Business Pulse magazine January|February 2018 by Business Pulse magazine

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14 Local

Business PROSâ&#x20AC;&#x2122; forecasts for

2018 The PULSE of Whatcom County

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VOL. 43 | NO. 1 PUBLISHER | Tony Larson

— WBA BOARD OF DIRECTORS — BOARD CHAIR | Doug Thomas, CEO, Bellingham Cold Storage EXECUTIVE COMMITTEE | Jane Carten, President/Director, Saturna Capital; Pam Brady, Director NW Government & Public Affairs, BP Cherry Point; John Huntley, President/CEO, Mills Electric, Inc.; Doug Thomas, President/CEO, Bellingham Cold Storage; Marv Tjoelker, Partner/Chairman, Larson Gross PLLC

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BOARD OF DIRECTORS | Ken Bell, President, Best Recycling; Janelle Bruland, President/CEO, Management Services NW; Tyler Byrd, Founder/President, Red Rokk Interactive; Jeremy Carroll, Vice President, Dawson Construction; Andy Enfield, Vice President, Enfield Farms; Guy Jansen, Director, Lynden Transport, Inc.; Sandy Keathley, Founder, K & K Industries; Tom Kenney, NW Regional President, Washington Federal; Ben Kinney, Operating Principal/Founder, Keller Williams, NVNTD; Jeff Kochman, President/CEO, AMBK; Tony Larson, President, Whatcom Business Alliance; Lynn Murphy, Sr. Government Affairs Rep, Puget Sound Energy; Laura McKinney, NW Regional Govt & Public Affairs, Alcoa Intalco Works; Becky Raney, Coowner, Print & Copy Factory; Sarah Rothenbuhler, Owner/CEO, Birch Equipment; Billy VanZanten, President, Western Refinery Services, Josh Wright, VP/Broker, Bell-Anderson Insurance For editorial comments and suggestions, write editor@ businesspulse.com. Business Pulse magazine is the publication of the Whatcom Business Alliance. The magazine is published bi-monthly at 2423 E. Bakerview Rd., Bellingham, WA 98226. 360.746.0418. The yearly subscription rate is $30 (U.S.). For a free digital subscription, visit businesspulse.com. Entire contents copyrighed © 2018 Business Pulse. All rights reserved. POSTMASTER Send address changes to Business Pulse, 2423 E. Bakerview Rd., Bellingham, WA 98226.

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FEATURES

Business Pulse asked leaders in seven industries to forecast the business climate in the new year BY MIKE MCKENZIE here’s an echo in the air…labor…automation….reguThey anticipate potholes and speed bumps. Yet, they know very lations….optimism…. well how to navigate them. One of the echoing issues across the These subjects echoed throughout interviews and a spectrum was labor. First, it’s the highest cost of doing business. survey conducted by Business Pulse to get a sense of Second, it’s hard to find workers with the necessary skill sets. how the Whatcom County business community is feeling about, And, third, some say there are those who don’t want to work at all. anticipating, and planning for 2018. Some of this is due to automation, such as computerization, In short, the economic forecast locally—as well as nationally—is robotics, drones, artificial intelligence and even a driverless tracgood, though not without concerns. And not surprisingly, they're tor was mentioned. Some is due to the cost of healthcare and the same concerns, regardless of the business. other benefits. And some is due to lack of training, education, For this feature, we interviewed two leaders from each of sev- and desire. en industries that typically foreshadow the overall economic and And government business regulations, sometimes viewed as financial outcomes across the country, the state, and our region: strangulating, cropped up in most conversations. Likewise, the Agriculture, Construction, Healthcare, Manufacturing, Maritime, cost of goods and services—in both business operations and Real Estate, and Technology. consumerism. Their conclusions: Business is very much alive and well here. Comments ranged from “we’re bullish” in Real Estate to No epitaph, just epitough, across the board. There’s no Easy “cautiously optimistic” in Farming and Maritime. Belief is strong Street. But they’re used to that. That’s not the avenue these highly that 2018 will continue on a positive economic path in Whatcom successful business leaders traveled to get where they are. County, Washington, and America. Read it and smile. P+ 30 | BUSINESSPULSE.COM JANUARY/FEBRUARY 2018

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BY MIKE MCKENZIE

Fourteen area industry leaders forecast 2018 business climate

To Nepal and Back

Local business leaders support impoverished hospitals and orphanages

Nepal is still suffering from the damage from 2015’s 7.8 magnitude earthquake, which killed more than 9,000 people and damaged or destroyed about 600,000 buildings.

By Sherri Huleatt

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BY SHERRI HULEATT

Two local businessmen support impoverished hospitals and orphanages

The Largest Solar Array in Whatcom County: 375 Panels Add Up to 'Net Zero' Power

BARRON COMPLETES

MILESTONE SOLAR PROJECT

By Sherri Huleatt As part of its stated mission to “improve lives,” Barron Heating & Air Conditioning commits to improving the environment in a major way. At its facility on Pacific Highway, north of Bellingham, the company recently completed a commercial solar power project that ranks as the largest in Whatcom County and fourth largest north of Seattle. The new 375-panel solar array can produce 125,000 kilowatt hours (kWh) of electricity at the Ferndale location—generating more electricity than it uses. Brad Barron, the company’s Business Development Director and son of CEO John Barron, spearheaded the project. Brad joined the company last year after a successful career in civil engineering, with a focus on green infrastructure. According to Brad Barron, the solar project has taken Barron Heating & AC to “net zero” power usage. By producing more power than the company facility uses, the project will pay for itself and become profitable in fewer than five years. Any unused power goes back into Whatcom County’s power grid for distribution throughout the community. Puget Sound Energy also rewards Barron with money-saving kWh credits for excess electrical production. “This project has allowed us to give back to our community and to one of the most beautiful places in the world, and I was really happy to be a part of it,” Brad Barron said. The company is considering a similar initiative at its Burlington and Marysville locations. Owner John Barron said, “We’re not just in the heating and cooling business. We’re improving people’s health.” The company also recycles more than 100 tons of scrap metal every year, equal to about 1,500 pieces of heating and air conditioning equipment. They received “Green Business of the Year”

recognition in 2013 from the Bellingham/Whatcom Chamber of Commerce and Industry. Barron Heating & AC has logged 45 years as a family owned and operated company. Innovation and versatility have spurred substantial and steady growth, especially since revising its business model about 10 years ago, with an emphasis on whole-home service and expanding product lines. Over the last five years, revenue has spiked 65%, hitting about $17 million a year, and the number of employees has doubled to 100. Barron has three locations (Ferndale, Marysville, and Burlington) serving a five-county area with heating and air conditioning products and services, fireplaces, and hot tubs. According to Brad Barron, the fourth generation of Barrons to work for the company, people give little thought to heating and AC until something breaks. What most people don’t know, he said, is that the average house is five to six times more polluted than the air outside. Fixing doors and windows only accounts for about 20% of a home’s leakage; the rest comes from vents and holes created for wiring, plumbing, drains, pipes, and chimneys. Hence, the Barron holistic approach—Home Performance Certified—that’s evolved from a traditional start. Barron Heating & AC started in 1972 under John’s father, Dan. He had been living in Seattle, commuting to work on the booming Sudden Valley development in Bellingham. John Barron said his father loved the area, so he spent his life savings on opening his own company, working out of a hotel the first year until he could move his wife and four kids to Whatcom County. One of Dan Barron’s first employees was his own father, who came out of retirement to help grow the business. John Barron

The view atop Barron’s Manufacturing Center.

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BY SHERRI HULEATT

Barron Heating & Air Conditioning achieves renewable milestone

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DEPARTMENTS leading edge NEWSMAKERS • NUMBERS • OUT AND ABOUT • BUSINESS OF RECREATION ENVIRONMENTAL STEWARDSHIP • CATCHING UP WITH... • GUEST COLUMNS

Ferndale Wants Your Business!

By Business Pulse Staff Fast-growing Ferndale is looking to bolster its business community as well with a strong online initiative. The City of Ferndale has launched ferndalemade.com, a website highlighting the advantages of doing business there. The site features information about many of the leading businesses already located in the city. Community development director Tori Burnett said, “Ferndale is uniquely situated within 90 miles of six million people, 10 minutes from an international airport and is one of the fastest-growing cities north of Seattle., Rather than just talk about why Ferndale is a good home for business, we’re showing our record of success.” The site helps businesses assess hundreds of potential locations in the Ferndale Market Area with robust, customized Ferndale-specific information and a direct line to its community development team. The city currently has just over 300 businesses.

Mayor Jon Mutchier pointed out that Ferndale has deep industrial roots. “We make things here and we’re proud of it. Whether you’re looking to start a new business, relocate one or expand your existing facilities, we’re ready to help you succeed.” Current Ferndale businesses are being encouraged to showcase what they’re making by using the hashtag #FerndaleMade. That information also is being shared on the website, which was designed by Ferndale-based FizzPop Media, assisted by City Councilmembers Cathy Watson and Greg Hansen.The initiative is an element of the three-year economic plan developed to attract new businesses. The most recent statistics put the Ferndale population at more than 13,000, which is a nearly 50% increase since 2000. Ferndale is the second-largest city in Whatcom County, after Bellingham, which has a population of more than 87,000. For more information on the FerndaleMade initiative, contact communications officer Riley Sweeney at 360.685.2353.

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Newsmakers, Out and About, Environmental Stewardship, and much more...

QA and

Hitting the ‘Suite’ Spot Ahl In With WBA to Create CxO Business Frameworks Group Interview by Mike McKenzie

Business Pulse: How do you describe your new venture with the Whatcom Business Alliance? Debbie Ahl: We’re going to offer a CxO (COO, CFO, CMO, etc.) Business Frameworks Group for CEOs and potentially other members of the C-suites of businesses in our community. The group will select and prioritize which key business frameworks it will focus on. What are some examples of frameworks? Strategic Planning, HR Platforms, Financial Statements—Analytics & Forecasting, Communications Strategy, Risk Management, Crisis Management and Disaster Recovery, Stakeholder Engagement, etc. How do you define your role in the process? In advance of each meeting, I’ll work with two or three of the CEOs who feel they have a solid approach to a particular framework, and they will create processes and will present them at a subsequent meeting. Then I’ll facilitate a conversation with the group, helping the CEOs identify critical learnings for their own organization, sharing best practices and adding from my own experiences. We will develop execution plans together and report progress.

How many will participate in a group? From 15 to 18 participants, in order to ensure a high level of conversation and engagement. How do you see the ever-increasing importance of CxO development? In business, leadership is everything. It impacts economic outcomes, employee engagement and organizational health and resilience. Developing the senior leadership or executive teams is critical to any organization. And structure is a great friend to leaders. Creating business frameworks is just one aspect of leadership, but frameworks can create stability and predictability. That allows a business to scale and grow, while supporting the organization’s culture and brand. Why are you so interested in developing leaders? If you look at my background, it has focused on healthcare. First from the provider perspective, then as a payer. I have a passion for equitable health outcomes of a community, and I believe this can best be achieved through the intersection of educational pathways and improved economic opportunity. When you develop great leaders, they will develop people throughout the organization.

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A discussion with Debbie Ahl

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AFTER HOURS BEVERAGES / CLOTHING /

BOOKS & MORE

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Your guide to post 9-to-5 living

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TAX CODE REFORM UNPACKED Come get clarity from your trusted VSH CPA Advisors

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publisher’s note

Are You Optimistic About 2018? Join the Club. Optimism Skyrockets in Business Community TONY LARSON

President, Whatcom Business Alliance Bob Sytsma, CPA Partner

Kari Doss, CPA Manager

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January 18th 7:30-9 am Bellingham Golf and Country Club

At the end of 2017, we reached out to our readers via an online business survey to determine how local businesses are performing and how business leaders are feeling about 2018. The results, along with comments from key industry leaders, are published in this issue and reflect a level of optimism I haven’t seen in at least the last10 years. A majority of local businesses experienced growth in 2017 vs. 2016 and expect further growth in sales and profits in 2018. They also expect an increase in capital expenditures. It is worth noting that our polling was conducted prior to the passage of the Tax Cuts and Jobs Act of 2017. The passage prompted immediate responses from companies like Boeing, AT&T, Washington Federal, Comcast, and Wells Fargo, just to name a few, who announced measures ranging from handing out bonuses, raising wages, and increasing spending. That optimism is shared at Business Pulse and the Whatcom Business Alliance. In 2018, we’re improving and expanding Business Pulse in a series of moves designed to bring more value to our advertisers, to expand our readership, and to bring current readers and members more information about the people, news, issues, businesses, and trends that shape our local economy and bring success to business and prosperity to our community. Leading the charge with the new-look Business Pulse are Associate Publisher Melissa Vail Coffman and Art Director Scott Book. The husband and wife team is a prime example of the trend cited by Dan Washburn of Windermere Real Estate in his article on Page 41. They sold their home in

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Seattle’s Ballard neighborhood in late 2015 and used the equity to buy a home here in the Geneva neighborhood. Melissa brings the experience of nearly 30 years in publishing, including more than a decade with Tiger Oak Publications, where she was group publisher of myriad titles, including the flagship Seattle magazine and Seattle Bride, and helped launch Seattle Business. Scott is an accomplished graphic designer who has designed print publications, advertising, and business collateral for more than 25 years. One of the most important changes in the new year is moving from four to six issues annually to provide more timely and comprehensive coverage of the vibrant Whatcom County business community. This is coupled with a tie-in between the magazine and redesiged businesspulse.com, with the introduction of Pulse+—denoted with a “P+” at the end of articles with additional content we moved to the website. We also are introducing lifestyle content with “After Hours” to suggest ways that busy executives might enjoy life beyond the workday. These shifts are all driven by the growing support of our readers and advertisers who share our understanding that when businesses are successful and strong, our community is stronger. If you’d like to learn ways to grow your business in 2018 by promoting your company through Business Pulse, our events, or WBA membership, please call me at 360.746.0411. We all have reason to be excited about 2018. Enjoy the issue.

Business Banking Equipment Finance Treasury Management Multi-Family Income Property Home Builder Finance

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leading edge NEWSMAKERS • NUMBERS • OUT AND ABOUT • BUSINESS OF RECREATION ENVIRONMENTAL STEWARDSHIP • CATCHING UP WITH... • GUEST COLUMNS

Ferndale Wants Your Business!

By Business Pulse Staff Fast-growing Ferndale is looking to bolster its business community with a strong online initiative. The City of Ferndale has launched ferndalemade.com, a website highlighting the advantages of doing business there. The site features information about many of the leading businesses already located in the city. Community development director Tori Burnett said, “Ferndale is uniquely situated within 90 miles of six million people, 10 minutes from an international airport and is one of the fastest-growing cities north of Seattle. Rather than just talk about why Ferndale is a good home for business, we’re showing our record of success.” The site helps businesses assess hundreds of potential locations in the Ferndale market area with robust, customized Ferndale-specific information and a direct line to its community development team. The city currently has just over 300 businesses.

JANUARY/FEBRUARY 2018 BUSINESSPULSE.COM | 11

leading edge NEWSMAKERS

People On the Move...

Archer

Jelinski

David Archer has been named General Manager of B-Town Kitchen & Raw Bar in Bellingham. He has more than 20 years of management experience in the Whatcom County hospitality industry. The restaurant, which opened last May, is located inside Four Points by Sheraton Bellingham Hotel & Conference Center at 714 Lakeway Drive. B-Town is one of the only raw-bar destinations in the area featuring oysters, clams, crabs, and other seasonal selections. John Burns, General Manager of Four Points Bellingham, said, “David’s knowledge of the best local producers of seafood, meat, produce, beer, and more will greatly benefit our customers.” Archer, a longtime Blaine resident and graduate of Blaine High School, said, “B-Town’s design and creative culinary concept has resulted in a unique dining destination that is second to none.” Also

Schwitter

Johnson

see www.fourpointsbellingham.com. Alivia Jelinski is the new director of facility rentals and business development at the Northwest Washington Fair & Events Center n Lynden. She is a lifelong Whatcom County resident with eight years of experience in the hospitality industry. Jelinski will assist the hundreds of clients who rent the diverse facilities at the Center. These include the 6,000-square-foot Mount Baker Rotary Building, the 46,000-squarefoot Henry Jansen Ag Center, the 18,000-square-foot Haggen Expo Building, and the Equine Event Center, including the heated Washington Tractor Arena. Center GM Jim Baron said, “Alivia’s customer-service and communication skills are ideal for this position.” She is active in the community, serving on the board of the Whatcom Dispute Resolution Center and social chair of Whatcom Young Professionals. She was named Ambassador of the Year

in 2016 by the Ferndale Chamber of Commerce. Also see www.nwwafair.com. The Muljat Group has announced two additions to its real-estate-broker team. Chris Schwitter, a Whatcom County native with a strong technology background, and Solveig Johnson, who comes with an ASP Home Staging certification. Schwitter, a graduate of Squalicum High School and Bellingham Technical College, has extensive knowledge of Bellingham’s neighborhoods and Whatcom County’s communities that he feels will help him meet the needs of clients. “With a degree in computer networking, I can use technology to effectively market properties online, where most buyers are now searching,” Schwitter said. Johnson already has closed 140 home sales in fewer than four years in the business and will use her ASP certification to prepare properties so they gain maximum return for the sellers. “I’ve also been involved in three successful house ‘flips,’ so I’ve gained practical knowledge about the costs and added value of making various improvements to a property,” Johnson said. Before entering the Whatcom County real-estate market, she was an outside sales consultant to high-end salons for seven years. The Muljat Group, located at 510 Lakeway Drive, has the highest volume of sales per agent in Whatcom County. Also see www.muljatgroup.com. P+

Woods Coffee Refreshes Its Signage Woods Coffee and Signs Plus teamed up to refresh the coffee company’s brand image and signage at a dozen locations, from Birch Bay to Bellevue, with another new site about to open at Hotel 116 in Bellevue. The first re-image appeared at the Lakeway-Bellingham site. Designers from both companies developed the plan to update the classic Woods Coffee logo, as well as signage, with state-of-the art components and a new drive-through experience. The rebrand includes hand-crafted neon elements, cutting-edge LEDs, sleek wayfinding signs, redesigned drive-through menus, clearance bars, and trash valets. A spokesperson for Signs Plus said both companies “are enthusiastic about continuing to support fellow Whatcom County businesses in their efforts to grow and expand.”

New signage by Signs Plus at Woods Coffee at Lincoln Square in Bellevue.

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leading edge MORE NEWSMAKERS The Melvin Brewing ‘Circus’ Comes to Town

How can we ignore a news release that begins: “The whacked-out, down-toearth, globally local circus show known as Melvin Brewing is proud to announce that the long-awaited Melvin Bellingham taproom has now morphed into an official Brew Pub” at 2416 Meridian St. The First Brews Bash was held on Dec. 7, featuring $3 beers, but as the release also explains, “But just as the caterpillar morphs into a butterfly, or something like that, beers will be normally priced at just $5 after the Dec. 7 opening.” The first four Melvin Bellingham beers on tap are Peaches Innit, their very first beer brewed in-house, MBR, a tasty beer with a “high chugability factor,” Block Away Brown, “nutty and smooth with a dry, sweet finish,” and Melvingham IPA, their very first IPA, featuring “massive amounts of hops.” As long-time locals will remember, the Meridian Street location originally was the Fountain Drug Store, peddling everything from pharmaceuticals to Christmas ornaments. Most recently, the space housed the Bikesport bike shop, before being converted into a brewery over the last six months, featuring “four fermentation tanks in the mysterious basement.”

Melvin Brewing’s long-awaited Melvin Bellingham taproom.

David Powers, General Manager of Melvin Brewing Bellingham, said, “Bellingham was one of the first markets we sent beer to when we still were brewing out of Thai Me Up in Jackson Hole, Wyoming. And this market welcomed us with open arms…” Born in 2009, Melvin Brewing is the “beer child” of Jeremy Tofte and Kirk McHale “to fulfill their desire to drink the madness.” Today it has a full-scale brewing facility and tasting room in Alpine, Wyoming, as well as the new Bellingham Brew

Pub and the Thai Me Up restaurant. Co-founder Tofte grew up shredding Mt. Baker from his home in Mount Vernon and says he always considered Bellingham the Jackson Hole of the west coast. Bellingham head brewer Dave Meadows began home brewing in 1984 and holds degrees in Gastronomic Science and Technology of Malting and Brewing. Also see www.melvinbrewing.com.

Fairhaven Fitness/Tennis Club Doubling in Size The longest-running fitness facility in Whatcom County will be doubling in size. Robin and Doug Robertson, co-owners of the Bellingham Training & Tennis Club in Fairhaven, completed a massive lobby/locker room/fitness area remodel in May and just broke ground on Dec. 11 for a building addition, exterior facelift and road reconstruction. The expansion will double the size of their fitness facilities and be filled with top-of-the-line cardio equipment and cutting-edge, strength-training equipment and offer programs focused on personal and and group training. “As (the Club) enters its 45th year, it will continue to anchor Fairhaven as a local, walkable urban village,” Robin said. The Robertsons teamed with RMC architects, Franklin Corp. 2020 Engineering and Christie & Christie Surveying on

the project. This year’s remodel included all new LED lighting and court surfaces, plus addition of the “RIDE” cycling studio and the “STRONG” functional training zone. “In our new addition, clients can look forward to the best combination of cardio and strength training in a warm and welcoming environment. We’ll also have some added office space, and the front of the building will be renovated for a beautiful, updated look,” Robin added. Construction on the addition began in mid-December and is expected to be completed in June. The Robertson’s committed to rebuilding McKenzie Avenue, between 8th and 9th Streets, and worked with Dave Ebanol and the City of Bellingham to devise a plan with the most possible on-street parking. The Robertsons are adding a sidewalk to improve safety in the area. Also see www. betrainingtennis.com.

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Blaine Printer Expands Into Label Business Blaine-based AMS Print & Mail is expanding into label printing, the fastest-growing segment of the print business, according to AMS president Dave Freeman. The 30-year-old company has just installed a new HP Indigo WS 6800 digital press that enables AMS to print any label designs and offer the largest color range available. The variable-data printing capability also allows clients to customize each individual label, including greeting customers by name on the label, Freeman said. “Anything from wine to cheesecake to beef jerky is crafted and sold locally and needs a label,” Freeman explained. “Previously, these producers had to turn to a label printer located elsewhere. Now local companies can have their labels made locally and we also can work with them on label design.”

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leading edge NUMBERS

2018 BUSINESS CONFIDENCE FORECAST The WBA conducted the 2018 Business Confidence Survey in November, 2017 and received an unprecedented number of responses—from supervisors and managers to C-level executives and business owners—in a broad spectrum of industries in our region.

SALES FOR 2018 Up over 10% Up 5-10% About the same Down 5-10% Down 10% or more

25.53% 33.74% 29.79% 6.38% 2.61%

Be sure to read the cover story beginning on page 30, for 14 local industry leaders’ forecasts of the 2018 busines climate. For all the results, visit businesspulse.com. P+

PROFITABILITY FOR 2018 CAPITAL INVESTMENT FOR 2018 Up over 10% 20.43%

Up over 10% Up 5-10% About the same Down 5-10% Down 10% or more

Up 5-10% 30.87% About the same 40.43% Down 5-10% 5.65% Down 10% or more 2.16%

STAFFING FOR 2018 Up over 10% Up 5-10% About the same Down 5-10% Down 10% or more

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7.83% 20.00% 64.78% 6.09% 1.30%

20.43% 30.87% 40.43% 5.65% 2.16%

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leading edge OUT AND ABOUT 1

BELLINGHAM’S MEETING HEADQUARTERS Whether your group is 5 or 500, our professional staff will make your next meeting or event a success.

VIP Receptions Conferences Trade Shows Training Seminars Outdoor Patio Company BBQ

Dcck the Old City Hall Party

Deck the Old City Hall Cocktail Party, sponsored by Lori and Scott Clough, opened the holiday season Dec. 1, 2017, with more than 100 in attendance. The party raises funds and awareness of the museum. “This museum goes back to 1892,” Scott Clough said. “Museums, libraries, and parks have value! You can’t put a dollar amount on that.”1. Mayor Kelli Linville with Rob Camandona, Vice President of US Bank and former president of Whatcom Museum Foundation Board. 2. Bob Hall, real estate developer, with John Clough, General Sales Manager at Northwest Honda, and John Reid of RMI Architects, consulting architect on Bellingham's waterfront development. 3. Lori and Scott Clough, event sponsors, have hosted this gathering for four years. Scott is a dentist in private practice. Lori is a long-time supporter of the museum. 4. Charlotte Archer, Whatcom Museum Foundation board member, with Cindy Kosonen, private client advisor at Chase Bank. 5. Meredith Murray, real estate broker at MacDonough Real Estate, is a new member of the museum.

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Business leaders were honored with awards before an audience of 430 at the Bellingham/Whatcom County Chamber of Commerce & Industry dinner Nov. 30, 2017. Held at Four Points by Sheraton Bellingham, the 13th annual event recognized outstanding performance in organizations from non-profits to CEOs to best green business. The 16 sponsoring companies included presenting sponsor Bank of the Pacific. 1. Judy Ask and Madison Weaver, Sales and Catering Managers at Silver Reef Hotel Casino Spa. 2. Jack Louws, County Executive, with wife Cindy. 3. Bellingham Cold Storage former Chairman/CEO Stew Thomas and current President/CEO Doug Thomas with spouses Bev Thomas and Sandy Thomas. 4. Scott Hume, President of Salish Wealth Management, and Mike Hollister, Regional Director of Highland Capital Management.

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leading edge BUSINESS OF RECREATION

SNOW + HEALTHY ECONOMY = GOOD SEASON

Courtesy Mt. Baker Ski Area

The Mount Shuksan side of Mt. Baker Ski Area. Mount Shuksan is immediately east of Mount Baker.

By Cheryl Stritzel McCarthy “Go ahead and fire it up, Andy!” said Duncan Howat, president and general manager of Mt. Baker Ski Area (MBSA), turning toward the camera with a big smile. “We’re ready to ski!” Howat, alongside lift supervisor Andy Lachi, stood in the engine room of the Mt. Baker resort’s new replacement chairlift No. 7, shooting a video for their website. The engine room, as clean as a hospital operating room, powers the four-person lift that offers more room and comfort, a shorter ride time and an easier dismount. The electric lift, which has a backup diesel engine, was manufactured in the United States. “It’s been a heck of a construction project,” Howat said. His grin widens as he steps outdoors into a mountain landscape worthy of a laptop screensaver, complete with an early snow falling out of the sky in buckets. Snow makes or breaks the ski-resort business, and this year’s La Niña forecast (cooler than normal sea-surface temperatures in the Central Pacific Ocean) has Howat feeling optimistic. Variable weather makes it difficult to pin down trends. Three years ago, snowfall was dismal and so were MBSA receipts. The last two years saw powder nearly daily, and receipts were up. “Overall, we’ve seen a 10% increase in business the last six or seven years,” Howat said. On a busy weekend day, the Mt. Baker Ski Area’s population will rival the city of Blaine (approx. 5,200). MBSA employs 325 people during the ski and snowboarding season and 50 year-round. Costs—roughly largest to smallest—consist of labor, taxes, energy, maintenance, permit fees (the resort pays the U.S. Forest Service to use the land), operations that include snow grooming and parking-lot clearing, food for the crews, and van transportation that carries workers from various pickup spots leading up to the resort.

“We’re probably the largest single contributor to the Mount Baker School District in the East County,” Howat said. Strong local economies boost ski revenue. Mt. Baker Ski Area draws heavily from lower B.C. and from Whatcom, Skagit, Snohomish and Island Counties. Early in the season, when other ski areas aren’t open due to lack of snow, MBSA gets King County traffic, too. “All those economies are pretty strong,” Howat said. “That lends itself to a good year.” Another positive sign: MBSA’s annual one-night film festival at Mount Baker Theatre—a jump-start to the season—sold out in its 18th year during November 2017. MBSA comprises 1,000 acres, eight chair lifts, three lodges with four food services, three bars, and two parking lots. Its biggest customer demographic is ages 17–40; second biggest is late 20s to mid 50s. Howat estimates that just over half of the customers ski, with the remainder snowboarding. But that depends on events. The Mt. Baker Legendary Banked-Slalom Contest, Feb. 9–11 this year, will draw snowboarders internationally and feature the sport’s elite because of the unique natural layout of Mt. Baker’s slopes. That contest began in 1985 at MBSA because the resort welcomed snowboarders and was most likely to have snow. As the website Zrankings.com (slogan: “Pure Awesomeness Factor”) states, “There is no ski mountain in North America, perhaps the world, that receives more snow than Mt. Baker. An average season at Mt. Baker would best the biggest year on record at most resorts across the West.” As peak season arrives with the new year, his 50th at the helm, Howat steps out of the engine room and looks skyward at the snow still falling hard. And he’s still smiling. P+

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TALKING WITH THE

MOUNTAIN MAN

Go ahead. Ask Duncan Howat what his title is at the Mt. Baker Ski Area (MBSA). “Chief janitor and repairman,” he’ll say, without missing a beat. It might be true. Howat, actually the President and General Manager, began working at ski resorts in 1966. He drove snowcats (truck-like vehicles designed for snow), ran lifts and skied on patrol. At age 24, he came to Mt. Baker. He had been in the military reserves during the Vietnam era and was recently discharged. Mt. Baker Ski Area was in disarray as a company at the time, and immediately the board hired him as its ski-area manager. MBSA is owned by 200-plus stockholders. Howat is one of a handful of majority stockholders as he approaches his 50th year with the company. Still lanky, athletic, and laconic at age 73, he said, “I still have my health. I’m lucky to be in the business as long as I have. I like the challenge, seeing employees grow and seeing people have an enjoyable time (skiing and snowboarding).” Mt. Baker is a rarity as one of the few remaining locally owned ski areas. “Most have been bought by real estate investment firms or conglomerates,” Howat said. “We’re mid-sized and locally owned and operated. That’s important.” Howat loves mountains, and Mt. Baker serves as his beacon. “Bellingham can be dark and gray,” he said. “But when you go into the mountains, it’s brighter.” —CSM

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Duncan Howat, President and General Manager of Mt. Baker Ski Area, skiing with his grandchildren Lucy, age 7, and Mac, age 5.

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leading edge ENVIRONMENTAL STEWARDSHIP

SATURNA CAPITAL'S CORE VALUES TRANSLATE TO GOOD EARTH By Dave Brumbaugh Saturna Capital doesn’t just believe in “doing the right thing” when it comes to the environment. This Bellingham corporation, renowned as a global-assets manager, instills environmental stewardship into its core values and primary business model. The company constantly supports community initiatives and emphasizes the importance of protecting our land, water and natural resources. The home page of Saturna’s website declares, in part: “Seeking sustainable investments with low risks in areas of the environment (and) social responsibility….” As an international, independent investment firm specializing in mutual funds and investment portfolios, Saturna Capital’s leadership stresses environmental stewardship policies that strengthen its reputation. The company shows customers its shared values, specifically, and that it can operate with accountability for environmental impact through multiple internal programs. “Programs such as e-delivery of account documents and lower-impact beverage service cut down on waste,” said president/ CEO Jane Carten,. “That ultimately saves us money, but a commitment to environmental stewardship makes a much deeper impression by showing our customers and the community that we

choose to be a responsible business.” Carten serves as President of the board of directors for the Whatcom Business Alliance (WBA). She will make a keynote presentation at the Smart Business Summit, presented by Sustainable Connections on Jan. 25 in Bellingham. Saturna Capital employs a Manager of Corporate Social Responsibility, Stephanie Ashton. She implements many wellness programs for the workforce to complement the environmental initiatives, such as switching from the provision of free soda to free LaCroix sparkling water. Travel incentivized by Whatcom Smart Trips enables employees to log trips—including those they make away from work by foot, bicycle, carpool, and public transportation—and to receive awards. The company has received its industry’s Community Investment Award. Saturna’s other environmental initiatives include: • Participating in the Sustainable Connections Toward Zero Waste program, composting or recycling about 80% of office waste. • Seeking compostable, recyclable and otherwise sustainable office supplies.

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• Participating in a Workplace Community Supported Agriculture (CSA) program at Cedarville Farm in Whatcom County and ensuring that employees have access to nutritious food and that local farmers have access to a more stable market. • Streamlining the beverage service offered to employees, and moving away from single-use plastic. • Purchasing the former Camp Black Mountain (now called Camp Saturna) on Silver Lake near Maple Falls in 2015. Camp Saturna provides groups a location to stage a variety of environmental educational programs and activities. Jane’s husband, Terry Carten, manages Camp Saturna, which rents out facilities for outdoor programming (which Saturna will help set up and provide staff) in a lakeside, mountainous terrain. The purchase ensured that the property’s 133 acres of timberland receive protections from logging. It’s all a values-based way of life with Saturna Capital’s 80-plus workforce.

SAVE THE DATE

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GREEN: BY THE NUMBERS

Saturna Capital’s environmental achievements: • 50% of recycled copy paper used, saving the amount of virgin paper produced from 57 trees each year. • 29% of Saturna customers utilize e-delivery for their account documents (industry averages 20-24%). • 3,400 miles for which Saturna employees received incentives through participation in Whatcom Smart Trips to walk, bicycle, ride buses, or share rides during 2017, about the same distance as a roundtrip between Bellingham and Omaha, Neb.

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leading edge CATCHING UP WITH... SHUTTLE SYSTEMS IN BELLINGHAM By Mike McKenzie When I first met four years ago with the staff at Shuttle Systems I drove high up toward Mt. Baker to tiny Glacier, where they were building apparatus for use by injury rehab clinics, hospitals, sports teams, and at home. The Shuttle was a whacky invention of a former aerospace engineer with no specific goal in mind for it other than to help his son’s high school cross country team with endurance training. That invention led to a company with international distribution. Since its appearance in the Spring 2013 edition of Business Pulse, Shuttle Systems has moved to Bellingham, and then moved again across town. And they’re about to expand operations space for the fourth time to 20,000 square feet to accommodate new manufacturing equipment, supply chain, and 15 employees (50% increase since 2014). So, what have they been up to the last four years? Since erstwhile inventor Gary Graham designed the original Shuttle 20001 in 1985, the company has come to now producing seven product lines with two-to-five models of each—all bearing a catchy name (e.g., Shuttle Recovery, Shuttle MVP). Startup came at a time of proliferation of knee and hip replacements during the 1980s, and then professional athletes climbed on board starting with the Chicago Bulls and Bears. About 80% of the NBA teams and almost all NFL teams (including the Seahawks) use Shuttle Systems apparatus, as do such college sports powerhouses as Florida, Southern Cal, and Ohio State. “Even individual athletes have put them in their homes,” said Parker Graham, Gary’s brother who heads up sales, research, and development. “We recently installed one for Kelly Walsh, the three-time gold medalist, U.S. Olympic beach volleyball player.” “Athletes use plyometrics on our machines,” Parker Graham said. “They can perform functional training using elastics for resistance instead of stacks of

Heather and Gary Graham at their local assembly plant.

weights.” Physically-challenged and elderly customers cotton to the Shuttles because they allow exercise with low-impact repetitions. Shuttle Systems engages in research through feedback from customers, many of which are involved in medical science, to fine tune the product models or to create new ones. In creation phase, Gary Graham implemented techniques he had worked on with a team at Boeing in the ’60s, helping astronauts to manage many physical effects in zero-gravity situations. Testing included effects on endurance. That sparked the idea for the original Shuttle. “He started out on the porch with a piece of plywood and some string,” said Heather Graham, Gary’s wife, who plugs into the business as needed, using her background in nutrition and gerontology. They continue to own Shuttle Systems and they have elevated a seven-year em-

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ployee, Janet Maxwell, to General Manager. A capital investment in automated equipment recently added speed and efficiency to the assembly line. And the next new product line will be called the Mini-Press Lite, revolutionary in that it’s so small it can be used by patients in bed. Word gets around mostly when Parker Graham attends about a dozen trade shows a year to demo with physical therapists and with sports training and conditioning specialists. Wholesale partners carry Shuttle Systems in their catalogs. Online marketing and sales is Shuttle Systems’ next step, with an emphasis on home use. “It’s amazing,” Gary Graham said, “how the input from users and professionals all over the world leads us to new ideas that come in faster than we can put them into use.”

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leading edge GUEST COLUMN | HEALTH CARE

ACA Reform in 2018: The Ghost of Healthcare Future

DR. ROGER STARK Washington Policy Center | Health Care

he Affordable Care Act (ACA), also known as Obamacare, became law in March 2010. The ACA has failed to reach its goals. Obamacare has not even come close to providing universal health insurance; it has not held healthcare costs down, and it has forced millions of people out of their existing insurance into government-controlled plans. If the Republican-loaded Congress doesn’t move on meaningful healthcare reform in 2018, the issue definitely will become a contentious topic of debate leading up to the 2018 mid-term elections. Looking back, remember that the ACA passed with only Democrats voting for the legislation. Until very recently, the majority of Americans opposed the ACA, according to polls. And Obamacare has been a contentious, lightning-rod issue from the beginning. Voters showed their unhappiness by electing a Republican majority in the U.S. House of Representatives in 2010, and a Republican majority in the U.S. Senate in 2014. Republicans subsequently took multiple votes to repeal and replace the ACA. These were all unsuccessful because President Obama threatened to veto any repeal-and-replace legislation. Upon the election of Donald Trump as President, with repeal-and-replace one of his cornerstone campaign promises, the law remains in place going into the new year, his second year in office. Leadership in the Senate Health Committee—Senators Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.)—has worked on a bipartisan bill to stabilize the insurance exchanges and the individual health insurance markets. However, entering 2018, while healthcare again sat on the back burner, Congress was debating a major tax reform package that carried some hope for relief in affordable healthcare possibilities. Complete repeal of the ACA would require at least 60 votes in the U.S. Senate. Republicans only have 52 seats. Consequently, any legisla-

tion to replace Obamacare can pass in the current political climate only through reconciliation, which deals with budget and financial considerations. (Passing a reconciliation bill requires just a simple majority vote in each house.) The 2016 election was a game-changer: Voters gave Republicans control of the U.S. House, the U.S. Senate, and the White House. Still, because of fundamental differences between the conservative and moderate wings within the Republican Party, only partial repeal and replace legislation passed in the U.S. House. And the U.S. Senate has fared even worse by not passing any ACA reform legislation. The bill that passed the House—the American Healthcare Reform Act (AHCA)—would have eliminated the individual and employer mandates to purchase health insurance. It would have eliminated all of the ACA taxes, saving taxpayers $883 billion over 10 years. It would have also reduced the federal deficit by $337 billion. For the first time, the ever-growing, costly Medicaid entitlement would have been reformed. The bill would have given individuals tax credits to individuals with which to purchase their own health insurance in the private market, rather than taxpayer handouts. And, the bill would have eliminated the Obamacare insurance exchanges. On the Senate side, Republicans could only lose two votes because of the slim 52 senator majority. A 13-member working group crafted the Better Care Reconciliation Act (BCRA) last spring. Although the details had minor differences from the House bill, the fundamental reforms to the ACA read very similarly. Multiple amendments were added to the BCRA, yet the bill stalled because it could not gain 50 votes. Several repeal-only bills were proposed in the Senate, but again none had the support of at least 50 members.

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A “skinny” bill proposal, The Healthcare Freedom Act, surfaced in the summer and would have: (1.) eliminated the individual mandate as of 2016; (2.) eliminated the employer mandate through 2025; (3.) eliminated the medical device tax, and (4.) allowed larger contributions to health savings accounts (HSA). It also would have given states more leeway in seeking waivers to the ACA. All Democrats voted no in a formal vote on this skinny bill, as did three Republicans—Senators Susan Collins (R-Maine), Lisa Murkowski (R-Alaska), and John McCain (R-Ariz.). Thus, the bill failed. The current bipartisan bill proposal backed by Sen. Alexander and Sen. Murray aims to stabilize the insurance exchanges and the individual health insurance markets. Basically, their bill would add more taxpayer money to shore up the failing ACA. Senate Majority Leader Mitch McConnell (R-Kent.), however, is unwilling to allow another potentially unsuccessful healthcare -reform vote in the Senate. House Speaker Paul Ryan (R-Wisc.) stated that the House had shifted its focus last year onto cutting taxes and would not consider healthcare reform again until at least this year, and wouldn’t even commit to that. Likewise, Senate leadership moved away from healthcare reform and was unwilling to allow a vote unless the healthcare reform bill is guaranteed to pass. However, hope surfaced when some healthcare reform shift-shaped into a provision in the tax-reform bill that eliminated the Obamacare individual mandate. The nonpartisan Congressional Budget Office estimated that repeal alone would save over $300 billion of taxes. This savings would come from a far smaller number of individuals signing up both for Medicaid and for taxpayer-subsidized health insurance in the Obamacare exchanges. In the meantime, health insurance premiums continued to rise both inside and outside of the Obamacare exchanges. Medicaid grows at a financially unsustainable rate. Therefore, Americans continue to find less access to timely and affordable healthcare. Congressional Republicans badly need a legislative victory to energize their base for the 2018 elections. If tax reform is not extensive enough, or, worse, fails altogether (it was looking good in December before this publication’s deadline), healthcare reform could again become a dominant issue in 2018.

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leading edge GUEST COLUMN | ENVIRONMENT

Promises, Promises But Nothing Seems to Change...

TODD MYERS Washington Policy Center | Environment

ig things are promised for the 2018 legislative session. With Democrats winning the Senate seat formerly held by Republican Andy Hill in Kirkland and Redmond, a one-seat majority of Democrats now fill that chamber. This gives Democrats control of the House, Senate, and the Governor’s office. On the environmental front, this means to look for several new proposals dealing with energy, salmon, and other environmental issues. Although some legislators promise big changes, it is more likely we will see only incremental efforts. Look for postponement of major changes until after the 2018 elections. The most notable environmental initiative will likely be some proposal to cut carbon emissions. After the 2017 election Governor Jay Inslee noted, “We now have those options available to us…,” and he promised to push carbon taxes and increased spending for “green” projects. Vice-Chair of the Senate Energy, Environment and Technology Committee (EE&T) Senator Guy Palumbo (Dem.) is working on a carbon tax package that would raise revenue, spending it on a combination of clean energy subsidies and

social programs. The details have not yet been finalized, but past estimates lie in the range of imposing a tax of 30 cents a gallon on vehicle gasoline, raising between $1 billion and $2 billion for the state. There are several concerns with this approach. First, a carbon tax could hit major Washington employers like Alcoa, known as energy-intensive, trade-exposed (EITE) industries. These companies would pay a high price, because they use a significant amount of energy for manufacturing, and they face competition in other states and countries with lower costs. Recently, a pulp and paper mill in southwest Washington announced it would move operations to Louisiana due to the high cost of regulation. Other EITEs could do the same if a carbon tax plan does not limit their vulnerability to higher costs. Of course, the more industries receive exemptions, the less effective the policy will be. That makes it unlikely that exemptions will be widespread. Second, the new Chair of the EE&T Committee, Senator Reuven Carlyle (Dem.), requested projects that could improve salmon recovery efforts. According to the Puget Sound Partnership’s measurements of environmental results, Wash-

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ington will not meet its 2020 recovery target and we are not making progress toward that goal. There is a need to prioritize funding for salmon recovery. Funding for some important projects has been slow in coming. Earlier this year, many pointed a finger of blame at the Trump Administration for failing to fund Puget Sound cleanup. Governor Inslee’s 2017 Capital Budget proposal, however, also cut tens of millions of dollars from these projects, compared with his previous request. Prioritizing funding for salmon would be a good step. It isn’t the only step, however. Marine mammal populations have increased and now consume more than one-third of salmon in some areas. This not only makes salmon recovery more difficult, it puts pressure on Orca whales that are not finding enough food. Scientists have understood this for some time, but politics have prevented an honest assessment of this threat. Without an effort to reduce the number of salmon being eaten by seals and sea lions, we will continue to struggle to save populations of salmon and Orcas. Finally, the Legislature will have to address the state Supreme Court’s ruling in the Hirst case, which essentially has banned any new rural wells for residential water. Although some claim the ruling helps fish, the amount of water involved is absolutely miniscule—less than 1% of all consumable water in the state, according to the Department of Ecology. The costs are borne by people in rural areas who have seen their property values fall dramatically. Those who care about the environment should be willing to pay for the benefit received by all of society. Putting the entire burden of those costs on rural families is unfair and does virtually nothing to help the environment. With the narrow, one-seat majorities in each chamber and the coming elections in 2018, it is unlikely the legislature will make big changes to environmental policy next year. There is hope, however, that lawmakers can reach bipartisan agreement on fixing the mess caused by the court in the Hirst decision while taking incremental steps to improve salmon recovery.



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     

  

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Business Pulse asked leaders in seven industries to forecast the business climate in the new year BY MIKE MCKENZIE here’s an echo in the air—labor…automation…. They anticipate potholes and speed bumps. Yet, they know very regulations….optimism…. well how to navigate them. One of the echoing issues across the These subjects echoed throughout interviews and a spectrum was labor. First, it’s the highest cost of doing business. survey conducted by Business Pulse to get a sense of Second, it’s hard to find workers with the necessary skill sets. how the Whatcom County business community is feeling about, And, third, some say there are those who don’t want to work at all. anticipating, and planning for 2018. Some of this is due to automation, such as computerization, In short, the economic forecast locally—as well as nationally—is robotics, drones, artificial intelligence and even a driverless tracgood, though not without concerns. And not surprisingly, they're tor was mentioned. Some is due to the cost of healthcare and the same concerns, regardless of the business. other benefits. And some is due to lack of training, education, For this feature, we interviewed two leaders from each of seven and desire. industries that typically foreshadow the overall economic and And government business regulations, sometimes viewed as financial outcomes across the country, the state, and our region: strangulating, cropped up in most conversations. Likewise, the Agriculture, Construction, Healthcare, Manufacturing, Maritime, cost of goods and services—in both business operations and consumerism. Real Estate, and Technology. Their conclusions: Business is very much alive and well here. Comments ranged from “we’re bullish” in Real Estate to No epitaph, just epitough, across the board. There’s no Easy “cautiously optimistic” in Farming and Maritime. Belief is strong Street. But they’re used to that. That’s not the avenue these highly that 2018 will continue on a positive economic path in Whatcom County, Washington, and America. Read it and smile. P+ successful business leaders traveled to get where they are. JANUARY/FEBRUARY 2018 BUSINESSPULSE.COM | 31

“The public doesn’t realize that 98% of the fish on the market in the U.S. comes from abroad.” – Colin Bornstein

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2018 MARITIME COLIN BORNSTEIN, President & CEO | Bornstein Seafoods his year, we’ll see a lot of consolidation going on in our commercial-fishing and processing industry. In large part, that’s due to the declining availability of skilled labor, but technology helps ease the problem. Contrary to some rumors, the ocean is very vibrant and full of fish. We’re a highly regulated industry. For example, a national regulatory change that will have significant effects in the coming year and beyond is the permitting of ground fish for one-year management, instead of monthly or weekly, as in the past. Now, companies like ours can plan better and process more fish. We operate with different dynamics than most because we’re not just coastal from California to Alaska; we import and export

product internationally. The public doesn’t realize that 98% of the fish on the market in the U.S. comes from abroad. That compares with 3040% exported from the U.S. Our commercial fisheries want to increase the opportunity for consumers to buy domestically, but it’s hard to compete with the off-shore markets. There’s a lot of negative publicity out there, but commercial fishing is alive and massive. Future harvests will thrive. For example, we’ve seen an increase of 800%plus over the last 15 years, and those catches will continue to grow. We’ve gone from under $5 million a year in annual sales to more than $70 million. But good news doesn’t sell. Skilled labor and automation are huge

issues in our industry. Technology helps us in efficiency, yet we still employ 200 people seasonally for two to three months. Our auto-fillet machinery reduces the need from eight people on the line to one or two less-skilled workers. A major reason for industrywide optimism is the emphasis on healthy eating and the protein and Omega-3 oil in fish. As things evolve and change, all we want is fair competition. I always think it’s going to be exciting in our business every year, and I see good things coming. I'm an eternal optimist. The economy is moving forward, we’re at the center of the protein movement in restaurants and at home, and the industry is vibrant and growing. I can't wait for 2018 to unfold.

MATT HARDIN, President & CEO | NW Diesel Power and Cardinal Yacht Sales ’m cautiously optimistic about 2018 because we have a more stable economy. Therefore, people want to go on with their lives and do more diascretionary spending. For instance, pleasure boating has regained popularity. Coming out of the recession, we’ve been like most companies in moving at a slower, steadier rate in revenue and growth. But overall, it’s an under-developed market in all aspects of the marine industry, so there’s plenty of room for growth. In our sector, businesses are being more careful and thoughtful about growth. On the one hand, the pleasure-boat business was hit very hard, and customers didn’t rush back in during the downturn. On the other, the commercial-boat business did well during that time. In any market, diversification keeps you focused on the key products.

Finding a talented labor pool is important here and across the U.S. Everybody wants people who want to work and who are excited about work. People talk about automation, but it’s still a relationship business. The Internet didn’t kill brick-and-mortar businesses. Trusted personal service still makes a difference. That’s how you solve problems and make people’s lives better. A concern I have for 2018 is the development on our waterfront so vital to our greater community economically. I pray that our local leaders fully understand the marine market—commercial, recreational, environmental, educational, and historical—and develop Bellingham’s waterfront to its full potential. Having spent my life on waterfronts all over the world, I find that too many of our leaders in waterfront development and planning spend very little of their time using the waterfront.

“Overall, it’s an under-developed market in all aspects of the marine industry, so there’s plenty of room for growth.” JANUARY/FEBRUARY 2018 BUSINESSPULSE.COM | 33

2018 AGRICULTU RE LARRY STAP, Co-Owner | Twin Brook Creamery ne big negative could impact 2018: threatened lawsuits by the Western Environmental Law Center in Eugene, Oregon, dealing with the federal Clean Water Act and the Resource Conservation and Recovery Act. They could cost Washington farmers millions to settle. We depend on our agencies—the EPA (Environmental Protection Agency) and DOE (Dept. of Ecology)—and countersuits to strike a balance against these special-interest environmental groups. Left unchecked, this could drive most of us out of business. The good news, in our parts and across the country, is that national advocacy is getting stronger. National polls show that 70-to-80% of consumers trust farmers. We’re the number-two economic driver, behind aerospace, in Washington.

We all have to do our part. So the big thing in 2018 is to stay engaged and continue to talk to the public. We just want to do our chores and make great products. A major impact is the huge change in D.C. What a breath of fresh air with the new leadership in the Departments of Agriculture and Interior and the EPA. We have good new leadership in our region, too. And we don’t have to worry about feds in black SUVs with dark windows pulling up with warrants. Nasty stuff. Labor is the biggest issue. The workforce is getting smaller and smaller. A big factor is living in a legal-marijuana state and operating a drug-free work place, with testing regimens. Safety is essential because we’re producing food for the public, we have truck drivers on the road and so forth. The cost of producing a gallon of milk

continues to rise, so growth creates a steep curve. I don’t see ’18 as any better industrywide, but certainly not worse, either. Ag should hold the line. Automation and efficiency will help. I think we’re typical of the industry: We put in robotic auto-milkers, taking human decisions out of the equation: the cows step up when they’re ready, instead of us herding them in. Automation replaces labor— which is about 23% of operational costs —but when you make huge capital upgrades, it’s expensive to pay down the debt. We’ve already seen auto-feeding and food scrapers in drive-through barns, and thus the elimination of tractors and blades and drivers for cleanup. All this contributes to environmental stewardship, too. I don’t know that we’ll see it this year, but we’re halfway there to driverless tractors.

ANDY ENFIELD, Vice-President | Enfield Farms

“In forecasting 2018, we’re paying attention to national industry trends, even though they might differ up here to some degree. Trade agreements in the berry industry vary from other agriculture. We see challenges in regulations, labor and trade agreements.” his year in agriculture, we have tons of challenges, as usual. As a farmer you have to maintain optimism that every next season you’re going to have a good crop. I’d say we remain cautiously optimistic. I can’t speak for dairy, which is the largest agricultural business in the county, but one big trend in farming is automation. We invested a great deal in 2017 in automated technology—sorters, auto-handling of crates and flats, auto-dumpers and autostackers. That serves two purposes: it increases efficiency with our processes and

workers, and less handling keeps people and food safer. Human contamination is one of the largest causes of food-safety issues. Our product is never touched by human hands. In forecasting 2018, we’re paying attention to national industry trends, even though they might differ up here (in NW Washington) to some degree. Trade agreements in the berry industry vary from other agriculture. Looking ahead, we see challenges in regulations, labor, and trade agreements. Regulators are going to do what they do. We’re fortunate to have a nice supply of

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labor, though that might be different in other areas of farming. We’ve invested to cover all the bases. We’re coming off an unusual 2017, especially in the raspberry market. Right now, it’s going through some of its toughest times because of foreign competition. Blueberries have been heavily planted not only in Whatcom County, but throughout the U.S. and the world. The blueberry supply is growing and we are looking for new markets to open up throughout the world. They’ve become such a popular product because of their taste and health benefits.

What a breath of fresh air....We have good new leadership in our region. â&#x20AC;&#x201C; Larry Stap JANUARY/FEBRUARY 2018 BUSINESSPULSE.COM | 35

2018 MANUFACT URING TED MISCHAIKOV, President & CEO | Healthy Pet he year ahead looks good for manufacturing in general and for us in particular. We just had our best year ever, and we expect 2018 to be stronger yet. Business has taken off like crazy. Automation is a most significant trend in manufacturing. This year we’re going into automated packaging. In our case, we’re expanding our plant in Jesup, Georgia—a $9.3 million investment— and moving some of our proprietary pelleting process there, creating new jobs. Other major issues are available labor, regulations, taxes, healthcare and environmental concerns. Right now, the most challenging issue is finding more great people. We work hard on recruiting and will continue to. We have a seriously good team. But Ferndale, in the

perspective of the U.S., sits in a cul de sac. We’re relatively remote and hiring opportunities are fewer. Nationally, we have a debacle around healthcare and taxes. We need the corporate income tax lowered to give small businesses more flexibility, which leads to innovation and resilience. I think all the politicians should be fired. It’s so ridiculous what’s going on at the federal level in Washington, D.C. So few are looking out for general Americans, instead of their own power-hungry special interests. Business doesn’t like poorly thoughtout things. We fundamentally strive for one thing: efficiency. We want the ability to make decisions to enhance efficiency, and government has made that more difficult.

And we need the opportunity for Joe Six Pack to buy a tool belt and a truck and go earn an income for his family. That possibility is almost extinct today. We need the biggest, happiest middle class to help this great nation survive. [On manufacturing’s attention to operating “green”] We’re totally committed to all-natural products and good environmental practices. In chaos theory, it’s called sensitive dependency. It manifests itself in many ways: a safer and cleaner work environment, improvements in quality assurance, better measurement, more valuable work and better logistics. It transcends industries, and the value is not easily quantified in these sorts of investments. But it’s neither political nor emotional. It’s common sense….

GRACE BORSARI, President & CEO | Altair Advanced Industries (AAI); DREW ZOGBY, President | Alpha Group; MICHAEL PERICA, Chief Financial Officer | Alpha Group race Borsari co-founded the original Alpha Technologies, which became the Alpha Group. Her own company, Altair Advanced Industries (AAI), manufactures all components for the entire global operation. She gathered two company officers for a roundtable conversation about manufacturing… Grace Borsari: You have to plan well ahead in managing a global supply chain. Overall, manufacturing looks good for the year ahead, although a bit seasonal in some places. Michael Perica (left): The fourth quarter of 2017 was our best ever. We’ve experienced double-digit growth since the global economic crisis of oh-eight and oh-nine—the great recession. That’s probably indicative with all successful manufacturing companies. Drew Zogby (right): One big thing, the technicians you hire today have a lot of skills that they didn’t have in the past. We’re seeing a higher level of literacy in the computer and electronic world. Even minimum skill sets are more advanced. MP: We’re in a sector that if you don’t

keep aware of national and global trends and continue to enhance your supply chain, you’ll lose competitive advantage. GB: (Addressing turnaround time as a key element in forecasting): You’ve got to be

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on your game, because timing is everything. For example, Altair can book and ship an order on two weeks’ notice. Alpha owns its manufacturing facilities here, in Georgia and in several countries. They are extensions of what we do here to locally support customers abroad. That’s a trend because it saves money and helps adapt to local needs. DZ: Local jurisdictions have to get on board. Otherwise, things can drag out in permitting. Time is the biggest asset in manufacturing—you have to be on time. You benefit from incentives when you add value locally. States in places like Brazil and India are pro-manufacturing, if you keep it in their country. MP: The biggest factors in forecasting the industry are wages and the cost of raw materials. The cost of making anything keeps going up. Fuel is a major part of that. And if you’re international—in our case, we’re doing business in 80-plus countries—you have tariffs in and tariffs out. In business planning, we have a 90day manufacturing forecast, a 12-month global financial forecast, and a five-year strategic plan.

“Automation is the most significant trend in manufacturing.” – Ted Mischaikov JANUARY/FEBRUARY 2018 BUSINESSPULSE.COM | 37

“Industrywide there’s a shortage of labor. After the last recession, a lot of tradespeople left the workforce or the industry entirely and didn’t come back.” – Jeremy Carroll

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2018 CONSTRUC TION KEVIN DEVRIES, CEO | Exxel Pacific rojections for our 2018 project pipeline are strong, based on continuing work from last year. It’s different for every contractor, but very large jobs like we have sometimes take two or three years to queue up and get ready to start. Looking forward, Seattle is ahead of the national trend in construction. Until a couple of years ago, everything was happening in Seattle. Now the work is pushing out to surrounding areas. We read reports and see that 5,000 cars a day are driving south to work, not because they love to drive but because of the lower cost of living in the outlying areas. The cost of living is still comparatively less in Bellingham and Whatcom County. Taxes are lower, and housing is less than half of Seattle’s, even though wages are better. In construction, it’s difficult for supply to keep up with demand in Bellingham. There’s a whole lot of interest up here in mixed-use projects and building affordable housing, but all projects face unique hurdles. The regulatory topic is a huge factor in the industry, due to the impact it has on both the local and national levels. People don’t even realize how much cost goes into building a project. Often, land costs to develop projects are less than the costs of permitting and entitlements. There are special challenges, too, like the cost of storm-water management.

“The cost of living is still comparatively less in Bellingham and Whatcom County.” There are a lot of publicly funded projects under construction now, a national trend. Like a growing demand for schools, for instance. As you build schools, taxes go up. We keep pushing the limits of what people can afford. It’s hard to make the budgets work, as construction costs and labor have increased much more rapidly than many realize. Operating a construction company is not getting any easier. Just the costs of keeping on top of safety and all the regulatory requirements continue to rise year-after-year and require sizable investments. As with any private development in Bellingham or Whatcom County or elsewhere,

the scope of a project depends on demand and the available cash and financing required to make the project work. If the project is “skinny,” a contractor has to build a level of product that’s worked out for a number. Construction is the only cost in a project that can be controlled via design and by lowering the cost of products used in the project. You never hear, “OK, we’ll lower costs of impact fees….” Many local developers with cash have worked very hard and want to invest in their communities for the long term. That is a different approach than your metropolitan developers who are looking to build a project, lease it up, and sell it.

JEREMY CARROLL, VP of Construction | Dawson Construction here’s a good business climate right now in the county and nationally–and good reasons to be optimistic. I’d say that 2017 was a crazy-hot year for the construction market in Whatcom County, because all the school districts in Bellingham and the county had several schools under construction. There also was a lot of multifamily housing construction that put a real strain on manpower. But the labor shortage is better up here at the moment. We’re still impacted here by what’s going on in Seattle. A lot of tradesmen and resources get pulled down into that market. They work for contractors who are based in Whatcom County but do a lot

of their work down there. That goes the other way, too. During slower times, we’ll all get workers from north of Seattle, like Snohomish County, who want to come up here and work. Industrywide, there’s a shortage of labor. After the last recession, a lot of tradespeople left the workforce or the industry entirely and didn’t come back. As building picked back up, we’ve all experienced a real shortage of manpower and it put a strain on the overall labor market. By the nature of where we work, geographically, contractors have to build a diverse portfolio of projects: a school, a bank, a student residence, multifamily housing, or something like (Dawson’s)

bridge renovation in Ketchican or a water-treatment plant. We don’t specialize in a particular type of project. Most companies in the area have been growing over the last five years. The Alaska market has been in a recession the last couple of years. At Dawson, we haven’t put a heavy focus on growth, though we continue to grow steadily. [On regulations:] The nature of our business and the regulatory considerations, like fees, are not any different than anyone else’s. So, 2018 probably will level off in this market. We had the big surge this year, now it’s about even with pre-2017, maybe even slightly lower.

JANUARY/FEBRUARY 2018 BUSINESSPULSE.COM | 39

People from Seattle are buying homes up here for cash....they sell and use their equity to enjoy the quality of life in a more affordable area. â&#x20AC;&#x201C; Dan Washburn

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2018 REAL ESTATE DAN WASHBURN, Owner | Windermere Real Estate/Whatcom y wife, Sharon, and I were among the migrators here from Seattle when we bought the Bellingham and Whatcom County Windermere franchise in 1995 to move away from the urban traffic and lifestyle and settle with family. We had 25 agents at that time, and now the agency has grown into the largest in this area, with more than 160 independent agents. The economy is a big reason for optimisim—on the national level as well as locally. Nationally, we’re encouraged and bolstered by the national GDP (gross domestic product) reaching 3% for the first time in eight years. And also, the new tax reform is driving the stock market. We’re expecting the creation of jobs nationwide. Regionally, we’re encouraged by the Seattle boom. It’s a result of the Amazon and Microsoft technology corridor increasing job opportunities, along with aerospace. Boeing had its stock basically double from

$150 to nearly $300 a share in just the last year, another indicator of how strong the Seattle market is. An interesting trend is the number of people moving north. They either want to get out of the traffic congestion, or they want to enjoy the quality of life up here, where it’s less expensive to live. The average price of a home in Seattle is $650,000, and in Bellingham it’s around $350,000. We’ve sold a lot of homes for cash to people moving here from Seattle. Because of the huge difference in prices, they can sell their homes down there and have enough equity to pay cash for one up here. Some are retirees, others are just seeking quality of life and affordability, and a good number of them move here and commute. We may be seeing more of those sales than others because of our connection with Windermere in Seattle. Another trend, heading into the new year, is the construction of more apart-

ments, rather than condos, as in the past. That’s caused by the high level of litigation tying up condo developments, due to stiff regulations. Locally, we began the year by expanding into Ferndale. We’ll be in an office on Main Street in a building with a Starbucks, next to Samuel’s Furniture. Construction is moving north of Bellingham, and Ferndale seems to be where it’s happening most. The construction of between 1,300 and 1,400 new homes is anticipated over the next 4-to-6 years. We’ll have 20 agents there dealing in both commercial and residential real estate, and the agency will center on accommodating small- to medium-sized builders. That puts us at five locations, plus a mall kiosk, with about 160 agents. And we’ll be adding more. So, nationally and locally, and buoyed by the move into Ferndale, we’re definitely bullish on 2018.

TROY MULJAT, Owner | The Muljat Group he big story this year is the residential sector. Inventory sits at historically low levels. Americans continue to move to the West Coast’s big cities, and Seattle is No. 3 nationally for growth. Overall, it’s a very good time to sell a house. The rise of double-digit appreciation is not sustainable. It has to pause and soften up the supply, as we see more and more housing construction. With low interest rates, you can borrow more. Growth of our business is slowing 10-12%, and sales are slower as well, though not

drastically. We’re not in a bubble, but it’s not sustainable. In our region, we have about 270 homes on the market. That’s a healthy 1-to-3 month supply. We ended the year with a record $400,000 median house price in Bellingham and below six months in selling turnaround-time from listing in an expensive market. That’s a good sign going forward. Commercial is an entirely different picture. There are four segments: multi-family, industrial, retail, and office space. There’s some synergy, but there’s more inventory

than we need, nationally and locally. We have a lot of old retail space. With a 1-to-2% vacancy rate, it creates a credit crisis. The question becomes, “How do K-Mart and JC Penney and Sears stay in business?” They either have to invest or go under. I anticipate a stable real estate market this year—no upswing, and no downswing—after a solid last five years. Industrial and multi-family housing are booming with very strong growth. Office is strengthening, too. Lack of supply is the problem. Especially up here in the Northwest.

“In our region, we have about 270 homes on the market. That’s a healthy 1-to-3 month supply. We ended the year with a record $400,000 median house price in Bellingham...That’ a good sign going forward.” JANUARY/FEBRUARY 2018 BUSINESSPULSE.COM | 41

2018 TECHNOLO GY BOB PRITCHETT, President & CEO | Faithlife ’m not directly involved in implementing new technologies, but I do track what’s developing in the industry in terms of what affects us and what the big trends are. Among the major trends to look for in 2018 are artificial intelligence (AI) and what is referred to as deep learning. They are dramatically changing what technology does. [Editor’s Note: Deep learning, a.k.a. deep-structured learning, is part of a broader family of machine-learning research and methods based on learning-data representations, as opposed to task-specific algorithms (“shallow learning”) moving toward AI.] We’re involved in a publishing function and building courses for people around the world. AI and other advancements are likely to come into play in deep learning that will affect us in coming years, if not this year. The software industry is driven by

computational power. We have the algorithms now and large enough capacity of data and computing power to overcome some of the past challenges of coding (software development). The concept of AI has been understood for some time, but we’re just now growing the capacity for it within the industry. Around 75 of our employees—about one-fourth—are in specifically technical positions….(and) we have been doing

various experiments with AI technologies. For example, we’re still figuring out how it will affect our work in analyzing ancient texts. Some analyses probably will become more advanced. We’ve brought in scholars who are subject-matter experts, and they deal with a relatively small collection of written texts and tag them by hand. We may be able to feed that hand-tagged data to deep-learning algorithms and have it tag other databases. Also, in software development, we’re experimenting with conversational interface. You can ask a question in English and get a response in English. You’ve been able to navigate our user interface with a mouse and ask our software questions about the Bible. Now we’re experimenting with making that interface like using Siri on an iPhone, where you’d have a choice of using the icons or simply asking the computer what you want and it will find it.

ED O'NEILL, Executive Director Technology | Emergency Reporting ’ve anointed 2018 as the Year of the Fastball Strategy, where you have to get your pitch over the plate quickly before your competitors can even take a swing. It’s an industry trend. Companies in technology are working harder to integrate with other systems by using the internet of things where everything is connected. This allows you to move fast and extend your reach to billions of connected devices. Impacting this year, you’ll see advances in things like drones and robotics, and, in our specialty niche of emergency reporting, we might soon have a self-driving fire truck. Uber, as we know, has self-driving cars. They’re all dependent on other sources and things affecting them, such as traffic and road and weather conditions. We want to do things we don’t understand. So we rely on integration of information, on connectedness, to harvest capabilities and possibilities.

To survive in a software business, there are just three choices: One, raise capital; two, take on partners; or three, get acquired. High tech is a very competitive,

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very mature field. You’ll see more consolidation and merger activity. It’s becoming survival of the biggest. Often, the first to market is the winner—like Uber and Amazon. But with scale and connectivity, mid-tier companies can go toe-to-toe with much larger ones—you no longer have to be an Oracle or Microsoft to win the game. Because of Seattle, the silicon center of the Northwest, there’s a high demand for technical skills. Locally, we have to compete hard to find people with those skills. Where all things are equal in wages and benefits, we’ve narrowed the gap. We can win on better quality of life and a little more affordable housing. But some still want urban; it’s a matter of city strokes for city folks. At Emergency Reporting we forecast 2-to-5 years out, and we have to remain agile in the process of efficient software development. It’s all part of the Fastball Strategy.

2018 HEALTH CARE DR. JAMES HOPPER, Chief Medical Officer | Family Care Network s for 2018, I’m optimistic. We always are. We wouldn’t be in this business if we weren’t. There’s always something I can do for patients I’m seeing, and I believe that the coming year will be better than the last. Reality may become something different. As healthcare organizers, we welcomed the ACA in March 2010 because it provided insurance for lots of patients. We had several who had lost their job, lost their insurance, and previously we could no longer see in a way they needed. We were limited by their poverty status. Our number of such otherwise uninsured patients increased from under 4,000 to about 11,000, pretty much overnight. Thus, the ACA was beneficial. On the other side, as a business, we’re trying to insure our own employees and provide something for their families. Our choices are not sold on the (ACA) exchange programs. Costs are going up as uncertainty grows over the ACA potentially going away.

For 2018, if the ACA is repealed, that’s a huge concern because it will shift costs to people with insurance, and insurers will end up having their medical-loss ratio worsen and so they will raise premiums. Even without the ACA, costs of healthcare for employees can only get worse.

We’re looking for ways to help us and other companies find lower premiums. That includes seeking different approaches to insurance for our 450 employees. Our model is unique—independent group practice in which our doctors own their practice. Nationally and regionally we see groups like ours throwing in the towel. Merger is the rule. Hospital systems are buying up many independent operations. Costs go up every year for staffing, largely because of salaries and benefits. We’re limited in increasing what we can charge, based on contracts with the government and insurers. We’re also limited in ramping up income while expense goes up. Most common medicines have relatively lower costs. But the overall cost of medications is going up dramatically. In particular, specialty prescriptions, such as immune-modulating and oncology drugs. Providers have opportunities to match prices; it’s not regular free-market conflict.

“Costs go up every year for staffing...” DALE ZENDER, Chief Executive of Hospital Services | PeaceHealth Northwest Network

“Technology has advanced so that more and more care can be provided safely without a hospital stay.” he last presidential election has created uncertainty in the healthcare environment. Regardless, PeaceHealth is unwavering in its commitment to the overall well-being of our community. No matter what happens with national healthcare policy, we will shape our own future by working closely with community partners, as well as state and national associations and elected officials. Healthcare continues to transform from a hospital-based model to an outpatient-based

model. Technology has advanced so that more and more care can be provided safely without a hospital stay. Examples would be the use of robotic surgery for several procedures, and refined surgical techniques for a number of orthopedic procedures. In some cases, healthcare practices can take place at a clinic or office located in a non-traditional setting, such as a mall or other commercial setting. The cost of care will continue to drive strategy throughout the industry, as consumers demand greater price transparency and value. JANUARY/FEBRUARY 2018 BUSINESSPULSE.COM | 43

Nepal is still suffering from the havoc created by 2015â&#x20AC;&#x2122;s 7.8 magnitude earthquake, which killed more than 9,000 people and damaged or destroyed nearly 600,000 buildings.

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To Nepal and Back

Local business leaders support impoverished hospitals and orphanages By Sherri Huleatt JANUARY/FEBRUARY 2018 BUSINESSPULSE.COM | 45

Tjoelker and his team visited two Nepalese hospitals, including one they just raised $120,000 for.

Tjoelker recounted crossing a bridge in Nepal, crowded with horse-drawn buggies, people herding pigs, motorcycles crammed with multiple riders, and modern tractors and machinery—“it was an incredible mix of cultures,” he said.

It’s not all work and no play . . . Tjoelker and his team were offered the rare opportunity to fly to Mount Everest’s base camp.

arv Tjoelker serves as a partner and the chairman of the board at the Larson Gross accounting firm, and on the executive board of the Whatcom Business Alliance (WBA). Until six years ago he had never been outside of North America. Now, since 2012, Tjoelker has logged three trips way, way outside our continent—to Nepal—one of the poorest and most remote countries in the world. And, one of the most dangerous places to visit, for various reasons. He took each trip—6,854mile each, or about a quarter of the Earth’s circumference), and 24 hours by air from Bellingham to Kathmandu—alongside his long-time business mentor, Alvin Starkenburg, a former Whatcom County councilman. Through a local nonprofit initiative, they traveled with three young companions (ages 18, 19, and 20) in support of improving healthcare for impoverished orphanages and hospitals in Nepal. Starkenburg has made the trip six times since 2006. Tjoelker’s and Starkenburg’s most recent trip, during October 2017, included visiting eight orphanages and two hospitals, attending a Rotary Club meeting, and receiving a rare invitation to fly to the base camp on Mount Everest—all crammed into just 10 days. Instead of repairing homes and building latrines (which they’ve also done), Tjoelker and Starkenburg use their business and networking experience to take a high-level approach to philanthropy, a core premise of a Rotarian’s pledge to serve. Tjoelker and Starkenburg join in connecting hospitals, orphanages, Rotary Clubs, and nonprofits worldwide to help revamp the healthcare system in Nepal. The efforts aim to build a better quality of life for Nepal’s millions of impoverished people, particularly orphans. Tjoelker and Starkenburg use these quick trips to build relationships in Nepal and assess how they can help. Their outreach takes place in partnership with the Mount Baker Rotary Club and Kidstown International—a Bellingham nonprofit that supports orphanages in Nepal, India, and Romania. Mount Baker Rotary Club has been a long-time partner of Nepal’s Orthopedic Hospital, which they’ve helped fund since the 1990s. Local Rotarian Jim Sinclair kicked off the partnership, and after he passed away, a Nepalese hospital wing was named for him. One of Tjoelker’s and Starkenburg’s most recent endeavors included raising money for a “Mobile C-Arms Machine” for a hospital in Patan—a machine that can quickly heal bones, with a low chance of infection. (Nepal has a considerable amount of bone injuries from accidents caused by poor roadways and pedestrian walkways.) After touring the hospital in 2014 and witnessing its poor conditions (Urgent Care, for example, has about 100 beds just inches apart, with no monitoring equipment), Tjoelker returned home and raised $35,000 through Mount Baker Rotary. And, after applying for Rotary International’s matching grant program, he raised $120,000 to fund the new Mobile C-Arms Machine, along with additional medical equipment. During Tjoelker’s latest trip he was contacted by Dr. Anil from Siemens Foundation, a healthcare organization in New York that operates hospitals and orphanages in Nepal. Anil knew

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Tjoelker and his team pose with children from one of eight orphanages they visited on their 10-day trip. “I come home feeling very blessed. We meet people who will forever be a part of who we are,” Tjoelker said.

“You can’t let the fear of the unknown stop you” –Marv Tjoelker of Tjoelker from his previous philanthropic work in Nepal. Anil asked Tjoelker to brainstorm partnership ideas involving Siemens Foundation, Rotary, and Nepalese hospitals and orphanages. Their brainstorm led to the “Stronger Together” program, which partners the Siemens Foundation and Rotary Club with hospitals and orphanages in Nepal. The joint goal is to develop a matching-grant program that improves healthcare for orphanages and 75 Nepalese hospitals. “Who knows what we’ll be able to do together,” Tjoelker said. “We now have a tremendous connection in New York that can help children in Nepal. It’s amazing how it all ties together.” Tjoelker said that the networking connections like this are a key reason for the mission trips to Nepal. In addition to making high-level connections, Tjoelker and Starkenburg visited eight orphanages to spend time with the children. “It’s so awesome to walk into an orphanage and there are 24 girls there, and they remember you from the last trip, and you remember them—it’s the coolest experience,” Tjoelker said. One of Tjoelker’s endeavors in his visits to Nepal is finding

sponsors for orphan children. Tjoelker said that just $38 a month funds a child’s schooling, shelter, clothes, and food. As one of the poorest countries in the world, Nepal needs all the help it can get. The country still suffers from damage caused by a 7.8 magnitude earthquake in 2015 that killed more than 9,000 people and damaged or destroyed about 600,000 buildings. Nepal’s income disparity is shocking, Tjoelker said. Modern, three-story homes owned by wealthy lawyers often sit kitty-corner to decaying huts fashioned from cardboard and scraps. Risks are involved in visiting Nepal. The country is landlocked, and has just one airport runway and two rail lines; so if something happens—like another earthquake—you’re essentially stuck, Tjoelker said. Yet, as soon as he and Starkenburg boarded the plane home they began planning their next trip back. “You can’t let the fear of the unknown stop you,” Tjoelker said. “If I hadn’t gone, I would have missed out on this incredible experience—meeting doctors, seeing new opportunities, going to Mount Everest’s base camp, and meeting kids. So you take a risk, but there’s a huge reward for it.”

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BARRON COMPLETES

MILESTONE SOLAR PROJECT 48 | BUSINESSPULSE.COM JANUARY/FEBRUARY 2018

The Largest Solar Array in Whatcom County: 375 Panels Add Up to 'Net Zero' Power By Sherri Huleatt As part of its stated mission to “improve lives,” Barron Heating & Air Conditioning commits to improving the environment in a major way. At its facility on Pacific Highway, north of Bellingham, the company recently completed a commercial solar power project that ranks as the largest in Whatcom County and fourth largest north of Seattle. The new 375-panel solar array can produce 125,000 kilowatt hours (kWh) of electricity at the Ferndale location—generating more electricity than it uses. Brad Barron, the company’s Business Development Director and son of CEO John Barron, spearheaded the project. Brad joined the company last year after a successful career in civil engineering, with a focus on green infrastructure. According to Brad Barron, the solar project has taken Barron Heating & AC to “net zero” power usage. By producing more power than the company facility uses, the project will pay for itself and become profitable in fewer than five years. Any unused power goes back into Whatcom County’s power grid for distribution throughout the community. Puget Sound Energy also rewards Barron with money-saving kWh credits for excess electrical production. “This project has allowed us to give back to our community and to one of the most beautiful places in the world, and I was really happy to be a part of it,” Brad Barron said. The company is considering a similar initiative at its Burlington and Marysville locations. Owner John Barron said, “We’re not just in the heating and cooling business. We’re improving people’s health.” The company also recycles more than 100 tons of scrap metal every year, equal to about 1,500 pieces of heating and air conditioning equipment. They received “Green Business of the Year”

recognition in 2013 from the Bellingham/Whatcom Chamber of Commerce and Industry. Barron Heating & AC has logged 45 years as a family owned and operated company. Innovation and versatility have spurred substantial and steady growth, especially since revising its business model about 10 years ago, with an emphasis on whole-home service and expanding product lines. Over the last five years, revenue has spiked 65%, hitting about $17 million a year, and the number of employees has doubled to 100. Barron has three locations (Ferndale, Marysville, and Burlington) serving a five-county area with heating and air conditioning products and services, fireplaces, and hot tubs. According to Brad Barron, the fourth generation of Barrons to work for the company, people give little thought to heating and AC until something breaks. What most people don’t know, he said, is that the average house is five to six times more polluted than the air outside. Fixing doors and windows only accounts for about 20% of a home’s leakage; the rest comes from vents and holes created for wiring, plumbing, drains, pipes, and chimneys. Hence, the Barron holistic approach —Home Performance Certified—that’s evolved from a traditional start. Barron Heating & AC started in 1972 under John’s father, Dan. He had been living in Seattle, commuting to work on the booming Sudden Valley development in Bellingham. John Barron said his father loved the area, so he spent his life savings on opening his own company, working out of a hotel the first year until he could move his wife and four kids to Whatcom County. One of Dan Barron’s first employees was his own father, who came out of retirement to help grow the business. John Barron

The view atop Barron’s Manufacturing Center.

JANUARY/FEBRUARY 2018 BUSINESSPULSE.COM | 49

From left, Brad Barron, Dan Barron, and John Barron.

“Over the last five years, revenue has spiked 65%, hitting about $17 million a year, and the number of employees has doubled to 100.” – John Barron, CEO, Barron Heating & Air Conditioning started “from the ground up, cleaning floors and bathrooms” in the mid-’70s. He worked in the warehouse, fireplace sales, installations, management, and overall sales. In 1998 John Barron and his business partner, Bill Pinkey, bought the company and they’ve run it together the last two decades. At start up, the core business was installation of heating and air conditioning equipment in new homes and buildings. Today, 80 percent of revenue comes from residential service and replacement in existing homes and just 20 percent from new construction. The flip, John Barron explained, was triggered when building halted in 2007. “We redefined ourselves,” John Barron said. “The recession was really galvanizing for our company” He said Barron’s No. 1 asset is its people working in a family culture. “To become a manager or leader a person has to care a lot about the people around them, to make them great,” he said. “You have to humble yourself, and in the last 40 years there’s never been a time when I’ve been more humbled by the people I

work with. Sometimes I feel like I have to pinch myself.” He cited an example: A long-time employee was diagnosed with ALS. Co-workers organized a series of fundraisers. The Barron leadership team matched the donations for one month. After the employees raised $7,500 and the company doubled it, they sent the ill employee and his wife on a trip. “A few employees did that,” Brad said. “That’s why we call ourselves ‘The Barron Family.’” The employment base has changed in recent years from 80% in trades (the rest in professional services) to 20%. “That makes it really difficult to find good workers,” Brad Barron said. “It’s been a real blessing to see what my great grandpa, grandpa, and dad have built and how it impacts people’s lives, especially our employees,” Brad Barron said. In hiring, John Barron said, “People can sniff out insincerity in a heartbeat, so you have to care. Our employees really do improve lives, and our community can feel that. I get good people by serving people.”

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Photos from top left: Dan & Vivian Barron (1972). Barron’s fireplace showroom (1975). Barron’s Ferndale location and corporate campus completed in 2008. Install and service vehicles in 1978 (4); 2017 (87).

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QA and

Hitting the ‘Suite’ Spot Ahl In With WBA to Create CxO Business Frameworks Group Interview by Mike McKenzie Business Pulse: How do you describe your new venture with the Whatcom Business Alliance? Debbie Ahl: We’re going to offer a CxO (COO, CFO, CMO, etc.) Business Frameworks Group for CEOs and potentially other members of the C-suites of businesses in our community. The group will select and prioritize which key business frameworks it will focus on. What are some examples of frameworks? Strategic Planning, HR Platforms, Financial Statements—Analytics & Forecasting, Communications Strategy, Risk Management, Crisis Management and Disaster Recovery, Stakeholder Engagement, etc. How do you define your role in the process? In advance of each meeting, I’ll work with two or three of the CEOs who feel they have a solid approach to a particular framework, and they will create processes and will present them at a subsequent meeting. Then I’ll facilitate a conversation with the group, helping the CEOs identify critical learnings for their own organization, sharing best practices and adding from my own experiences. We will develop execution plans together and report progress.

52 | BUSINESSPULSE.COM JANUARY/FEBRUARY 2018

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2018 BUSINESS PERSON OF THE YEAR AWARDS MARCH 21, 2018 Hosted by Business Pulse magazine

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What would that look like, specifically? The platform of corporations, businesses and nonprofits that spans our nation offers a vast opportunity. Imagine if all organizations improved their economic output by even 1%, and if leadership skills and capabilities energized and inspired workers to give back to their communities, schools, neighborhoods and churches. Think how the health of our communities would be impacted. What is the most important element for success? Leadership is the key to improvements in every area: stakeholder engagement, innovation, organizational resilience. The synergy of the C-suite leadership, its focus on the organization as a whole and strong communication around a compelling vision is what builds momentum and results.

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JANUARY/FEBRUARY 2018 BUSINESSPULSE.COM | 53

The 'NEX' Best Thing to a Passport By Tamara Anderson-Loucks

You’re driving from Whatcom County up into Lower B.C. for a business trip, a day off, or a vacation stay. Or, you’re coming down from Vancouver or elsewhere to shop. And, as you approach the border, the dread creeps into your day. Ah, the wait time. Travelers between the United States and Canada know firsthand how long the wait can be to enter from either side, whether by car, by air, and even by water. Canadians often drive into the U.S. to fill up their gas tanks and grocery bags, then sit in long lines at the border wondering if it was worth it as they idle away the money saved. And where would we ever willingly stand in long lines to then subject ourselves to invasive screening, except at the airport? Well, weary travelers…relief can be yours. NEXUS to the rescue. Apply for the NEXUS program and receive expedited entry between the U.S. and Canada. No passport required, no X-rays, and no stranger’s gloved hands patting down your nether regions. Approved NEXUS pass holders have five advantages: • Faster dedicated lanes at vehicle border crossings; • NEXUS kiosks when entering Canada by air; • Global Entry kiosks when entering the U.S. through designated Canadian pre-clearance airports; • Expedited processing at marine reporting locations, and • Eligibility to apply for the Transportation Security Administration (TSA) PreCheck program for air travel. And it’s worth noting that not all ports of entry throughout the U.S. and Canada are part of the NEXUS program. Lummi Island resident David Wing, in a phone interview, talked about the advantages he and his wife, Janet, get from using a NEXUS pass. “I can’t believe what a difference it makes,” he said. “I can pass hundreds of cars waiting in line to cross the border, and I go through the NEXUS lane in a matter of minutes. We also use it when we fly out of Vancouver (British Columbia) airport. The NEXUS card, along with a retinal scan, takes the place of a passport.” The process for obtaining a NEXUS pass equates to a typical busy border-crossing wait. First step, complete an application either online or by mail. Both require a $50 non-refundable application fee. Then wait several weeks for a response. Second, upon receiving a conditional approval, you schedule an interview at an enrollment center. Wing said, “During the interview you are well-scrutinized—checked upside down, sideways, and every other way.” Third, after your interview, you’ve arrived at the border crossing equivalent of the application process—wait time. You wait. And wait. And wait. (Both U.S. and Canadian authorities must approve your application.) Your card will arrive in the mail. Or not. Approval is not automatic. While the majority of applications receive a stamp of approval, some applicants get denied. As Bellingham resident Mallina Wilson

discovered, the reasons for denial remain a mystery. Wilson is a realtor who travels frequently to Canada. “When I list or show a property in Point Roberts, I have to go through the border four times each trip,” Wilson said. “I applied for a NEXUS pass to speed up the process. But I received a denial letter with no explanation. I have no criminal history. I have no idea why I would have been denied. I was told that I could reapply, but if I don’t know why I was denied in the first place I may just be denied again.” If and when you receive a NEXUS pass, it’s good for five years, then requires renewal. The process for renewal normally takes place online only. Wing said, “Janet and I recently renewed. Generally, you are not required to do in-person interviews for a renewal. However, I was randomly flagged and did have to go in for interviews.” For more information on the NEXUX program, visit www.cbp. gov/travel/trusted-traveler-programs/nexus. Set up an account at Login.gov, which will direct you to the Trusted Traveler Program site. When (if) your application is approved, you will receive a radio frequency identification membership card to use instead of a passport when entering the U.S. or Canada through designated NEXUS land, air, and marine ports of entry. While NEXUS does not replace a passport for all international travel, it does save significant time in U.S.-Canada travel. Well worth the wait.

54 | BUSINESSPULSE.COM JANUARY/FEBRUARY 2018

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PULSE looks AFTER HOURS

CASUAL

Special thanks to Chris Hayward and her staff at Quinn + Foster for putting our Looks together. The new clothing store is now open at 128 W. Holly St., Bellingham. 360.671.2000

LEFT: Stenstrom Donagal Tweed/grey wool vest $380, Raffi cashmere scarf in midnight blue $145, Fidelity Jimmy jean $212, Haupt shirt blue print $137. RIGHT: Anorak Vest- red $140, Bella Dahl plaid flannel shirt $124, Beautiful People fleece pencil skirt $120, Ilse Jacobson red rain boots $220.

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BUSINESS

LEFT: Alberto denimâ&#x20AC;&#x201C;regular slim cozy jean $220, JKT Model Trent blk/blue $398, Maceoo v-neck solid navy w/shirt cuffs $89. RIGHT: Raffi unisex cashmere beanie $105.00, Vince black cuffed pant $295, 0039 Italy white blouse $144, Cashmere and Cupcakes red sweater $105, Right Bank Shoe Co. mule $231.

JANUARY/FEBRUARY 2018 BUSINESSPULSE.COM | 59

PULSE wine AFTER HOURS

Business Pulse asked Ted Seifert of Seifert & Jones for his top eclectic mix of wines with broad appeal and balance.

THIS ISSUEâ&#x20AC;&#x2122;S TOP PICK

La Chanterelle 2015 Cabernet Sauvignon Bellingham, Washington | $34.99 A young couple who live in Bellinghamâ&#x20AC;&#x2122;s Lettered Streets neighborhood make this wine in their basement, importing the fruit from eastern Washington. They micro-produce 100 cases per year and deliver their product via bicycle.

Gerald Talmard 2016 Macon-Uchizy Chardonnay Burgundy, France | $11.99 A little French white. A clean mineral expression of chardonnay, unoaked, with flavor profiles of baked apples and pears. Medium bodied and dry. Pairs well with seafood, chicken, pork and lamb.

L'Ecole No. 41 2016 Semillon Columbia Valley, Washington | $13.99 Made by a second-generation artisan producer in Walla Walla. Rich with vibrant fruit and balanced acidity. Pairs well with any food out of the Salish Sea: clams, mussels, salmon. A perfect white for the Northwest.

60 | BUSINESSPULSE.COM JANUARY/FEBRUARY 2018

Teutonic Pigs and Swards 2016 White Portland, Oregon | $23.99 Ever-so-slightly pink in color with beautiful aromatics from the Muller and Chassealas-candied fruit, lemon/lime zest and bright citrus notes. Coming from the Pinot Noir, you get earthy-funky, cheese flavors.

Quinta Esencia 2016 Tinto Toro Spain | $21.99 This 100% Tempranillo from the western plains of Spain is imported by a local man with a wine import business. It is full-bodied and loaded with fruit.

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Floating Rock 2011 Syrah Rattlesnake Hills, Washington | $12.99 A good value from a family operation in Yakima. The syrah is loaded with plums and red fruits, not too heavy on body weight, and not overwhelming on the palate. Easy to drink. All wines available at Seifert & Jones 19 Prospect St., Bellingham. 360.393.3271

JANUARY/FEBRUARY 2018 BUSINESSPULSE.COM | 61

PULSE reads AFTER HOURS Blue Ocean Shift: Beyond Competing— Proven Steps to Inspire Confidence and Seize New Growth W. Chan Kim and Renee Mauborgne Blue Ocean Shift shows how diverse businesses can move from a “red ocean” crowded with competition into the “blue ocean” of wide-open, uncontested markets. Authors Kim and Mauborgne, professors at INSEAD, the graduate school with campuses in France, Singapore, and Abu Dhabi, draw on a decade of research that combines psychology with real-world insight. Suitable for start ups to established companies, Blue Ocean Shift expands on material presented in their previous book Blue Ocean Strategy, which sold 3.6 million copies internationally.

In their preface, the authors write, “What inspired us were organizations that went beyond competing to create new opportunity and jobs, where success was not about dividing up an existing, often shrinking pie, but creating a larger economic pie for all—what we call blue oceans.” For any process to work, it must build confidence as much as unlock creativity, the authors write. (2017 Hachette) $28, Village Books and Amazon. Recommended by Village Books.

2 Second Lean, How to Grow People and Build A Lean Culture Paul A. Akers 2 Second Lean is the story of Paul Akers, an industrial arts teacher whose knack for innovation led him to start a product-development company in his garage in 1997. Now president of FastCap, a global company based in Ferndale that develops woodworking equipment, Akers writes and speaks widely on his Lean principles and how they apply to businesses around the world. 2 Second Lean, about the elimination of waste through continuous improvement, includes Akers’ journey of mistakes and improvements. The title refers to making

small, 2-second improvements every day. The principles apply to all processes, not just manufacturing, and can be used by anyone in any business, Akers said. First, you must see the waste, then make improvements. He offers one example of an Indy 500 pit crew: they change a tire in eight seconds by eliminating all wasted motion, transport, and defects. (2017) $14.99 on FastCap.com, or FastCap retail store 5016 Pacific Highway, Ferndale. Also on Amazon.

The Pivot: Orchestrating Extraordinary Business Momentum Lori Michele Leavitt Leadership consultant Lori Michele Leavitt has worked with 30 local businesses since moving her consultancy to Bellingham in 2013. “I wrote this book for businesses that have grown up,” Leavitt said. “They’ve been in business for a while, and want to be more nimble. “In the book I help identify: what are your next best steps? On thepivotbook.com, you can get a summary. I’ve boiled down how to get business vibrancy into six indicators. Track those six and you’ll see your business gaining momentum.” Becky Raney, chief operating officer of Print & Copy Factory, recommends Leavitt’s methods. “Running a business, there are so many 62 | BUSINESSPULSE.COM JANUARY/FEBRUARY 2018

things that come at us,” Raney said. “It’s hard to filter through it and find clarity.” Raney is using the book to create a theme for 2018 for everyone in her business to rally around. “What will make us the best in Whatcom County, in Washington state?” Leavitt said the “pivot” requires small shifts more frequently, by more people, and a clear idea of how the leader’s actions fit into strategy. “How do you have a vibrant business; one that commands highest valuation, stays ahead of the competition, and is a great place to work?” (2017 Abrige Media), Amazon, Barnes & Noble, and to order at local bookstores.

DEBBIE AHL CONTINUED FROM PAGE 52

How does this human leadership play out against the rapid advancements in technology, such as robotics and artificial intelligence? All of the new technology certainly has a role in our future, and a role in improving our business outcomes. But none of it will happen without human leadership, an understanding of people, of relationships, and of our need to make a difference, to matter and to leave a legacy. What’s your message to women aspiring to executive business careers and/or entrepreneurship—is the ceiling still glass? I don’t think of myself as a trailblazer for women. I do feel strongly about helping create opportunities in business for women, especially in the C-suite. Women have made big gains in the workplace, but we’re still far too short of women in executive positions. I always encourage businesswomen to go for the top, go for all they can achieve and I love supporting their efforts.

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What’s the back story on your business ventures? My career simply evolved. I worked in the emergency room at a local hospital to put myself through college. They offered me a job in public relations, and then I grew up through administration. After the hospital was acquired for the second time, I joined a startup, Olympic Health Care Management, a third-party health plan administrator specializing in Medicare. The Olympic companies were acquired by Aon and matched with an insurance license (Sterling), and I was asked to be the CEO. Neither the insurance field nor running a company were ever in my plans. What was in your plans? I had an interest in world affairs and had thought about becoming a news reporter. When I moved here to go to Western (class of ’81), I wanted to become the next Christiane Amanpour (chief international correspondent at CNN and anchor of a global affairs program). So, I majored in political science and communications.

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JANUARY/FEBRUARY 2018 BUSINESSPULSE.COM | 63

SAVE THE DATE

2018 BUSINESS PERSON OF THE YEAR AWARDS MARCH 21, 2018 Hosted by Business Pulse magazine

For sponsorship information contact Melissa Coffman at melissa@businesspulse.com or visit www.businesspulse.com

DEBBIE AHL CONTINUED FROM PAGE 63

When did you see healthcare coming? I never foresaw a career in healthcare management and systems. I followed opportunities as they came, and one kept leading to another. Life happens, and opportunities came up while I worked my way through college at St. Luke’s Hospital. My direction turned towards healthcare. President/CEO of Olympic Health Care…Sterling Health Plans…Edgewater Advising LLC—what’s next? I’m enjoying applying 40 years’ experience to help companies scale and grow, and helping others prepare for leadership roles. Now, as a consultant, I can manage my time to enjoy family, friends and travel. My husband and I have six adult children, and we have added four brides and three granddaughters to the family in the last two years, with our first grandson due in January! I also have the opportunity to give back to the community in roles with various organizations. And I’m very excited about the new WBA program we’re starting.

CAREER PATH 1978-1989: St. Luke’s Hospital: Ward Clerk, Public Relations Director, Administrative Director of Marketing 1989-2000: Olympic Health Management Systems, Inc.: Director of Marketing, Executive VP for Development; Chief Operating Officer. 2000-2009: Sterling Life Insurance Company: President & CEO. Current: § Founder & Managing Partner, Edgewater Advising § Senior Advisor, ADVault § Interim Executive Director, Mount Baker Kidney Center § Trustee, Bellingham Technical College § Chair, NW Innovation Resource Center Board § Member, Center for Innovation in Education, College of Business & Economics at WWU § Board of Directors, Compass Health

64 | BUSINESSPULSE.COM JANUARY/FEBRUARY 2018

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