2008 .................... 6%

Principal Activities Mechanical and electrical inspection, functional check-out, quality assurance/quality control, plumbing, welding, modular fabrication, industrial and commercial construction.

Worldwide Employees ..............650 Alaska Employees ....................455 Year Established.....................1980 49er Rank Last Year ...................29

Main Business Full-Service Transportation Company

Subsidiaries Udelhoven Inc., Udelhoven International Inc.

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27 Carlile Transportation Systems

Still Growing Strong

1800 E. First Ave. Anchorage, AK 99501-1833 Phone: 907-276-7797 Fax: 907-278-7301 www.carlile.biz pspittler@carlile.biz Top Executive: Linda Leary, Pres.

REVENUE (Millions $) 2009........................................$126 2008........................................$123 2007........................................$122 2006........................................$116 2005..........................................$93 Change from 2008 .................... 2%

Principal Activities Truck load and less-than-truck load, heavy haul, hazmat and warehousing.

Subsidiaries Kuukpik Carlile LLC, Carlile Logistics Noteworthy Events in 2009 2010 Carlile celebrates their 30th anniversary of serving Alaska.

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Peak Oilfield Service Co. 2525 C St., Ste. 201 Anchorage, AK 99503 Phone: 907-263-7000 Fax: 907-263-7070 www.peakalaska.com peak@peakalaska.com Top Executive: Mike O’Connor, Pres.

Still Growing Strong

Worldwide Employees ..............585 Alaska Employees ....................585 Year Established.....................1987 49er Rank Last Year ...................23 REVENUE (Millions $) 2009........................................$125 2008........................................$132 2007........................................$125 2006........................................$115 2005..........................................$85 Change from 2008 ................... -5%

Main Business Alaska General Contractor Principal Activities Oilfield general contracting, heavy civil construction, ice-road construction, crane support, drilling support, all-terrain vehicle transportation and remote camps, power generation and communication facility fabrication.

Noteworthy Events in 2009 Precision Power, a former wholly owned subsidiary, is now a division of Peak Oilfield Service Co.

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29 Era Alaska

5245 Airport Industrial Rd. Anchorage, AK 99502 Phone: 907-450-7200 Fax: 907-450-7274 www.flyera.com sales@flyera.com Top Executive: Bob Hajdukovich, Pres./CEO

Still Growing Strong

Worldwide Employees ..............775 Alaska Employees ....................775 Year Established.....................1948 49er Rank Last Year ...................26 REVENUE (Millions $) 2009........................................$117 2008........................................$124 2007..........................................$60 2006..........................................$35 2005..........................................$30 Change from 2008 ................... -6%

Main Business Scheduled Passenger/Cargo Services Principal Activities Statewide commuter airline with scheduled passenger flights, freight and charter services. Era Alaska includes: Era Aviation, Frontier Flying Service and Hageland Aviation Services.

Noteworthy Events in 2009 HotH Inc. purchased Era Aviation during spring of 2009. Beginning January of 2010 all HotH carriers began doing business as Era Alaska.

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40 Years... Thanks to our customers and employees, we’ve been privileged to serve Alaska’s oil industry for over 40 years. Our goal is to build a company that provides a service or builds a project to the complete satisfaction of its customers. We shall strive to be number one in reputation with our customers and our employees. We must perform safely. We must provide quality performance. We must make a proﬁt. We shall share our successes and proﬁts with our employees. Work can be taken away from us in many ways, but our reputation is ours urs to lose. Our reputation is the key that will open doors to new business in the future. e.

www.akbizmag.com • Alaska Business Monthly • October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Koniag Inc.

Still Growing Strong

194 Alimaq Dr. Kodiak, AK 99615 Phone: 907-486-2530 Fax: 907-486-3325 www.koniag.com Top Executive: William Anderson Jr., Pres./CEO

Worldwide Employees ..............835 Alaska Employees ......................65 Year Established.....................1972 49er Rank Last Year ...................35 REVENUE (Millions $) 2009........................................$116 2008........................................$101 2007..........................................$91 2006........................................$128 2005..........................................$97 Change from 2008 .................. 14%

Main Business Alaska Regional Native Corporation Principal Activities Government contracting and consulting, design and management of construction projects, fluid reprocessing, control systems and alloy distribution, telecom and security contracting, information sciences, database engineering, telecom system software.

Subsidiaries Angeles Comoposite Technologies Inc, Angayak Construction Enterprise, Clarus Technologies LLC, Clarus Enviornmental Services, Ditigized Schematic Solutions LLC, Dowland-Bach Corp., Frontier Systems Integrator LLC, Karluk Wilderness Adventures, Koniag Development Corp., Koniag Services Inc., Koniag Technical Services, Professional Computing Resources Inc., Washington Management Group, XMCO Inc.

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Noteworthy Events in 2009 In May 2010, Koniag opened the doors of their new corporate headquarters in Kodiak, Alaska.

31 Three Bears Alaska Inc.

Still Growing Strong

445 N. Pittman Rd., Ste. B Wasilla, AK 99654 Phone: 907-357-4311 Fax: 907-357-4312 www.threebearsalaska.com steve@threebearsalaska.com Top Executive: David A Weisz, Pres./CEO

Worldwide Employees ..............343 Alaska Employees ....................293 Year Established.....................1980 REVENUE (Millions $) 2009........................................ $111 2008........................................$106 Change from 2008 .................... 5%

Main Business Retail Grocery and General Merchandise Principal Activities Retail sales.

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www.akbizmag.com • Alaska Business Monthly • October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Neeser Construction Inc.

Still Growing Strong

2501 Blueberry Rd., Ste. 100 Anchorage, AK 99503 Phone: 907-276-1058 Fax: 907-276-8533 www.neeserinc.com jerry_neeser@neeserinc.com Top Executive: Jerry Neeser, Pres.

Worldwide Employees ..............271 Alaska Employees ....................268 Year Established.....................1975 49er Rank Last Year ...................32 REVENUE (Millions $) 2009........................................$110 2008........................................$105 2007........................................$130 2006........................................$148 2005........................................$127 Change from 2008 .................... 5%

Main Business General Contracting Firm Principal Activities General contracting, commercial, industrial, medical, multi-family, retail and correctional. Design-build, fast-track turnkey projects. Hard bid, negotiated and construction management for-fee contracting methods utilized.

Noteworthy Events in 2009 Won national DBIA award for Anchorage Civic and Convention Center. Completed SCF Primary Care Center III. Ahead of schedule on Goose Creek Correctional Center. New Crime Lab foundation being poured.

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Still Growing Strong

Matanuska Electric Association Inc. 163 E. Industrial Way Palmer, AK 99645 Phone: 907-745-3231 Fax: 907-761-9368 www.mea.coop contact@matanuska.com Top Executive: Joe Griffith, Gen. Mgr.

Worldwide Employees ..............142 Alaska Employees ....................142 Year Established.....................1941

Main Business Electric Cooperative Principal Activities Electric cooperative.

REVENUE (Millions $) 2009........................................$110 2008..........................................$97 Change from 2008 .................. 14%

Noteworthy Events in 2009 Launched Round Up, a program to assist those who are in need of assistance in our community. Currently negotiating a power supply for MEA’s long-term generation needs.

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www.akbizmag.com • Alaska Business Monthly • October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Goldbelt Inc.

Still Growing Strong

3075 Vintage Blvd., Ste. 200 Juneau, AK 99801 Phone: 907-790-4990 Fax: 907-790-4999 www.goldbelt.com goldbelt@goldbelt.com Top Executive: J.Gary Droubay, Pres./CEO

Worldwide Employees ...........1,000 Alaska Employees ....................250 Year Established.....................1974 49er Rank Last Year ...................33 REVENUE (Millions $) 2009........................................$108 2008........................................$106 2007..........................................$85 2006..........................................$76 2005..........................................$59 Change from 2008 .................... 2%

Main Business Government Contracting, Tourism Principal Activities Tourism, government contracting, facility management, IT consulting, construction and vehicle leasing.

Subsidiaries Goldbelt Falcon LLC, Goldbelt Hawk LLC, Nisga’a Data Systems LLC, Godlbelt Raven LLC, CP Leasing Inc., Lifesource Biomedical LLC, Goldbelt Orca LLC, Goldbelt Eagle LLC, Facility Support Services LLC, Goldbelt Security Services LLC, Goldbelt Cedar LLC Noteworthy Events in 2009 Goldbelt’s 8(a) government grew to $98.9 million in 2009.

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35 The Tatitlek Corp.

Still Growing Strong

561 E. 36th Ave. Anchorage, AK 99503 Phone: 907-278-4000 Fax: 907-278-4050 www.tatitlek.com info@tatitlek.com Top Executive: Roy Totemoff, Pres./CEO

Worldwide Employees ...........2,927 Alaska Employees ....................139 Year Established.....................1973 49er Rank Last Year ...................36 REVENUE (Millions $) 2009........................................$108 2008..........................................$90 2007..........................................$81 2006..........................................$46 2005..........................................$20 Change from 2008 .................. 19%

Main Business Alaska Native Village Corporation Principal Activities Military training support, foreign culture and language training; weapon training; logistics services; construction; sign manufacturing and installation; facilities maintenance; IT development, support and training; and property management.

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www.akbizmag.com • Alaska Business Monthly • October 2010

Subsidiaries Tatitlek Contractors Inc., Tatitlek Construction Services Inc., Tatitlek Management Inc., Tatitlek Support Services Inc., Tatitlek Technologies Inc., Tatitlek Training Services Inc., Tatitlek Response Services Inc.

2010 ALASKAâ&#x20AC;&#x2122;S TOP 49ERS: STILL GROWING STRONG Still Growing Strong

Matanuska Telephone Association Inc.

Worldwide Employees ..............400 Alaska Employees ....................400 Year Established.....................1953 49er Rank Last Year ...................34

1740 S. Chugach St. Palmer, AK 99645 Phone: 907-745-3211 Fax: 907-761-2481 www.mtasolutions.com Top Executive: Greg Berberich, CEO

REVENUE (Millions $) 2009........................................$106 2008........................................$103 2007..........................................$96 2006..........................................$97 2005..........................................$93 Change from 2008 .................... 2%

Main Business Telecommunications Principal Activities Communications and entertainment service provider for local, wireless, long-distance, directory (online and print), broadband Internet, digital TV and Avaya Business Systems.

Subsidiaries MTA Communications Inc. (100 percent) Noteworthy Events in 2009 Remaining strong and resilient in the fiercely competitive communications industry.

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Still Growing Strong

Usibelli Coal Mine Inc. & Alaska Affiliates

Worldwide Employees ..............128 Alaska Employees ....................128 Year Established.....................1942 49er Rank Last Year ...................39

PO Box 1000 Healy, AK 99743 Phone: 907-452-2625 Fax: 907-451-6543 www.usibelli.com info@usibelli.com Top Executive: Joe Usibelli, Chairman

REVENUE (Millions $) 2009..........................................$91 2008..........................................$73 2007..........................................$66 2006..........................................$61 2005..........................................$52 Change from 2008 .................. 25%

Main Business Coal Mining Principal Activities Coal mining and coal marketing. Wholesale power and retail district heating, investments, real estate and vineyards.

Subsidiaries Aurora Energy, Usibelli Investments, Usibelli Vineyards Noteworthy Events in 2009 Exportation of coal to Chile and Japan.

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2Q 7KH +XQWÂŤ 360 W. Benson Blvd., Suite 210 Anchorage, Alaska 99503 Phone: (907) 334-6971 info@eyakcorp.com eyakcorporation.com

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Still Growing Strong

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Homer Electric Association Inc. 3977 Lake St. Homer, AK 99603 Phone: 907-235-8551 Fax: 907-235-3313 www.homerelectric.com homerelectric.com Top Executive: Brad Janorschke, Gen. Mgr.

Worldwide Employees ..............140 Alaska Employees ....................140 Year Established.....................1945

Main Business HEA is a member-owned electric cooperative.

REVENUE (Millions $) 2009..........................................$87 2008..........................................$77 2007..........................................$70 2006..........................................$68 2005..........................................$59 Change from 2008 .................. 13%

Principal Activities Electric utility provider for most of the western Kenai Peninsula, from Sterling to Kachemak Bay. The company also operates and maintains the State-owned Bradley Lake hydroelectric project.

Noteworthy Events in 2009 Independent light generation project, which will result in generation facilities in Nikiski by 2014.

Worldwide Employees ................94

Still Growing Strong

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Construction Machinery Industrial LLC 5400 Homer Dr. Anchorage, AK 99518 Phone: 907-563-3822 Fax: 907-563-1381 www.cmiak.com k.gerondale@cmiak.com Top Executive: Ken Gerondale, Pres./CEO

Alaska Employees ......................94 Year Established.....................1985 49er Rank Last Year ...................25

Main Business Sells and Services Heavy Equipment

REVENUE (Millions $) 2009..........................................$87 2008........................................$124 2007..........................................$91 2006..........................................$76 2005..........................................$70 Change from 2008 ................. -30%

Principal Activities Distributor of construction, mining and logging equipment in Alaska. Representative for Volvo, Hitachi, Atlas Copco and Doosah Metso mining.

Noteworthy Events in 2009 The highest market share for construction and mining equipment in North America for Volvo and Hitachi.

40 Ahtna, Incorporated

Corporate Headquarters: Anchorage Office: PO Box 649 406 W. Fireweed Lane Glennallen, Alaska 99588 Anchorage, Alaska 99503 Phone: (907) 822-3476 Phone: (907) 868-8250 www.ahtna-inc.com Ahtna, Inc., an Alaskan Native Corporation, is a global company providing exceptional construction and integrated services to both government and private sector clients.

Corporate Capabilities: • Civil Construction • Environmental Remediation Services • Facilities Support Services • Food Service Contractors • Fuels Management • Government Contracting • Janitorial Services • Oil & Gas Pipeline Construction • Surveying • Tourism • Vertical Construction For more information on Ahtna and our subsidiaries, visit us online at www.ahtna-inc.com. www.akbizmag.com • Alaska Business Monthly • October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG The Kuskokwim Corp.

Still Growing Strong

4300 B St. Anchorage, AK 99503 Phone: 907-243-2944 Fax: 907-243-2984 www.kuskokwim.com dc@kuskowkim.com Top Executive: Maver Carey, CEO

Worldwide Employees ..............110 Alaska Employees ......................10 Year Established.....................1977 REVENUE (Millions $) 2009..........................................$87 2008..........................................$31 Change from 2008 ................ 182%

Main Business Alaska Native Corporation Principal Activities Government services, construction, aerospace and real estate.

Subsidiaries TKCA, Suulutaaq, Kuskokwim Properties, Kuskokwim Community Growth

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41 Watterson Construction Co.

Still Growing Strong

6500 Interstate Cir. Anchorage, AK 99518 Phone: 907-563-7441 Fax: 907-563-7222 www.wattersonconstruction.com info@wattersonsconstruction.com Top Executive: Bill Watterson, Pres.

Worldwide Employees ................90 Alaska Employees ......................90 Year Established.....................1981 49er Rank Last Year ...................38 REVENUE (Millions $) 2009..........................................$86 2008..........................................$78 2007..........................................$86 2006..........................................$73 2005..........................................$75 Change from 2008 .................. 10%

Main Business General Building Contractor Principal Activities Fort Wainwright: Two barracks; company operations facility and vehicle maintenance facility. Fort Richardson: Barracks and Warrior In Transition complex. Anchorage School District: Chester Valley School renovation.

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Transportation T t tii Tank T k & Trailer Service Center • Sales • Service • Parts

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• National Board “R” Stamp & DOT Inspections & Certifications • Leak Repairs, Rebarrels & Tank Change Outs • Bottom Loading, Vapor Recovery Conversions, Pumping Systems • Trailer Running Gear & Maintenance • No Job too big or too small • Large Parts Inventory Service – Contact Wayne Walker Parts – Contact Wayne Olsen West-Mark Service Center 3050 Van Horn ~ Fairbanks, AK

907-451-8265 (TANK) 800-692-5844 74

www.akbizmag.com • Alaska Business Monthly • October 2010

Noteworthy Events in 2009 ABC National Excellence Award for Safety; CHASE partner with SOA OSHA

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Cook Inlet Region Inc.

Still Growing Strong

2525 C St., Ste. 500 Anchorage, AK 99509 Phone: 907-274-8638 Fax: 907-279-8836 www.ciri.com info@ciri.com Top Executive: Margaret L. Brown, Pres./CEO

Worldwide Employees ................80 Alaska Employees ......................80 Year Established.....................1972 49er Rank Last Year ...................22

Main Business CIRI is an ANC with diverse business interests.

REVENUE* (Millions $) 2009..........................................$80 2008..........................................$11 2007........................................$120 2006........................................$192 2005..........................................$83 Change from 2008 ................ 619%

Principal Activities CIRI’s diversified business portfolio includes energy and resource development, oilfield and construction services, real estate development and management, environmental remediation, tourism and hospitality, telecommunications and other investments.

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*Revised CIRI revenue figures.

43 Colville Inc.

Still Growing Strong

100 Sag River Rd. Prudhoe Bay, AK 99734 Phone: 907-659-3198 Fax: 907-659-3190 www.colvilleinc.com info@colvilleinc.com Top Executive: Mark Helmericks, Pres./CEO

Worldwide Employees ................97 Alaska Employees ......................97 Year Established.....................1981 49er Rank Last Year ...................41

Main Business Full-Service Solid Waste Services, Industrial Supply with NAPA, Offshore Logistics

REVENUE (Millions $) 2009..........................................$76 2008..........................................$64 2007..........................................$50 2006..........................................$50 2005..........................................$39 Change from 2008 .................. 18%

Principal Activities Oil and gas industry support services, fuel industry supply and solid waste utility and logistics.

Subsidiaries Alaska Interstate Construction LLC, ANC Research & Development LLC, CIRI Alaska Tourism Corp., CIRI Land Development Co., North Wind Inc., Peak Oilfield Service Co., Fire Island Wind LLC, Stone Horn Ridge LLC Noteworthy Events in 2009 CIRI acquired North Wind Inc., an environmental remediation services company. It continues to invest in and develop diverse real estate, energy and other projects in Alaska and other states.

Subsidiaries Brooks Range Supply, Colville Logistics, Colville Solid Waste Utility, Prudhoe Bay General Store

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www.akbizmag.com • Alaska Business Monthly • October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG Peninsula Airways Inc.

Still Growing Strong

6100 Boeing Ave. Anchorage, AK 99502 Phone: 907-771-2500 Fax: 907-771-2661 www.penair.com missya@penair.com Top Executive: Danny Seybert, Pres.

Worldwide Employees ..............450 Alaska Employees ....................450 Year Established.....................1956 49er Rank Last Year ...................40 REVENUE (Millions $) 2009..........................................$70 2008..........................................$70 2007..........................................$70 2006..........................................$65 2005..........................................$62 Change from 2008 ....... No Change

Main Business Passenger, Cargo and Charter Service

Noteworthy Events in 2009 Increased fleet with addition of two Saab airplanes.

Principal Activities Regional airline serving 42 communities in Western Alaska, the Aleutians and Pribilofs.

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45 Roger Hickel Contracting Inc.

Still Growing Strong

11001 Calaska Cir. Anchorage, AK 99515 Phone: 907-279-1400 Fax: 907-279-1405 www.rogerhickelcontracting.com contact@rogerhicklecontracting.com Top Executive: Mike Shaw, Pres.

Worldwide Employees ................80 Alaska Employees ......................75 Year Established.....................1995 49er Rank Last Year ...................44 REVENUE (Millions $) 2009..........................................$67 2008..........................................$58 2007..........................................$45 2006..........................................$51 2005..........................................$43 Change from 2008 ................ 169%

Main Business General Contractor – Commercial and Road Work Principal Activities General contractor of civil and commercial projects. Union contractor and member of the Associated General Contractors of America.

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Doyon, Limited provides high-quality • oil field services • security • engineering management • construction • facility management • tourism

LEADER in

All We Do

Doyon Values • financially responsible • pride and respect in Native ownership • socially and culturally responsible • commitment to the long-term • honesty and integrity • commitment to excellence • respect for employees

WWW.DOYON.COM Doyon, Limited (907) 459-2000 Doyon Drilling Inc. (907) 563-5530 Doyon Universal Services (907) 522-1300

www.akbizmag.com • Alaska Business Monthly • October 2010

Noteworthy Events in 2009 Associated General Contractor’s Excellence in Safety Record for a building contractor.

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hiulista Services Inc. (CSI) is a diverse Alaska Native corporation with a distinct focus. A subsidiary of Calista Corporation, CSI is a staunch supporter of local hiring practices, on-the-job-training and superior work. CSI is a for-profit organization that provides professional and on-the-job training services to government and private entities. Established in 1996, it offers an array of services, including full camp services, facility management, base operation support, fuels management, and logistics and staffing for private and federal operations. â&#x20AC;&#x153;The vision of CSI is to become the Calista Regionâ&#x20AC;&#x2122;s largest provider of jobs for shareholders and descendents though economic opportunities within the region, state and worldwide locations,â&#x20AC;? says Senior VP for Alaska Operations Monique Henriksen. That vision is clearly illustrated in its 90-plus percent shareholder- and descendent-hire rate at the Donlin Creek project. CSI currently has about 150 employees, whom Henriksen credits with helping the company excel. She says: â&#x20AC;&#x153;We have open dialogue with our employees and are looking for ways to better our services for each unique project. Every employee is equally important in each job, and we take pride in our work and stand beside them.â&#x20AC;? In fact, the key to CSIâ&#x20AC;&#x2122;s success is its communication with employees and customers, as well as teamwork. Each employee is a team member with valuable expertise. â&#x20AC;&#x153;We are an ever-changing company that consistently looks at improving our skills, abilities and services,â&#x20AC;? Henriksen says. â&#x20AC;&#x153;CSI continually keeps up to date with State, federal and local requirements, as well as the internal processes for everyday business.â&#x20AC;? Because CSI focuses on diversifying

)NQDCN 4GUQWTEGU 4GIKQPCN 5WRRQTV .QECN *KTG its services, the company is constantly exploring its approach to meeting customersâ&#x20AC;&#x2122; needs while ensuring quality measures are being met. If a service is outside its area of expertise, CSI seeks alternativesâ&#x20AC;&#x201D;not by changing the project outlineâ&#x20AC;&#x201D;but by broadening its scope to meet it. CSI strives to provide clients with the highest level of quality, professionalism, integrity and satisfaction. Fostering a work environment that encourages new ideas, new innovations and growth is also important. This philosophy has served the company well. For example, in a project where CSI supplied regional personnel involved in drilling in remote Alaska, it completed the job three weeks before deadline. Consequently, the company was complimented by State officials for its hard work and keeping Alaskaâ&#x20AC;&#x2122;s pristine wilderness in tact. CSI also has received numerous safety achievements involving rural projects. Such accomplishments demonstrate the effectiveness of its hiring practices. â&#x20AC;&#x153;Our Alaskan/Native-hire preference has given CSI a chance to prove how important Alaska lands are to our community,

children and for the future,â&#x20AC;? Henriksen explains. â&#x20AC;&#x153;It also proves that work can be performed safely and that we are guided by State-regulated requirements for the environment. Some of our personnel have lived in Alaska all their lives and understand the climate, wildlife and wilderness.â&#x20AC;? Recently, CSI and its teaming partners won a three-year, multiple-camp services contract with URS Corp. in support of geological survey work. In the future, CSI plans to expand its capabilities to manage all aspects of camp equipment services, concentrating on work force development and working with companies on investing in Alaskan/Native-hire for the future.

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Ä&#x153; Ä¤ Ä&#x; Ä&#x153;Business Ä&#x; Äą Ä Ä ÄŻ Monthly Ä¤ ÄŽ Ä Ä¨ Ä â&#x20AC;˘ÄŠOctober ÄŻ www.akbizmag.com ÄŤ â&#x20AC;˘ Alaska 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG UNIT Company

Still Growing Strong

Worldwide Employees ................35 Alaska Employees ......................75 Year Established.....................1977 49er Rank Last Year ...................43

620 E. Whitney Rd. Anchorage, AK 99501 Phone: 907-349-6666 Fax: 907-522-3464 www.unitcompany.com info@unitcompany.com Top Executive: Michael J. Fall, Pres.

REVENUE (Millions $) 2009..........................................$59 2008..........................................$59 2007..........................................$52 2006..........................................$50 2005..........................................$50 Change from 2008 .................None

Main Business Commercial General Contractor

Noteworthy Events in 2009 Company was awarded $21 Million Army National Guard contract.

Principal Activities Commercial general contractor involved in all types of building construction, including design-build, construction management and design-assist.

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47 The Superior Group Inc.

Still Growing Strong

PO Box 230387 Anchorage, AK 99523 Phone: 907-344-5011 Fax: 907-344-5094 www.superiorpnh.com tmentzer@superiorpnh.com Top Executive: W. Michael Blake, Pres./Corp. Gen. Mgr.

Worldwide Employees ..............218 Alaska Employees ....................218 Year Established.....................1964 REVENUE (Millions $) 2009..........................................$55 2008..........................................$35 2007..........................................$36 2006..........................................$36 2005..........................................$36 Change from 2008 .................. 57%

Main Business Full-Service Mechanical and Electrical Contractor Principal Activities Providing full-service mechanical and electrical contracting, including design, commissioning and maintenance services.

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48 DOWL HKM

Still Growing Strong

4041 B St. Anchorage, AK 99503 Phone: 907-562-2000 Fax: 907-563-3953 www.dowlhkm.com jpayne@dowlhkm.com Top Executive: Stewart G. Osgood, Pres.

Worldwide Employees ..............400 Alaska Employees ....................200 Year Established.....................1962 REVENUE (Millions $) 2009..........................................$55 2008..........................................$45 2007............................................$0 2006............................................$0 2005............................................$0 Change from 2008 .................. 22%

Main Business Civil Engineering, Planning and Survey Principal Activities Civil, structural and geotechnical engineering. Planning, landscape architecture, environmental, and construction administration.

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ƛȽɃɀȷȳɀΎƫȳɀɄȷȱȳΎȴȽɀΎƱȽɃɀΎƝɄȳɀɇΎƦȳȳȲ ƛȽɃ Alaskan Owned & Operated No Job Too Big or Too Small One-time or Regular Service Anchorage or Anywhere!

ƫȷȼȱȳΎ̸̶̰̰

3OHDVH FRQWDFW RXU RI¿FH DQG RQH RI RXU family member representatives will be happy to assist you with questions or to arrange courier service.

(907) 345-4980 www.rosiesdelivery.com

www.akbizmag.com • Alaska Business Monthly • October 2010

Subsidiaries Superior Plumbing and Heating, Alaska Sheet Metal, Haakenson Electric, Superior Mechanical Service, Support Services of Alaska Noteworthy Events in 2009 Celebrating 46 years serving Alaska.

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG T OP 49 ERS B USINESSES L ISTED A LPHABETICALLY

COMPANY Afognak Native Corp./Alutiiq

2010 49ers

2009 Revenue

2009 49ers

2008 Revenue

2008 49ers

2007 Revenue

2007 49ers

2006 Revenue

2006 49ers

2005 Revenue

Rank

$ Millions

Rank

$ Millions

Rank

$ Millions

Rank

$ Millions

Rank

$ Millions

766.25

729.80

515.70

537.90

521.90

Ahtna Inc.

231.01

196.14

99.85

110.05

95.30

Alaska Interstate Construction LLC

140.00

117.00

125.50

120.00

60.00

Alaska USA Federal Credit Union

293.00

311.60

270.30

201.90

171.00

Arctic Slope Regional Corp.

1,945.06

2,297.34

986.32

1,700.00

1,587.00

Bering Straits Native Corp.

162.30

113.34

1,391.57

1,294.85

993.68

762.41

321.07

Calista Corp.

203.02

224.09

138.44

94.45

57.19

Cape Fox Corp.

254.84

224.19

60.40

55.12

38.00

Carlile Transportation Systems

126.00

123.00

122.00

116.00

92.50

Chenega Corp.

1,077.00

894.00

768.00

782.00

643.00

Chugach Alaska Corp.

1,105.27

951.95

940.51

890.00

785.00

Chugach Electric Association Inc.

291.10

289.50

259.00

267.50

226.90

Colville Inc.

75.90

64.40

49.70

Construction Machinery Industrial LLC

87.00

124.00

91.00

76.20

70.00

Cook Inlet Region Inc.*

79.89

11.12

119.83

191.73

82.68

Davis Constructors & Engineers Inc.

151.50

178.20

180.38

194.00

134.00

DOWL HKM

54.56

Doyon Limited

308.50

295.56

272.37

Era Alaska

117.00

124.00

60.00

First National Bank Alaska

156.21

170.67

188.80

Goldbelt Inc.

107.75

106.00

85.00

Golden Valley Electric Association Inc.

197.42

214.00

196.00

Bristol Bay Native Corp.

76.18

44.63

38.80

0.00 222.30

171.80

180.46

158.83

76.00

165.00

35.00 14

70.00

30.00 59.00 117.00

Homer Electric Association Inc.

87.28

68.00

59.00

Koniag Inc.

115.57

101.27

90.77

128.15

97.26

780.00

740.00

670.00

550.00

Lynden

77.45

0.00

680.00

Matanuska Electric Association Inc.

109.95

Matanuska Telephone Association Inc.

105.76

103.29

95.80

97.00

92.83

1,260.00

1,175.50

975.00

822.00

527.00 126.70

NANA Regional Corp. Inc.

96.82

85.00

69.50

Neeser Construction Inc.

110.40

105.20

130.00

148.00

Olgoonik Corp.

135.00

82.00

78.48

77.00

Peak Oilfield Service Co.

125.00

132.00

125.00

115.00

Peninsula Airways Inc.

70.10

70.30

64.90

61.80

Roger Hickel Contracting Inc.

67.40

58.08

44.81

50.65

42.67

Sealaska Corp.

201.01

125.77

193.97

178.60

144.30

The Aleut Corp.

146.06

116.05

96.47

120.00

96.00

The Eyak Corp.

422.89

281.70

231.00

95.73

74.70

The Kuskokwim Corp.

86.70

30.70

The Superior Group Inc.

55.00

35.00

36.44

35.54

The Tatitlek Corp.

107.50

90.00

81.20

46.00

The Wilson Agency LLC

206.80

159.90

147.82

144.30

112.00

Three Bears Alaska Inc.

111.25

105.77

0.00

Tyonek Native Corp.

171.49

135.00

95.00

0.00

Udelhoven Oilfield System Services Inc.

132.13

124.42

106.83

91.78

76.30

316.70

334.30

291.00

258.80

267.14

Ukpeagvik Inupiat Corp.

71.50 85.00

0.00

0.00 19.60 0.00 0.00

UNIT Company

59.00

52.00

50.10

49.87

Usibelli Coal Mine Inc. and Alaska Affiliates

91.46

73.12

66.23

60.53

52.40

USTravel

166.00

192.00

191.00

165.00

Watterson Construction Co.

86.00

78.00

86.00

72.60

*Revised CIRI revenue figures.

www.akbizmag.com • Alaska Business Monthly • October 2010

135.00 27

74.50

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG T OP ERS B USINESSES L ISTED BY C ATEGORY TOP 4949 ERS LISTED BY BUSINESS CLASSIFICATION Rank 2010

CLASSIFICATION / COMPANY

Employees Alaska

Total

2009 Rev. $ Million

CONSTRUCTION

CLASSIFICATION / COMPANY

Rank 2010

Employees Alaska

Total

2009 Rev. $ Million

Ukpeagvik Inupiat Corporation

600

1,900

316.70

Doyon Limited

1,427

2,727

308.50

Cape Fox Corporation

140

624

254.84

Ahtna Inc.

397

2,004

231.01

Calista Corp.

348

1,285

203.02

Sealaska Corp.

580

201.01

Tyonek Native Corporation

896

171.49

Bering Straits Native Corp.

289

941

162.30

The Aleut Corporation

141

850

146.06

Olgoonik Corp.

391

135.00

Koniag Inc.

835

115.57

Goldbelt Inc.

250

1,000

107.75

FINANCE, INSURANCE, REAL ESTATE

The Tatitlek Corporation

139

2,927

107.50

Alaska USA Federal Credit Union

1,298

1,487

293.00

Kuskokwim Corporation

110

86.70

The Wilson Agency LLC

206.80

Cook Inlet Region Inc.

79.89

First National Bank Alaska

736

156.21

Native Organization Total

14,495

56,625

2,053

2,242

656.01

RETAIL TRADE 293

343

111.25

293

343

111.25

400

105.76

400

105.76

Davis Constructors & Engineers Inc.

210

330

151.50

Alaska Interstate Construction LLC (AIC)

650

140.00

Neeser Construction Inc.

268

271

110.40

Watterson Construction Co.

86.00

Roger Hickel Contracting Inc.

67.40

UNIT Company

59.00

1,368

1,456

614.30

Construction Total

ENGINEERING DOWL/HKM

Engineering Total

Finance, Insurance, Real Estate Total

200

400

54.56

200

400

54.56

INDUSTRIAL SERVICES

Three Bears Alaska Inc.

Udelhoven Oilfield System Services Inc.

536

585

132.13

Retail Trade Total

Peak Oilfield Service Co.

585

125.00

TELECOMMUNICATIONS

Construction Machinery Industrial LLC

87.00

Colville Inc.

75.90

1,312

1,361

420.03

Industrial Services Total

MECHANICAL/ELECTRICAL CONTRACTOR The Superior Group Inc.

Mechanical/Electrical Contractor Total

218

55.00

218

55.00

MINING Usibelli Coal Mine Inc. and Alaska Affiliates

Mining Total

Matanuska Telephone Association Inc. Telecommunications Total

TRANSPORTATION Lynden

698

2,164

680.00

Carlile Transportation Systems

455

650

126.00

Era Alaska

775

117.00

Peninsula Airways Inc.

450

70.10

2,378

4,039

993.10

170

166.00

170

166.00

128

94.46

Transportation Total

128

94.46

TRAVEL

NATIVE ORGANIZATION

10,595.38

USTravel 20

Arctic Slope Regional Corporation

4,689

10,966

1,945.06

Travel Total

Bristol Bay Native Corp.

473

1,762

1,391.57

UTILITY

NANA Regional Corporation Inc.

3,200

9,300

1,260.00

Chugach Electric Association Inc.

325

291.10

Chugach Alaska Corporation

886

5,500

1,105.27

Golden Valley Electric Association Inc.

253

197.42

Chenega Corporation

330

5,500

1,077.00

Matanuska Electric Association Inc.

142

109.95

Afognak Native Corp./Alutiiq

203

6,133

766.25

Homer Electric Association Inc.

140

87.28

The Eyak Corporation

314

422.89

Utility Total

860

685.75

www.akbizmag.com • Alaska Business Monthly • October 2010

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2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG

Cook Inlet Region Inc. Rebalancing act proves successful

BY TRACY KALYTIAK

hen financial markets tanked two years ago, Cook Inlet Region Inc. saw a corresponding plunge in the value of its marketable securities portfolio. Officials of the 38-year-old Native corporation didn’t wait to see whether the market would take the value of those securities back up again, however. “We decided to liquidate those marketable securities and rebalance our portfolio to account for changed market conditions,” said Sophie Minich, CIRI’s chief operating officer. CIRI’s bold decision and its longtime focus on diversification of its business enterprises led to its rank of No. 43 this year on Alaska Business Monthly’s annual list of the Top 49 Alaskan-owned and -operated revenue earners in the state.

Cook Inlet Region Inc. Chief Operating Officer Sophie Minich.

The Native corporation tallied $11.1 million in revenue in 2008. Last year, however, CIRI earned close to $79.9 million in revenue. The corporation’s profitability in-

creased as well. In 2008, it tallied a loss of $22.7 million. The following year, CIRI posted a profit of $24.5 million. “In addition to rebalancing our marketable securities portfolio,”

www.akbizmag.com • Alaska Business Monthly • October 2010

Minich said, â&#x20AC;&#x153;we took the capital losses from 2008 and offset them against capital gains from preceding years and received a substantial tax refund from the Internal Revenue Service. Financial markets started to rebound in 2009 and we saw a positive gain in our portfolio.â&#x20AC;?

5 6 $ (QJLQHHULQJ ,QF

DIVERSIFIED INTERESTS CIRI participates in about every segment of Alaskaâ&#x20AC;&#x2122;s economy, as well as investing in the Lower 48. The corporation is involved in tourism, oil and gas, alternative and renewable energy, construction and real estate. A stagnant economy in the Lower 48 translated into financially strapped potential tourists opting not to fly, drive or cruise up to Alaska. CIRIâ&#x20AC;&#x2122;s tourism division responded by controlling costs: closing parts of facilities that werenâ&#x20AC;&#x2122;t being used, hiring fewer employees, paring back tour schedules. The corporation also focused on online marketing outreach, reaching out to people who prefer to travel independently rather than under the wing of a tour group or cruise operator. Thanks to its diversification, other aspects of CIRIâ&#x20AC;&#x2122;s operations are showing promise even in the midst of a troubled economy. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re going to continue in that vein,â&#x20AC;? said Jim Jager, CIRIâ&#x20AC;&#x2122;s director of corporate communications. â&#x20AC;&#x153;The economy might go bad or individual industries might slow down, but weâ&#x20AC;&#x2122;re more protected from downturns because CIRIâ&#x20AC;&#x2122;s investments are diversified across different industries and geographic regions. The $125 million to $150 million Tikahtnu Commons development project is one high-profile example of a segment of CIRIâ&#x20AC;&#x2122;s business that is exceeding expectations. Located near the Glenn Highway intersection with Muldoon Road in Anchorage, the shopping and entertainment complex boasts the Tikahtnu Stadium 16 and IMAX Theater, which opened in June. Anchor stores, including Best Buy, Target, Kohlâ&#x20AC;&#x2122;s and Loweâ&#x20AC;&#x2122;s, occupy prominent spots in the development, with a clutch of satellite shops nearby. A PetSmart store and Red Robin restaurant are being

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ October 2010

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built on the west side of the complex. “Roughly two-thirds of the Tikahtnu Commons project will be constructed by the end of the year,” Minich said. “We’re presently working with Browman Development Co., our partner, to find tenants to occupy the east side of the project.” CIRI acquired the 95-acre Tikatnu Commons land under federal surplus property provisions of the Cook Inlet Land Exchange, as part of its Alaska Native Claims Settlement Act entitlement. In South Anchorage, CI RI is in the process of constructing a 40,000-square-foot office building that is the first phase of a 22.4 acre mixeduse, office-retail project that includes the former Klatt driving range. The office building is leased to the Doyon family of companies and completion is expected sometime near the middle of 2011. The full project is expected to include up to 100,000 square feet of office space, additional retail and service businesses and will take several years to complete.

ENERGY PROJECTS

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On Fire Island, CIRI is finalizing negotiations for major construction contracts related to its plans to erect a large-scale wind power-generation project. CIRI owns 3,200 acres on the island. The corporation is also negotiating power purchase agreements with utility officials. “Work crews are on the island clearing land for pads and roads,” Jager said. “We expect that construction crews will install horizontal infrastructure including tower pads, roads and on-island transmission next summer.” Jager says ice in Cook Inlet poses logistical challenges that limit Fire Island’s construction season. “We can’t barge heavy equipment to the island until Cook Inlet ice is clear,” Jager said. “Our construction season start and finish dates are weather-dependent.” CIRI hopes to start installing wind turbines in spring 2012 and to have power online in the third quarter of that year. The Fire Island project will erect 33 1.6 megawatt wind turbines expected to generate approximately 144,000 MW hours of electricity

www.akbizmag.com • Alaska Business Monthly • October 2010

annually, enough power to meet the needs of 17,000 Southcentral Alaska households. Fire Island is not CIRI’s only energy project in Southcentral. The corporation launched its Stone Horn Ridge LLC joint venture in June to develop an underground coal gasification (UCG) project. It involves drilling down into deeply buried coal seams and transforming the coal via chemical reaction into synthesis gas, commonly called syngas, which will then be produced to the surface and handled like natural gas. Syngas can be burned to generate electricity, upgraded into synthetic natural gas or liquid fuels, or used in other industrial processes. CIRI expects Stone Horn Ridge will be online and producing syngas by 2015. “The proposed project site is north of the Beluga River, on CIRI land on the west side of Cook Inlet,” Jager said. “It is about eight miles northwest of Chugach Electric Association’s Beluga Power Plant. “We’re still defining how much resource is recoverable with the UCG process,” Jager said. “We anticipate that the site could produce enough syngas to fuel a 100-megawatt power plant for thousands of years.” Minich said CIRI finished the first phase of its planned resource-assessment drilling last spring. “A team will be back in the field doing a second round of drilling and site assessment this fall.” “CIRI is committed to responsible project development that will include carbon capture and management.” Jager said, “but we have not committed to any particular technology yet.”

LOWER 48 DEVELOPMENT CIRI and its partner, Intermountain Management, opened a 126-room Hyatt Place Hotel in San Antonio, Texas, last spring. The hotel occupies 2.5 acres of a 22-acre parcel of CIRI land. That parcel could eventually be developed into a mixed-use project that will likely include offices, a restaurant and other retail or service businesses. “We’re watching the economy now, to see what opportunities arise,” Minich said. ❑ www.akbizmag.com • Alaska Business Monthly • October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG

Era Alaska CEO Robert Hajdukovich.

Era Alaska BY TRACY KALYTIAK

Getting excited for the future 86

ntil recently, Frontier Flying Service, Hageland Aviation Services, Era Aviation and Arctic Circle Air Service existed as separate companies that, depending on each one’s specialty, busily whisked passengers or cargo to destinations all over Alaska. Now, thanks to a lightning-quick series of combinations and acquisitions, the four operate under one brand, Era Alaska. “What we’ve done in the last three years is the equivalent of me walking up to 29 hanging tires swinging randomly in a row, shooting an arrow through and

hitting a bull’s-eye,” said Era Alaska CEO Robert Hajdukovich. This feat helped Era Alaska garner 30th place on Alaska Business Monthly’s list of the Top 49 Alaskan-owned and -operated revenue earners in the state. According to figures released by Era Alaska, its revenues in 2008 were $124 million. Last year, revenues were listed as $117 million. The company employs about 775 people. “The acquisitions and combinations were more a matter of timing and stars aligning than they were of precognitive planning,” Hajdukovich said.

www.akbizmag.com • Alaska Business Monthly • October 2010

MULTIPLE ACQUISITIONS Robert Hajdukovich originally steered the operations of Frontier Flying Service, a Fairbanks-based air commuter, postal and charter company his father, John Hajdukovich, bought in 1974. In 2008, Frontier combined with Hageland Aviation Services, forming a holding company known as HoTH Inc. HoTH is an acronym rhyming with “broth” that combines the first letters of the last names of John Hajdukovich, Hageland president James Tweto and founder L. Michael Hageland, Hajdukovich said. HoTH acquired 61-year-old Era Aviation in the spring of 2009. and in October 2009, acquired 100 percent of the common stock of Arctic Circle Air Service. That latter acquisition brought with it two Shorts 330 “Sherpa” cargo aircraft, which can accommodate payloads up to 5,000 pounds and 1,250 cubic feet of cargo space. They have a range of up to 700 miles, speeds up to 190 mph and can haul small cars, midsize pickups and assorted tracked vehicles.

NEW OPPORTUNTIES “This brings in a whole new era, a new opportunity to offer service unavailable before because of size restrictions,” said Don Singsaas, director of cargo and logistics for Era Alaska. Singsaas had been Arctic Circle Air’s director of operations. “They would be able to do one snowmachine at a time, but items 25-30 feet long, big siding material, they weren’t able to handle. Not all villages have forklifts to load and unload. With our Sherpa, you can slide things in and out without a lot of ground-support equipment.” In January, all HoTH carriers began doing business as Era Alaska. The company accumulates approximately 74,000 flight hours a year, schedules daily flights to more than 100 destinations in Alaska, serves 650,000 passengers annually and transports 30 million pounds of freight and mail.

FAA CERTIFICATIONS Each component carrier in Era Alaska has its niche. Era provides passenger service, charters and transportation of mail and freight. Through June, www.akbizmag.com • Alaska Business Monthly • October 2010

Hajdukovich said, Hageland provided 40 percent passenger service, 45 percent freight and mail and 15 percent charter. Frontier provided 27 percent charter, 50 percent freight and mail and 23 percent passenger service in that period, he said. â&#x20AC;&#x153;Thatâ&#x20AC;&#x2122;ll continue to shift more to Hageland, freight and mail,â&#x20AC;? he said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ll transfer charter to Frontier.â&#x20AC;? Now, Era and Frontier each hold Part 121 federal aviation regulation certificates, which enables both companies to operate larger aircraft. The certification, however, comes with the burden of higher expense and more frequent inspections from Federal Aviation Administration authorities than the Part 135, nine-seats-or-fewer carrier receives. So, the company plans to divest itself of Frontierâ&#x20AC;&#x2122;s Part 121 certificate, transforming it into a Part 135 carrier. â&#x20AC;&#x153;There has to be a specific reason for having a certificate of that type,â&#x20AC;? Hajdukovich said. â&#x20AC;&#x153;Why would you want two? There has to be a value and there really isnâ&#x20AC;&#x2122;t a value. It should be on the one airline, not two.â&#x20AC;?

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The company is in the final stages of revamping its website, to direct customers from the component companiesâ&#x20AC;&#x2122; websites to Era Alaskaâ&#x20AC;&#x2122;s site. It installed new fiber optics and new servers at its Anchorage headquarters, at a cost of about $250,000. Streamlining the reservations process is a key goal, Hajdukovich said. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s been some confusion relative to reservations,â&#x20AC;? he said. â&#x20AC;&#x153;I hope weâ&#x20AC;&#x2122;re over those humps.â&#x20AC;? Before, reservations had been handled separately from Fairbanks and Anchorage and there were bottlenecks at different levels for the customer that increased the time they waited. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re spreading the call volumes to everybody now,â&#x20AC;? he said. â&#x20AC;&#x153;It used to be if you called the Anchorage reservations line, youâ&#x20AC;&#x2122;d be on hold. Now, youâ&#x20AC;&#x2122;re put on a queue for Anchorage or Fairbanks. If a line opens in Fairbanks, an agent there will get that call.â&#x20AC;?

SOME TURBULENCE Melding four companies into a single, more cost-efficient one hasnâ&#x20AC;&#x2122;t

www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ October 2010

always been a smooth process. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s come at the cost of cash, bad communications, inefficiencies,â&#x20AC;? Hajdukovich said. â&#x20AC;&#x153;Despite our best efforts, weâ&#x20AC;&#x2122;re making progress in helping people figure out whoâ&#x20AC;&#x2122;s in charge, who do I work for, who do I listen to. How do I vent that Iâ&#x20AC;&#x2122;m not happy. Out of all that, you have to remember you have peopleâ&#x20AC;&#x2122;s lives at risk and not sacrifice safety.â&#x20AC;? Seeing the impact of the combination and acquisitions on his familyâ&#x20AC;&#x2122;s company has been difficult for Hajdukovich. â&#x20AC;&#x153;Being born and raised at Frontier, thatâ&#x20AC;&#x2122;s been pretty traumatic,â&#x20AC;? he said. â&#x20AC;&#x153;Era and Hageland have grown, but Frontierâ&#x20AC;&#x2122;s really contracted. Itâ&#x20AC;&#x2122;s been rough not only from the family perspective, but for the employees. Consolidating jobs has been a real challenge.â&#x20AC;? The combination of Hageland and Frontier Flying Service saved more than $10 million a year in consolidation and efficiencies, Hajdukovich said. â&#x20AC;&#x153;When you first combine, there are so many things that are obvious; itâ&#x20AC;&#x2122;s like tripping over $100 bills,â&#x20AC;? Hajdukovich said. â&#x20AC;&#x153;Now, itâ&#x20AC;&#x2122;s like picking up rocks and looking for quarters. Before, we were picking up rocks looking for pennies. Thereâ&#x20AC;&#x2122;s a continual reevaluation of how to be more efficient, consolidate services.â&#x20AC;? When Frontier first combined with Hageland, Hajdukovich didnâ&#x20AC;&#x2122;t envision a future that included moving into an Anchorage headquarters or acquiring Era. â&#x20AC;&#x153;We were expecting to grow the Frontier certificate in Part 121 (scheduled air carrier) operations, get a Dash 8 (aircraft) in competition with Era and grow Hageland in Part 135,â&#x20AC;? he said. â&#x20AC;&#x153;But ultimately when we looked at that growth process, we saw it would be a significant capital investment. We had to ask the question, â&#x20AC;&#x2DC;Are there other alternatives to growth?â&#x20AC;&#x2122;â&#x20AC;? Hajdukovich says he is now working toward splicing the disparate cultures of the old companies into one. â&#x20AC;&#x153;My role is to try to wedge people out of the past and get people excited â?&#x2018; about the future,â&#x20AC;? he said.

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG

The Kuskokwim Corp. Diversifying investments proves lucrative

Photo by Rachel Klein/Courtesy of The Kuskokwim Corp.

BY TRACY KALYTIAK

aver Carey found herself in a predicament at the start of what she thought would be a promising marketing career. The architectural engineering firm she worked for decided to lay off employees, including Carey. She needed to find work. “I came knocking on the door of the village corporation, asking, ‘Do you have anything at all?” Carey said. “I took a $9-an-hour administrative assistant job. I thought I’d keep it until I found a real job, but they kept adding things to my plate.” Eighteen years later, Carey, 42, is settled in the same workplace, though not in the same job. She now serves The Kuskokwim Corp. as its chief executive officer. The company ranks

The late Leo Morgan, who was chairman of the board for The Kuskokwim Corp., and TKC CEO Maver Carey at the Napa Valley site of the Suulutaaq flood control project.

No. 41 among Alaska Business Monthly’s annual list of the Top 49 revenue earners in the state.

FORMED

MERGER

The Kuskokwim Corp. was formed in 1977 when 10 Alaska Native Claims

Settlement Act village corporations located along the middle region of the Kuskokwim River merged in an effort to reduce the higher cost of running each corporation independently. The villages included Lower Kalskag, Upper Kalskag, Aniak, Chuathbaluk,

www.akbizmag.com • Alaska Business Monthly • October 2010

Photo by Rachel Klein/Courtesy of The Kuskokwim Corp.

Napaimute, Crooked Creek, Red Devil, Georgetown, Sleetmute and Stony River. TKC had 1,100 shareholders, primarily Yupik Eskimos and Athabaskan Indians from the middle Kuskokwim River region, when Maver Carey first found her job there in 1992. Now, the corporation has 3,100 shareholders on its rolls. Those rolls are swelling because the board of directors has, since 1993, twice approved enrollment of 2,000 shareholder descendants. Shareholders are receiving dividends, as well as a chance to participate in managing the corporation, thanks to TKC’s efforts to provide scholarships and training for them.

FIRSTHAND KNOWLEDGE Carey knows firsthand what other shareholders might be able to accomplish if they receive jobs and training within the company fold. She moved from her administrative assistant job into being a shareholder records clerk. That led to being a shareholder relations and records

Maver Carey, CEO, with a young TKC shareholder from Sleetmute, Alaska.

manager to managing the day-to-day office affairs. Then, she moved into strategic planning, budgets and investments before becoming vice president, acting president and then CEO.

“Working for a small organization, you’re able to wear many hats and dive into projects you might not be able to with a larger company,” she said. “The adding to the plate helped me grow and

NANA

REGIONAL CORPORATION, INC.

Creating a Strong Corporation Today For the Shareholders of Tomorrow

www.nana.com www.akbizmag.com • Alaska Business Monthly • October 2010

focus on what more I could do for the company. I was never bored. They said, ‘You did that well, let me give you this to do. We believe in you.’ It just kept making me grow with the company.” Carey says her key mentors were the late Leo Morgan and the late Glenn “Tiny” Fredericks. Morgan was a founder of TKC and served on the corporation’s board of directors for more than 30 years – mostly as chairman. He died Aug. 7, at the age of 61, of congestive heart failure. “He was such a huge leader,” Carey said. “He had the passion to guide us to where we are today. It’s going to be a very large role to fill, but I have the confidence the board will step up in leadership.” The board was expected to select its new chairman at a Sept. 8 meeting, after press time. Glenn Fredericks played a central role in the formation of ANCSA and the merger of the 10 village entities into TKC. He died in 2007 at the age of 71. “He had so many connections in and around the state of Alaska and was central in guiding us into new investment ventures with the corporation,” Carey said. In addition to providing opportunities for adult shareholders, TKC is growing ties with village school districts. “We have a working relationship now, a memo of agreement,” Carey said. “A lot of (schoolchildren) don’t know what the village corporation is, what they do. We need to get the word out about working opportunities. There are a lot of people who don’t want to leave the region.”

GROWING REVENUES Two years ago, TKC tallied $30.7 million in revenue. The following year, that figure had more than doubled, to $86.7 million. Projected revenue for 2010 is $110 million, Carey said. TKC employs a total of 110 people, 10 of whom work in its Anchorage headquarters. Fifteen other employees in Alaska are working on a National Guard contract. When Carey first started with TKC, the corporation had most of its investments in a stock and bond portfolio and had a few passive real estate investments – apartment buildings – that JL Properties managed.

www.akbizmag.com • Alaska Business Monthly • October 2010

DIVERSIFIED INVESTMENTS Carey took the helm as CEO seven years ago and steered the corporation into 8(a) business-development program projects. “We were trying to diversify our investment opportunities,” she said. TKC launched a holding company, TKC Development, which housed its 8(a) opportunities. Then, TKC created a civil 8(a) subsidiary known as Suulutaaq. Suulutaaq is currently about 14 months away from completing work on a $65 million, three-year flood-control contract in Napa, Calif. Renee Fredericks, president of Suulutaaq, is the daughter of the late Glenn Fredericks. She is overseeing Suulutaaq’s portion of the Napa project, which involves working on three bridges and raising streets three to five feet higher. “When big flooding comes, it destroys buildings, shops, the theater and there is damage to homes and businesses,” Fredericks said. Substantial completion of the Napa project is expected to take place in December 2011. Suulutaaq also is working on a $10 million, 10,000-square-foot headquarters for the U.S. Department of Homeland Security in Tucson, Ariz. Another subsidiary, TKC Aerospace, initially was a partnership with NANA and evolved into TKC having 100 percent control. This subsidiary has a contract with the U.S. Coast Guard for aircraft and helicopter modifications, Carey said. Suulutaaq is nearing the end of its 8(a) life, so TKC now is looking back toward the region that spawned it, hoping to bring home construction contracts and form partnerships with tribal corporations. Fredericks believes those efforts and stimulating shareholder involvement are key to the success of the region. “I think that’s the goal of TKC, to give their own shareholders opportunities, look for those people who show promise, aptitude and a willingness to stick with it,” Fredericks said. “It’s a long haul sometimes. If you give opportunities to succeed, they’ll be able to provide for themselves and their families, ❑ make their lives better.”

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www.akbizmag.com • Alaska Business Monthly • October 2010

2010 ALASKA’S TOP 49ERS: STILL GROWING STRONG

Three Bears Alaska

David Weisz (center), president and CEO of Three Bears Alaska Inc., in one of two Valley locations, with Steve Mierop, vice president and chief financial officer (left), and Paul Soennenberg, vice president and chief operating officer.

BY TRACY KALYTIAK

Moving forward for 30 years 94

ate Root made a deal five years ago that put his employer’s product, Raven’s Brew coffee, on the shelves of a chain of grocery stores in Southcentral Alaska. Root didn’t actually enter one of those Three Bears stores until the following year and was surprised to see it mingled a warehouse-style establishment with conventional retail groceries and general merchandise. “I was shocked our product was moving at the volume it was moving,” Root said. “It didn’t fit the format of their store, but they gave it an

opportunity to succeed. They promoted it at eye level. Once they did that, our product did the rest of the work.”

PAYING ATTENTION PAYS OFF That attention to the needs of suppliers and customers and a thorough knowledge of their business and their market are factors that have helped Three Bears Alaska earn the rank of No. 32 in Alaska Business Monthly’s annual list of the Top 49 Alaskan-owned and –operated revenue earners in the state. The business took in revenue of $105.7 million in 2008. The following

www.akbizmag.com • Alaska Business Monthly • October 2010

year, that figure jumped to $111 million. Three Bears employs 293 people in Alaska (with a total of 343 nationally) working in the chain’s 40,000- to 60,000-square-foot stores and its corporate headquarters. “We’re not into 100,000- to 150,000-square-foot stores,” says Three Bears’ President and CEO, Dave Weisz. “We’re not like the bigger chains. We want to keep our stores just right.”

STEADY EXPANSION Carr-Gottstein veteran Larry Weisz first launched the business 30 years ago in Tok, after acquiring one of the town’s two grocery stores. Initially, the store was known as Gateway Food Center. In 1983, that name changed to Frontier Foods. The eldest of Weisz’s eight children, Dave Weisz grew up in the family business and now runs the grocery chain from its corporate headquarters near Wasilla. Four of his siblings are also involved in the business. Dave Weisz has served as president since 2006; his father Larry retired in 2008 but still chairs Three Bears’ board of directors. “When my dad went to Tok, the store had frozen meat, no fresh produce,” Dave Weisz said. “We decided to try to offer fresh products, learn to cut meat, do our own repairs, change the refrigeration system.” Larry Weisz opened his second store in 1989 in Valdez. That was the first store known as Three Bears. It was also the first of the Three Bears stores to sell warehouse products. “Larger-size families prefer to shop the club pack,” Dave Weisz said of the warehouse goods his stores offer. “And, there are conventional products for smaller families. We give both options.” Four years later, Larry Weisz opened a store in Seward known as Paceco. Then came a Kenai Three Bears store in 1995 and a Three Bears at Four Corners between Palmer and Wasilla in 2005. In 2007, Three Bears opened its first store outside Alaska, in Butte, Mont.

GOING NATIONAL The opening of that store opened up an unexpected new financial vista for Three Bears that enabled the chain to affordably bring magazines into all their

stores and acquire other products at a more advantageous cost. “I expected the cost of goods to be pretty much the same when we opened the Butte store,” said Steve Mierop, vice president and chief financial officer for Three Bears Alaska. “But, we discovered that one store in one other state is considered a national account. There are different pricing structures. That was something we tripped into; it was a pleasant surprise.” The most recent Three Bears opened in Meadow Lakes in 2008, west of Wasilla just off Pittman Road. Its corporate headquarters relocated from Tok to Meadow Lakes in 2007. Three Bears’ stores at Four Corners, Kenai and Butte, Mont., offer full lines of hunting, fishing and camping gear in addition to the company’s traditional mix of groceries and general merchandise.

SERVING COMMUNITIES Three Bears taps into the communities it serves, figuring out which specialty items certain stores should offer. “We sell an unbelievable amount of canning supplies out of Kenai, as well as shipping containers and lots of ice when the fish are running,” Mierop said. “The Russian communities want cabbage, herring, desserts, vegetables. In the Montana market, they asked if we were going to have fresh Alaska seafood. We do have it there. The market told us what they wanted.” Paul Sonnenberg, Three Bears’ vice president and chief operating officer, says the company is still small enough to be agile, and therefore can react quickly to the changing needs of a distinct market in a distinct locale. “We can tailor business to it without waiting six months to get a corporate OK,” he said. “We want to keep that aspect.”

LONG-STANDING FREIGHT RELATIONSHIP Terry Umatum, Alaska director of sales for American Fast Freight, says his company has served as Three Bears’ freight carrier for more than a decade. Every week, American Fast Freight hauls up trailers of refrigerated and other goods from Washington state that are destined for Three Bears’ stores. “We take anywhere from six to eight

www.akbizmag.com • Alaska Business Monthly • October 2010

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loads per week for them throughout Alaska,â&#x20AC;? Umatum said. â&#x20AC;&#x153;Anything dry, from sporting goods to flour to meat, cheese, dairy, to ice cream and anything else that would be frozen. Weâ&#x20AC;&#x2122;ve had a great relationship. Itâ&#x20AC;&#x2122;s been a partnership from the get-go. With Three Bears and American Fast Freight, itâ&#x20AC;&#x2122;s been a really good, tight fit. Weâ&#x20AC;&#x2122;ve been able to help each other out.â&#x20AC;? Umatum says Three Bears is a â&#x20AC;&#x153;hunker down and get the job doneâ&#x20AC;? type of company, rather than an entity that obsesses about image and advertising. â&#x20AC;&#x153;Theyâ&#x20AC;&#x2122;re honest, have integrity,â&#x20AC;? he said. â&#x20AC;&#x153;When they say what theyâ&#x20AC;&#x2122;re going to do, they mean it.â&#x20AC;?

Senator Theodore Fulton Stevens.

STORE-WITHIN-A-STORE CONCEPT

1923-2010

Bill Bass, president of Advantage/ Bass Alaska, also praises Three Bears. Bassâ&#x20AC;&#x2122;s business supplies goods for Three Bearsâ&#x20AC;&#x2122; sporting goods â&#x20AC;&#x153;outpostsâ&#x20AC;? within its stores. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s a concept originated by Dave, a sporting-goods department within the store,â&#x20AC;? Bass said. Even with competing sportinggoods stores close by, Three Bears finds a way to tap into fresh opportunities, Bass said. â&#x20AC;&#x153;Theyâ&#x20AC;&#x2122;re all the same,â&#x20AC;? Bass said of the offerings at competitorsâ&#x20AC;&#x2122; sporting-goods outlets. â&#x20AC;&#x153;Three Bearsâ&#x20AC;&#x2122; outposts (at its Tok, Seward and Kenai stores) sell firearms, reloading supplies, holsters, gun cases, apparel. They do real good in marine supply.â&#x20AC;? One reason Three Bears is so successful, Bass said, is because it places its stores in areas that do not levy sales tax. â&#x20AC;&#x153;The company passes on the savings to the customer,â&#x20AC;? Bass said. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m very thankful we have the opportunity to work with them. Theyâ&#x20AC;&#x2122;re top-notch guys.â&#x20AC;? Root, of Ravenâ&#x20AC;&#x2122;s Brew Coffee, echoed that sentiment. He says his companyâ&#x20AC;&#x2122;s growth in Alaska was made possible by the success of its product in Three Bears stores. â&#x20AC;&#x153;They know what they need to do,â&#x20AC;? Root said. â&#x20AC;&#x153;Sure, theyâ&#x20AC;&#x2122;ve learned it over the years, but it seems to me theyâ&#x20AC;&#x2122;ve never stopped moving forward. Theyâ&#x20AC;&#x2122;re always progressing with the times. They really know their business, know their stores, know their customers. They know what it takes to sell products off their shelves. Thatâ&#x20AC;&#x2122;s one â?&#x2018; smart family.â&#x20AC;?

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ October 2010

IN MEMORIUM

Ted Stevens Reflection

There settled a stillness across the land BY PEG STOMIEROWSKI

ormer Sen. Ted Stevens was nothing if not resilient. His death at 86 in a plane crash Aug. 9 on a lonely mountaintop north of Dillingham cast a long shadow in The Last Frontier. It was a jolting end to a life lived large. Four others died with him in the crash. When interviewed a year ago by phone from Washington, D.C., for purposes of inclusion in Alaska Business Monthly ‘s annual lineup of Junior Achievement laureates, Mr. Stevens made it clear that, despite difficult transitions, his focus was full charge ahead. “You have to keep going,” he wanted young people to understand, “no matter what happens. If you lose one job, you have to find another.” His four decades as senator for Alaska, beginning in 1968, were laced with big triumphs and challenges. The nation’s longest-serving Republican senator was known as a dedicated proponent for his rugged state, its interests, its people – sometimes gruff about it, oftentimes fierce. His life story contains whispers of vulnerability, even mortality. As we noted in January, in previewing Mr. Stevens’ life and potential legacy, it would be hard to conceive of a worse period to be young than the times when Ted and his three siblings were growing up. Son of an accountant, he was born in 1923 and lived in a small cottage in Indianapolis. Eventually he moved with his parents to Chicago, but the stock

Photo by Clark James Mishler

market crash ended his dad’s job and ushered in the Great Depression. After their parents divorced, the kids went back to live with their grandparents. His father went blind for several years. Mr. Stevens the boy helped care for his dad and a disabled relative. He recalled that he began working at the tender age of 6, doing whatever he could to alleviate family pressures. He never stopped pushing on – it was his way of life. Mr. Stevens was instrumental in Alaska being granted statehood in the Eisenhower era. He was behind the Alaska Native Claims Settlement Act, the trans-Alaska oil pipeline, the Magnuson-Stevens Act governing fisheries management and safety. He

helped create the Denali Commission to modernize Rural Alaska infrastructure. He was an ardent supporter of public broadcasting and the arts. “Our hearts are broken, our lives are shattered,” Sen. Lisa Murkowski said in Anchorage after his death. “There is nothing that has happened in my lifetime, there is nothing that has happened since statehood, that Ted Stevens did not touch, that he did not build, that he did not create.” One of the saddest days of his life, Mr. Stevens once said, was when his first wife, Ann, was killed in an aircraft accident at Anchorage International Airport. That time he had survived, and as the centuries shifted gears, lived to see the airport – so much a link to the outside world – renamed the Ted Stevens Anchorage International Airport. It was the same year he was honored as “Alaskan of the Century.” That his death came in another aircraft mishap has been received knowingly by Alaskans and others who have spent any time here. It happens. Here, whispers of mortality still are etched into cold earth, and still get under the frontier’s skin. We will remember him. We will miss him. Surviving Mr. Stevens are his wife, Catherine, five children from his first marriage, one daughter from his second marriage, and 11 grandchildren. Along with his family, Alaskans grieve their ❑ beloved Uncle Ted.

www.akbizmag.com • Alaska Business Monthly • October 2010

LEGAL SPEAK

BY JEFF WALLER

From Litigation to Mandatory Arbitration

The shift in employment dispute resolution

Jeff Waller

he use of arbitration to resolve employment disputes has become very popular because arbitration is typically less expensive than litigation, there is greater privacy (court documents are public records where arbitration records are not), results are obtained faster and often there is a greater predictability of the outcome of the arbitration. The reduction in cost as compared with litigation expense even holds true despite both parties can be, and often are, represented by an attorney in the arbitration hearing. Arbitration is an alternative to litigation where the parties agree in advance to submit their disputes to an unbiased third person who will take evidence, hear testimony and then issue a decision regarding the dispute. Typically, the arbitrator’s decision is binding upon both parties just as if the matter had been decided in court. Arbitration awards are also enforceable in court, if needed.

ARBITRATION PROFESSIONALS There are many professional arbitration companies available that can provide not only an arbitrator with an extensive background in employment law, but also can provide arbitration rules and procedures, staff that keep the arbitration process moving forward, and a hearing location. The rules and procedures can be particularly helpful in reducing cost because they set forth time requirements and procedures that begin on the date a party requests arbitration, and include how the parties exchange evidence, how arguments and evidence are presented at the hearing, and include a deadline for the arbitrator’s final decision. Employers have used two methods to require that an employee submit any employment dispute to arbitration: a mandatory arbitration provision included in the employee manual, or a separate signed arbitration agreement. Each of these areas has its apparent

advantages and disadvantages, but the trend is for employers to use a separate signed agreement. As with any choice affecting the employment relationship, an employer should check with their lawyer for advice. For a time, many employers preferred to include a mandatory arbitration provision within the employee manual because of the simplicity of merely providing a new hire with the employee manual and having the employee sign a document that he or she had reviewed the manual. Further, in most employee manuals the employer reserves the right to change the manual without notice to the employee, which provided the employer with additional flexibility regarding the mandated arbitration process.

FLAWED APPROACH Unfortunately, the employee manual approach has some inherent flaws because normally the employee

www.akbizmag.com • Alaska Business Monthly • October 2010

manual is not a contract between the employee and employer, and because unilateral changes by the employer to the employee manual that could affect the arbitration clause may not be enforceable. Most employee manuals state that the manual itself is not an employment contract between the employee and the employer. The employer does not want to accidentally convert an at-will employee into an employee under a contract. However, because an employee manual is normally not a contract, then the arbitration provision in the manual would not be a contract either. As such, there is some doubt whether the employer could require the employee to submit any employment dispute to arbitration based upon a provision in the employee manual. Further, courts have been reluctant to allow unilateral changes by the employer to the employee manual to modify the arbitration provision, assuming that the provision is enforceable.

CURRENT TREND The current trend is for employers to have a separate agreement with each employee that requires arbitration of any employment dispute, past, present or future, with the agreement also referencing federal and State arbitration statutes (an agreement would not apply to union employees and any such discussion is beyond the scope of this particular column). On the surface, this may sound difficult – a contract with each and every employee – especially if an employer has a high turnover of workers. However, with the assistance of an attorney, the employer can draft a standard arbitration

agreement that each employee signs. Because the agreement is in standard form, the only difference is adding the employee’s name and signature. The signed original is retained in the employee’s file and a copy is provided to the employee. A standard arbitration agreement can also set forth additional control of the dispute-resolution process by selecting the alternative dispute-resolution company that will handle the dispute, specifying the use of particular arbitration rules and procedures, indicating whether full or limited discovery will be allowed, and even requiring the arbitrator, not the court, decide whether the dispute between the parties is subject to arbitration under the agreement.

AVOID LITIGATION Providing these further measures in the arbitration agreement sets forth a clear and understandable process for the parties to follow. With a proper arbitration agreement in place between the employee and the employer, if an employment dispute arises, the lengthy litigation process is avoided in favor of a streamlined dispute resolution process. This saves time and money for both sides. ❑ About the Author Jeff Waller is a senior associate attorney at Holmes Weddle & Barcott P.C. in Anchorage. His practice includes litigation, construction law, employment law, insurance defense, and real estate matters. Prior to becoming an attorney, Waller owned and operated several businesses.

www.akbizmag.com • Alaska Business Monthly • October 2010

OIL & GAS

Source: USDO1, BLM Source: USDOI, BLM

The lease sale showed that industry’s interest in NPR-A is on low ebb, but it will most likely eventually recover, as there have been several cycles of enthusiasm and discouragement over the long history of the reserve.

NPR-A BY MIKE BRADNER

laskans have always looked at the vast National Petroleum Reserve-Alaska (N P R-A) on the western North Slope as a kind of fall-back after being unable to get the coastal plain of the Arctic National Wildlife Refuge opened for exploration.

100

The central North Slope area, where the major oil fields are now producing, is pretty well picked over in terms of major new discoveries. ANWR’s coastal plain, the NPR-A and the Beaufort Sea offshore are seen as unexplored areas that could supply new oil to sustain the trans-Alaska oil pipeline.

But ANWR is blocked, as is, for now at least, to offshore exploration.

NPR-A DISAPPOINTMENT As a fallback, however, NPR-A has been a disappointment so far. The Aug. 11 federal lease sale in the reserve was a bust. Only five tracts were

www.akbizmag.com • Alaska Business Monthly • October 2010

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sold by the U.S. Bureau of Land Management, all to ConocoPhillips and all along the edges of lease blocks already held by the company and its partner in those tracts, Anadarko Petroleum Corp. That ConocoPhillips did not bid aggressively in the sale was no surprise. The company has said it has reduced its onshore Alaska exploration and will emphasize offshore exploration in the Chukchi Sea because prospects are better and the offshore doesn’t suffer the high State of Alaska taxes that apply onshore, even in NPR-A. Also, a dispute over federal permits for a Colville River bridge that would provide access to the CD-5 drill site west of the river has delayed access to the new drill site and to prospects further west in the petroleum reserve. CD-5 is a satellite to the Alpine oil field in the Colville River delta. But where the main field is on State lands, the new drill site is west of the river channel and is within NPR-A. The project is important symbolically because it would be the first truly commercial oil development within the reserve. However, the bridge and road to CD-5 would establish initial infrastructure that would be extended incrementally to several small, known oil deposits farther west. The ebb of industry interest can’t all be laid on the CD-5 dispute, however. High costs of exploring remote areas in the reserve, the lack of infrastructure, the modest size of targets identified by geologists so far, and the State’s high taxes on oil (Alaska taxes apply in NPR-A, although royalties will be paid to the federal government) also have had discouraging effects. What was surprising in the lease sale, however, was that Anadarko didn’t bid even in partnership on the five tracts ConocoPhillips did acquire. This tells us that Anadarko, which is known in Alaska for its aggressive exploration, is now down on NPR-A. It should also be noted that FEX LLC, also a previous explorer in the reserve, and an existing leaseholder there, did not bid in the Aug. 11 sale. For Anadarko, what may also be a factor is the effect of its partnership with BP in the Gulf of Mexico well that suffered a blowout and major spill.

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The financial uncertainties of the gulf accident for Anadarko may have affected its ability to commit capital budget to new Alaska exploration. It will be interesting to see if the company continues with work in the foothills region of the Slope this winter, where it is engaged in a gas exploration and development program. The lease sale showed that industry’s interest in NPR-A is on low ebb, but it will most likely eventually recover, as there have been several cycles of enthusiasm and discouragement over the long history of the reserve. Major exploration thrusts with no successes have been followed by down cycles in interest, but after a few years another initiative materializes. One important difference, however, is that there have now been commercialscale discoveries in NPR-A. Although they are small ones, which could be developed if the CD-5 dispute is resolved. If settled, there will be infrastructure built into the reserve and modest amounts of oil can begin to flow. The region will begin proving itself, confidence will be restored, and more industry investment will follow. The fact that the State and local Alaska Native corporations, most important being Arctic Slope Native Corp., share a royalty interest in NPR-A, adds a new political dimension that wasn’t present in the early phases of exploration. There is also a connection between offshore developments, at least in the Chukchi Sea and NPR-A. The Chukchi, off Alaska’s northwest coast, has potential for multiple large oil and gas discoveries, geologists believe, and if those are made the companies exploring say a pipeline will be built to shore and across the NPR-A to the trans-Alaska oil pipeline or a natural gas pipeline, if one is built. A pipeline built across NPR-A will allow development of small- or medium-sized discoveries in the reserve that cannot by themselves justify a pipeline. If there are large offshore discoveries as an anchor customer, such a pipeline would truly open up NPR-A.

LONG HISTORY The reserve has a long history. The 23.5-million-acre enclave was created

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in 1923 by President Warren Harding as a Naval Petroleum Reserve on the recommendation of government geologists. There was no discovered oil at the time, but it was considered an area of potential. The reserve was managed by the U.S. Navy as Naval Petroleum Reserve No. 4 until 1976 when Congress reclassified the area and placed it under the U.S. Bureau of Land Management, renaming it the National Petroleum Reserve-Alaska. A provision was added to share 50 percent of federal revenues, including lease sale bonuses, lease rentals and production royalties, with the State. The 1976 federal law also required that a portion of the State-shared revenues be shared with Inupiat communities within the reserve to offset any impacts of oil and gas development. An annual appropriation by the Legislature is made to satisfy this requirement. State production taxes and other taxes apply to oil that would be produced from the reserve, as they do to production from other federal lands in Alaska. Although intended as a kind of strategic petroleum reserve for the nation,

there have been only small amounts of oil and gas actually found despite extensive exploration over many years, none of them considered of commercial size until recently. In early exploration, a small oil field was discovered at Umiat, on the reserveâ&#x20AC;&#x2122;s southeast boundary. A modest gas field also was discovered near Barrow, at the far northern edge of the reserve. Both were considered too small to develop, although gas wells at Barrow were subsequently drilled to supply gas to nearby government installations and eventually to the Inupiat community of Barrow. Additional drilling has since added new reserves and a second gas field of modest size also was discovered. The North Slope Borough, the regional municipality, now manages the gas fields. There have been several phases of exploration in the reserve, none of them successful enough in terms of finding discoveries to justify construction of extensive infrastructure, although ConocoPhillips and Anadarko Petroleum are hoping to develop several small discoveries with an incremental expansion of roads and pipelines from

the Alpine field, which is on Statemanaged lands. In the years just after World War II, the Navy sponsored an extensive round of exploration drilling at locations across the reserve, which resulted in the finds at Umiat and Barrow and shows of oil and gas at other locations. From 1944 to 1953, the U.S. Navy and U.S. Geological Survey spent $50 million to $60 million in exploration and drilled 45 shallow-core test wells and 36 test wells. In the late 1970s, after the reserve was transferred to the BLM, another government-sponsored program of test drilling was funded by the government. This resulted in seven additional test wells at a cost of $500 million. The U.S. Geological Survey managed this effort with Husky Oil, a Canadian independent, hired as contractor. With a lack of success in that effort, the government decided to turn over the exploration to private companies, and the first federal lease sales were authorized in NPR-A in 1981. Leasing to private firms was authorized in the Naval Petroleum Reserve Production Act of 1976, which transferred the

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Interest in NPR-A was rekindled 10 years later, in the late 1990s, after ConocoPhillips and Anadarko Petroleum discovered the Alpine field on State and Arctic Slope Native Corp. lands in the Colville Delta. old NPR-4 to the BLM, but the first leasing program was initiated by the Interior Departmentâ&#x20AC;&#x2122;s appropriations act of 1981. Companies purchased leases and some wells were drilled, but again with poor results. Six oil companies obtained the majority of the leases: Arco, Texaco, then British Petroleum, Chevron, Shell and Exxon. Exploration was again unsuccessful, and oil prices meanwhile dipped. There was still no major movement toward a natural gas pipeline. Industry interest in NPR-A dwindled. In the final BLM sale of that early leasing period there were no bids offered by companies. Interest in NPR-A was rekindled 10 years later, in the late 1990s, after ConocoPhillips and Anadarko Petroleum discovered the Alpine field on State and Arctic Slope Native Corp. lands in the Colville Delta. The Alpine discovery was virtually on the northeast border of the reserve, and companies could see that the same geologic trends continued into the northeast NPR-A along the coast. Industry was also aided by new technology, particularly the use of three-dimensional seismic, which allowed explorers to map subtle geologic formations that could not be detected using the earlier two-dimensional seismic. The result of the rekindled interest was the latest leasing initiative beginning in 1999, under the Clinton administration. The reserve was divided into planning areas that included the northeast, the area nearest the Alpine discovery; the northwest, which included the central and northwestern areas of the reserve near the Inupiat communities of Barrow, Atkasuk and Wainwright; and a large southern area, which included parts of the Brooks Range within NPR-A.

www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ October 2010

Since 1999, five lease sales have been held in the northeast and northwest areas and 300 leases are currently active. Approximately 30 exploration wells have been drilled on these leases since 1999, with only modest discoveries made by ConocoPhillips and Anadarko in one area and by FEX LLC in an area farther west. It is not yet known if any of these discoveries are economic, although ConocoPhillips and Anadarko hope to eventually develop small discoveries in the “Moose’s Tooth” unit area. The plan is currently stymied by a controversy over permits to build a bridge across the Colville River near the Alpine field to CD-5, a drill pad that is just west of the river. The bridge and an access road are part of the infrastructure that would support development of the NPR-A discoveries further west. Depending on how this issue is resolved, those may be developed.

NEW ACTIVITY Meanwhile, there is new activity in the Umiat area, the site of one of the very early discoveries in the reserve. Recently a small Houston-based independent company, Renaissance Umiat LLC, has taken ownership of federal leases at Umiat and hopes to add reserves through additional drilling and to develop the field. The early estimate of Umiat reserves was 70 million barrels, but the new work done has upgraded this estimate. A unique aspect of the Umiat oil is that it is high grade, to the point that it can be used as fuel in diesel engines without refining. Renaissance is working with the State on plans for a road to the area from the existing Dalton Highway. The road would open the region year-round – affordable access so that exploration can continue without having to build costly ice roads every year. The road would also aid in construction of a pipeline. Renaissance hopes to bury its production pipeline in the gravel roadbed, rather than building the pipeline in an elevated fashion on vertical support members as most other North Slope pipelines are built. The Umiat crude oil is high-gravity oil, which would allow it to be shipped at colder temperatures than other North ❑ Slope crude oils. www.akbizmag.com • Alaska Business Monthly • October 2010

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OIL & GAS

Training workers for the gas line BY MIKE BRADNER

MEETING HEAVY WORKER DEMAND We’re starting from a weak base, though. The state’s present skilled

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Photo by Mike Dinneen/Courtesy of UAA

f we get a gas pipeline, will we have enough skilled workers to build it? This is one of the central concerns of the pipeline builders long with the other challenges this mega-project faces. Both pipeline groups proposing gas pipelines, the TransCanada-ExxonMobil consortium and the Denali pipeline group led by BP and ConocoPhillips, have said that labor availability and the productivity of labor – that is, how skilled and well-trained the workers are – will affect construction costs, one of the major risk factors they face. There are worries, too, over effects the megaproject will have on the state’s other employers. Will the pipeline pull able-bodied workers out of a lot of other jobs, leaving employers scrambling? The answer is probably yes. It happened before with construction of the Trans Alaska Pipeline System in the 1970s and it will probably happen again, state labor officials concede, although there are important differences between TAPS and the gas pipeline. Fewer workers are likely to be engaged in gas pipeline construction than the oil pipeline in the 1970s because of automated pipeline construction technology. Also, the state’s population and labor force are now bigger and better able to absorb such shocks. However, if there is to be a gas pipeline, State, business and labor leaders want to be prepared not only to minimize disruptive effects but also to help Alaskan workers enjoy more of the bigmoney wages and to gain valuable skills they can use after the pipeline is built.

Students and staff outside the Alaska Native Science and Engineering Program (ANSEP) building on the University of Alaska Anchorage campus from the 2010 ANSEP Summer Acceleration Academy and Summer Bridge programs.

work force is aging and workers are retiring in increasing numbers. There may not be enough younger people entering training to replace them, much less provide enough workers in a few years’ time to meet the heavy demand of pipeline building. The good news is that planning and preparation efforts for the pipeline are

under way and have been for some time, and industry and labor are also taking separate initiatives. A major effort underway is with the Alaska Gasline Training Plan developed by the State Department of Labor and Workforce Development. The plan was assembled in 2008 and 2009 and people are working in several State

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agencies to coordinate the education and training effort involved. Both pipeline consortiums are working closely with the State. Meanwhile, concerns over the work force have stimulated industry, contractors and unions to get busy with other training. One initiative underway, by construction unions and contractors, working cooperatively, is on pipeline construction training held periodically in Fairbanks, typically in early winter. Trainees practice welding and burying pipe and work with heavy equipment. The annual pipeline training event held in Fairbanks is the only one of its kind in the nation. The session lasts for two weeks. Training as a combined work force, students receive hands-on instruction in conditions similar to those they will experience on an actual pipeline project. Instruction is provided by journeymen in the pipeline construction trades with the support from pipeline trade training trusts and pipeline construction companies. Funds are provided by the Denali Commission, the State Department of Labor and Workforce Development, industry and the pipeline trade unions. Most graduates of the annual programs, many from rural Alaska, have been hired right away to work on North Slope oil field pipeline work. Many are now in their second and third winter seasons on the Slope. Another initiative is training provided through Southwest Alaska Vocational and Education Center in King Salmon with CH2M Hill, a major North Slope contractor. This is aimed at turning out candidates for operations and maintenance jobs on the Slope. Since the program started in 2008, CH2M Hill has hired 100 of its graduates, about 94 percent of all graduates, according to Trevor O’Hara, CH2M Hill’s manager for the program. There are many trainees from communities in the Bristol Bay and Aleutians regions, but the program draws students from across the state, including the Anchorage, Mat-Su and Kenai Peninsula areas, as well as the Interior and the Arctic. The total also includes 39 former military moving into civilian jobs. There has been an 84 percent retention rate of the graduates hired so far, O’Hara said.

Lodging, meals and instructional books are provided under a State Training and Employment Program (STEP) grant coordinated through the Alaska Department of Labor. “Students are not paid wages while they’re in the program, but those who successfully complete the course are extended an offer to work on the North Slope,” O’Hara said.

AGING WORK FORCE Looking at the bigger picture, the work force that will really build the pipeline

are the young people now in Alaska high schools and middle schools. Although the existing skilled workers in Alaska will be tapped first for pipeline jobs, the facts of the demographics are that Alaska’s skilled work force is aging and by the time pipeline construction cranks up, five years the earliest, many in these ranks will have to be filled with younger people. It takes years to train a skilled worker. Could these young people be convinced that the opportunities in construction and technical skill fields are

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there? It could be a tough sell, given the uncertainties about the gas pipeline. It’s not all about the gas pipeline, though. There could be a lot of other jobs out there. Most of the critical skills being taught are also needed in other industries, in mining, utilities and manufacturing facilities like fish processing plants. The jobs needed for the pipeline involve a huge spectrum of skills that will be attractive to many employers. The Department of Labor and Workforce Development has identified 1,300 critical pipeline occupations in its plan, almost all of them useful in many industries. The strategic plan for pipeline work force development, put together by the labor department, has identified not only the 1,300 occupations but also 41 Alaska-based training providers and various campuses of the University of Alaska statewide that can provide the training.

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Building of the gas pipeline will be a lot different than construction of the oil line. The gas line will be buried for all of its length, unlike the oil pipeline which was built above-ground for half of its length. The vertical support members, or VSMs, on the aboveground portion created a lot of complexity and labor requirements. Those won’t be there for a gas pipeline, which will involve just welding the pipe and burying it. Also, 35 years have gone by since TAPS was built and pipeline builders today use sophisticated automatic welding technologies that will reduce the demand for labor. On the other hand, there are unusual aspects of the gas pipeline project that create other demands, one being the moving and handling of the heavywalled pipe planned for the project. As an illustration, it is likely that only one length of heavy pipe can be moved on a truck because of the weight. With TAPS, several lengths of pipe were stacked and moved on a truck. The point is that a lot more trucks, many more truck drivers, more fuel and support, and more traffic on highways, will be involved. In fact, the materials handling and logistics of the gas pipeline project may be as complex as the oil pipeline, if not more so. Every

transportation portal into the state’s Interior, and into Canada’s Yukon Territory, is likely to be jammed. It is the complexity of these logistics that create a huge variety of skill sets that will be in demand. “Regardless of the pipeline’s route, size or when it is built, it will require workers in hundreds of different occupations,” said State labor economist Brian Rae, writing in Alaska Trends, a monthly magazine published by the labor department. “While the gas pipeline is fundamentally a construction and operations project, its sheer size presents problems not normally encountered on the average construction job. Job sites become small cities. Their remote location requires them to be self-sufficient, so a broad range of work must be performed,” Rae wrote. “One doesn’t normally find bus drivers, laundry workers, maids and housekeeping cleaners, cooks and dishwashers, or even employment and recruitment specialists on most construction sites,” he wrote. These jobs, as well as equipment operators, truck drivers, mechanics and construction supervisors, are included in the labor department’s inventory of pipeline-related occupations that will be in demand.

MEETING DEMAND FOR ENGINEERS One skill that will also be greatly in demand will be engineers, of almost all kinds. In this area the University of Alaska is reaching out to largely untapped human resources in rural Alaska. There are special programs that encourage rural students to take academically-challenging high school courses and to enter advanced technical and professional university programs. One program, the university’s Alaska Native Science and Engineering Program, or ANSEP, has been very successful and is now recognized as one of the nation’s most successful innovations in advanced education for minorities. ANSEP helps Alaska Native high school and, starting this year, middle school students prepare for challenging university engineering and science programs. Once in college, ANSEP helps them stay there. In existence

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for more than a decade, the program has a solid track record. About threequarters of engineering and science students in ANSEP stay with their programs through studies that often span five years. That is three times the “retention” rate for Native Americans in science and engineering studies nationally and a third higher than the retention rate for students in these fields regardless of ethnicity. Although targeted at Alaska Natives, ANSEP classes and study sessions are open to all UA students. The program is growing on all fronts, demonstrating its success. This year 40 Alaska Native freshmen started their engineering and science freshmen year studies under ANSEP, a record level. Last year there were about 250 students enrolled in university engineering and science programs, under ANSEP, between the Anchorage and Fairbanks campuses.

PRE-COLLEGE PREPARATION Also, a “summer bridge” program that helps recent high school graduates prepare for their freshman year had

29 students in 2010, another a record and up 40 percent up from 2009. BP underwrites the summer bridge program and provided paid internships for six of the students. A significant milestone in the high school preparation is that for the first time, all of the summer bridge students were fully prepared in math and science. None of these students will need remedial math or science work as they begin their university classes. Several are starting at advanced levels of calculus, essentially gaining them a full year in math. All of this is the result of ANSEP’s highschool outreach, where the university works with students while they are still in high school. Last year ANSEP worked with about 400 students in high schools across the state. Sponsors and corporate donors to ANSEP include nationally-recognized names like Siemens and Microsoft as well as several Alaska companies, although BP and Alyeska Pipeline Service Co. were founding partners. Federal and state agencies including the U.S. Fish and Wildlife

Service, the Alaska Dept. of Fish and Game, USGS, NOAA, and the U.S. Forest Service now provide support and internships for students in the biological sciences. The National Science Foundation has also provided financial support to ANSEP, and this year the Legislature appropriated state funds, for the first time, to support ANSEP’s pre-college programs for high schools. ANSEP’s experience, and that of the CH2M Hill and the pipeline construction training shows that there is considerable untapped potential in rural communities for human resource development. Tapping this resource, however, takes money and active support by business and governmental institutions. One of the keys to ANSEP’s success is reaching rural students while they are still in high school to encourage them to tackle tough subjects in school, and then supporting them in bridging a cultural divide when they come to urban communities to enter college. The payback, having a trained resident work force, is well worth the ❑ investment, however.

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OIL & GAS

‘Tackling issues before they become problems’ BY HEIDI BOHI

System (TAPS), would probably say this depicts preventative maintenance, much like a high performance athlete tapes bones and joints to prevent injuries during the game. “Alyeska’s philosophy is to tackle maintenance issues before they become problems,” says John Baldridge, senior director for pipeline operations, of the company’s strategy to run the 33-yearold pipeline safely and efficiently. Richard Fineberg, a long-time critic

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www.akbizmag.com • Alaska Business Monthly • October 2010

n the cartoon, a doctor in a white coat is tightly wrapping the transAlaska oil pipeline with a megasize roll of first-aid tape. The vertical support members (VSM) that typically cradle and support the 800-mile pipe in aboveground sections have been replaced with wobbly crutches. Maintenance and operations officials at Alyeska Pipeline Service Co. (APSC), responsible for operating and maintaining the Trans Alaska Pipeline

of the oil industry, APSC and all pipeline-related matters would likely say that the drawing depicts another example of cost-cutting measures that are being used to repair the aging structure while putting Alaska in grave danger of having another oil spill. In fact, Fineberg used this very art on one of several reports he has written over the past 30 years called “Pipeline in Peril: Alaska at Risk on the 20th Anniversary of the Trans-Alaska Pipeline.”

Although the terms “maintenance and operations” sound as if they could refer to the building’s cleaning and grounds crew, when it comes to the pipeline this department is the pivotal point for virtually everything the company says it stands for: providing a safe, environmentally responsible, cost-effective and reliable means to move liquid hydrocarbons to market, reflecting its belief in the company’s dedication to the integrity of TAPS and to providing a reliable supply of Alaska North Slope crude oil. According to Baldridge, about 85 percent of APSC resources go into maintaining the system, which is operated round-the-clock from a control center in Anchorage, where a small group comprises the operations team responsible for opening and closing valves, and adjusting flow speeds from Pump Station 1, just south of Prudhoe Bay, to Valdez. Currently, the focus of this activity is Pump Stations 1, 3, 4 and 9. When pipeline construction was completed in 1977, there were eight pump stations, and one relief station. Two additional pump stations were commissioned in 1981 as flow was increasing, ultimately reaching 2.1 million barrels per day in 1989. Since then, pump stations have continued to be taken offline as the amount of oil being carried from the North Slope to the Valdez Marine Terminal (VMT) continues to drop off due to lack of production. Lower throughput requires less pumping to maintain momentum. The year-to-date average of oil moving from Pump Station 1 on the North Slope to Valdez is 620,711 barrels per day, substantially less than its peak load of 2.03 million carried in 1988. By 2015, it is anticipated that this daily oil throughput will approach 500,000 barrels unless additional sources of oil are developed. At the same time, APSC says the Slope’s producing fields have enough oil to supply the pipeline for at least several more decades and unexplored prospects on land and in the ocean could be part of the solution. At the heart of just about every pipeline performance challenge that maintenance and operations has to solve, is the issue of reduced throughput, which led to APSC implementing

its strategic reconfiguration (SR), an ongoing project that relies on technology to reduce infrastructure, to position TAPS for more efficient operation to provide more flexibility for future increases or decreases in throughput, and simplify operations as a cost-cutting measure, while also enhancing safety, operational integrity and environmental performance. It is the single biggest pipeline investment since construction and involves installing automated, electrically driven pumps instead of fueldriven, and upgrading and automating key-control systems. The SR project, which has been delayed until 2014 when Pump Station 1 is converted, includes replacing the pumps that move the oil to Valdez so they work during reduced throughput, was not without its own challenges, least of all which were a cost overrun – it ended up coming in at $700 million, more than twice the anticipated $250 million – and significant delays because it proved to be more difficult than APSC and owners anticipated. Delays resulted from a number of factors including a shortage of skilled craft and management, delays in engineering, and late material deliveries. When the pipeline was moving oil at peak efficiency in the ‘80s, it took four days for a barrel of oil to travel from Prudhoe Bay to Valdez. Today, with lower flow rates and corresponding lower flow velocities, it takes about 13 days. Because the oil spends more transit time in the pipe to get to Valdez, it has more time to cool and the temperatures of the oil are colder at lower flow rates. The colder oil temperatures create several issues such as the formation of wax and ice within the pipeline, as well as the potential for movement of the buried segments of the pipeline as the result of frost heaves. Considered the most troubling incident so far, the main power and the backup source failed during a routine system test at Pump Station 9, about 10 miles outside of Delta Junction resulting in about 4,000 barrels of oil into a secondary containment area. Spilled oil remained, within the lined, secondary containment area, which is underlain by a plastic liner. “The tank overflowing at Pump Station 9 was definitely an event we didn’t

want to have happen,” Baldridge says, adding that the company has learned from it and will try to prevent anything like that happening again. “We have transported 16 billion barrels of oil, but we never want to see one drop of crude unless it’s in the lab.” Maintenance shutdowns are a significant part of Alyeska’s ongoing pipeline integrity-management program and allow crews to work on projects simultaneously along the pipeline and at the VMT. This summer, crews conducted two major shutdowns of TAPS to conduct this preventative maintenance, which involves most of the organization and months of preparation so that intensive field activities can be coordinated with the OCC in Anchorage. During the July shutdown, a 36-inch valve at Pump Station 9 was replaced. Crews also rerouted aboveground gas supply lines at Pump Stations 3 and 4, replacing existing belowground fuel gas piping, a proactive measure to ensure uninterrupted gas supply to turbine generators. If a pipeline were built today, it would probably be built at 30 inches or less in diameter, compared to the 48-inch structure that winds across Central Alaska. With low-flow issues central to the pipeline’s future and future planning efforts, APSC is investing $10 million to conduct the “TAPS LowFlow Impact Study” to explore options for addressing the potentially adverse effects of declining throughput. It is expected to be completed next year, Pat McDevitt, senior project manager for low-flow studies says. The study will identify critical issues related to lower flow rates and recommend how to remedy them. It also will evaluate issues associated with flow rates down to 300,000 barrels per day. In the study, the critical issues associated with declining pipeline throughput are: frost heaving of belowground pipeline sections; water settlement in the TAPS stream; ice formation in the pipeline, deposition of wax the interior pipeline wall; and the possibility of high viscosity oils delivered to TAPS in the future. This geotechnical limit study assumes that the buried portion of TAPS must operate above freezing to prevent the formation of ice lenses in

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the ground, which could lead to frost heaves and place strain on the pipeline. As a result, the plan assumes that it is necessary to maintain a TAPS operating temperature limit of 38 degrees Fahrenheit by adding heat, where necessary, and recommends further evaluating the true geotechnical temperature limit of the pipeline, as described in a summary report prepared by TAPS owners. According to the study, the volume of water transported through TAPS becomes increasingly problematic as throughput and velocity decline. Water in TAPS poses three concerns: at lower velocities, water separates from oil and may create an environment for internal pipeline corrosion; during cold weather pipeline shutdowns, separated water may accumulate at valves and pipeline low points, potentially freezing and causing problems when resuming flow; and during extreme winter operations, without the addition of heat, the operating temperature of TAPS may fall below freezing, which could cause problems resulting from ice formation during flowing conditions. The study is in-

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vestigating the potential volume and location of any water dropout, the freezing characteristics of water in the crude stream, and how these factors may impact pipeline operations. The volume of crude oil solids – commonly referred to as wax – that crystallizes in the TAPS oil flow increases at lower oil temperatures is also caused by declining throughput. Increased wax deposition on the pipe wall poses internal pipeline corrosion concerns and creates potential problems in obtaining data from instrumented pigs, though there is no evidence that increased crude oil solids are causing internal corrosion issues at current throughput levels. The study included flow loop testing using North Slope oil samples at various flow rates and temperatures to evaluate and predict wax deposition at lower pipeline flow rates. Evaluation of the test results and the validation of wax deposition models are currently under way. Current crude composition does not pose viscosity problems in TAPS, which is another area the report is addressing. If crude composition changes in the

future and becomes heavier, resulting viscosities may exceed the physical limitations of TAPS. The plan recommends further study of TAPS operating limits to determine if there is a need for pipeline viscosity specifications in order to transport future volumes. To date, McDevitt says, the company’s hypothesis about what issues would surface has been accurate and there have not been any big surprises. It is likely that additional investment in pipeline infrastructure, such as crude oil heating will be required to address the issues associated with lower flows. The study will provide more clarity when certain modifications will take place and at what levels of throughput. Further modeling should narrow the range of uncertainty and enable improved forecasting of capital and operating expenses for TAPS. As the study is being completed, McDevitt is presenting updated information to the public and the Legislature. Until then, he says, “We are still trying to get our arms around what the results ❑ are, but we’re not there yet.”

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OIL & GAS S I D E B A R

TA P S Trans Alaska Pipeline System More than just an oil pipeline

or every inch of the pipeline, there’s a littleknown fact about the Trans Alaska Pipeline System (or TAPS as it’s referred to in the industry), ranging from historical information and construction trivia, to maintenance and operations terms, several of which are highlighted here. It can all be found in “The Facts,” an alphabetical compilation of data updated every year by Alyeska Pipeline Service Co. and available online at www.alyeska-pipe.com.

INTEGRITY MANAGEMENT PLAN (IMP): Integrity management comprises all activities that monitor and maintain the integrity of all hydrocarbon-handling facilities on TAPS. The purpose of IMP is to protect the environment by preventing oil spills, comply with all laws and regulations, maintain facilities within industry standards, and monitor and mitigate integrity risks. LEAK DETECTION SYSTEM: Provides detection and location of oil spills. TAPS has three independent systems: line volume balance (LVB), which compares the volume of oil entering the line with the volume leaving it; transient volume balance (TVB), which compares reported flow with calculated flow and can identify the probable location of a leak by pipeline section; alarms which signal deviations in pressure, flow or flow rate balance. OPERATIONS CONTROL CENTER (OCC): The OCC continually monitors the status of all pump stations and valves using supervisory control and data acquisition (SCADA) systems with remote sensors. Data such as pressures, flow rates, temperatures, tank levels and valve positions are recorded and analyzed for abnormal operations or any indication of a pipeline leak. The pipeline controller at the OCC can rectify any abnormal operation by changing settings for pump speed

or relief valves, or by issuing idle or stop commands to the mainline pumps. The OCC controller can also activate remote control valves. The monitoring and analysis systems include backup communications equipment and computers. PIG: A pig is a mechanical device that is pushed through the pipeline by the oil to perform various operations on the pipeline without stopping the flow of oil. This process is referred to as “pigging.” Alyeska runs two basic types or classes of pigs: cleaning and instrumented or “smart.” These devices help Alyeska clean and inspect the pipeline to prevent and detect problems. The three basic types of smart pigs are ultrasonic transducer (UT), magnetic-flux leakage (MFL) and curvature. These pigs are used to periodically inspect for pipeline corrosion and deformation using nondestructive sensor technologies including ultrasound and magnetic sensors. As they evaluate the data, engineers look for suspect areas and compile a list of specific locations to determine and prioritize integrity investigations through a “corrosion dig,” a physical examination of the pipeline. Depending on what the dig reveals, the corrective action might be the addition of a sleeve or a new, higher-quality coating developed since the pipeline was originally constructed. Cleaning pig: Also known as scraper pigs, these pigs sweep the pipe of built up wax, water or other solids that precipitate out of the oil stream. They prevent the buildup of a corrosive environment. Their use also makes the oil easier to pump. Instrumented (smart) pigs: Instrumented pigs are in-line-inspection (ILI) tools called “smart pigs.” The data they gather allows engineers to recommend intervention before wall loss anomalies ❑ become a problem. SOURCE: Alyeska Pipeline Service Co.

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OIL & GAS

Photo by Heather A. Resz

Harold Heinze, chief executive officer, Alaska Natural Gas Development Authority, explains the public corporation’s idea for a project to distribute propane to Fairbanks and other communities in advance of a gas line from the North Slope.

North Slope Propane Project ANGDA, private investors want to extract and truck it to Fairbanks BY HEATHER A. RESZ

head of a large-scale natural gas pipeline project, a group of public and private partners have approached North Slope producers about buying 5,000 to 10,000 barrels a day of propane to re-sell as a lowercost fuel option for Alaskans. The private investors are interested in financing and building a $200 million propane-extraction plant on the North Slope, and then trucking the fuel to

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Fairbanks for sale to users, said Harold Heinze, chief executive officer, Alaska Natural Gas Development Authority. From there, barges from Nenana would deliver the propane to villages along the Yukon and Kuskokwim rivers, he said. A 2002 ballot initiative created the Alaska Natural Gas Development Authority, or ANGDA, to “develop a natural gas pipeline from Prudhoe Bay to tidewater on Prince William Sound

and a spur line to the gas distribution grid in Southcentral Alaska.” TransCanada and ExxonMobil are working together on the Alaska Pipeline Project. Open season ended in July. And Denali – The Alaska Gas Pipeline is a joint gas line effort between BP and ConocoPhillips. Its open season ends this month. However, until there is a gas line to monetize the North Slope’s 35 trillion

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cubic feet of stranded gas, the 40,000 to 80,000 barrels of carbon gas drawn to the surface every day are re-injected into the reservoir, Heinze said. But regardless of which pipeline proposal is constructed, he said, one-third of Alaskans live in areas that won’t be served by it. So ANGDA is exploring this separate propane project as a way to provide a lower-cost fuel alternative to rural Alaskans for space heating, electrical generation and cooking, Heinze said.

MARKET-DRIVEN SOLUTIONS ANGDA commissioned PND Inc. Consulting Engineers in 2005 to study the feasibility of “Propane Distribution throughout Coastal Alaska.” “Implementation of this project could help to address the long-term problem of access to affordable power and heat, allowing value-added industries to develop in remote areas, enhancing community economic development and benefiting all Alaskans,” according to the report. Now, about half of the 15 million gallons of propane used annually in

Alaska is produced at the Tesoro Refinery in Nikiski and the other half comes from Prince Rupert, British Columbia, Canada, by aqua train to Whittier where it is loaded on the railroad and shipped to Anchorage, according to the PND study. Especially in communities with yearround barge access, in-state propane could provide an “efficient, stable, lower-cost alternative to diesel and heating fuel in some Alaska coastal communities,” the study says. But the propane project’s timeline and scope changed after oil prices peaked in August 2008. “We’ve always seen the possibilities. But when the price went up a few years ago, we realized we couldn’t wait,” Heinze said. In Fairbanks, where distillates are the primary fuel for heating, the price per gallon was three times as high as in Anchorage, with residents there facing a longer, colder winter, he said. “If oil prices had continued at $150 a barrel, the basics of living in that community would have been very difficult,” Heinze said.

That’s when he had an idea: What if they could break the resource loose without a pipeline? “It’s something we could do here and now,” Heinze said. To that end, ANGDA contracted with propane consultant Mary Ann Pease to organize a two-day conference on the project last fall with representatives from gas producers, gas sellers, the trucking industry, storage container owners and barge companies to learn more about the opportunity. “This is not government coming in and putting in a gas-extraction facility,” Pease said. “It’s a marketdriven solution.” BP is the Prudhoe Bay operator. Without its nod, the project can’t move forward, Heinze said. Pease said the North Slope major producers – BP, ConocoPhillips and Exxon – have been highly cooperative thus far, but she said the partners await approval from the oil giants to move forward with the idea. “It’s such an incredible dream that could become a reality,” Pease said. BP spokesperson Steve Reinhart

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said the company is still considering the propane proposal. “We understand the important role energy plays across Alaska, including rural communities, so we will evaluate this carefully.”

AFFORDABLE ENERGY KEY TO SUSTAINABLE ECONOMIES The idea is for ANGDA to purchase 5,000 to 10,000 barrels a day of North Slope propane from North Slope producers, which it would sell wholesale to industrial consumers or consortiums of buyers for in-state use. Heinze said propane produced in Alaska would be cheaper than fuel produced out of state and shipped here. And it’s also cheaper than diesel, the primary fuel source in rural Alaska. To begin, a January 2010 Northern Economics study anticipates propane demand of 2,500 barrels a day – 500 barrels for the industrial load and 2,000 for residential, according to Patrick Burden, company president. Though, he said demand is expected to increase annually as users transition from diesel to propane fuel. The propane usage estimates

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Northern Economics prepared were part of an “In-State Gas Demand Study” prepared for TransCanada and ExxonMobil as part of their Federal Energy Regulatory Commission filing, Burden said. For the first five years, demand is estimated at 131.5 million gallons, according to the Northern Economics study. “It’s economical and it’s such an attractive alternative to diesel and it burns cleaner,” Pease said. Propane powers clothes driers, cook stoves, heating stoves, hot water heaters, portable space heaters, and it can power electrical utility generators, Pease said. Still, it takes about 50 percent more propane to produce the same amount of energy as with diesel. Burden said more rural communities could take advantage of the savings propane offers if they had bulk propane-storage tanks. But the tanks are expensive and rural villages would likely need federal grants to afford the costs of purchasing and installing the storage tanks, he said. “On the road system it’s a slamdunk. It’s a no brainer. You’d convert to propane,” he said.

In areas of the state where propane would need to be stored for 10 to 12 months, the opportunity is different because communities would need to invest in bulk storage first. Burden said Pebble Mine – because it would have year-round barge access – is an example of the kind of large remote project that might also see propane as an economical option for its energy needs. For individual rural Alaskans, the biggest savings would come from using propane for space heating instead of diesel, Burden said. Alaska Energy Authority’s Power Cost Equalization program helps cover a portion of electrical costs in rural Alaska, Pease said. “If you have affordable energy, you can have a sustainable economy,” she said. Portions of the Anchorage, Mat-Su and Kenai Peninsula boroughs have used natural gas for heating and electrical generation for the past 50 years, Heinze said. Once a pipeline is complete, Valdez and Fairbanks will be ❑ added to that list, he said.

www.akbizmag.com • Alaska Business Monthly • October 2010

TOWNS IN TRANSITION

Palmer and Wasilla

Photo by Patty Sullivan/MSB

JP Azure loads a test shipment of coal at Port MacKenzie. The ship is a super Panamax vessel, too big to fit through the Panama Canal, yet pulled up easily to the fenders at Port MacKenzie in June.

Mat-Su towns forge ahead BY HEIDI BOHI

ahoo, Mat-Su! While this homegrown ditty blasts across the air waves encouraging Alaskans and visiting friends and relatives to spend travel dollars in the MatanuskaSusitna Borough, at the same time, the giddy-up-and-go dynamic behind the little jingle also captures the energy that is pulsing through the entire Valley as it continues to grow faster than farm crops in the midnight sun. While other communities and regions statewide talk about jobs and economic development as part of their long-term wish list, the core communities of Palmer and Wasilla are forging ahead in some of the state’s largest industries – along with attracting some

new ones – developing a sturdy economic base that is likely to put one of the largest boroughs in the state on everyone’s map in the next several years.

VISITOR INDUSTRY For those just passing through in search of a good time, Bonnie Quill, executive director of the Mat-Su Convention and Visitors Bureau (MSCVB), says that the visitor industry – one of the largest and fastest growing in the region – continued to see increases in the number of international and independent travelers arriving this past summer. Despite the punch, many Southcentral communities took from 117,000 cruise passengers who did not sail here due to the

economy and redeployment of ships to other ports of call, when final season numbers are tallied she expects to find that the industry again came out on top. Of about 780,000 visitors annually, Quill says that during the peak summer season 90 percent arrive from Outside and 60 percent are Alaskans who are all too familiar with borough attractions that range from 2,000 miles of dedicated trails – for hiking, snow machining, fourwheeling and dog mushing – to high-end lodges and some of the state’s top attractions such as the Iditarod Sled Dog Race and the Alaska State Fair. Currently, visitors spend $201 million annually and create 3,100 jobs, which she says could measurably grow

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if it invests in needed tourism infrastructure, such as more inviting trailheads, restrooms, kiosks and interpretive information. MSCVB is also in the beginning planning stages for developing a new Mat-Su Valley South Gateway Visitor Center.

EXPLOSIVE GROWTH Since 1975, when the population was 10,000, Mat-Su has experienced what any region would consider explosive growth. By 2000, the census counted 60,000 residents and since the beginning of the decade estimates show the population has grown 43 percent in eight years hitting 83,000 people. At a growth rate of more than 3 percent, Borough officials say they are expecting this number to jump to at least 89,000 in the next count. Trying to ease the growing pains is now the challenge, Dave Hanson, economic development director for the Borough says, pointing to the commissioned Economic Development Strategic Plan that was released in April and will be used to guide local government in its planning efforts.

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Much of Mat-Su’s growth has been sustained by Anchorage residents seeking more affordable housing options and a small-town, rural lifestyle. This migration resulted in a housing boom in 2005-2006, which at the same time made it difficult to manage the influx and resulted in haphazard growth patterns and conflicting land uses. Public services and infrastructure have also struggled to keep pace with the growth.

UNDIVERSIFIED ECONOMIC BASE According to the report, there are several other challenges the borough must take into consideration when planning for the next several years. With few large private employers, the economic base remains undiversified and largely dependent on external factors, including federal and State fiscal policy, the health of the Anchorage economy, and the price of oil. The borough also lacks a common vision for growth and development, which deters new investment by creating the perception that the borough does not offer a stable and positive business climate. Mat-Su’s competitiveness for export-oriented

industrial development also is limited by the state’s remoteness relative to high growth markets, as well as high transportation, labor and energy costs. At the same time, the Borough is well positioned within the state to attract companies serving the Alaska market and the ongoing development of Port Mackenzie and the expected rail extension will enhance Mat-Su’s competitive position for export-oriented industrial development. More than 180 people, mostly from the region’s business community, participated in planning committee, focus groups and interviews through the process. The result was identifying seven top economic strategies for attracting new business, several of which the borough is well under way to implementing. “Now we just need to make sure that we get the story out about what great a place to do business and to live in the borough is,” Hanson says. Working with the University of Alaska Anchorage Mat-Su College, University of Alaska Fairbanks and the Mat-Su Regional Medical Center,

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Photo by Patty Sullivan/MSB

the borough is establishing a university-medical district that will serve as a focal point for attracting high-level jobs, facilities, research, education and training. These efforts include growing the Mat-Su College into a four-year institution, Hanson says, that will include a paramedics training program, which just had its first class finish year one. The college is also designated by the University of Alaska system to become the center of renewable energy programs and will work with the borough’s new state-of-the-art recycling center. “This area of growth offers higher paying jobs with professors who have master’s and doctorate degrees, which also adds to improving quality of life in the borough,” Hanson says, while attracting professionals and technical services in the areas where the area needs more services. The borough also will continue to invest in the tourism infrastructure and marketing of Mat-Su. As an exportbased sector supporting small business, tourism is growing increasingly important to the borough’s economy and its capacity to attract and accom-

Cutting through the hill to meet Lu Young Lane, the heavy equipment is hauling out tons of material. This will be a truck route through the industrial district at Port MacKenzie for the efficient offloading of bulk resources. A nearby parallel train route veers off into a 100-train car loop.

modate greater numbers of independent travelers is critical to the sector’s success. In 2008, the borough funded a “Tourism Infrastructure Needs Study,” conducted by the McDowell Group. Quill says it identifies tourism infrastructure investments that will increase the visitor experience and make them want to stay longer and spend more money.

MULTI-MODAL PORT One of the strategies that promises to have some of the most significant and far-reaching economic impacts is the borough’s efforts to develop a multimodal transportation infrastructure at Port Mackenzie, including the construction of a rail extension from the port to the Alaska Railroad’s mainline and ferry service to Anchorage and beyond. A

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fully developed multi-modal port will serve as a key transportation asset for the state and position Mat-Su to attract significant new private investment and employment opportunities. The port would also open up Mat-Su to international trade and investment possibilities with the entire Pacific Rim, Hanson says. Currently, about 70 new jobs were created this summer at the port, says Elizabeth Gray, deputy borough manager says. When also factoring in building the rail extension and the new ferry the M/V Susitna coming online by 2013,

Anchorage stands to benefit with 730 annual jobs and $50 million in annual income being injected to the region. The Susitna ferry will create a more complex regional economy in Upper Cook Inlet. One of the next steps toward this end is to work with Anchorage to select the landing site so it can then complete landing designs, Gray says. Tyonek and Kenai are also interested in ferry service.

PRISON CONSTRUCTION Goose Creek Correctional Center, scheduled for completion by 2012, is

one of the largest vertical construction projects ever taking place in Alaska and has been compared to building an entire university campus. The new facility will create 350 jobs that average $48,000 a year, plus benefits, and is being built on a 330-acre tract about nine miles from Port MacKenzie. The center includes 430,000 square feet of buildings on 135 acres where the $240 million compound will house 1,536-bed medium-security long-term male felony offenders, many who are currently serving sentences outside of Alaska, Gray says. TerraSond Ltd., a business representing the arrival of a new industry in the Valley, recently opened a main office in Palmer with 60 employees whose salaries average close to $70,000 a year. The company’s decision to locate there is a classic example of what the borough is trying to market to other industries with the hopes of attracting them: “It’s a good place to do business with a good quality of life,” Hanson says. Specializing in hydrographic, geophysical and land surveys, its team of specialists work with their vessels and equipment to provide high-quality surveys for clients in several industries, including oil and gas, pipeline, power and telecommunications, renewable energy, mining, surveying and engineering, shipping, dredging and construction, and government agencies – including port authorities, the National Oceanic and Atmospheric Administration (NOAA), and the U.S. Army Corps of Engineers (USACE).

MODULAR CONSTRUCTION INDUSTRY Looking ahead, Hanson says, the borough also is trying to build up the modular construction industry that constructs pre-engineered buildings for North Slope camps. It has succeeded in attracting the Alaska company Builders Choice, which will move 70 to 100 workers to the Valley, each making about $51,000 a year. Efforts like these are consistent with one of the key strategies identified in the economic development plan, which is to build a greater awareness of Mat-Su as a destination for new investment among employers in Anchorage. “MatSu should be top of mind to companies seeking expansion within the region,” the report says. ❑

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www.akbizmag.com • Alaska Business Monthly • October 2010

REGIONAL REVIEW

BY TRACY BARBOUR

The Kenai Peninsula A haven for retirees Photo by Anne Marie Holen

Homer recently constructed Reber Trail, a multi-use gravel pathway that connects Fairview Avenue to Reber Road.

he Kenai Peninsula is inarguably among the state’s most scenic and frequented regions. Situated on Alaska’s southern coast between Cook Inlet and Prince William Sound, the peninsula is filled with an abundance of wildlife, from puffins and sea lions to harbor seals and humpback whales. The region also encompasses an amazing landscape accented by beautiful parks, flowing rivers and glistening glaciers. It includes the rugged Kenai Fjords National Park, which includes the Chugach National Forest, Kenai National Wildlife Refuge and Kachemak Bay State Park. The Kenai Fjords National Park is a popular destination. The park maintains several trails near Exit Glacier, giving visitors a rare and up-close opportunity to see how a glacier can reshape a landscape and encroach on its surroundings.

“It’s the Florida of Alaska.” – Alyssa Shanks, Economist Alaska Department of Labor

Homer at a Glance Population: 5,550 Location: Approximately 200 miles southwest of Anchorage Key local contact: Mayor James Hornaday Main industries: government, oil and gas production and refining, tourism and fishing Government structure: Mayor and city council Hospital: South Peninsula Hospital University: Kachemak Bay Campus of Kenai Peninsula College/University of Alaska Airport: Homer Airport

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Photo courtesy of U.S. Army Corps of Engineers

the borough’s residents were older than 65 in 2009, compared to 8 percent statewide. And only 64.8 percent of the borough’s population was in the labor force in 2009 – working at a paid job or looking for work – compared to 70.1 percent statewide. In terms of its racial makeup, 86.5 percent of borough residents are white, compared to 72 percent statewide, and 10 percent are Alaska Natives and American Indians, versus 17.9 percent statewide, according to 2008 estimates.

DIVERSE ECONOMY

The proposed expansion of Homer’s East Harbor Basin Small Boat Harbor would enhance the facility’s ability to handle more boats, as well as larger vessels.

Often simply called “the Kenai,” the Kenai Peninsula is a large expanse of land that extends about 150 miles southwest from the Chugach Mountains. It contains the Kenai Peninsula Borough, which is home to 8 percent of the state’s population and 6 percent of its employment. The borough has a population of more than 53,500 people, about 19,300 of whom live within its four largest incorporated cities: Kenai, Soldotna, Homer and Seward. These cities have 7,115, 4,021, 5,551 and 2,609 inhabitants, respectively, according to 2009 Census Bureau estimates. The rest of the borough’s residents live in Anchor Point, Clam Gulch, Cohoe, Cooper Landing, Crown Point, Fox River, Fritz Creek, Halibut Cove, Happy Valley, Hope, Jakolof Bay, Kachemak, Kalifornsky, Kasilof, Moose Pass, Nanwalek, Nikiski, Nikolaevsk, Ninilchik, Port Graham, Primrose, Ridgeway, Salamatof, Seldovia, Sterling and Tyonek. Some of these smaller communities are located off the road system and are accessible only by boat or float plane.

OLDER POPULATION With its bountiful wildlife, breathtaking vistas and endless possibilities for outdoor activities, the Kenai Peninsula is a magnet for tourists and independent travelers. The Kenai is renowned for being Alaska’s playground. “It’s a fun place,” said Alaska Department of

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Labor Economist Alyssa Shanks in a July interview. “Loads of people from Anchorage and the Mat-Su Valley and beyond go there on their weekends to fish, camp and explore.” The Kenai Peninsula Borough is also a mecca for retirees in Alaska. The peninsula has warm, sunny weather in the summer, milder winters and numerous recreational opportunities. It also has property tax incentives for older residents and a lower cost of living (due, in part, to more affordable housing costs). “It’s the Florida of Alaska,” Shanks says. According to Shanks’ April 2010 Alaska Economic Trends report, Kenai Peninsula Borough residents get the highest percentage of their income from retirement and disability insurance benefits – 4.9 percent in 2007 – out of all Alaska’s boroughs and census areas. The Haines Borough, which also has a reputation as an Alaska retirement haven, had 4.4 percent. Homer is also attractive for retirees, as more than 10 percent of residents there were over 65 in 2000. The borough’s population tends to be older than the state’s as a whole and considerably less racially diverse. The median age of the borough’s residents was 39.4 in 2009, compared to 33.5 for the state overall. The borough’s median age was the eightholdest out of the state’s 27 borough and census areas. Eleven percent of

The Kenai Peninsula Borough has one of the most diverse economies in Alaska. Its economic activity revolves around government, oil and gas production and refining, the visitor industry and fishing. Secondary industries like health care, retail trade and construction also generate a significant amount of jobs and dollars for the region’s economy. The borough has a fairly stable economy, and it’s been that way since 2000. But that’s expected to change this year due to a decline in visitors. “It’s likely that it’ll take a bit of a hit this year due to lower cruise ship tourism,” says Shanks. “But it might not be hit that hard due to a suspected increase in independent tourism.” Shanks added that the oil and gas industries are also an economic area of concern. “They have a large impact on the economy, and it’s been a long time since new oil fields were tapped,” she said. Still, Shanks expressed confidence in the borough’s economy: “It is well equipped to handle shocks to any one sector at a time,” she said in the interview. Although it has a relatively small economy, the Kenai Peninsula Borough has a broad range of jobs. Five industry categories represent the bulk of its employment: local government, retail trade, leisure and hospitality, natural resources and health care. Together, they represented only 58 percent of the borough’s employment in 2008, according to Shanks. “That diversity allows the borough to be more resilient to declines in any one industry,” she said in the April Alaska Economic Trends. About 23 percent of the borough’s wage and salary jobs are in local, State

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or federal government. Five of the borough’s largest employers are government entities, and most of those are in local government. For example, the Kenai Peninsula Borough School District is the largest single government employer, facilitating education for nearly 9,400 students in 44 facilities. The Alaska Department of Corrections operates the 500-inmate Spring Creek Correctional Center across Resurrection Bay from Seward and the 360-inmate Wildwood Correctional Complex three miles north of Kenai. These facilities have about 200 and 100 employees, respectively. Government jobs are important to smaller economies such as the Kenai Borough’s because they provide stability, relatively high salaries and comprehensive benefits, according to Shanks.

Although it has a relatively small economy, the Kenai Peninsula Borough has a broad range of jobs.

the appearance of Homer’s F/V Time Bandit on the Discovery Channel’s “Deadliest Catch” TV series. Having completed a number of seasons, the popular show has brought national attention to the city of Homer. In March, Homer was filmed in a series of TV commercials featuring Geico’s Caveman character aboard the Time Bandit.

HALIBUT IS KING IN HOMER Homer is situated on the shore of Kachemak Bay on the southwest side of the Kenai Peninsula. The city was named after Homer Pennock, a gold mining company promoter who arrived there in 1896. A picturesque “hamlet” by the sea, Homer is one of the most beautiful places in creation, according to Mayor James Hornaday. “Homer is a family oriented place with friendly people and good schools,” Hornaday says. “It’s a good place to raise children.” In Homer, halibut is king, which is why Homer is known as the “halibut fishing capital of the world.” Most of the fishing permits in Homer are for halibut, herring and groundfish. “We have a lot more halibut here than any place in the country,” Hornaday says. Homer has a very active commercial and sport fishing industry, with 70 or 80 boats involved in charter fishing alone, according to Hornaday. But visitors to Homer want to do more than just catch fish; they want to watch whales, otters and other wildlife as part of their interest in ecotourism. Tourism, like fishing, is an important driver of Homer’s economy. There had been a slight dip in tourism, Hornaday says, but now things are on the upswing. “We’ve had nine cruise ship stops coming to Homer,” Hornaday says. “It’s certainly a positive influence.” Another positive influence has been

WORLD FAMOUS The city of Homer also is known for its award-winning Pratt Museum, which receives 20,000 to 30,000 visitors annually. The museum is dedicated to the process of education by exploring the natural environment and human experience relative to the Kachemak Bay region of Alaska. “Our museum is world-famous,” Hornaday says. “It has been labeled one of the top museums in the nation.” Homer also is establishing itself as a valuable research center. For instance, Kachemak Bay is the largest of 23 sites in the National Estuarine Research Reserve System (NERRS) in the nation, and the only one in Alaska. Its goal is to conduct ecosystem-based research that fosters a life-long appreciation and understanding of the coastal environment. Homer is especially interested in researching erosion, glacier rebound and the effects of climate change. “We were one of the first communities in the nation to put together a climate change plan,” Hornaday says. Currently, Homer’s No. 1 priority is identifying an alternate water supply. Within the next 10 years, the city will need a new water supply to replace its sole water source: Bridge Creek Reservoir. Population growth within the city, increased demands for city water from residents outside city limits, increasing numbers of tourists and summer

residents, and climate change that has reduced surface water availability are all factors driving the need for a new water source. Homer is proactively exploring its options, including using an existing stream such as Twitter Creek, Diamond Creek or Fritz Creek. Homer also is working on a number of major infrastructure improvements that will help position the city as the economic and transportation hub for the Kenai Peninsula. To enhance the cargo-handling facilities at the Port of Homer, upgrades are being planned for the Deep Water Dock. The dock will be expanded to increase its overall width and length, and a terminal building and other upland improvements will be added. The facility will be capable of handling containerized freight delivery to the Kenai Peninsula, thus reducing the cost of delivering materials and supplies to much of the peninsula. Expanding the dock will, ultimately, reduce the cost of living in Homer, Hornaday says. Homer is also seeking funding to increase the size of its East Harbor Basin Small Boat Harbor. Homer has the largest individual small boat harbor in Alaska, according to Hornaday, and the expansion is much-needed to handle the high volume of its activities. Two U.S. Coast Guard vessels are ported there, the Alaska State Ferry comes in, plus many other boats use the harbor. “We really need to add another small boat harbor, but it’s very difficult to get federal funds for that,” Hornaday says. “We have requests in, and we are hopeful.” Recently, Homer completed an $11 million rehabilitation project to make its sanitary/sewer system more efficient. The city also has finalized the much-anticipated Reber Trail. The multi-use gravel pathway connects Fairview Avenue to Reber Road, providing nonmotorized access from the lower elevations of Homer to the west hillside. One project that won’t be happening in Homer is the proposed town center. The project, which would have been built on 19 acres of land owned by Cook Inlet Region Inc., is on “indefinite hold,” according to CIRI spokesman Jim Jager. “When Fred Meyer pulled out, the project collapsed,” Jager says. “Without a major anchor, it was not ❑ economically feasible.”

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TOURISM

Unbeatable view of Cook Inlet’s Turnagain Arm from Rainbow Peak south of Anchorage.

BY PEG STOMIEROWSKI

hile Alaska’s tourism industry continued last summer to experience its share of white-water conditions, vendors were scrambling to hold on and achieve a tenuous stability amid cruise revenue losses and uncertainty about what the future will bring. The state entered the 2010 tourist season braced for about a 9 percent drop in overall tourism traffic, including an expected loss of about 140,000 fewer cruise passengers, reflected Ron Peck, president and chief operating officer of the Alaska Travel Industry Association (ATIA) in Anchorage. Normally, visitors services, until recently a growth industry, is credited with bringing several billion dollars into the state and providing 40,000 jobs, but Petroleum News in August assessed losses during two years at about 5,000 jobs and $420 million in spending, which Peck confirmed.

2010 SUMMER NUMBERS UNKNOWN While updated visitor compilations, including July through September figures, weren’t available in mid-August, clearly the slump did impact operations at Denali Park, in the Fairbanks area and other destinations in Interior and Southeast.

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The head tax stemmed from a successful ballot initiative passed in 2006. Still, Peck said, some relief is likely in the travel sector. Legislative actions reducing head tax liability by more than 43 percent for next season have lifted hopes, he said, that during this fall and winter, cruise lines may reintroduce some ships for 2012. Meanwhile, the tourism picture in 2010 seemed to be more of a collage than any unified rendering. In many areas, gains were spotty at best, with some businesses hitting a home run while others continued to experience pain and frustration from the bench, depending on a host of factors, including travelers served and cost of services. Where there were reports that business was up, there often was talk of slight increases. Overall, tourism in Alaska in 2009 totaled 1.83 million visitors, including 242,500 fall/winter visitors and 1.6 million May through September, according to ATIA. That was down from 1.95 million in 2008, including 1.7 million summer and 247,400 winter visitors. Alaska hosted a million cruise visitors in 2008 and 2009 – 600,000 for round-trip Inside Passage and 400,000 for one-way gulf cruises, Peck said, with about half of the latter group taking a land excursion. In 2010, the Port of

Anchorage hosted one cruise liner arriving from Seattle every two weeks. For the 2011 season, there were several developments that Peck, in midAugust, was anticipating would help bring some relief to the picture: ■ With Oceania and Disney cruises coming to Alaska for the first time and Crystal Cruises returning, netting an estimate of 40,000 additional passengers, cruise figures would be expected to slightly increase. ■ The continuation of additional carriers and gateways to Alaska should also help provide a lift to the state’s troubled travel industry, along with impacts from the use of additional State marketing allocations.

SOUTHCENTRAL In Anchorage in 2010, the redistribution of cruise ships meant potentially 117,000 fewer passengers coming into the city, said Jack Bonney, spokesman for the Anchorage Convention & Visitors Bureau (ACVB). That remained a significant hit for the city. That said, he added, the MS Amsterdam made a splash as the first vessel of its size to tie up regularly (every other Monday from May to September) in Anchorage in its 14-day cruises from Seattle. The ship brought about 1,380 passengers and 600 crew members into

www.akbizmag.com • Alaska Business Monthly • October 2010

the city each trip, and while some passengers ventured as far as Denali Park, their impact was certainly felt around town. In another sunny corner, Bonney reported in August that according to the STR Report, from January to June of 2010 hotel revenues were up 10 percent and occupancy 6.9 percent over 2009. July appeared strong anecdotally, but numbers for July and August were not yet available. In Anchorage, he noted the popularity of new museum exhibits and the Anchorage Downtown Partnership’s Music in the Park program. The new Festival of Flowers drew crowds to Town Square in June. The schedule for the popular downtown music program was expanded to include Mondays to accommodate cruise passengers traveling from Seattle into the Port of Anchorage, and a number of new businesses opened their doors in time to benefit from this traffic, Bonney said. Bringing together the Solstice Festival and the Hero Games also helped ramp up interest. At the Anchorage Museum, visitors from home and elsewhere responded enthusiastically to several new exhibits – the Smithsonian Arctic Studies Center, the Thomas Planetarium and the Imaginarium Discovery Center, which includes hands-on science exhibits. The museum received national attention for the new spaces, Bonney said, while the New York Times portrayed Anchorage itself as a destination for travelers, spotlighting some interesting businesses along G Street and throughout downtown. ACVB also opened the Film Anchorage office to assist film and photo productions interested in basing production in Alaska. The Film Anchorage office serves as a liaison between filmmakers, the Alaska Department of Commerce Alaska Film Office, and Alaska-based film professionals and businesses. “Everybody Loves Whales,” a feature film directed by Ken Kwapis and starring Drew Barrymore and John Krasinski, in August was in preproduction in Anchorage. Set construction began in July and filming will continue into winter. Alaskans are working on the production in a wide array of capacities.

The statewide interest by feature films is driven by a state incentive program, which offers qualified filmmakers transferable tax credit. In another statewide initiative, six Alaskans – musician Phillip Blanchett, packrafter Roman Dial, Kodiak museum director Sven Haakanson, historian Jane Haigh, brewery force Geoff Larson and artist Paul Paquette – for the third time pitched favorite haunts to other Alaskans on www.TravelAlaska. com for the ATIA Insider’s Alaska campaign, naming a selection of beaches, hiking trails and eateries.

Late in the season, travel tips were shared on Twitter, via @alaskatravelnews, and on Facebook, on the Alaska Travel News fan page. Recommendations included packrafting the Eagle River, whale watching in Juneau, stopping at the Copper Rail Depot Saloon in Copper Center, and visiting the touch tank at the Kodiak Fisheries Research Center.

HOMER Elsewhere, on the Kenai Peninsula, Homer saw more tourism this year, with fishing charters and accommodations

Dane Ketner, ice climbing, Ptarmigan Peak, Anchorage. Alaska’s beautiful landscape attracts adventure climbers from around the world. www.akbizmag.com • Alaska Business Monthly • October 2010

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well-booked and a busy atmosphere along the Spit, said Paul Dauphinais, executive director of the Homer Chamber of Commerce. After last year, he said, the level of activity has been surprising and gratifying. Halibut fishing was good, he said. One couple coming into Homer in July had to make 15 contacts before they secured a room, he said, and were unable to book bear-viewing seating for more than a week. Referring businesses out of Homer noted some difficulties for guests accessing busy activities. Activities continued to do well in August, he reported. While the economy in general may be slow to recover, business at Alaska Adventure Cabins Alaska Cabins, a handful of unique vacation rentals on 15 acres along the Sterling Highway coming into Homer, has managed to defy the worst of the trends, said coowner Bryan Zak. “We’ve been in business for 12 years and our business has been growing steadily for 11 of them,” he said. “The only decline in our business financials came in 2009, when we were down

25 percent from our best year ever, which occurred in 2008. This year we are seeing a continued upward trend, even above our 2008 numbers.” Zak offered his 10 best practices list for challenging times: ■ Advertising: “When business is tough, we spend more to advertise.” ■ An increase in advertising by State, local and Kenai Peninsula tourism partners. ■ More state residents touring Alaska, and participation in the “Buy Alaska” program. ■ More foreign travelers. ■ Cultivating a base of repeat business. ■ The heat wave in the Lower 48. ■ More families choosing to vacation together. ■ An increase in independent travelers. ■ Product quality and uniqueness. ■ Active involvement in the local and business community.

INTERIOR AND SOUTHEAST ATIA’s Peck shared that at Denali

National Park, the Tundra Wildlife tour, the main tour used by cruise passengers on the land portion of their trip, was down this year, while the main transportation system used by independent travelers, known as the Visitor Transportation Shuttle, was up in June by more than 3 percent. In Sitka, the May through September cruise passenger count for 2010, said Sandy Lorrigan, of the Sitka Convention and Visitor’s Bureau there, was 139,513, compared to 219,910 in 2009, which already was down from 289,753 in 2008, 234,423 in 2007 and 267,026 in 2006. And while the drop in cruise trade hurts community retail sales, Lorrigan said, a few store owners were reporting doing just a little better than they’d anticipated. Small businesses, including bed-and-breakfast establishments, were having ups and downs, but were down overall. Most restaurant owners also were reporting business and beverage sales were down, and the same for lodges, fishing groups and tour companies. One company she polled said while most people appeared to be still pinching pennies, their more affluent

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www.akbizmag.com • Alaska Business Monthly • October 2010

Skiing is a popular winter activity for locals and visitors alike alike. Pictured, the Chugach Mountains from Powerline Pass.

customers seemed to be loosening up again in their spending. In mid-August, however, Sitka was looking forward to hosting the Conference on Russian America Aug. 19-21, Lorrigan said. Scholars were to present original research exploring the history and significance of Sitka. And overall, while there were 21 groups booked for 2010, compared to 24 in 2009, the business impact, once all of the figures were in, was expected to be higher in 2010 because of group size or event length. At the Petersburg Chamber of Commerce, where most summer visitors were inquiring about fishing, glacier and whale watching, Barb Steltz reported these comparative summer fig-

ures for 2010 and 2009: May, 684 to 781; June, 1,078 to 828; July, 1,183 to 1,175. Sallie Dwyer, director of the local chamber, said tourism officials here, in a community where residents host small cruises but aren’t as dependent on cruise traffic as some larger communities are, have been pleasantly surprised that visitor figures this summer weren’t worse, especially since the Trident Seafoods and Ocean Beauty canneries, in the face of a poor fish run, didn’t open their doors this summer for about the first time anyone could remember. And while a lot of visitors were drawn by the birding to be enjoyed here, Dwyer feels the state is doing a better job of selling the Alaska’s charms

to a diverse audience – drawing more independent travelers, Canadians and northern Alaska residents for “staycations.” More people from up north, she said, are coming down to Southeast, “and it’s the first time for a lot of them.” In decades past, when luring cruises meant having to create deepwater ports to accommodate the larger ships, many people in the Petersburg area were thoughtful about what it would mean, in a quality-of-life sense, to be flooded repeatedly each summer with almost as many passengers as there are local residents. “They didn’t want to have to create things for them to do,” she said. In general, she said, the cruise tax debate is encouraging more Alaska residents to pause and take notice of what’s happening to their state, and to consider how to help share the natural beauty of Alaska, in her words, “without selling out.” That is, while keeping the experience “real” so that it will still be Southeast, meaning, to her, still a place of rugged beauty grounded in, among other traditions, Russian history, totem poles and gold mining. ❑

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TOURISM

Hotel Business: Up and Down for 2010 Loss of cruise ships to Alaska reason for decline BY BARBARA SAUNDERS

Photo courtesy of Embassy Suites

s the economy affecting hotel business this year? What impact are we feeling from cruise line cuts, about 140,000 visitors total? What are we going to see in 2011? Anchorage’s Captain Cook and Embassy Suites; Fairbanks’ Pike’s Waterfront Lodge; and Juneau’s Baranof management and sales directors reveal the answers.

CAPTION COOK DIVERSIFIES At the Hotel Captain Cook, Chris Block, director of sales, says getting bookings is more of a struggle this year. “We are constantly worried about the economy and the changes in state and out of state,” he said. “Tourism has suffered due to the economy and we are constantly working with partners to fill occupancy.” With the hotel portfolio diversified between leisure travelers, tourism, airline components and government travel, to name a few, bookings remain at a more consistent level. Small business owners may be feeling the impact of this year’s economy moreso, but a larger hotel has business travelers from many sectors – the legal industry, oil, construction, medical, engineering, architectural. If one sector is down, another may be thriving. “It’s long-standing customers, such as Arctic Slope Regional, Doyon, Calista, Wells Fargo and ConocoPhillips, to name a few, that we value and truly appreciate and consider family here in the hotel,” says Darren Hubbard, national corporate sales manager. The hotel has placed more focus and concentration on travel business from Juneau, Fairbanks, Seattle, Dallas and Houston.

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Numbers are up from last year at Embassy Suites of Anchorage.

“We have also added more value within our guest room rates with specials that incorporate such traveler needs such as breakfast, parking or use of the athletic club and always complimentary WiFi,” says Hubbard. Every year, as part of its philosophy, the hotel has continual upgrades to the tune of $1 million to $1.3 million in the budget. This year it may be new flat screens, remodeling the athletic club, new flooring – another year it may be new linens and bedspreads. That’s why Hubbard, who has 18 years experience at the hotel, is proud to say the Captain Cook is one of the best hotels in Alaska. “We sell service and that’s why we are able to retain and attain new clients.” Another fact Hubbard feels has added consistency to its service: Walter Hickel Jr., president and CEO of Hickel Investments and the Hotel Captain Cook, has been running the hotel for 38 years.

SUITE BUSINESS UP Bill Remmer, general manager for Embassy Suites of Anchorage, says travel has been strong for his hotel this year. “Our numbers are up from last year,” says Remmer. The reason for growth: “We are rated as a top service hotel. People stay here and recommend their stay to others, hear about us from other travelers, or look online and read our reviews.” Embassy Suites is an all-suite hotel, relatively new, in great condition. Clients enjoy a cooked breakfast and cocktail reception as part of the amenities – a plus for business and leisure travelers. “Smith Travel Research gives us reports,” says Remmer, “so we have an idea of how we are doing. A high percentage of travelers are from out of state in the summer, but the oil industry makes up our largest business yearround. The marketplace has been solid, stronger than predicted.

www.akbizmag.com • Alaska Business Monthly • October 2010

INTERNATIONAL TRAVEL UP IN FAIRBANKS “With tourism down in Fairbanks this year, we’ve certainly been affected,” says Deborah Hansen, sales and marketing manager for Pike’s Waterfront Lodge. Business travel is not up either. “It’s challenging. “We’ve offered more specials. We have a $99 special on light days. That’s half the regular rack rate. That’s something we never would have offered a few years ago.” Hansen doesn’t see any change for next year. But she is hoping the $16 million the Legislature and governor has provided for the Alaska Travel Industry Association ($7 million for FY2011), with a matching $2.7 million from the private sector, will help toward growth in the travel industry in Alaska. On a positive note, the hotel has seen growth in international travel. Australians tend to take long vacations, for example, and the Australian dollar is doing well. “But we just can’t make up the cruise numbers.” People tend to buy land packages from the cruise line or even book on their own. But Fairbanks hotels are losing that traffic, too, because people are tending to take shorter vacations and airline prices have increased to Fairbanks. “I don’t think anyone is doing well this year. Smaller hotels and the bedand-breakfast industry have been hit the hardest,” says Hansen.

Photo courtesy of FSA Advertising

“We have enough activity in Alaska to maintain our business level despite a nationwide economy that is stable at best.” Does Alaska have an advantage over the Lower 48? Frequently. If the economy is soft in the Lower 48, resources may be redirected to Alaska. In the summer, the hotel sees frequent tourism travel from out of state. In the winter, the leisure travel is more in-state. However oil industry and business travel is active throughout the year, so that activity can make up for loss of tourism travel. This summer was stronger than the doom-and-gloom forecast. Even though 120,000 cruise berths were pulled out from coming to Alaska statewide, people are still here. Remmer remains optimistic about some improvements for the cruise industry next year. “We have a lot of younger families,” says Remmer. “People have figured out that they can still come to Alaska on their own and for lower air fares this year. The hotel is often running at full capacity.” What is the prediction for next year? “I think we’ll have solid travel. There are opportunities for growth here and in the Lower 48. The business community is getting stronger across the country,” says Remmer. The economy in Alaska has had a small correction, but people are beginning to feel more stable financially, he adds.

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JUNEAU SOFT, THEN STRONG If you ask hotel managers in Juneau how the hotels are doing this year regarding travel, you may get a different answer than in Anchorage. At least that was the forecast early in the season. Steve Hamilton, general manager for Westmark Baranof Hotel, says travel is off in Juneau. “It’s softer than what we have seen.” That was in July; by August he was singing a different tune. “I’ll be up probably 20 percent over last year for August,” he said. “We’re very excited about August. At the end of summer things really picked up.” June 2010 was also great due to Celebration, a bi-annual Alaska Native conference coordinated through the Sealaska Heritage Institute and held even years in Juneau. The Baranof (195 rooms) competes with the Goldbelt (105 rooms) and the Prospector (62 rooms) hotels in the downtown market. A new Aspen Suites Hotel by the airport opens April 2011 with 78 rooms. The legislative session also helped this year. “If the legislative session was not held in the Capital City of Juneau,

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Some managers of hotels are just happy to be flat if not slightly up this year. we would have no reason to be open (off-season). Juneau would turn into a summer town like Skagway (cruise ship passengers embark and disembark in Skagway and not in Juneau).” Hamilton attributes growth to Gov. Parnell being in office, living in Juneau, and bringing in his commissioners and staff. That alone has brought significant business to the Baranof during session. Hamilton is hopeful that business from the legislative session will be just as strong next year. He is also anticipating the legislature body will push for a 120-day session (late January to mid-May), instead of the current 90day session (late January to mid-April).

ATIA’S TRAVEL STATISTICS Ron Peck, president and chief operating officer, of the Alaska Travel Industry Association (ATIA), assessed the outlook for Alaska visitors for the summer of 2010 and beyond. Because of the loss of 125,000

travelers in the summer of 2009 and a reduction of 140,000 cruisers for this summer, the prognosis for this year was challenging. The good news is independent travel appears to be up slightly over 2009, but not better than the 2008 season. Hotels and lodges are feeling the impact differently due to the market segment of visitors in different regions of Alaska. The Interior and Denali Park region are experiencing a difficult season because substantial portions of their tourist numbers rely on cruise tour business. Reduction in demand equals a reduction in price, which is being seen in hotel specials in Fairbanks in particular. Some managers of hotels are just happy to be flat if not slightly up this year. Anchorage and Southcentral hotel business appears to be faring a little better because their mix of business is less reliant on cruise and cruise tour visitors exclusively. The good News – Oceania Cruises is coming to Alaska in 2011 – also Disney Cruise Line. Those in the tourism industry are hopeful additional cruise ❑ business will return in 2012.

www.akbizmag.com • Alaska Business Monthly • October 2010

MINING

Saving Red Dog Mine Transitioning the Aqqaluk Deposit BY MARY EDMUNDS

Photo courtesy of NANA Regional Corp. Inc./Photo by Chris Arend

he Red Dog Mine, operated by Teck Alaska Inc., lies 82 miles north of Kotzebue on land owned by NANA Regional Corp. The treeless landscape is close to the bones of the earth. A thin skin of vegetation covers looming hills. To the north, the DeLong Mountains are outlined against the Arctic sky. Red Dog has been the largest producer of zinc and lead in the world, only recently surpassed by a mine in India. But the Main Deposit, opened in 1989, is expected to run out of ore in 2012. In order to continue, Teck must extend its operations to the smaller Aqqaluk (AH ka luke) deposit, which was named after Robert Aqqaluk Newlin Sr., the first chairman of the NANA Regional Corp. board.

PERMITTING ISSUES The permitting process for the Aqqaluk Deposit was completed in January 2010. In February, parts of the permit were appealed by individual plaintiffs from Kivalina, a village 66 miles downstream from the mine. They were joined by plaintiffs from Point Hope, as well as by the San Francisco-based Center on Race, Poverty and the Environment. However, 20 Northwest tribal organizations supported the new permitting. The effect of total dissolved solids (TDS) on drinking water has been an issue. Discharge water from the mine goes into the Middle Fork of the Red Dog Creek, a tributary of the Wulik River, the source of Kivalina’s drinking water. In 1998, when mining began in the Main Deposit, the limit was 200 milligrams per liter. In 1999, the EPA approved a more lenient interim standard at 1,500 milligrams per liter for wastewater discharge. Teck’s process for treating wastewater to remove traces of lead and zinc uses lime.

Each year more than 31,000 environmental tests take place at Red Dog Mine. Andy Willman, Teck environmental technician and NANA shareholder, tests the water in Red Dog Creek.

The minerals are precipitated out and held in the form of sludge. The calcium from the lime forms calcium sulfate in the water in the form of TDS. So far, mine personnel have not been able to find a process that would meet the more stringent limit.

In May, a Supplemental Environmental Impact Statement required by the E PA concluded that the discharge limits would protect the environment. In fact, the discharge water from the mine has reduced the

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original acidity of the water caused by minerals naturally leaching into the stream. Aquatic life has appeared where it was absent previously. Work on opening the Aqqaluk deposit has progressed over the summer even though the permitting process was unresolved. Issues dealing with TDS, as well as levels of lead, zinc, selenium and cyanide, were still being reviewed. Teck is committed to protecting the environment. In the past decade, the mine has invested $111 million to improve the environmental performance of the mine. All told, Red Dog Mine is regulated by and works with about two dozen federal, State and local agencies. Compliance with regulations is taken seriously, keeping the mine’s environmental technicians busy monitoring all mine activities.

GETTING AQQALUK TO MARKET Red Dog Mine began preparing the new site May 20 this year. The initial focus is on removing a million tonnes (a tonne is a metric ton) of waste rock. Site fences, new haul roads and water drainage-control systems were projected for the summer. “We’re going to be as busy as we were back in 1998,” said Mike Bonneau, Red Dog general manager. The original Main Deposit contained 77 million tonnes of rock containing 17 percent zinc and 5 percent lead. The Aqqaluk Deposit contains 51.6 million tons of reserve ore containing 16.7 percent zinc and 4.4 percent lead. Although this is less than the Main Deposit, it is substantial. The ore deposit originated around 338 million years ago on the sea bed when mineral rich springs precipitated the zinc and lead. These minerals formed layers on the ocean floor. Formation of the Brooks Range 126 million years ago lifted the ore body and broke it into three separate but related deposits – Main, Aqqaluk and the much smaller Qaniayaq. Because the ore body is close to the surface, it is particularly suited to open-pit mining techniques. Waste rock, which contains too little lead and zinc to be economic, is removed. About one tonne must be removed in order to expose each tonne of ore. Once blasting has taken place, ore

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and waste rock are hauled to their appropriate destinations. The zinc and lead minerals in the ore are removed by milling and flotation processes. The milling machines grind the rock to a fine powder. Flotation involves mixing the ground rock powder with water and chemicals. Air is injected into the bottom of the tank and the minerals attach to the bubbles that float to the top, where the concentrates are skimmed off. The concentrates are then are hauled about 50 miles to a port on the Chukchi Sea and shipped during the summer months to Teck facilities in British Columbia, Canada. Eventually the concetnrates are shipped to smelters where sulfur is removed, producing pure zinc and lead. Zinc is used in the galvanizing process used on nails and car bodies to prevent rusting and lead is used in the manufacture of batteries. Opening up the Aqqaluk Deposit will allow Red Dog Mine to continue to supply market demands.

THE NANA-TECK CONNECTION Teck and NANA Regional Corp. have a unique relationship. From the beginning, the views and values of the Inupiat culture have informed the policies of the Red Dog Mine. The Inupiat subsistence lifestyle is important, not just for economic reasons, but also for retaining their traditions. Inupiat culture relies heavily on cooperation and consensus. In 1989, prior to the start of mining operations, the Independent Subsistence Committee made up of residents from the villages of Noatak and Kivalina was established. They selected a route for the haul road to the port that took into consideration caribou migration, waterfowl nesting sites and fish-spawning areas. During caribou migration, the committee can request the road be closed for the safety of the herd. Representatives from the mine and members of whaling crews meet to plan summer shipping schedules in order to minimize effects on the traditional whale and seal hunts. Subsistence is not the only concern. The company also looks toward the future when the life of the mine will

end. “A couple of years ago we said let’s close this pile area, we don’t need to use it any more and then we can test our reclamation techniques to see how effective they are. We have another 20 years of mining, so here’s a chance to really get it right,” said Teck Alaska Inc. Manager Environmental and Public Affairs Jim Kulas. There is no expectation that the landscape will be restored exactly to its original appearance. Instead, it will be configured to fit the natural contours of the area. In the test area, the pile was contoured into a more gradual slope to minimize erosion. Material was put down and compacted as hard as a road bed in order to preclude leaching of minerals due to rainwater. Revegetation has begun, including the planting of willows. Teck has long had a mutually beneficial relationship with NANA. The mine pays royalties to NANA, as well as borough, State and federal taxes. It provides employment in an area where it is lacking. Approximately 62 percent of the workers in the summer are NANA shareholders and 58 percent in the winter. Herb Adams is a mill shift supervisor from Kotzebue. “My son was eight years old when I started here,” Adams said. “Now he’s grown up and he also works here in the mine department.”

TRANSITIONING DEPOSITS Removing the overburden covering the Aqqaluk Deposit is expected to continue through the end of the year. Ore from the Main Pit will continue to be used. Next year about a third of the ore will come from Aqqaluk and two-thirds from the Main Pit. The two streams of ore will be milled together until the stream from the Main Pit is phased out in order to obtain a smooth transition. If the permitting issues were not being resolved and work on Aqqaluk not allowed to proceed, the mine would have to shut down when the Main Deposit ran out. It would take at least 18 months to restart, which could make resumption of operations economically unfeasible. Instead, good environmental and social management policies seem to be paying off, with a new ❑ horizon well in sight.

www.akbizmag.com • Alaska Business Monthly • October 2010

CONSTRUCTION

Federal Government Construction in Alaska U.S. Army Corps of Engineers to spend nearly $2 billion from 2010-2012 BY HEATHER A. RESZ

U.S. Army Corps of Engineers photo by Tom Findtner

he Alaska District of the U.S. Army Corps of Engineers is on course to disburse nearly $2 billion completing a variety of projects statewide from 2010 to 2012. The fullservice Alaska District employs about 500 professional Department of Defense civilians in its three major programs: military construction, water resource development, and environmental cleanup and restoration activities. The size and scope of the district make it unique in the world, said Dr. Larry McCallister, director of programs and project management. “We do all the civil works, regulatory, military real estate and military construction for Alaska,” he said. “We’re the primary design and construction agent for the Army and Air Force in Alaska.” The Alaska District – part of the Pacific Ocean Division – is headquartered on Joint Base Elmendorf-

Richardson near Anchorage. Alaska has two regional Corps of Engineers’ offices. The Northern Area Office on Fort Wainwright near Fairbanks manages construction north of the Alaska Range, and the Southern Area Office on Joint Base Elmendorf-Richardson manages construction to the south. On average, the Corps of Engineers work represents about 8 percent of construction in the state, said Chris Tew, chief of the contracting division. All total, federal spending makes up a third of the state’s economy, according to a 2008 report by the Institute for Social and Economic Research. Petroleum is another third and all other jobs make up the remainder, according to the report. Corps of Engineers relies on competitive bid process for 90 percent of contracts Though companies anywhere in the

U.S. can bid on projects here, Alaska companies have a unique advantage. “It’s very difficult for a firm to come up here and compete without experience working in Alaska,” said Tew. “Because of that, most bids are won by Alaska firms.” To help get the word out about its upcoming projects, he said the Corps of Engineers provides Alaska companies an overview of upcoming projects at quarterly Industry Days events in Anchorage and Fairbanks. “We have a lot of ongoing work and we have a lot getting ready to go out,” McCallister said. Tew said about 90 percent of the Corps of Engineers’ projects are bid competitively. And about 30 percent of contracts go to small businesses, he said. “We’ve put literally hundreds of millions of dollars into small businesses in the past few years.” Each fiscal year, Congress appropriates funding for military construction work. Most of the funds for 2010 are already obligated through contracts, Tew said. He said the Corps of Engineers has one American Recovery Reinvestment Act project left to award for a floating breakwater for Unalaska harbor before the Sept. 30 end of fiscal 2010. “Our goal is to have the majority of our 2011 projects ready to go to bid Oct. 1 and all of our bids awarded by March 1, 2011,” McCallister said. So contractors have the entire, brief Alaska construction season to do the work. This year, Alaska contractors also saw another $100 million in projects funded by the American Recovery

During an overflight of Shishmaref, a rock revetment shown on the right built by the U.S. Army Corps of Engineers-Alaska District protects the village from shore erosion. www.akbizmag.com • Alaska Business Monthly • October 2010

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CORPS OF ENGINEERS PERFORMS BROAD SCOPE OF WORK The scope of work the Corps of Engineers performs is very broad, Tew said. The Alaska District includes: a military program; civil works program; environmental and special projects; small business opportunities; emergency maintenance response; regulatory program; real estate; tribal liaison program and safety. Take the union of the erstwhile Elmendorf Air Force Base and Fort Richardson into the new Joint Base Elmendorf-Richardson or JBER, and relocation of Kulis Air National Guard Base at the southwestern edge of Ted Stevens Anchorage International Airport to JBER. Tew said Corps of Engineers staff is in the process of finalizing new internal processes based on the realignment. Though contractors used to working with the Corps of Engineers shouldn’t worry; they won’t see big changes, he said. The Corps of Engineers also is starting the design of the new JBER Headquarters on Elmendorf, Tew said. Then, when the move is complete, the Real estate division of the Corps of Engineers will complete the documents to extinguish the land lease and transfer ownership of buildings on the former Kulis site to the State of Alaska, according to Tom Kretzschmar, chief of real estate division. “There aren’t too many places where the Corps hasn’t worked,” Tew said. “We’ve had a gigantic economic impact over time.” And while Alaskans may be familiar with Corps of Engineers functions like permitting, erosion control, dredging and contracting, folks likely don’t know the Alaska branch also has a new international presence. During the last two years, the Alaska District also has added a Humanitarian Assistance program, McCallister said. The international effort pairs the Corps of Engineers with various

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local organizations, which it helps build health clinics, schools, houses and weather shelters, he said. “We plan the projects and hire locals to do the work,” McCallister said. “We oversee construction and then transfer it to the local government when it’s complete.”

U.S. Army Corps of Engineers photo by Curt Biberdorf

and Reinvestment Act, he said. The primary Alaska recipients of stimulus dollars were harbor and port projects in Anchorage, Akutan and Unalaska, McCallister said. “There is no doubt there will be jobs for the next two years because of that money.”

MILITARY CONSTRUCTION MOST OF CORPS BUDGET In Alaska, one of the Corps of Engineers largest recent projects was the $215 million Bassett Army hospital at Fort Wainwright, McCallister said. It also was responsible for a new $27 million Troop Medical Clinic on Fort Richardson, and a $3 million addition that began this year. “There is a lot of military construction going on still,” he said. For several years, the financial focus of the Corps of Engineers military construction work was building facilities for the new Lockheed Martin F-22 Raptor, which began operating in the Pacific region in August 2007. But for the next three to five years, McCallister said the financial focus will shift to Army projects. Each year the lion’s share of the Corps of Engineers Alaska budget comes from Congress as appropriations for specific military construction projects. Of the Alaska District’s $637.7 million total fiscal year 2011 budget, Congress authorized about $400 million for 16 military construction projects. The remaining $237.7 million in the 2011 budget will fund 64 civil works projects, 147 environmental projects, 40 interagency and international service projects and 33 humanitarian assistance projects, according the Corps of Engineers. In 2010, 350 projects and activities were funded in the Alaska District at total cost of $627 million. Of that, $341.2 million was for 19 military construction projects. So far, eight military construction projects valued at $350 million in are scheduled for the 2012 Alaska District program.

CIVIL WORKS PROJECTS BUILD ALASKA’S INFRASTRUCTURE Civil works historically has received the second largest slice of the Alaska

A clamshell dredge fills a barge with sediment during routine maintenance at the Port of Anchorage.

District funding pie. Civil projects include designing and building new harbors and navigation channels, expanding existing harbors, providing flood risk management and erosion protection, and restoring damaged environmental habitat, said Steve Boardman, chief of civil project management branch for the Alaska District. Civil and environmental projects provide the direct infrastructure to support life in Alaska, he said. Communities in rural Alaska are located along waterways and rely on them for transportation like people in Southcentral do roads. It’s crucial that people from Kotzebue to Unalaska are able to bring in vessels and off load cargo, Boardman said. Erosion control, flood-risk management, and harbor dredging and navigational improvements are just some of the more visible ways the Corps of Engineers’ civil works programs contribute to day-today life across Alaska, he said. The Alaska District dredges five harbors annually and 40 harbors periodically, Boardman said. But the district’s largest civil works project is the Chena River Lakes Flood Control Project, which protects Fairbanks and Fort Wainwright. After hurricanes Katrina and Rita, the Corps of Engineers began evaluating its projects to see if they could withstand 100-year level floods, Boardman said.

www.akbizmag.com • Alaska Business Monthly • October 2010

“We found some areas that need fixing,” he said. The Port of Anchorage is the largest – ongoing – civil project in the state, he said. Though the Corps isn’t responsible for the project, it is responsible for a $23.5 million contract awarded to Manson Construction to dredge virgin material from the front of the new dock to establish a depth of minus 35 feet mean lower low water there. “So when those terminals are ready vessels will have a place to moor,” Boardman said. The Corps of Engineers also is responsible for the annual dredging at the Port of Anchorage necessary to maintain water depths in silty Cook Inlet, he said. The civil works department also is finishing a study, and justification, to support deepening the whole Anchorage harbor to minus 45 feet mean lower low water, Boardman said. Following are highlights from some of the Corps of Engineers’ other ongoing and upcoming projects.

BUILDER

AKUTAN HARBOR PROJECT

KIVALINA EROSION PROTECTION

Knik Construction Co. Inc. of Anchorage was awarded a $31.9 million contract in February to construct a boat harbor at Akutan, on an island in the Aleutian Island chain, to be completed September 2012. The project involves constructing two rock breakwaters totaling approximately 1,500 feet in length and dredging 960,000 cubic yards of material to create an entrance channel and mooring basin. The contractor will obtain, deliver, and place rock for the breakwaters.

Brice Inc. of Fairbanks completed a $4 million project in Kivalina Aug. 9, to construct the last 400 lineal feet of rock revetment on the ocean side of the community under an agreement with the Northwest Arctic Borough. Previously, Brice had constructed 1,600 lineal feet of rock revetment under the Alaska Coastal Erosion program, funded by the U.S. Congress. The revetment was placed on the ocean side of the island to provide interim erosion protection to Kivalina while the community plans its relocation.

JUNEAU FLOATING BREAKWATER Trucano Construction Co. Inc. of Juneau was awarded a $600,450 contract in July to install a floating breakwater at the small boat harbor on Douglas Island this fall to lessen wave energy entering the harbor. The company will drill and drive steel piles into the rocky seabed under 30 to 40 feet of water to hold the floating breakwater in place. “We’re in dialog with Douglas. They’d like to do more,” Boardman said.

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ST. PAUL BOAT HARBOR UPGRADE Completion of an $18.2 million, multiphase upgrade to Saint Paul’s small boat harbor is scheduled in 2011. The small boat harbor is being constructed inside the existing commercial harbor at Saint Paul. Dutra Dredging Co. is dredging an entrance channel and maneuvering and mooring areas, demolishing an existing rubblemound breakwater, and constructing three new rubblemound breakwaters.

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TANAGA AND OGLIUGA ISLANDS ENVIRONMENTAL INVESTIGATIONS U.S. Army Corps of Engineer photo by Richard Ragle

The Corps of Engineers conducted environmental investigations at former Naval/Army auxiliary air stations on Tanaga and Ogliuga Islands in the western Aleutian Islands last summer. The U.S. Fish and Wildlife Service administers the islands as part of the Alaska Maritime National Wildlife Refuge. This and previous investigations and cleanup efforts at the two Formerly Used Defense Sites, or FUDS, are efforts to determine the extent of environmental contamination and unexploded munitions are left by former military activities. Will Mangano, environmental engineer, (left) and Jacob Sweet, chemist, with the U.S. Army Corps of Engineers-Alaska District operate the ultraviolet optical screening tool on Tanaga Island at the Formerly Used Defense Site.

About 60 percent of the dozens of remaining FUDS sites in Alaska still need to be surveyed and cleaned, McCallister said. To speed the cleanup, Congress increased the program’s budget from $28 million in 2010, to about $50 million in 2012, he said. The project received the Secretary of the Army Award for Environmental Restoration on Aug. 4. It’s the highest honor the Army awards in the field of environmental science and sustainability, according to a press release announcing the award.

UNALAKLEET EROSION PROTECTION Kiewit Pacific Co. will complete an $18.3 million contract in October to construct 671 feet of rock wall for erosion protection in Unalakleet. ❑

Fiscal Year 2011 Detailed Corps of Engineers Project List Military Projects Joint Base Elmendorf-Richardson (Fort Richardson) • Battle Command Training Facility, • Multi-Purpose Machine Gun Range • Brigade Complex (MEB) Phase I Total: $113.2 million Joint Base Elmendorf-Richardson (Elmendorf Air Force Base) • Railhead Operations Facility • Weapons Release Facility • Add/Alter Air Support Operations Squadron Training Facility Total: $30.3 million Fort Wainwright • ATF Ph IIA Hangar • ATF Phase IIB • Urban Assault Course • Army Family Housing Replacement

Environmental Program • Formerly Used Defense Sites: More than 50 properties at $40 million • Army Environmental: 50 projects at $15 million • Air Force Environmental: 10 projects at $10 million • International Interagency Support Environmental: 12 projects at $5 million • Environmental Support to Military Construction: $5 million • Native American Lands Environmental Mitigation Program: 15 to 20 cooperative agreements at $5 million Total: 147 projects at $80 million Interagency and International Services Program

Total: $194 million Fort Greely • Fire Station Eielson Air Force Base • Repair Central Heat and Power Plant – Phase 2 Civil Works Program 27 Studies (ongoing) 11 Construction projects (two new) 12 Continuing authorities projects 12 Operations and maintenance activities

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Flood control and coastal emergencies $400,000 Regulatory $ 7.7 million Total: $85.7 million

$ 2.3 million $51.8 million $500,000 $23 million

• Missile Defense Agency: Seven projects at $25 million • NOAA National Environmental Satellite, Data and Information Service: five projects at $8 million • Defense Energy Support Center and IIS Fuels: Eight projects at $4 million • Federal Aviation Administration: five projects at $15 million • Denali Commission: 15 projects at $3 million Total: 40 projects at $55 million Humanitarian Assistance Program • Humanitarian assistance in Asia: Total: 30 projects at $13 million

www.akbizmag.com • Alaska Business Monthly • October 2010

CONSTRUCTION S I D E B A R

U.S. Army Corps of Engineers, Alaska

Real Estate Division Managing 500 real estate instruments and about 2 million acres of land BY HEATHER A. RESZ

rom appraisals and land acquisitions to disposal of property under military control – the real estate division of the Alaska District of the U.S. Army Corps of Engineers provides a full range of real estate services to the military in Alaska. “We perform real estate actions for civil and military projects all over the state,” said Tom Kretzschmar, chief of real estate division. He said the division also performs real estate activities for other federal and non-federal agencies, too. Kretzschmar came to Anchorage in February to head the Alaska District’s real estate division, but he’s been with the Corps for seven years and in the real estate industry for more than 20 years. He works with a 15-person staff that includes cartographers, appraisers and realty specialists to manage its 500 real estate instruments and about 2 million acres of land. “On a daily basis, we manage a large volume of transactions,” Kretzschmar said. “There is always some entity that needs an interest in real estate from us.” The real estate division’s work includes things like negotiating easements for a breakwater project in Unalaska, granting the Alaska Railroad Corp. easements to extend rail north 80 miles through Fort Wainwright and Eielson Air Force base. In Unalaska, construction crews needed easements from private property owners while building the breakwater project, Kretzschmar said. So he said he sent one of the division’s real

Photo courtesy of U.S. Army Corps of Engineers

Tom Kretzschmar Chief of Real Estate Division U.S. Army Corps of EngineersAlaska District

estate agents to Unalaska to negotiate an easement for the property. “In many ways, we’re sort of like an independent real estate agency,” Kretzschmar said. The division’s involvement with a piece of property can extend through its whole life cycle, he said. “We acquire property. Manage property. And dispose of the property,” Kretzschmar said. He said the division is in the process of disposing of two parcels now. One piece of property will be transferred to the Port of Anchorage

and another to an Alaska Native corporation. Kretzschmar’s division will complete the paperwork to transfer the former Kulis Air National Guard b improvements back to the State base of Alaska. He said they also are working to transfer land to the Port of Anchorage that was a terminus site for an old Army pipeline that pumped aviation fuel from Whittier to Anchorage. The division also is working with the Alaska Railroad Corp. to grant the easements it needs to extend its rails north 80 miles through Fort Wainwright and Eileson Air Force Base to provide improved transportation options for the U.S. military, mass transit and freight. Kretzschmar said the railroad has created proposed designs and is beginning the Corps of Engineers permitting process. “That project is going to have lots of involvement by the Corps and the Army,” he said. “It’s a major development.” Districtwide the Corps of Engineers as a whole as been busy because of projects funded by the American Recovery and Reinvestment Act. The 2005 Base Realignment and Closure Act that created the new Joint Base Elmendorf Richardson won’t change the role of the Corps of Engineers in Alaska. “We’ll be doing a lot of the same things here, but we’ll be doing more of them for the Air Force,” ❑ Kretzschmar said.

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CONSTRUCTION

Understanding Construction Economics Government’s role in industry stabilization BY GAIL WEST

ne of the most important industries in Alaska, construction, is interwoven with nearly every other industry in the state, according to Scott Goldsmith, a professor of economics at the University of Alaska Anchorage Institute for Social and Economic Research. Goldsmith said when the economy is good, businesses need the industry for expansion. When the economy sinks, the industry tends to sink with it. “It can be a good bellwether to indicate how other industries are doing because all other industries feed into the construction industry,” Goldsmith said.

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“We’re not small potatoes. Alaska construction means more than $7 billion a year to the state. That’s 20 percent of our state economy.” – John MacKinnon, Executive Director Associated General Contractors of Alaska Reflections of buildings in downtown Anchorage Anchorage.

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ALASKA IN GOOD SHAPE The good news for Alaska is that today’s construction industry is relatively stable, compared to the booms and busts of the past. In fact, the industry may be in better shape here than it is in many other states. As Goldsmith reported to the Associated General Contractors in January of this year, the nation had lost 1.6 million construction jobs. Factoring in the number of federal dollars flowing into Alaska along with oil and gas spending and that from other resourcedevelopment industries, the state has a relatively healthy construction industry. “We’re not small potatoes,” said John MacKinnon, executive director of the Associated General Contractors of Alaska. “Alaska construction means more than $7 billion a year to the state. That’s 20 percent of our state economy.” Of that annual investment into Alaska, public monies – federal, State and local – will account for just more than $2.5 billion this year, according to ISER’s construction spending forecast produced annually for AGC. That

projection, however, was published before additional construction funding for Alaska was finalized. “After the ISER report was published, the 2010 Legislature passed a new State capital budget with nearly $3 billion in construction funding,” said John Boucher, senior economist for the State of Alaska. “It won’t all hit the street this year, though,” Boucher added. “Generally, our budget dollars fund projects that may take a few years to complete. After a budget is passed, that money is made available through appropriations to State agencies for programs and projects. The vast majority of these projects are done by private contractors. “For example,” Boucher said, “DOT (the State’s Department of Transportation and Public Facilities) anticipated putting more than $750 million in projects on the street this year.”

FUNDING STABILIZED BY STATE Alaska Office of Management and Budget Director Karen Rehfeld added that the State does what it can each year to keep construction spending as stable as possible. “There have been large contributions from the federal side over the past several years – particularly in highways, aviation and village safe water and sewer projects,” she said, and added that when some of that funding lags, the State tries to even out the spending level as much as possible. “In developing our budget, we have to look down the road,” Rehfeld said. “We have to look at what we expect in income and expenses for the next year. We have to make certain we’re careful in our investments because when oil revenue declines are forecasted, we may have to go into savings. In good years, we have to hold on to some of that revenue so we’ll have it available when we need it.” Rehfeld said the State also leverages its money as much as possible, looking to maximize the multiplier effect. “When the Legislature looks at additions to the capital budget,” she said, “they look to municipalities and figure out how much the State money will leverage for the project we’re funding. The availability of match dollars really helps us stretch our

money, and we use local resources and materials as much as we can.”

PRIVATELY OVERBUILT These public dollars will become more important to Alaska’s construction industry in the near future. MacKinnon said the State is coming down from a large amount of private construction – projects such as the Providence Health Care expansion, construction of bigbox stores and housing. “We’ve overbuilt,” MacKinnon said. “The demand has fallen because of the nationwide recession, and we’re seeing that indirectly. The big chains aren’t expanding the way they might have without that recession.” He added that government funding of civil work is healthy; the national stimulus bill brought about $250 million to Alaska. In November 2008, voters passed a bond issue for $315 million for projects – some of that still wending its way through the system – and, he said, with the “very healthy” capital budget passed this year, the construction economy should continue healthy and stable at its current level. “In addition,” MacKinnon said, “there’s another bond issue before voters in November – $397 million for education facilities.” Some of the money the State put into its capital budget this year, MacKinnon added, was for deferred maintenance. “It isn’t glamorous, but it is necessary. The leaky roofs, buildings pumping heat out instead of holding it in,” he said. “We have opportunities now to become more energy-efficient and save future money. With $300 million going into home weatherization two years ago, that’s been a big boost to the construction economy. Our building supply businesses and residential contractors have seen a noticeable difference in their revenue – selling new heating systems, windows, doors and other types of weatherization materials.”

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KEEPING MONEY IN ALASKA How do the public and private dollars entering the construction industry in Alaska help to churn the state’s economy? Primarily through using Alaska contractors and employment of residents, according to MacKinnon.

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“One thing we didn’t do much of about 20 or 30 years ago, was keep the money inside Alaska,” he said. “Today, we capture more of it here. Alaska companies and Alaska residents are doing most of the work instead of bringing crews in from Outside.” MacKinnon added that in today’s market, Alaska companies can do whatever Outside companies can do. “We have some top talent here,” he said. “We’ve had to be more innovative in many cases, working with the short seasons, the fact that materials aren’t readily available, environmental seasons – fish passage, bird nesting, etc. We have to be innovative in the way we get our work done in the shortest possible time. We have to think seriously about how we can save time and money.” When it comes to building a project, MacKinnon said, companies use local aggregate. Asphalt oil is “Alaskan,” labor is “Alaskan.” Equipment may come from Outside, but importing it still generates Alaska jobs – it is usually purchased through Alaska businesses and comes through Alaska ports, such as the Port of Anchorage.

RECIRCULATING DOLLARS More of that money, however, could be kept inside Alaska, generating more of Alaska’s economy than leaking into other state’s economies. “A dollar spent in the local economy is worth much more than a buck, since it can recirculate through the economy several times,” said Curtis Thayer, deputy commissioner of Alaska’s Department of Commerce, Community and Economic Development. “Without a doubt, addressing the hole in our economic bucket that allows money made here in Alaska to leave the state, is a big part of the challenge we face. “As we expand the capacity of our transportation, energy and communications infrastructure, it will become easier to diversify Alaska’s economy away from almost exclusive reliance on revenue from the oil and gas industry,” Thayer added. “As we diversify, more money earned here will be more likely to remain here.” Goldsmith said he didn’t “have a good handle on how much leaves the state,” and added he didn’t think anyone really did. The Department of

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www.akbizmag.com • Alaska Business Monthly • October 2010

Labor does an annual analysis of nonresident employment by industry, and construction hits high on that list – just under fishing and tourism. “We’re probably doing a better job now at keeping the dollars in Alaska because the industry is larger than it was 10 or 20 years ago,” Goldsmith said. “That means we have more capacity locally to do our own projects. “To keep the money in our own economy, we’re training our own work force and working to reduce the cyclical fluctuations in the industry as much as possible,” he added. “That keeps employees working so they don’t leave Alaska in search of work Outside.” Unfortunately, however, in 2008 (the latest available numbers, according to the State Department of Labor and Workforce Development), we sent $1.8 billion out of state in non-resident hire, according to Click Bishop, commissioner of the department. In an address to a June 28 meeting of the Anchorage Chamber of Commerce, Bishop said that Alaska’s non-resident hire represents 20 percent of its work force.

Neal Fried, an economist with the same State agency, agreed that training our own work force is a big step toward keeping more payroll dollars in Alaska. “We’re providing training opportunities now that wouldn’t even have been possible 10 years ago – health aides, teachers, construction workers,” Fried said. “If more of the materials and goods needed in construction were produced locally, the economic multiplier of construction would be even greater. “We’re the third largest client of the Port of Tacoma, behind China and Japan,” said Fried. “The Alaska construction industry accounts for a lot of that shipping.” Construction projects in rural Alaska present an even greater challenge to companies. MacKinnon said he knew of companies that went into a community ahead of a project to help train prospective local hires. “You can’t do much better than that,” MacKinnon said. “Wage- and hour-rules benefit a company that can hire locally – per diem is high for employees who don’t live where they

work. If a company can hire locally, it’s a cost savings.” Thayer acknowledged what’s been done, and said the process of keeping more construction dollars in the local villages and communities is a work in progress. “A stable and diverse economy will lead to long-term prosperity for individuals and businesses,” he said. “To this end, work force development is a component of economic development that cannot be ignored, both on and off the road system. By targeting work force development to meet present and projected future needs, regionally and statewide, we enhance the opportunity for local hire and ensure a better quality of life for all Alaskans. “We really do need to break down more of these barriers, and do more to encourage training and hiring locally for rural jobs,” he added. Although the gears grind slowly sometimes, State agencies and the construction industry are working toward the goal of increased local hire – and keeping more dollars in ❑ local economies.

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MANUFACTURING

Modest economic sector growing

Photo courtesy of Made in Alaska (MIA)

Anchorage-based Insulfoam, the Made in Alaska program 2009 Manufacturer of the Year, makes foam products for roofing and below-ground insulation.

BY PEG STOMIEROWSKI

hat may be most notable about manufacturing in Alaska is the modest size of this economic sector, and consequently, its gentle muscle. While sector employment has been essentially level for several years in the 13,000 range, “there’s just not much of it,” said Neal Fried, an economist for the State: “It doesn’t drive the economy at all.” And while growth is foreseen in some corners, the figures are still modest.

MANUFACTURING SECTOR Nationwide, Fried observed, the manufacturing sector has been one of the losers in the lingering national recession. Millions of factory jobs have disappeared since 2000. But in Alaska, he added, “we’re not building washing machines and consumer goods that are being sold around the county. “That’s not to say we think it’s good that we don’t have any,” he added, but it helps to explain why there’s seemed to be less of a slowdown in Alaska than in many regions of the Lower 48. While nationally in 2008 about

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12 percent of the gross national product owed to manufacturing, in Alaska it was about 2 percent, Fried said. Seven of the top 100 private-sector industries in 2009 were manufacturing, and this all involved seafood, he said. The decline of logging in recent decades, with the loss of pulp mills and jobs, represented a big hit to the manufacturing industry, he said. Bakeries and other food product operations still play a lively role. Helping to fill out the industrial profile are pipes, pumps, tanks, plastics, printing, textiles, breweries and beverages, construction and wood products, paving, refining, machine shops, boats, household, medical equipment, chemicals and some fertilizer production and other light manufacturing. Besides seafood processing, timber used to be a dominant player, Fried said, but not anymore; there also have been losses on the fertilizer front. Today almost two-thirds of manufacturing employment in Alaska, he said, is tied to seafood processing. The rest of the

sector, he added, is made up of a diverse mixture of enterprises. Industrial manufacturers include companies like Pacific Power Products, which wholesales diesel engines; Greer Tank, making conduits and storage tanks; Cascade Machinery and Electric, which manufactures pumps; Unique Machine, a machine shop that has patented items used by oil companies globally; Alaska Structures; Totem Equipment and Supply, which makes customized heating solutions; Alaska Industrial Resources, pre-fabricated metal buildings; and steelmaker ST Fabrication. On the high-tech side, firms are engaged in production of continuous ropes, underwater data collection and aircraft carrier deck-cleaning solutions.

GROWTH EXPECTED With Alaska’s population density challenges, and its statehood only 50 years old, its manufacturing sector – only about 565 players strong – is largely made up of small and nascent enterprise, agreed Chris Buch-

www.akbizmag.com • Alaska Business Monthly • October 2010

holdt, executive director of the Alaska Manufacturing Extension Partnership (AMEP) in Anchorage, which is only in its fifth year. Buchholdt said the sector can expect 19 percent growth in the next few years, as small business continues to grow and thrive. Most of the growth is projected in food products. “We’re a very young state compared to rest of the world,” Buchholdt said. “If we make something, it’s typically to satisfy the local marketplace. We’re just developing products that are exportable. “Manufacturing is more than just stamping out widgets,” he said. “It’s adding value to Alaska’s resources. It’s substituting for goods that were previously imported. And it’s going global with Alaska solutions for working in cold, remote areas.” AMEP offers a spectrum of manufacturing and quality management services for mature businesses aiming to improve their performance and take advantage of opportunities. It is one of 59 affiliates of the U.S. Department of Commerce’s National Institute of Standards and Technology Manufacturing Extension Partnership (NIST MEP), with its main laboratory outside of Gaithersburg, Md. In general, “the supply chain follows the processor of a product,” Buchholdt said, pointing to Insulfoam in Anchorage as a company that has invested millions in new equipment to service local building needs. Leading the prominent challenges to be solved in order to see industrial manufacturing grow are transportation and energy costs, he said, and also such laborrelated costs as workers’ compensation and liability protections. Manufacturers in Alaska have to pay careful attention to whom they are marketing, he said, and how they will make the product available, including potential shipping costs.

NAVIGATING OPPORTUNITY The state’s remoteness and population of less than 700,000 makes it challenging to attempt to sustain such largescale manufacturing as seen elsewhere in auto, textile or electronics plants, said Bill Popp, president and CEO of the Anchorage Economic Development Corp., and such other fields as chemicals, biotech and pharmaceutics require knowledge-base supports.

Given the appropriate products, he said, he could envision air cargo opportunities through Ted Stevens Anchorage International Airport. He pointed to the Alaska Forward Project (www.alaskapartnership.org) as an effort led by the private sector to identify old challenges and new directions in order to foster a sustainable, resilient economy. One of the challenges it has identified is fragmented and ineffective statewide economic development efforts in the past. In the meantime, many local businesses already have learned how to navigate immediate boot-strap opportunities, Buchholdt said. Many small local producers have figured out, for instance, how to capture shelf space for their products, he said, including at such giants as Costco.

HIGH TECH IN HOMER One company – and it’s not the only one – that seems to be defying some of the odds is Kachemak Research Development. Founded in 1998 by Colleen Riley and her husband, Larry, and headquartered in Homer, KRD is a HUBZone, woman-owned, research and development, and support services company that this spring landed a $9.7-million U.S. Air Force contract for continued development of its trademarked AutoScan under-vehicle, bomb-inspection system. Besides military applications, the Rileys see applications for the system at ports and immigration and customs checkpoints. Since 2005, KRD has received about $11 million in military contracts for the project. Prototype manufacturing began in Homer in 2006, with some manufacturing also done in Utah. Annual revenues are $2.5 million to $3 million, said Colleen Riley. She is proud of the pace with which KRD was able to field the system, especially since so many R&D defense projects, she says, die on the vine before reaching fruition. While the project drew its first contract in 2005, by 2008 “we had a beta test AutoScan running at MacDill Air Force Base, and by the end of 2008, we had market-ready systems.” Located east of downtown, KRD, which has nine employees in Homer, has a fully equipped office building, shop, and double-wide for off-site employees. Another four employees, including a computer programmer, occupy leased

office and storage space in North Salt Lake City, Utah, which houses the contract accounting and administrative arm of the corporation. Two retired Air Force majors work from Panama City, Fla. KRD subcontracts for labor with such Homer businesses as Glenn’s Welding, Sloth Boats, Fritz Creek Welding and Otto’s Machine Works. It buys metal and aluminum from Alaska Steel and lumber from Spenard Builders Supply. That’s all money and business that stays in Homer and contributes to the local economy, Riley emphasized. The company aims to hire locally first, statewide second – particularly graduates from engineering programs at the University of Alaska at Anchorage and Fairbanks – and nationwide third, she said, and while manufacturing on a small scale is feasible in Homer, where KRD’s tech team lives and works, it might not make sense on a larger scale. The firm continues to consider other sites in Alaska, such as Kenai or Anchorage, where shipping costs could be controlled, and, Riley says, “We have not ruled out manufacturing outside of Alaska if that places us in a more competitive position. As a Department of Defense contractor, we will not manufacture abroad.” She anticipates having 30 employees two years from now and could envision 100 employees in five years. Finding qualified employees has been a challenge, she said, and the Salt Lake office developed when KRD couldn’t hire qualified accountants in Homer, and some tech help was imported from the Lower 48 when KRD couldn’t find qualified engineers with degrees. “On the flip side, Riley added, “we have found some of our most talented employees here who came up for the love of Homer and Alaska as opposed to a job.” Besides distances and time zone differences, shipping costs represent a barrier to manufacturing in Alaska, Riley said. “Access to materials and equipment is more limited, increasing the lead-time on materials, which also impacts cash flow and the delicate balance of having enough parts and supplies on hand, while avoiding too much inventory. “If you take all the problems that manufacturers face in the Lower 48,” she said, “and multiply that by a factor of four or five, you come close to ❑ understanding the challenges.”

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MANUFACTURING

Promoting Alaska-Made Products

BY PEG STOMIEROWSKI

144

Photo courtesy of Made in Alaska (MIA)

anufacturer Doug Glenn may seem to have an uncanny knack for being in the right place at the right time. For him, this quality has been a key to business growth, along with his aviation knowhow and a lot of long, hard work over many, many years. Glenn, founder of Northern Reclamation Services LLC in Palmer, is working on a promising process using hay for straw wattles in erosion-control blanketing materials. He expects revenues this year of half a million. While his story is unique, Glenn is just one of many enterprising state residents who are making a living marketing and selling Alaska-made products. Clearly he is a man who enjoys what he does. Through Northern Reclamation’s parent company, Glenn Air, he also handles aerial reseeding, fertilizing and fish restocking operations. In his new enterprise, started in 2007, he is promoting the use of Alaska-made wattles – nettings used in land reclamation projects or to keep sediments out of drainage systems – rather than having to ship wattles from Colorado or elsewhere. He envisions huge savings for construction and mining companies, a vision grounded in experience. For almost a quarter of a century, Glenn has been doing cleanup and reclamation work for coal- and goldmining companies. Early on, he brought in an old agricultural airplane to service equipment fuel needs at remote sites and “before I knew it, Usibelli was asking

Penelope Cyr-Lorenson lives in Kodiak and makes a variety of baskets.

me to do some reseeding for them.” About eight years ago, the State ramped up regulations governing sediment and started importing straw wattles from places like Colorado. “We’d imported a lot of them, but the shipping costs were killing us – until we started making them at home using Alaska products,” he said. “Also, we’re not importing any bugs and weeds from down south.” Glenn built a structure at the Palmer Industrial Park and envisions employing about 20 people full time. He has financed his business primarily through private banking and out of his own pockets, but it would likely take a loan

to get the blanket machine up and running, he said in August.

MADE IN ALASKA In Anchorage, Bill Webb, president and owner of Webb’s Consulting and Management Services, is the program manager and agent for the State’s Made in Alaska (MIA) program. The Alaska Department of Commerce, Community and Economic Development Office of Economic Development houses the MIA program, made public in 1986 by then Gov. Bill Sheffield. It promotes the purchase of products manufactured and crafted in Alaska – large and small. The program

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also aims to preserve Alaska’s arts heritage and bolster its artisan community. Certified permit holders, according to Webb, use the logo to signify that their product has met certification requirements, including producing most of the product in Alaska, as confirmed through inspection. The annual fee for the MIA permit is $25 per product line, or a maximum fee of $75 per permit holder. The signature polar bear and her cub are familiar at open-air markets, gift shops and some conferences around Anchorage. Program leaders say many local retailers honor the effort by stocking these products to promote local industry. Michael Hanzuk, development specialist for the State, said that with similar products – some produced globally and presented alongside state, regional or local products, often at lower prices – the program plays an important differentiating role for the discriminating consumer who wants to buy Alaskamade goods. Still, even some Alaska manufacturers are shipping their products elsewhere, including to the Asian market and to the Lower 48 states. Jewelry is big in the program. Other products commonly associated with the Made in Alaska logo include clothing, furs, leather and woven goods, body care products, musical instruments, Eskimo dolls, bamboo fishing rods, photography, rocks and natural products, beads, dog treats; food, including fish, cheese, beer, meads and honey ciders, potato chips, candies, coffee, biscotti, chocolate, vodka, jams, syrups, mustard, pickles; wire and rope, bulletproof trailers, insulation, aircraft parts and sand and gravel. The website lists all permit holders at www.madeinalaska.org along with other program information. Annually the MIA program on average lists about 1,100 permits issued and Webb says participation numbers have remained fairly level. “It’s a slow growth in general, Webb said, “since we get a lot of people who move out of state.” Every year in Alaska, he said, 25 percent to 30 percent of the population changes, so “we get a lot of dropouts who have to be replaced.” Hanzuk said total permits, by (fiscal) years, were as follows: 2005, 1,116; 2006, 1,126; 2007, 1,082; 2008, 1,098;

2009, 1,047 and 2010, 1,097, with renewals averaging 86.5 percent. “We guarantee that a stickered product is made in Alaska,” Webb said, “with 51 percent or more value added in Alaska and that materials used are of Alaska origin when available and possible.” While overall participation figures are fairly stable, there is growth in the area of new products, with some entrepreneurial-minded vendors adding additional items to traditional product lineups, Hanzuk said. As far as product quality control goes, it’s up to the manufacturer, said Hanzuk. “The only assurance the State has is to verify that the product is made in the state.” As for enforcing compliance with requirements of the program, program participants themselves are helping more than ever before, he added. “The State may own the rights to the program, but it’s the people who help police and run it. If they want it to grow, it’s up to them to help. And they do.” Other promotional programs use other logos, for example, the signature hand authenticating Alaska Native-made handicrafts, and the Alaska Grown symbol, and Webb said MIA works with those programs and shares rack care.

GETTING THE WORD OUT Webb travels around the state spreading word about the program through onsite workshops and Webinar programs. Learning how to expand market area is one of the more frequent concerns, he said, especially in small communities. The program is getting more electronic as it goes, Webb said, with e-mail distribution of newsletters when possible. Along with holding more Webinars that can bring together people in geographically diverse regions, Made in Alaska is embracing social networking. It plans to carve out a presence on Facebook, Twitter and other social media sites. Each year the program names a Manufacturer of the Year; this year’s will be selected in the first quarter of 2011. The last two recognized were, for 2009, Insulfoam, in Anchorage, for its work specializing in the manufacture of foam products for roofing and below-ground insulation; and, for

2008, Kaladi Brothers. Started in 1986 as a small espresso cart in Anchorage, Kaladi now has more than 12 cafes, and employs more than 165. According to the 2009 citation, Insulfoam has operated in Alaska since 1973 and has been an MIA permit holder since 1994. Its staff of about 17 tends to double during the construction season. Not all businesses that could qualify for the program participate. “Some people with limited manufacturing and/or hand-crafting capabilities can sell all of the product they can make (or want to make) without the use of the Made In Alaska logo,” Webb said. “Others do not want to buy a business license. Some do not know about the program until they get more active in retailing their product. Many find that they are not qualified.”

SUPPLY CHAIN LINKS Since food processing plays such a big role in Alaska, another growing presence is Global Food Cooperative and its buyer-producer get-togethers. The group aims to bring professionals and teams in this field together on behalf of servicing links in Alaska’s food supply chain, as its website states, “for the purpose of a world-class industry.” The organization is gearing up for Global Food Alaska 2011, a “OneSupply Chain Solution – Food, Beverage and Bio Products” conference “for decision-makers.” The event, a symposium about how buyers buy, is held by the group biannually. It is being held June 8-9, 2011, at the Soldotna Sports Center, Kenai Landings. Commercial companies offering products harvested in Alaska and their supply-chain partners are invited to register, as are the commercial buyers of such goods. Custom tours are arranged for professionals wishing to view production facilities in Alaska. With more than 130 exhibits planned, the show is designed to feature such associated products and services as food distribution, transport, loading, packaging, quality control, IT, brokerage, equipment, communication, export, finance, nutrition, R&D, education, marketing and more. At the capstone dinner on June 8, leaders in food harvesting, production and mar❑ keting are to be honored.

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HEALTH & MEDICINE

The Affordable Care Act

“Providence entered into the health reform debate with certain priorities and principles, the most important of which was Providence’s belief that health care is a basic human right.” – Joel Gilbertson, Vice President, Government and Public Affairs Providence Health and Services

No photo credit found

Joel Gilbertson Vice President, Government and Public Affairs Providence Health and Services

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ongress passed the $875 billion Affordable Care Act in March. While only a handful of provisions in the law will affect next year’s benefit plans, companies in Alaska are already working to understand what this legislation means in the short- and long-term. Plan years starting on or after Sept. 23, 2010, must provide certain benefits, which include no lifetime limits

on coverage for all plans, no rescissions of coverage when people get sick and have made an unintentional mistake on their applications, and extension of parents’ coverage to young adults under 26 years old. Those who get health insurance through employers also receive benefits, including no coverage exclusions for children with preexisting conditions and no “restricted” annual limits.

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COMPLEX BILL “This is definitely one of the most complex bills that we’ve encountered in quite awhile,” said Mike Humphrey, director of benefits, University of Alaska. “Health and Human Services (HHS) is still developing regulations, so we’ve not yet been able to fully assess all of its impacts. I believe that the reform plan will continue to evolve over the next seven or eight years – with 2,700 pages of regulations, it will generate untold volumes of clarifications.” According to Humphrey, the first impacts of the new health care law will be felt on the university level on July 1, 2011. “While the university is self-insured, Premera Blue Cross processes our claims and Caremark takes care of the pharmacy portion,” Humphrey said. “The university is developing plan models to present to those companies to make sure that the plans fit within their frameworks. As we roll out ideas, we’ll also be talking to our employees, faculty and staff about the different directions these plans could go.”

ADDED BENEFITS, ADDED COSTS While some employees may be pleased with the added benefits that come with health care reform, others may be more concerned with the added costs. “Employees are definitely keyed in on the cost component, but at same time, see the additional coverage as a good thing,” Humphrey said. “New benefits include employees’ ability to cover dependents 18 to 25 on their health care plans, which some see as a positive. There is also an expanded slate of preventative services, though the university already offers a very comprehensive wellness program. “There will be additional costs to the university and its employees,” he added. “We share jointly in the costs of our health care plan, so all of us will pick up more expenses.” Humphrey estimates that with the first group of changes, employees will see a possible 3.5 percent bump in addition to medical inflation costs. The university plans to send mass e-mails, host presentations, meet with union representatives and governance groups, and mail documentation home

to families to keep employees abreast of what’s coming. “On a local level, and in Washington, D.C., there will continue to be tweaks, and the plan will continue to be shaped,” Humphrey said. “We’ll wait to see how things evolve, and figure it out as we go. It’s a massive undertaking.”

NEW RULES AFFECT CARE As one of the state’s top 100 largest private employers, Access Alaska, a nonprofit, consumer-controlled organization that provides independent-living services to seniors and the disabled, is also taking a hard look at what the Affordable Care Act means to its employees. The company employs approximately 300 office and personal care workers. “We currently provide benefits to our full-time workers, which is fairly rare in this field,” said Executive Director Jim Beck, adding that all of the company’s employees pay a small percentage of their monthly insurance premium. “Right now, there are still questions, so I don’t know whether we’ll be raising the amount that employees need to pay; I think like many companies, we’ll know more once the regulations are written and clarified later this year.” As an organization that already had a health care plan in place, Access Alaska is grandfathered in, which means that since its plan existed on March 23, 2010, it is exempt from some of the new requirements. “One key issue that we’re facing is what this ‘grandfathered’ status means, and what the advantages and disadvantages are, especially as we begin to feel the major impacts of the legislation in 2014,” said Bill Wood, human resources director. “There are a number of regulations for 2010 and 2011 not covered under the grandfathered status, so we need to be ready to meet those by our July 2011 renewal date.” According to the Department of Health and Human Services, plans can lose their grandfathered status if they significantly cut benefits or increase out-of-pocket spending for consumers. In the short term, Access Alaska is making sure that employees are aware of the new rules that immediately affect their care. These include the fact that insurance companies must cover

emergency services without prior authorization, whether those services are provided in- or out-of-network. “Employees need to know that they don’t have to wait for an insurance company to make a decision in a lifethreatening emergency,” Wood said. Plans must now also cover preventative services such as PAP tests, PSA tests and infant screening with no cost to the consumer.

HARD DECISIONS Long-term decisions include whether or not the company wants to “pay or play” by completely opting out of the insurance business. “If a company opts out, they pay a penalty and excise tax, and may have to front a portion of the costs for employees to find other insurance,” said Wood. “One result of this may be that employees will choose to no longer work for companies that don’t provide insurance.” While the new act is forcing companies to make hard decisions, Beck believes that health care reform is a positive thing for employees and society as a whole. “I believe that in the nonprofit field, too frequently people accept lower standards of employment compensation and benefits, which is unfortunate,” he said. “To an extent, those who work in the human services field should have equity with other folks in the work force. “In our field, we see direct service workers – those who provide hands-on care for seniors and the disabled – not making a living wage,” he continued. “I look forward to the day when more people have primary care insurance. It will lessen the burden on emergency rooms and hospitals, which is what people without insurance frequently use as primary care providers. It’s a big drain on the economy and slows down business growth.” As a provider for people with disabilities, Access Alaska deals with many people who are victims of a broken health care system. “Many folks with disabilities can’t get insurance coverage due to pre-existing conditions, and they have exorbitant prescription costs,” he said. “They want to work, and with the right kinds of supports they could stay in the work force. Instead, they’re stuck at home because that’s the only way

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they can get benefits. The system now doesnâ&#x20AC;&#x2122;t incentivize work.â&#x20AC;?

BASIC HUMAN RIGHT The only private-sector business in Alaska with more than 4,000 employees, Providence Health and ServicesAlaska, took a proactive approach toward the development of the Affordable Care Act. â&#x20AC;&#x153;As a health care provider, health care reform means more to us than as just an employer. This legislation will have a tremendous and profound impact on our organization, so we have been involved in advocacy and working with elected leaders from the start,â&#x20AC;? said Joel Gilbertson, vice president, government and public affairs, Providence Health and Services. â&#x20AC;&#x153;As a not-for-profit, Catholic health ministry, Providence entered into the health reform debate with certain priorities and principles, the most important of which was Providenceâ&#x20AC;&#x2122;s belief that health care is a basic human right,â&#x20AC;? he continued. â&#x20AC;&#x153;As an employer and a health care provider, we continue to focus on building a more efficient health

care system; providing higher-value, higher-quality health care; making it economically sustainable; ensuring access to health care; and making sure that poor and vulnerable populations are protected.â&#x20AC;? According to Gilbertson, a lot of work will need to be done over the coming year to translate the legislation into something â&#x20AC;&#x153;direct and meaningfulâ&#x20AC;? to the community. â&#x20AC;&#x153;While the purpose of health care reform is to establish a framework that moves health care to something more sustainable, most folks will concede that itâ&#x20AC;&#x2122;s an imperfect piece of legislation,â&#x20AC;? he said. Providence is now gearing up to meet the Actâ&#x20AC;&#x2122;s early provisions. â&#x20AC;&#x153;More Alaska residents will become insured and enter into the health care market, so we need to make sure that we have the capacity and infrastructure to deliver the services they require,â&#x20AC;? Gilbertson said. â&#x20AC;&#x153;Provider reimbursements are also undergoing changes with the goal of driving greater value and coordination into the health care system,â&#x20AC;? he continued. â&#x20AC;&#x153;The traditional fee-for-service

model is slowly transitioning to payment models that incentivize coordinated care and encourage providers to work together for healthier outcomes for patients, making a more direct link between quality outcomes and how much providers are paid.â&#x20AC;?

HEALTH AND WELLNESS As the largest private employer in the state, Providence has always worked with its employees to identify specific ways to promote healthier lifestyles and lower the utilization of health care services. Providence offers a robust employee health and wellness program that includes a clinic that provides direct care to its employees, as well as a support system and infrastructure to help employees with chronic conditions. â&#x20AC;&#x153;At the end of the day, we all have a shared goal,â&#x20AC;? said Gilbertson. â&#x20AC;&#x153;We want our employees to be healthy, and we want to make health care as affordable as possible. No one wants to see premiums go up. And when our colleagues need care, we want to make sure that they get the most high-quality, patientfocused care possible.â&#x20AC;? â?&#x2018;

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ October 2010

HEALTH & MEDICINE O P I N I O N

Health Insurance Professional on Obama Care ‘Legislation comes at an inopportune time’ BY DAVID FRAZIER

n my view the much publicized Affordable Care Act enacted March 23 could not have come at a more inopportune time given that the nation is in an economic crisis of immense proportions. The legislation requires employers to provide health insurance coverage with mandated benefits for the uninsured, both employed and unemployed, which will be funded through increases to payroll taxes and premium costs.

HEALTH INSURANCE CRISIS Certainly, we have a health insurance crisis in America: 15 percent of the population is either underinsured or lacks coverage at all. That’s a big problem, and we need a plan to fix that situation by providing affordable health insurance. The Obama plan doesn’t solve the problem, it only exacerbates the issue. It’s no wonder the electorate is unhappy, the President’s polling numbers are weak and the opposition is gaining political strength. Clearly what this new legislation does not include is any cost-containment feature that the American people can understand. What Americans do understand is that medical costs are way too high. Treatment for serious illness is something that is barely affordable, even if your employer is providing group insurance coverage.

NO COST CONTROLS FOR MEDICAL CARE The new health care law does not include cost controls that will help the average American pay for necessary and important medical care. It does add medical mandates that seem important, but only add costs to the patient and health care system. Sadly, while these features will certainly create and expand entitlement programs, they do little to actually control the cost of care, which the majority of

Americans see as the biggest problem with health care delivery today. One of the first requirements of the new law calls for group and individual health insurance plans to pay all preventive care, with no lifetime maximum. All diagnostic procedures are to be paid-in-full with no patient cost sharing (no co-pays), including all laboratory, x-ray tests, immunizations and colonoscopies. The additional cost of this liberalization of coverage, although popular, is to be paid for with new federal taxes. Other mandates include expansion of group insurance coverage for disabled adult dependents, students up to the age of 26, expanded air transportation benefits, additional coverage for mental and nervous conditions, participation in clinical trials, premium reduced for COBRA benefits, and well baby care extended to age 3. Of course, this all comes at an additional cost to the employer, the employee and the nation.

UNFAIR INSURANCE COMPETITION The Obama plan envisions a National Exchange, where group and individual coverage may be purchased directly. That could be good for the consumer if it includes the right to purchase health insurance across state lines, but raises the issue of unfair competition. It has been predicted that government competition will result in fewer insurance companies surviving, with only about half a dozen making it to 2020 when all mandates will be in force. Lack of competition usually means higher prices. The Obama reforms of unlimited major medical coverage, increased prescription drug benefits and limitations on maximum out-of-pocket costs are to be added to Medicaid and Medicare, furthering fueling escalating costs of delivering medical care.

TAX CREDITS New for calendar year 2010, small businesses with few than 25 employees and average wages of less than $50,000 get a tax credit for their contributions toward health insurance for employees. The tax credit starts at 35 percent and increases to 50 percent in 2014 when the National Exchange is operational. A full tax credit may be available to small businesses with fewer than 10 employees with average wages of less than $25,000. This is one example of how the roll of CPA’s and accountants will expand as they assist clients in handling changes that will be enforced by the Internal Revenue Service. When an employer applies for the premium tax credit next tax season, the person responsible for the return will also be charged with knowing the new tax law inherent in the Obama health scheme.

INSURANCE PREMIUM INCREASES The Congressional Budget Office (CBO) has determined that implementation of the plan has been mostly negative rather than positive. All the cost savings that were supposed to be achieved have been proven to be false. According to the CBO the average American will see his or her health insurance premiums raise an average of $2,100 per year under the new legislation. In all the changes described, there are no real identifiable cost containment features. All the act promises is to deliver health insurance at a higher cost to the consumer and apply greater mandates on businesses. My advice is to obtain and read a summary of the law. If you like what you read, do nothing. If you don’t like what you see, then contact your favorite senator or congressman. ❑ About the Author David Frazier is an insurance broker and consultant who has arranged group benefit plans for Alaska employers more than 30 years.

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HUMAN RESOURCES

Steps to success

Photo courtesy of Mikunda Cottrell & Co.

Photo courtesy of Dimond Center Hotel

Photo courtesy of Chugach Alaska Corp.

BY DEBORAH JEANNE SERGEANT

Barney Uhart President Chugach Alaska Corp.

Michelle Gruber Sales, Marketing, Events Manager Dimond Center Hotel

James C. Hasle, CPA President and Managing Director Mikunda Cottrell & Co.

n today’s economy, constantly winning new clients makes for a challenging business model. Repeat sales or service to the same customers – client retention – represents a way to live up to the old adage, “work smarter, not harder.” “Customer retention is vital,” said Bob Bulmer, who owns and operates Alaska Executive Search in Anchorage with wife Anne. “We’ve had some of the same clients for over 30 years.” Barney Uhart, president of Chugach Alaska Corp. in Anchorage, believes his company’s stability is due in part to client retention, especially “when times are tough and new clients are harder to come by. It sustains revenue backlog and promotes employee retention as well.” Who wants to work for a company where everything’s constantly changing?

Client retention saves money in other ways, such as marketing. You’ve already won these clients. Now you can focus on doing business with them. “Return business is very important to the Dimond Center Hotel for many reasons,” said Michelle Gruber, sales/marketing and event manager for the hotel. Client retention “keeps occupancy consistent,” she said. “If business is slow and we are scrambling to find new customers, the only guarantee we have are those who continually keep us busy.” Satisfied long-term clients eventually become your partners in advertising. “Growth in this industry is not only achieved by direct marketing, but by word-of-mouth from past customers,” Uhart said. James Hasle, CPA, president and

managing director of Mikunda Cottrell & Co. in Anchorage, said that retention benefits his firm by allowing for “referrals, staff development, growth and, ultimately, a strong business model.” You can usually count on faithful clients to spend a little more if you need to ramp up sales to get you through a rough patch or during a seasonal slump. Up-sell products and services to them only occasionally and keep it a soft sell for the best results. Otherwise, you risk damaging the relationship. Client retention can be a tremendous boost to your company; however, don’t rely too heavily upon one or two major clients. It can spell disaster if you lose them for whatever reason. Diversify your client base and/or your products or services enough so you will be alright if your key clients’ business evaporates.

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So how do you make occasional clients into regulars? First, understand what clients want, both in your industry and individually. Mikunda Cottrell & Co. provides CPA and business consultation services. “We operate using a team concept to ensure our clients get the benefit of diverse ideas,” Hasle said. At Alaska Executive Search, the Bulmers and their staff find out what their clients need and what their placement candidates have in terms of skills, pay expectation and career goals. “If we don’t listen to clients and candidates, we can’t find both sides of the equation,” Anne said. “By not listening, we would be wasting everyone’s time,” Bob added.

In your industry, you may need to survey clients, both informally and formally, to find out what they need from your company. But don’t let research get too important. Some companies spend so much time trying to figure out the rules that the game plays on without them. Second, follow through with what clients want. Hasle sums up the top means of customer retention as “service, service, service.” Anybody can make a product or perform a task, but a company that provides top-level service keeps its clients. “We do what clients ask us to do,” Anne said simply.

Common Client Retention Misconceptions Once a client, always a client. “Many firms believe that retaining a client is a simple task. The reality is that clients are always looking for cheaper, better and more cost effective ways of acquiring services or products. To forget that can be deadly in any industry.” – Barney Uhart, President, Chugach Alaska Corp. It’s better to get new business paying full price than to keep long-term clients who take advantage of discounts. “Unfortunately, keeping new business isn’t always a guarantee, so if you try to replace someone who has been loyal to your company with someone new, you will lose out in the end. The best thing to do is to be organized enough to that you can bring in the new business without interfering with the guests who have been around.” – Michelle Gruber, Sales/ Marketing and Events Manager, Dimond Center Hotel “The ongoing success of our business is a direct result of treating our current customers with respect and basically (showing) gratitude for their loyalty. As a customer, I certainly would be more likely to shop around if a company takes for granted that I’ll stick around when they’re slacking in service.” – Andrea

Larson, Owner and General Manager TransNorthern Aviation It doesn’t matter how you treat employees, only how you treat clients. “You should take care of your employees and know what their needs are. We’re a small business but we have medical and dental (insurance) for all our employees. That’s out of Anne’s and my back pocket. When you work for a good employer, people get to know the reputation of the company.” – Bob Bulmer, Owner, Alaska Executive Search “Excellent client service is a direct result of firm culture. Our focus is on establishing an environment that develops professional careers, not jobs. This has enabled us to enjoy a lower than average (employee) turnover rate.” – James C. Hasle, CPA, President and Managing Director, Mikunda Cottrell & Co. Retention is only about relationships. “Client retention is always a factor of client satisfaction and customer service. It would be naïve for any business to expect client retention based on relationships, history, or any other factor if the client service is not kept up to the highest standards.” – James C. Hasle

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Bob added, “We don’t play games. What we say is how we follow through.” The Bulmers’ principles have helped them build a relationship of trust with their clients. “If they trust you, they’ll continue doing business with you,” Bob said. Customers want to know they can count on you. If they can, they’ll come back for more. “The bulk of our work is in the government-contracting industry,” Uhart said. “Client retention typically means we are doing a good job. As a result, and as government personnel relocate, we are remembered for our performance and cooperation elsewhere and are thought of as a potential for new work at different locations.” Third, reward clients for doing business with you, not for switching to someone else. So often businesses work so hard to win new business (as do their competitors) that it actually is more rewarding to become someone else’s new customer than to remain loyal. Sign-up bonus, anyone?

Quick Fact Parker, Smith & Feek, an insurance and risk-management brokerage firm with offices in Anchorage and Bellevue, Wash., boasts a 2009 client retention rate that is just under 98 percent.

she said. “This allows them to budget their travel easier.” Just don’t give away the store. If clients can get what they want for free, it makes no sense to pay you for it. Say thank you. A note, a call, a little gift now and then: all of these gestures help clients feel appreciated. It’s especially important to thank clients on holidays, dates important to the client (such as the grand opening of a new branch or the purchasing agent’s birthday), or whenever the relationship deepens in a significant way. Keep in mind that you’re setting a precedent. If you send a gift basket for Christmas a few years, they’ll likely expect every year. It’s OK to mix it up with a variety of thank-you gestures, but at least do something and try to keep it at the same level: a gift basket of fruit one year, and a cookie tin another. Or if your company mails holiday cards, send personally signed cards one year and one featuring a group photo of the employees the next.

Whether it’s a point-earning program, volume-buying discount, or longevity reward, they need to see that giving their business to you is worth it. Referral benefits are also a nice touch. These gestures aren’t cheesy; they work. Just ask Gruber. At Dimond Center Hotel, after 10 visits, guests receive their 11th free and they love it. “Many of our frequent guests take advantage of the punch card,” she said. Corporate guests can also save when they lodge at Dimond Center. “For companies who stay with us often, we negotiate annual contracts Fourth, give business transactions a with a set rate they can depend on,” personal touch. “We stress involvement of the owners in all aspects of client work and are committed to quality, attention to detail and timely completion of work,” Hasle said. Get to know clients on a deeper level. At first, this can mean keeping a dated log of the information that comes up as you interact. Over time, you’ll begin to remember the little details. Use that information to build bridges of familiarity. In follow-up points of contact, recall those tidbits of conversation, such as, “How did that skiing trip go?” or “Did your son decide where to go for college?” On a less personal level, simply sending out a newsletter or a friendly, periodic note to keep in contact helps out. “We keep in close contact with these companies throughout the year to give them updates on their status with the hotel and to keep the relationship a positive one,” Gruber said. ❑

About the Author Deborah Jeanne Sergeant worked as a human resources director for several service industry-based firms and manufacturing companies before starting her freelance writing career in 2000. She frequently writes on human resources topics.

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Photo courtesy of First National Bank Alaska

OPINION

BY BETSY LAWER, VICE CHAIR FIRST NATIONAL BANK ALASKA

ou’ve heard a lot about the future of Alaska’s economy lately, and I hope this article will add something positive to the discussion. But before we look ahead, let’s take a look at Alaska’s economy a short 50 years ago. Those of you who were here, as I was, know that life was good, but much different than today, economics-wise. In 1960, our economy was small, with only 90,000 jobs, and half of those were with the federal government. It was extremely seasonal – the number of private-sector summer jobs was double the amount in the winter. Household income for Alaskans was 10 percent to 20 percent below the U.S. average, and the new state’s infrastructure was primitive by today’s standards. We all know that picture has brightened considerably. Today, Alaska is home to more than 350,000 jobs, income has risen from $3 billion in 1960 to $24 billion, and population from 230, 000 to 660,000. In terms of raw numbers, Alaska’s economic growth has been a huge success story. So what happened to fuel that growth? We all know the answer to that one, too. Prudhoe Bay. With the discovery of billions of barrels of oil on the North Slope, Alaska entered a new era, one where the economy was significantly and permanently changed. With oil revenue flowing into the State’s coffers (85 percent of general fund revenue is from petroleum sources), the economy became a dynamic engine for accelerated growth and increased income, with a certain stability, too. The petroleum industry became a key support for the “three-legged stool” of Alaska’s economy – petroleum being one leg, federal spending another. All

other basic industries combined, such as fishing, tourism and mining, make up the remaining leg. We’ve been extremely fortunate to have the petroleum industry underpinning the Alaska economy. For 40 years, we’ve enjoyed unparalleled prosperity in all corners of the state, in all sectors of our economy. The construction industry knows better than any how important the petroleum industry has been to our state and to the build-up of our infrastructure.

Betsy Lawer

of the economy thrive, including the construction industry. Our state must become more business-friendly to encourage continued investment by industry. That’s an uphill battle in a state recently ranked at the very bottom of CNBC’s “America’s Top States for Business.”

BUT THINGS ARE CHANGING

SO WHAT CAN YOU DO?

The easy-to-reach oil on the North Slope is running out. Production has been declining for a number of years, a fact masked by the higher oil prices of recent years. The petroleum industry has taken a wait-and-see attitude on additional investment in Alaska because of uncertainly in tax structure and fiscal policy matters. In the '80s, the price of oil dropped precipitously. Income from petroleum industry taxes and royalty oil sales dropped just as dramatically, leading to an unprecedented fiscal crisis in Alaska. With one of the legs of the stool seriously shortened, the economy wobbled uncontrollably. Thousands of jobs disappeared, income plunged, the bottom fell out of the housing market. People left the state in the proverbial droves, with 12 percent of Alaska’s population, more than 60,000, heading south. No one expects to see a repeat of these dramatic events, but if we don’t quickly change the course we’re on, I predict we’ll see a long, slow strangling of the economy, bringing on conditions just as challenging as those of the late '80s. It’s a fact of our economic life: a healthy petroleum industry is essential to a healthy Alaska economy, which helps all sectors

AGC’s executive director John MacKinnon put it very well in the last issue of this magazine: Your voice counts! Alaska’s leaders need to know it’s time to take definitive action on the future of Alaska’s economy. I suggest you pose three specific questions to your elected officials and candidates in this fall’s elections and let them know you need specific answers. Ask them what steps we can take to: • Encourage new responsible investment in resource development that produces lasting benefits. • Build a fiscal plan that conserves assets and provides long-term stability. • Ensure all Alaskans share a commitment to the path that leads Alaska to a stable economic future. Encourage everyone you know to write the candidates and elected State officials to ask these questions about Alaska’s economic future. Because it’s not just about us anymore; future generations will be greatly affected about the decisions we make over the next few years. We can wait no longer. That’s why I say, when it comes to our economy, the ❑ future is indeed now.

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FISHERIES

The fine art of post-spill seafood marketing BY HEIDI BOHI

“No oil has flowed into the gulf for weeks, but it’s just the beginning of our work. I’m Iris Cross. BP has taken full responsibility for the cleanup in the Gulf and that includes keeping you informed. My job is to listen to the shrimpers and fishermen, hotel and restaurant workers and find ways to help. That means working with communities. We have 19 centers in four states, we’ve made over 120,000 claims payments – more than $375 million dollars – we’ve committed $20 billion to an independent claims fund to cover lost income until people impacted can get back to work. We’ll keep looking for oil, cleaning it up if we find it and restoring the coast. I was born in New Orleans. My family still lives here. BP is going to be here until the oil is gone, and the people in businesses are back to normal. Until we make this right.”

well Smith wants to know if you’ve seen the ads like this 60-second TV spot, one of several in a multi-media campaign BP is running nationwide as a part of its efforts to reassure the American public that it is taking full responsibility for the explosion of the Deepwater Horizon rig on April 20 that led to the BP oil spill – the largest in U.S. history and the second largest in world history after the 1910 Lakeview Gusher in Kern County, Calif. Smith is doing everything he can to refute the perception that Louisiana’s seafood is tainted and unsafe to eat, but with a four-person staff and a

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limited budget, he says it is impossible to reach current and potential Gulf seafood customers as quickly as he needs to, as commercial buyers cancel orders, resulting in part from widespread consumer fears that residual oil and cleanup dispersants will make them sick. “Everyone I talk to is seeing these BP commercials all the time,” he says from his office in New Orleans, where he is executive director of the Louisiana Seafood Promotion and Marketing Board, responsible for promoting the state’s seafood industry. “They’re spending millions a day to blanket the country with these mes-

sages and we haven’t gotten a dime to rebuild the brand of Louisiana seafood at all, at a time when we’re in a very precarious situation and our brand is being trampled on. We need to be doing the same thing BP is doing – they’re rebuilding their brand, we need to rebuild ours. We want the same opportunity to get that message out.” In the meantime, the organization is doing what it can to mitigate further damage while developing a recovery strategy with the hopes that BP will give the industry the recovery money needed to implement a crisis-communications campaign similar to the one the oil giant is using for its own image repair.

www.akbizmag.com • Alaska Business Monthly • October 2010

Florida Fish and Wildlife Conservation Commission biologists collect endangered sea turtles in the Gulf of Mexico about 50 miles south of Destin, Fla., August 3. The turtles are checked for exposure to oil, and either released back into the Gulf or taken to a rehabilitation facility.

Photos by Tim Donovan/Florida Fish and Wildlife Conservation Commission

A biologist inspects a Green Turtle that has been exposed to oil; it will be taken ashore to a rehabilitation facility, then treated and released.

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Workers deploying boom just off Pensacola Beach in Gulf of Mexico, June 14.

PERCEPTION BIGGEST PROBLEM As the Deepwater Horizon sank and oil began gushing to the surface of the Gulf of Mexico, one of Smith’s first phone calls was to Alaska Seafood Marketing Institute (ASMI) Executive Director Ray Riutta. The sister organization faced many of the same challenges 21 years ago when the Exxon Valdez oil tanker dumped 11 million gallons of crude into Prince William Sound, fouling not only waters and beaches statewide, but also along the way taking its seafood brand along with it as images of oil slicks and wildlife covered in black crude appeared in worldwide media. Five years after the 2005 Hurricane Katrina, just as the Gulf started to see signs of slow recovery, is the first time Smith turned to Riutta for guidance. In the aftermath of that disaster, perception had also been the biggest problem the region’s seafood industry faced. Despite being given a clean bill of health from federal agencies one month after the incident, and after testing 30,000

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samples and approving them for consumption, it took two years to persuade the nation that it was okay to eat seafood from these waters. “We are going to experience the same hangover challenge as we did then,” Smith predicts. When the call came through, it didn’t take long for Riutta to figure out what he wanted to talk about: “We’ve got another problem,” Smith said within days of the catastrophe. Although initial industry recovery efforts from the Exxon Valdez spill preceded Riutta joining ASMI, he is all too familiar with the resulting impact the disaster had on the seafood industry and maintains a top-of-mind awareness about implementing a crisis communications strategy in the event another incident threatens to tarnish this critical market.

REALITY NOT SO BAD More than 21 years after Alaska’s experience, the affected Gulf states face

special challenges that are simply a sign of the times. In 1989, media coverage was limited to images that appeared in daily television and print media outlets. Today, technology allows for 24-hour, worldwide coverage on the Internet, so for weeks, consumers were deluged by dramatic images of the oil geyser gushing from the ocean floor. The reality is that 360 miles of 7,500 miles of Gulf coastline were impacted, though the resulting media frenzy magnified the impact of the images, exacerbating the public’s perception of the problem, says Mark Robson, director of marine fisheries management, Florida Fish and Wildlife Conservation Commission. Alaska’s seafood industry felt the effects of misinformation for about five years, and he suspects the Gulf states, including Florida, Louisiana, Texas, Mississippi, Alabama and Georgia, may have an even tougher time erasing these images from the world’s mind even after the oil is cleaned up.

www.akbizmag.com • Alaska Business Monthly • October 2010

ASMI ADVICE: ZERO TOLERANCE In the meantime, Louisiana, Georgia and Florida are relying on guidance and information from ASMI and other organizations that had first-hand experience with recovery efforts in Alaska. In addition to various representatives traveling south, ASMI is sharing information, including a report produced for the 20th anniversary of the spill, its response manual, market research surveys, books and weekly reports generated during recovery efforts. The most important piece of advice, Riutta says, is that these areas establish a zero-tolerance policy when it comes to seafood inspection so product does not slip into the marketplace that is tainted, regardless of the cause. “Nothing will ruin recovery efforts faster,” he says, adding that despite Alaska’s extensive testing program, even 10 years later it was not unusual for consumers to occasionally

question Alaska’s seafood quality. At the same time, he recommends Gulf industry leaders invest in domestic and international market research so they know exactly what public opinion is and how to craft a positive message to counter misperceptions and misinformation about the safety of seafood consumption. Because several states covering a vast distance are impacted, a consistent and coordinated approach is critical for effective messaging and to maximize marketing dollars. Securing funding – and a lot of it – is going to be crucial to maintain a constant flow of information with the public as market conditions slowly return to normal.

WHAT WORKED FOR ALASKA “They have to be able to tell their story and market the positive aspects of their products,” Riutta says, “because most of what gets picked up by the press will be negative.”

In Alaska’s case, he says, ASMI’s budget jumped from $7 million to $10 million and stayed at that level for the next decade after the spill. What was also effective for Alaska was using various spokespeople to deliver testimonial-style messages attesting to the quality of the seafood. In addition to featuring the governor, Alaska enlisted the President and celebrity chefs. Shortly after the Prince William Sound spill, and before salmon fishing started, Vice President Dan Quayle and his wife Marilyn traveled to Cordova to offer support and meet with the community. Margy Johnson, then mayor of Cordova and owner of The Reluctant Fisherman Inn, remembers him asking if the locals had suggestions for how he could help. “Mr. Vice President, I serve Copper River salmon to my family and in my restaurant. Please serve it in the White House at official functions to

Workers cleaning oil from a rescued Northern Gannet at the Tri-State Bird Resuce and Research Inc. in Pensacola, Fla., June 15.

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assure the country that our salmon are still as noble, beautiful and filled with Omega-3’s as they ever were,” she says of her challenge to him. “He was good for his word,” she says today, and from that point on the media picked up on the White House menus that featured Alaska seafood.

LOUISIANA-ALASKA BOND “Anything that casts dispersion on the U.S. seafood industry is bad for all of us, so we want to do what we can to help them regain their ground by helping them from a marketing perspective,” Riutta says from his Juneau office, 3,000 miles from the Gulf region. There is no economic benefit for Alaska out of the Gulf’s loss, but, he says, any negative images for any domestic seafood provider risks ruining the nation’s reputation as providing anything short of a superior product. About one-third of domestic seafood consumed in the contiguous United States comes from Gulf waters. Louisiana is the No. 1 provider of shrimp, oysters, crab, crawfish and alligator production in the country and comes in as

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Photo courtesy of Alaska Seafood Marketing Institute

“Anything that casts dispersion on the U.S. seafood industry is bad for all of us, so we want to do what we can to help them regain their ground by helping them from a marketing perspective.” – Ray Riutta Executive Director Alaska Seafood Marketing Institute

a close second in the harvest of fin fish, harvesting 73 percent of the nation’s domestically produced shrimp and 59 percent of its oysters, according to the National Marine Fisheries Service. The $2.4 billion seafood industry, along with wildlife and boating resources comprise a critical part of Louisiana’s economy: one out of every 70 jobs is seafood-related. Most jobs are in family owned and operated companies. Similarly, 62 percent of the country’s seafood landings come from Alaska, as does 96 percent of all U.S. wild salmon, ranking Alaska No. 9 in the world in terms of seafood production. The seafood industry is second only to the oil industry in Alaska in terms of the revenues it generates for State coffers, and it provides more Alaska jobs than oil and gas, mining, tourism and timber combined. In the case of Louisiana and Alaska, the two states have a unique bond in that their economies are both heavily dependent on the oil and commercial fishing industries. In both states, too, multiple generations have fished the same waters and cannot imagine an❑ other way of life.

www.akbizmag.com • Alaska Business Monthly • October 2010

ALASKA TRENDS BY JOEL AINSWORTH

Alaska Trends, an outline of significant statewide statistics, is provided by the University of Alaska Center for Economic Development.

Alaska’s Export Market A

sian markets continue to dominate Top 10 Countries for Alaskan Exports (2009) Alaska’s foreign trade, averaging 69.1 percent of the market share since 2006. Over the past four years, the Chinese appetite for Alaska commodities has grown, surpassing South Korea for second largest receiver of Alaska exports. In 2006, China represented 11.6 percent of Alaska’s export market – by 2009, it accounted for approximately 20 percent. The chart illustrates the proportional market share of Alaska’s top 10 export countries for 2009. The statistics for U.S. exports are gathered and published by the U.S. Census Bureau. Rather than being collected through surveys, exporters are required under U.S. law to submit their trade data electronically, making it unique in U.S. Census data-collection methods. In 2009, Alaska accounted for 0.3 percent of total U.S. exports; the primary export commodities are seafood, minerals, energy, precious metals and tors, such as electronic integrated circuitry. Valued at under $1 million forest products. While natural resources have traditionally dominated in 2006, integrated circuitry exports jumped to $20 million by 2009, ❑ Alaska’s export market, there have recently been gains in other sec- accounting for a 0.6 percent share of Alaska’s total exports. Source: U.S. Census Bureau

ALASKA TRENDS HAS BEEN BROUGHT TO YOU THIS MONTH COURTESY OF PACIFIC PILE & MARINE

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ALASKA TRENDS Indicator

Units

GENERAL Personal Income – Alaska Personal Income – United States Consumer Prices – Anchorage Consumer Prices – United States Bankruptcies Alaska Total Anchorage Total Fairbanks Total EMPLOYMENT Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast Sectoral Distribution – Alaska Total Nonfarm Goods Producing Services Providing Mining and Logging Mining Oil & Gas Construction Manufacturing Seafood Processing Trade/Transportation/Utilities Wholesale Trade Retail Trade Food & Beverage Stores General Merchandise Stores Trans/Warehouse/Utilities Air Transportation Truck Transportation Information Telecommunications Financial Activities Professional & Business Svcs Educational & Health Services Health Care Leisure & Hospitality Accommodation Food Svcs & Drinking Places Other Services Government Federal Government State Government State Education Local Government Local Education Tribal Government1 Labor Force Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast

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Period

Latest Report Period

Previous Report Period (revised)

Year Ago Period

Year Over Year Change

US $ US $ 1982-1984 = 100 1982-1984 = 100

1st Q10 1st Q10 2nd H09 2nd H09

30,560 12,167,340 194.83 217.54

29,371 12,037,360 190.03 213.14

4.05% 1.08% 2.53% 2.06%

Number Filed Number Filed Number Filed

June June June

98 73 20

101 78 17

75 53 10

30.67% 37.74% 100.00%

Thousands Thousands Thousands Thousands Thousands

June June June June June

340.20 184.48 43.39 38.12 38.24

334.42 183.43 43.38 37.31 36.25

335.81 181.71 42.78 38.94 36.97

1.31% 1.52% 1.41% -2.10% 3.44%

Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands

June June June June June June June June June June June June June June June June June June June June June June June June June June June June June June June June June June

342.4 53.8 288.6 17.6 17.2 12.0 19.2 17.0 12.7 66.9 6.7 37.6 6.8 10.4 22.6 6.1 3.1 6.4 4.3 14.1 25.2 40.0 28.1 37.5 10.1 21.7 11.1 87.4 19.4 25.5 6.1 42.5 23.1 4.0

325.2 44.8 280.4 16.6 16.3 12.2 17 11.2 6.9 64.5 6.4 37 6.5 10.3 21.1 5.7 2.9 6.4 4.2 13.9 24.8 40.1 28.8 33.3 7.3 20.5 11.1 86.3 18.8 25 6.6 42.5 24 3.7

339.9 50.2 289.7 15.6 15.4 13.2 18.9 15.7 11.6 67.4 6.6 37 6.6 9.6 23.8 6.4 3.3 7.2 4.7 15 27.8 38.5 28.3 38.5 11 21.5 11.7 83.6 17.7 24.7 5.9 41.2 22.3 4

0.74% 7.17% -0.38% 12.82% 11.69% -9.09% 1.59% 8.28% 9.48% -0.74% 1.52% 1.62% 3.03% 8.33% -5.04% -4.69% -6.06% -11.11% -8.51% -6.00% -9.35% 3.90% -0.71% -2.60% -8.18% 0.93% -5.13% 4.55% 9.60% 3.24% 3.39% 3.16% 3.59% 0.00%

Thousands Thousands Thousands Thousands Thousands

June June June June June

368.54 198.82 46.60 40.96 41.60

362.75 197.75 47.45 40.18 39.67

366.95 197.25 46.42 42.11 40.76

0.43% 0.80% 0.39% -2.73% 2.07%

www.akbizmag.com • Alaska Business Monthly • October 2010