‘STEP UP FOR BUSINESS ADVOCACY’ CAMPAIGN, P. 58
JOHN HUNTLEY Mills Electric CEO stands tall for job creation
MAGAZINE WINTER 2017
Pier Pressure Will Cherry Point ever have another one? Or anything else…
80% market share… 3x growth by 2020
What’s their secret? Jeff Gray, Director of Outreach & Fit, Superfeet
The business of dogs
Meet a vet, groomer, the boarder, the masseuse, and the store that has everything
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Healthcare, land use, and minimum wage The Publication of The Whatcom Business Alliance
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TABLE OF CONTENTS
CHERRY POINT A FOURTH SHIPPING PIER similar to the one pictured here at Cherry Point industrial area is but one of the several contentious points in the language of a proposal by Whatcom County Council that could prevent building another PIER.
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SPECIAL REPORT: ‘CHERRY POINT COALITION’ FORMS TO CAN THE BAN A LARGE CONTINGENT of like-minded business leaders have aligned with Whatcom Business Alliance (WBA) with the intent of informing the public on negative economic impacts of a proposal by Whatcom County Council to declare a moratorium on the heavy industrial zone and deep water port at Cherry Point. Compromise is the goal on language that upholds environmental stewardship while protecting business expansion.
COVER STORY: SUPERFEET INSOLES NOW PADDING ABOUT GLOBALLY IN THE UPPER THIRD of our Top 100 Privately-Owned Companies in Whatcom County last year, reporting revenues between $50M-$60M (2015), Superfeet continues to expand its reach from its state-of-the-art HQ in Ferndale. Now employee-owned and self-declared as a “no rules” environment, the company features a “Zen Room” arcade for breaks, and other features that has earned Best Places to Work recognition. Watch for a WBA Industry Tour there this year.
'STEP UP FOR BUSINESS ADVOCACY' TAKING ON ISSUES TO ADVANCE education about major issues facing companies and employees, a WBA campaign launched last fall “for business advocacy” – a strong mission arm of the organization. Some examples – such as an averted restriction in the LAHAR zone below Mt. Baker – have already been addressed as the campaign moves into an anticipated complex 2017.
GUEST COLUMNS: VIEWS OF NEW LAWS, AND MORE WHAT WILL BECOME of Obamacare with the change in administrations, and how does it affect the rules in place for this year? This topic, covered by nationally-recognized expert Dr. Roger Stark, is one of the strong guest columns by staffers at Washington Policy Center among our eight editorials. The others touch on the state’s new land commissioner, and the new minimum wage/sick leave law.
4 | BUSINESSPULSE.COM
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TABLE OF CONTENTS
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INDUSTRY REPORT: NOT WOOFIN’ YOU – THE BUSINESS OF DOGS FLOURISHES YOU NAME IT, whatever a dog owner needs hereabouts, somebody or several somebodies can provide it. Dogs lead the pack in the national rise in pet ownership. Food (of course), verterinary care, grooming, boarding, toys, beds, dishes, leashes, on and on and on, keep the dog happy. Here’s a close look at five different businesses within the industry.
THE ENCYCLOPEDIA OF LARRY: CLARK FEED & SEED KEEPS ‘EM HAPPY LARRY OLTMANN and his wife, Mary Jo, bought the store 40 years ago and have kept it running as the longest-standing company in the same location in both Whatcom and Skagit County dating to the turn of the last century. They specialize in high-end, no-additives dog food, and Larry will instruct you all about it. Dogs comprise the largest segment of business after fish.
ENTREPRENEUR ENTERPRISE: MEET MIKE ANDES – IF YOU CAN CATCH HIM STANDING STILL LONG ENOUGH AT AGE 10 he started his own business – mowing lawns with his brother – and earned enough to buy a trampoline and save some for college. Now, at 21, he has four startups (and more in mind) and markets himself as a “serial entrepreneur,” starting with Augusta Lawn Care Services.
For editorial comments and suggestions, please write editor@businesspulse.com. Business Pulse Magazine is the publication of the Whatcom Business Alliance. The magazine is published at 2423 E. Bakerview Rd., Bellingham, WA 98226. (360) 746-0418. The yearly subscription rate is $22 (US). For a free digital subscription, go to businesspulse.com or whatcombusinessalliance.com. Entire contents copyrighted © 2017– Business Pulse Magazine. All rights reserved. POSTMASTER: Send address changes to Business Pulse Magazine, 2423 E Bakerview Rd., Bellingham, WA 98226. 6 | BUSINESSPULSE.COM
Publisher Tony Larson Managing Editor Mike McKenzie Feature Writers Sherri Huleatt Cheryl Stritzel McCarthy Mary Louise Van Dyke Guest Columns Randall Benson: Lean Visual Management Jacob Deschenes: Personal Investing Todd Myers: Environmentalism CJ Seitz: Business Development
Erin Shannon: Minimum Wage 2017 Dr. Roger Stark: Obamacare 2017 Tech Help/Big Fresh: Life in the Tech Lane Cover Photo Jeff Gray: Courtesy of Superfeet Photography Sherri Huleatt Cheryl Stritzel McCarthy Mike McKenzie
Courtesy Photos Augusta Lawn Care Services Kelly Frere / BigDog Massage Phillips 66 Refinery at Cherry Point Superfeet Graphic Design/Layout Kevin Baier Ad Sales Jon Strong Subscriptions Janel Ernster Administration Danielle Larson
Facilitating Business Prosperity & Community Prosperity whatcombusinessalliance.com
The Whatom Business Alliance The Whatom is a member Business organization Alliance iscreated a member to organization created to enhance Whatcom County’s enhance qualityWhatcom of life through County’s thequality preservation of life through the preservation and creation of healthy businesses and creation andof good healthy jobs.businesses We encourage, and good jobs. We encourage, support, facilitate and advocate support, onfacilitate behalf ofand local advocate companies on behalf in of local companies in every industry who are working every industry to retainwho jobs; are and working are interested to retain jobs; and are interested in expanding their operations in expanding and startup their companies operations interested and startup in companies interested in locating in our community. ss Prosperity & Community Facilitating Prosperity Business Prosperity & Community Prosperity locating in our community.
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EXECUTIVE COMMITTEE EXECUTIVE COMMITTEE
Jeff Kochman President
John Huntley President/CEO
AMBK
Mills Electric, Inc.
EXEC
BOA
John Huntley Jeff Kochman President/CEO President
John Huntley Board Chair President/CEO Jane Carten President/Director Mills Electric, Inc.
Mills Electric, AMBK Inc.
Saturna Capital
Board Thomas Chair Doug Jane Carten President/CEO President/Director Bellingham Cold Storage Saturna Capital
BOARD OF DIRECTORSBOARD OF DIRECTORS
Pam KenBrady Bell President Director
Pam Brady Janelle Bruland Director President/CEO
NW Govt. Bestand Recycling Public Affairs NW Govt. and Public Affairs Management Services NW BP Cherry Point BP Cherry Point
Janelle Tyler Bruland Byrd President/CEO President/CEO Management Red Rokk Interactive Services NW
Andy Scott Enfield Corzine MajorVice Accounts President Executive
Sandy Andy Keathley Enfield Founder Vice President
Tom Kenney Sandy Keathley Regional President Founder
Puget Enfield Sound Farms Energy
KEnfield & K Industries Farms
Washington Federal K & K Industries
Larry BobMacDonald Pritchett General President Manager / CEO The Social Live Team Faithlife Corp
Brad Rader Bob Pritchett Vice President President / CEO Uptrail Corp LLC Faithlife
BradRaney Rader Becky Vice President Owner/CEO LLC Print &Uptrail Copy Factory
Marv Doug Tjoelker Thomas Partner/Chairman President/CEO
Marv Tjoelker Partner/Chairman
Bellingham Larson Gross Cold PLLC Storage Ken Bell President
Larson Gross PLLC Pam Brady Director
Best Recycling
NW Govt. and Public Affairs BP Cherry Point
Jeremy Tyler Byrd Carroll Scott Corzine President/CEO Vice President Major Accounts Executive Red Dawson RokkConstruction Interactive
Jeremy Carroll Andy Enfield Vice President Vice President Dawson Construction
Tom Kenney Larry MacDonald Ben Kinney Regional President General Manager President/CEO The Social Live Team Washington Federal Keller Williams, NVNTD
Bob BenPritchett Kinney President / CEO President/CEO Faithlife Corp Keller Williams, NVNTD
Sarah Rothenbuhler Becky Raney Owner/CEO Owner/CEO Equipment PrintBirch & Copy Factory
Sarah Rothenbuhler Jon Sitkin Owner/CEO Partner Birch Equipment Chmelik Sitkin & Davis P.S.
Puget Sound Energy
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Enfield Farms
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Not pictured: Guy Jansen, Director L
Jon Sitkin Partner
Billy VanZanten Jon Sitkin CEO Partner
Josh Wright Billy VanZanten VP/Broker CEO
Josh Wright VP/Broker
Chmelik Sitkin & Davis P.S.
Western Sitkin Refinery Services Chmelik & Davis P.S.
Bell Anderson Insurance Western Refinery Services
Bell Anderson Insurance
Not pictured: Guy Jansen, Director Not Lynden pictured: Transport, Guy Jansen, Inc. Director Lynden Transport, Inc. 8 | BUSINESSPULSE.COM
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LEADING OFF Tony Larson | President, Whatcom Business Alliance The Whatcom Business Alliance is a member organization made up of businesses of every size and shape, from every industry. The WBA enhances the quality of life throughout Whatcom County by promoting a healthy business climate that preserves and creates good jobs.
Post Election Consumer and Business Confidence Soars
G
oodbye, 2016… and good riddance. Hello, 2017…and welcome. That seems to be the sentiment of many business people and consumers.
At the end of 2016, I attended two local economic forecast events. The Whatcom Business Alliance hosted one; the other was US Bank’s 27th annual event. The events were both wellattended and took place after the presidential election in November. Attendance suggested that many there held especially high interest in prognostications from economic and business experts, as well as feedback from other business people regarding their future expectations. At the US Bank event, business folks in attendance filled out a written survey, the results of which were revealed at the end of the event. Consensus? Consistent with the economists themselves, the Whatcom County business community is optimistic regarding expectations for growth, employment, and general business conditions in 2017. Even though the local feedback was unscientific and statistically insignificant, the results ran consistently with national polling on both consumer and business confidence, post-election. The National Federation of Independent Business (NFIB) reported in December 2016 that 10 | BUSINESSPULSE.COM
small business optimism remained flat leading up to Election Day, and then rocketed higher as business owners expected much better conditions under new leadership in Washington. The NFIB Index of Small Business Optimism is one of the oldest and most widely-respected economic research reports in the country. They’ve collected data about small business economic trends for every quarter since 1973 and have had monthly surveys since 1986. Their December survey asked small business owners a battery of questions related to their expectations for the future and their plans to hire, build inventory, borrow, and expand. And with particular interest in how the election impacted business confidence, according to NFIB Chief Economist Bill Dunkelberg, “…We bifurcated the data to measure the results before and after the election. The November index was basically unchanged from October’s reading up to the point of the election, and then rose dramatically after the results of the election were known.” Job creation plans increased from a net 9 percent through Nov. 8 to a net 23 percent after the election. Expected higher sales rose 16 points, from a net 4 percent to a net 20 percent. Expected better business conditions, the biggest mover in the survey, rose from a net minus-6 percent to a net 38 percent, a massive 44-point spike. Polling rang similar on the con-
sumer side. According to Surveys of Consumers Chief Economist Richard Curtin, consumer confidence surged in early December 2016 to the highest level in 12 years – since the start of 2004. According to Curtin the surge was largely due to consumers’ initial reactions to President-elect Donald Trump’s surprise victory. When asked what news they had heard of recent economic developments, more consumers spontaneously mentioned the expected positive impact of new economic policies than ever before recorded in the long history of the surveys. An equal number volunteered negative judgments about prospective economic policies, but the frequency of those negative references was less than half its prior peak levels, whereas positive references were about twice their prior peak. If you’re like me, you’ve become skeptical of polling numbers. We should be skeptical. If this election taught us anything, it’s that we have to question mainstream thought. The consumer confidence numbers referred to here are backed up by several reputable polling firms, including The Conference Board. It’s a global, independent business membership and research association looked to by policy makers on both ends of the political spectrum for data. I’ll let you speculate on why consumers are feeling more confident now. (continued on page 77)
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BUSINESS PROFILE: SUPERFEET SUPERFEET MOVED from a 5,000 square foot facility to a 50,000 square foot facility in Ferndale in 2011. Founded in 1977, the company now boasts 144 employees scattered across the globe.
Photos and article by Sherri Huleatt 12 | BUSINESSPULSE.COM
THE SOLE OF SUPERFEET: How the company dominates the insole world but still keeps its heart
A
t first glance, a shoe insole isn’t much to look at—just a flat piece of rubber shoved into the bottom of a shoe that, hopefully, you use to make your next run, walk, or hike a little more bearable.
But that’s not the case for shoe insoles by Superfeet. For this insole-making powerhouse on the southwest edge of Ferndale—which owns a whopping 80 percent of the U.S. insole market—insoles are crafted artfully using the latest podiatric science. Instead of insoles bought on impulse at the drugstore, Superfeet’s products are targeted for the customer truly looking to resolve back, knee, and foot problems in the long term. And, of course, to step up their ski game.
WHATCOMBUSINESSALLIANCE.COM | 13
BUSINESS PROFILE: SUPERFEET
AMY OLIVE, consumer marketing manager, shows off The Superfeet Way, a book detailing the company’s history and core values.
Founded by Dr. Dennis Brown and Dr. Chris Smith in a small podiatric lab in Lynden in 1977, Superfeet offered the first overthe-counter insole specifically designed for outdoor recreation. As innovators in the podiatric field, Dr. Smith and Dr. Brown got their start with “Insta-SkiThotic” technology, which helped ski boot fitters craft custom orthotics in about 40 minutes, rather than the typical six weeks. In 1980, the brand struck gold with the “Green” insole—the firstever, trim-to-fit insole, which has remained their bestselling product for the last 40 years, and which opened the doors for the U.S. overthe-counter sports insole market. 14 | BUSINESSPULSE.COM
Throughout the ‘80s, Superfeet’s dream team slowly assembled: • Randy Curran joined the team as the sports industry expert. • Jeff Gray became their outreach expert—traveling all over the U.S. to host educational Superfeet clinics.
“It comes down to having really passionate employees who will do whatever it takes” —Amy Olive, consumer marketing manager
• Lynette Zeigler joined as their customer care and shipping expert.
• Sven Coomer—a former Olympic athlete—offered boot design expertise. • Scott Dohner offered decades of business experience that helped propel the company to what it is today. Together, these five key players and the founders, Drs. Brown and Smith, would take Superfeet from a small lab in Lynden to its 50,000 square-foot facility in Ferndale today, along with offices in the United Kingdom and Canada. And, with exception of Coomer, every team member stayed with the company until retirement. “Our success happened overnight, it just took us 40 years,” said Jeff Gray, director of outreach
INSOLES OF EVERY SIZE and for a wide variety of applications, all distributed globally, line the product display walls at Superfeet in Ferndale.
and fit and a 40-year veteran of Superfeet. We did it with a product that works extremely well—it takes people’s pain away and it gives comfort to their feet. When you have a product that’s so powerful, you get testimonials from consumers saying, ‘You’ve changed my life—you’ve taken 20 years of knee pain or back pain away.’ “That’s a powerful message and it’s built a powerful culture.” In the beginning, though, not everyone was so enamored with their product. As one of the primary spokespersons for the company and the only original team member still actively working for the company, Gray’s biggest challenge was convincing consumers and retailers that the harder the insole, the better. “Most people think they should put their feet on something soft, but that makes you go crooked quicker,” Gray said. “We sold some-
thing rigid in the soft world, so we knew it took education to get the consumer and retailer to understand the product. That was my job. I had
“They’ve copied our colors, our packaging— everything. If they’re serious, they’ll copy our 1 percent donation outreach, too. My goal is to get other companies of similar sizes to do the same thing.” —Jeff Gray, director of outreach and fit
to train our reps, sales force, retailers, and consumers. Superfeet was an education company that happened to sell an insole.”
Gray traveled all over the U.S. spreading the Superfeet gospel, and it paid off in droves. In 1995, the company got its first order from REI, and in 2001 Superfeet expanded beyond the sports market to offer insoles for dress shoes and high heels. In 2015, they launched 16 new products—their highest number ever—and in the spring of 2017 they’ll not only start 3D printing insoles, they’re also launching an entirely new line of shoes built from the inside out. That’s right – instead of manufacturing a shoe and designing the insole to fit, these shoes will be built to fit the insole. This product diversification is all part of their “Vision 20/20 Plan,” which aims at tripling sales revenue between 2015 and 2020. A hefty goal, to say the least, but Amy Olive, their consumer marketing manager, is confident they can do it. “It comes down to WHATCOMBUSINESSALLIANCE.COM | 15
BUSINESS PROFILE: SUPERFEET having really passionate employees who will do whatever it takes,” she said. Beyond that, Olive sited Superfeet’s core values and incredible product as the main reasons for the company’s success. “We put people ahead of profit— that’s how we did it,” Gray said. “We didn’t know if we could build a company on core values and still make it profitable, but we did. We broke all the rules of how Wall Street says you have to do it.” Beyond Superfeet’s stellar product, the workplace culture makes them stand out. Amidst the lime green walls and ultra-modern office space, a friendly and passionate team demonstrates that they truly believe in the company’s ideals and products. That’s one of the reasons Superfeet transitioned from being 50 percent employee-owned in 2006, to 100 percent employeeowned in 2015. This change gave the employees a greater stake in the company and an even greater
“Our success happened overnight, it just took us 40 years. We put people ahead of profit—that’s how we did it.” —Jeff Gray, director of outreach and fit
drive to grow. The company has 90 employees in their Ferndale office and another 54 scattered across the globe. To boost transparency amongst employee shareholders, Superfeet hosts a company-wide meeting once a month where key leaders and employees talk openly about the company’s struggles and successes, and how to grow. Once a year, they also host cross-functional “Culture Pillar Teams,” based on the company’s core values: environment, brand, culture, execution, customerdriven, and innovation. Each team brainstorms a way to improve the 16 | BUSINESSPULSE.COM
ANNIE HOWARD, Superfeet’s PVC (“People, Values, and Culture”) manager, displays Superfeet’s first “Pets of Superfeet” calendar—just one of the ways the company builds on its employee-focused culture that centers on having fun.
company, pitches the idea to leadership, and, if approved (almost always), launches the idea. That’s how Superfeet ended up with an ultra-calming, laid back “Zen Room” arcade, and “GTD” (“Get Things Done”) awards posted around the office. The pet-friendly, “no rules” company also just released their first “Pets of Superfeet Calendar,” featuring beauty shots of the employees’ beloved critters. All of these things and more are why Superfeet has been ranked as one the country’s
best places to work by Outside Magazine three times in the last few years. Beyond the fun culture Superfeet constantly looks for ways to streamline operations and to boost productivity. Several years ago they strapped pedometers to their entire warehouse team so they could track their footsteps and cut unnecessary movements. The strategy gave them the data they needed to redesign their entire warehouse with the goal of cutting 1 million unnecessary footsteps.
Two years ago they also added a state-of-the-art, custom-built Adco machine, which packages their insoles for them. Before the machine, they packaged about six boxes a minute; now, they can do 50-60 boxes a minute, allowing them to increase capacity significantly, without hiring a whole new team. Superfeet also has made philanthropy a huge priority. They donate 1 percent of total sales to charity— splitting the money among local, national, and reserve charities. The reserve fund is used for natural disasters and unexpected calamities. Philanthropy is a major point of pride for the entire team, but especially for Gray, who has strong relationships with all of the company’s national charities, including Fisher House, Our Hearts to Your Sole, Medical Teams International, Conservation Alliance, and the Boys & Girls Clubs of America. Gray recently returned from a trip to Guatemala where he and
"THE ZEN ROOM" Superfeet's break room arcade.
WHATCOMBUSINESSALLIANCE.COM | 17
six other Superfeet employees built several dozen latrines for a small village. Philanthropic trips like this are so popular amongst employees that they have to draw names to see who gets to go. Last November, Gray and his team fed 350 homeless people at the Lighthouse Mission in Bellingham and partnered with PeaceHealth St. Joseph Medical Center to offer flu shots, pedicures, shoes, socks, and Superfeet insoles. “This winter, we’ll provide 2,000 hygiene kits and Superfeet insoles for people across six cities,” Gray said. “There was one night we went to Fred Meyer and cleared out two to three rows of shoes in one night, so we could donate them.” Superfeet also has turned their Christmas party into an annual fundraiser, in which they raffle
off prizes and donate the funds to a group of local families in need. Despite so much giving, Superfeet has kept a relatively low profile in Whatcom County. According to
“We didn’t know if we could build a company on core values and still make it profitable, but we did. We broke all the rules of how Wall Street says you have to do it.” —Jeff Gray, director of outreach and fit
Olive, it’s not about publicity, it’s about genuinely wanting to help. “We give to the community because it’s fun and we want to” she said.
Gray said his hope is that their competitors, like Dr. Scholl’s, start their own charity programs. “They’ve copied our colors, our packaging—everything. If they’re serious, they’ll copy our 1 percent donation outreach, too. My goal is to get other companies of similar sizes to do the same thing.” Superfeet’s heart for philanthropy is grounded in the company’s core values. “When Scott Dohner hired our sales manager, he told him, ‘I don’t ever want to hear that you missed your kids’ soccer games because you were doing Superfeet. You put family first,’” Gray said. “Everything we do comes down to our core values of honesty, integrity, fairness, respect, and responsibility—when you build a company around those values, you’re going to be successful.”
THE SOLE is the heart of Superfeet’s center of operations – or, more precisely the insole, as displayed on a product wall at the headquarters in Ferndale.
18 | BUSINESSPULSE.COM
ANALYSIS: CHERRY POINT AMENDMENT TO COMP PLAN
Special Report compiled by Business Pulse
WHATCOM COUNTY COUNCIL HAS A CHOICE:
Is Cherry Point open for business, or not? ON THE WESTERN-MOST edge of Ferndale at Cherry Point, two major oil refineries – Phillips 66 seen in the glow of sunset here, and BP – combine to provide a whopping percentage of the economic welfare of Whatcom County in jobs, taxes paid, and philanthropic community supNEED lorem ipsum in hosagain? horibuntem omnonsum ia con tus, essendam nostatus, ut conum pubport. Will they everCAPTION, have neighbors in industry linato utus bon66din sulis tesatbondam publium con dem ina, catis hoctus alius, est desblicere consi conum (Photo courtesy of Phillips Refinery Cherry Point)
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WHATCOMBUSINESSALLIANCE.COM | 21
ANALYSIS: CHERRY POINT AMENDMENT TO COMP PLAN
PIER, OR NO PIER? Permitting is in place for a fourth loading pier similar to this one at Cherry Point, and legal questions have arisen over whether it can ever be built because of disputed zoning. Large manufacturers would find this possibility in a deep-water port appealing. (File photo)
J
ohn Huntley, president of Mills Electric in Bellingham, found himself recently in a place he never thought he’d be – in a room full of people on a snowy night, standing in front of the Whatcom County Planning Commissioners, and talking about the future of businesses at Cherry Point.
“I was under the mistaken impression that if you simply did your work, did it right, and followed the rules, the government would support your efforts,” he said, recalling that experience in an interview. “That didn’t appear to be the case at this meeting.” 22 | BUSINESSPULSE.COM
“My business and many others rely on the companies at Cherry Point, and it’s common business sense that if you’re not able to adapt to the changing marketplace – if you’re frozen in time – your business won’t survive.”” —John Huntley, Owner/President, Mills Electric
Huntley is one of many contractors, business allies, and company executives and employees scratching their heads over a certain proposed amendment to one important section of one especially significant chapter in the 11-chapter Whatcom County Comprehensive Plan. The puzzler was sent to the Planning Commission by the Whatcom County Council, and if approved as written the amend-
ment would discourage future business growth and would squeeze existing and future business operations in Cherry Point. At the core of why it’s so vital: Cherry Point is the only area in Whatcom County zoned for heavy industrial use, and as such it’s become a giant center for community prosperity. The controversial amendment in question has become the focal point of a heated battle about Cherry
JOHN HUNTLEY, President of Mills Electric, standing before a relic photo of Phillips 66 Refinery at Cherry Point, is one of hundreds of subcontractors at Cherry Point. His contracts provide 100s of well paying jobs with Cherry Point companies, a prime example of the multiplier effect spreading from that industrial area. (Photo by Mike McKenzie)
Point’s future, in general, and specifically what the future looks like for its long-standing, current business base.
A LAST-MINUTE PROPOSED CHANGE THAT WOULD HARM CHERRY POINT BUSINESSES In June of 2016, the County Council was finishing its review of the Comprehensive Plan – the document that is the policy-setting map for Whatcom County’s growth. At the 11th hour, after more than a year of review, the Council offered up an amendment to the Land Use section that attempted to put a stop to the growth of the businesses operating in Cherry Point. It also would ban any throughput of fossil fuel shipments in and out of the area.
“I don’t want to see real unrefined fossil fuel go to Asia, because it will all come back here as pollution…. But I also want us to treat our refineries as good stewards….(they) are good businesses and good citizens. If we keep pushing them they may leave.” —Barbara Brenner, County Council, District 3 (7th term)
County Council member Barbara Brenner, the sole vote against the amendment that passed 6-1, offered her own amendment, which was rejected by the Council. “I don’t want to see real unrefined fossil fuel go to Asia, because it will all come back here as pollution since Asia has few regulations for refining,” she said in a phone conversation about her position.
The Council majority passed an ordinance that goes much farther than unrefined fossil fuel since it includes propane, butane, natural gas, and other fuels that are not unrefined. “But I also want us to treat our refineries as good stewards, because they’re doing a clean job,” Brenner continued. “Most of the pollution and acidity around here WHATCOMBUSINESSALLIANCE.COM | 23
ANALYSIS: CHERRY POINT AMENDMENT TO COMP PLAN
THE AREA ADDS VALUE TO THE WHATCOM QUALITY OF LIFE The ramifications of Cherry Point’s business health is not limited to its geographic footprint. Cherry Point industries serve as a linchpin to Whatcom County’s economic health, and therefore its quality of life. A joint Western Washington University and University of Washington study commissioned by the WBA in 2014 quantified what most people already perceived instinctively, including: • The Cherry Point Industrial Zone is home to 2,200 jobs, roughly 2.5 percent of the total job base in the county -- and supports directly or indirectly roughly 11 percent of the jobs in the County (about 9,000). • The jobs in the Cherry Point area have an average wage of around $114,000 a year (compared to the County average of $41,000). • The businesses in the Cherry Point Industrial Zone pay more than $200 million in taxes each year – which pays for everything from schools to public safety to general government services. • The businesses also support others in the community by making more than $1 million in charitable contributions each year. BARBARA BRENNER, Whatcom County Council Member, cast the only vote perceived by Cherry Point stakeholders as favorable to their long-term interests. (File photo)
isn’t coming from them. It’s coming from Asia on the prevailing winds and currents. Our refineries are good businesses and good citizens. If we keep pushing them they may leave and we could wind up with even more pollution coming from Asia and fewer decent paying jobs.”
STAKEHOLDERS SPEAK OUT The non-profit Whatcom Business Alliance (WBA), with a board – including Huntley on the executive committee – and its membership comprising businesses of every size, and from every industry in Whatcom County, felt it was important to create a member coalition of Cherry Point businesses and stakeholders and bring balance to the conversation. The coalition’s intent is to educate the County Council on the consequences of the language about current and future business at Cherry Point, as well as the businesses, schools, fire districts, libraries, nonprofits, municipalities, and others who rely on the economic activity out there. 24 | BUSINESSPULSE.COM
"BP Cherry Point Refinery is contained within the Blaine School District,” according to Amber Porter, the director of Finance and Operations for the Blaine district. “Approximately 26 percent of the tax revenues collected for the Blaine High School construction project are expected to come from BP. Phillips 66 is a local partner and major financial contributor towards our annual Math Championships Competitions."
THE BUSINESS ALLIANCE MAKES SOME HEADWAY In the face of pushback from the business community, employees, contractors, and other stakeholders, the County Council punted the proposed amendment back to the Planning Commission last August to discuss, determine and recommend appropriate language. In doing so, the Council passed a six-month moratorium on any fossil fuel projects at Cherry Point, thereby freezing any development, improvements, or expansions by current businesses or new projects (and the jobs that would come with all that). Which brings us back to John Huntley in front of the Planning Commission on a cold December night. “Why fix something that’s not broken?” Huntley said. “My business and many others rely on the companies at Cherry Point and it’s common business sense
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ANALYSIS: CHERRY POINT AMENDMENT TO COMP PLAN
A COUNTY COUNCIL AMENDMENT would close the door on possible future developments at the heavy industrial zoned area of Cherry Point, where two oil companies an aluminum smelter and many other businesses have been operating as community partners for many years. (File Photo)
that if you’re not able to adapt to the changing marketplace – if you’re frozen in time – your business won’t survive.”
WHAT’S IN THE PROPOSAL? The proposed amendment by the Council picks winners and losers at Cherry Point – with the existing companies and any future development there becoming the losers. The amendment essentially puts up a “no further upgrades or action” sign on all the businesses now at Cherry Point. “Taking future flexibility away from our facility practically ensures that we will be unfairly constrained,” said Karen Shorten, Plant Manager at Phillips 66 Ferndale Refinery. ”Our competitors, including those in Skagit County, will be able to take advantage of opportunities that we won’t be able to.” Second, the language attempts 26 | BUSINESSPULSE.COM
“Approximately 26 percent of the tax revenues collected for the Blaine High School construction project are expected to come from BP (Cherry Point Refinery). Phillips 66 (Ferndale Refinery) is a local partner and major financial contributor towards our annual Math Championships Competitions.” —Amber Porter, Director of Finance & Operations, Blaine School District
to ban the possibility of a fourth industrial pier at Cherry Point, choking off the opportunity for
shipping of products or commodities of any kind- not just fossil fuels. Brad Owens serves as president of the Northwest Jobs Alliance, and he weighed in on the attempt to eliminate the possibility of building a fourth industrial pier. "The existence of a naturally deep-water shipping terminal in the Cherry Point urban growth area would attract large scale economic development,” he said. “Economic development that creates desperately needed family wage jobs. It really seems counter-intuitive to ban a gateway to the rest of the world for the exportation of domestic products and/or commodities.” The amendment ban, if it became permanent, would stifle free-market competition. Shorten at Phillips 66 said in an email response for this article: “In a very competitive commodity market like ours, these kinds of advantages are significant and could jeopardize our future profitability and thus our
WHATCOMBUSINESSALLIANCE.COM | 27
ANALYSIS: CHERRY POINT AMENDMENT TO COMP PLAN
“A naturally deep-water shipping facility would attract large scale manufacturing that would create family wage jobs here at home… It really seems counter intuitive. It’s actually more environmentally responsible to ship by water whenever possible instead of rail or truck.” — Brad Owens, President, NW Jobs Alliance
viability.”
LEGAL QUESTIONS ARISE
BRAD OWENS, president of NW Jobs Alliance, a local, nonpartisan membership organization of business, civic and labor leaders, and elected officials. Its mission: “To promote the growth of family wage jobs in the context of sound environmental practice.” 28 | BUSINESSPULSE.COM
Tony Larson, president of the Whatcom Business Alliance (WBA), observed: “This is a onesided amendment created with a goal of stopping climate change around the world.” The WBA provides a nonpartisan voice for business countywide in addressing issues like this one; Cherry Point is a lightning rod with its three mega-industries comprising oil and aluminum production. “While it’s a laudable goal to address concerns about climate change, limiting the ability for a private company to export its legal products is a slippery slope and clearly falls outside the Council’s legal authority,” Larson said. “This amendment will not achieve its desired objective and instead will put thousands of local jobs at risk, as Ms. Brenner so aptly pointed out. It will also damage a significant portion of our tax base that funds education and public safety and fuels our local economy.” The WBA Board, which has business advocacy as one of its platforms, holds consensus that free-market heavy industrial business and attention to environ-
“Taking future flexibility away from our facility practically ensures that we will be unfairly constrained…. In a very competitive commodity market like ours, these kinds of advantages are significant and could jeopardize our future profitability and thus our viability.”
ship on a large scale. As Owens at NWJA pointed out, shipping by water is the most environmentally friendly and responsible means to ship large quantities of product. What he called “a gold mine of property” at Cherry Point, with the possibility of an already-approved fourth pier, opens up to large-scale development and manufacturing. Cherry Point remains the last deep-water access site left on the West Coast large enough to accommodate cape-size vessels. That holds appeal for all kinds of
large manufacturing plants.
WHAT’S NEXT? When economic development is proposed for Cherry Point, an abundance of local, county, state, tribal, and federal oversight and review already takes place before development of any kind gets approved. The fight for Cherry Point’s jobs and Whatcom County’s economic well-being will roll into the 2017 calendar year with an aggressive agenda during these first
— Karen Shorten, Plant Manager at Phillips 66 Ferndale Refinery.
mental concerns are not mutually exclusive.” “There is a way to both balance the economic opportunities at Cherry Point and protect the environment,” Larson said. “But with this proposed amendment it’s clear the County Council doesn’t see it that way at this point.” The County’s amendment includes language for Whatcom County to conduct a study for the sole purpose of determining how the county can ban the transportation of fossil fuels through the county. “Even the Council’s own legal counsel said their attempt to regulate interstate commerce is unconstitutional,” Larson said.
IRONIC TWIST IN THE NEED FOR DEEP-WATER SHIPMENT An irony, regarding environmental concerns: What if you consider that a large manufacturer of, say, solar panels or wind turbines or electric cars wanted to build a plant in the U.S. with access to a deep-water port? All concerned parties opposed to the County Council proposal recognize that manufacturing on a large scale requires ability to WHATCOMBUSINESSALLIANCE.COM | 29
ANALYSIS: CHERRY POINT AMENDMENT TO COMP PLAN few months of the year. At the time of this writing (Dec. 18), the County’s Planning Commission was expected to send a final version of their work back to the County Council in January for its members to accept, reject, or amend the recommended language from the Planning Commission. “The Planning Commission has worked hard, taken their role seriously, and improved the language,” Larson said. “But it’s not there yet.”
HAVEN’T WE SEEN THIS BEFORE? The WBA has given the Planning Commission proposed
language, put together by its members and stakeholders, that they contend will balance the needs of business and continue environmental protection. The Planning Commission has taken extra time to look at the alternative language, and only time will tell how much or how little they will accept. Not so long ago that new regulation in Bellingham forced large employers such as Georgia Pacific to close. The bottom line is that the language in the County Council’s amendment looks like a recipe for history to repeat itself. One dire possibility is that “poison pill” language could give the county an opportunity to create
ordinances that could cause large employers to see the beginning of the end and eventually shut down. “No matter what the Commission does, it goes to the County Council and we’ll need all hands on deck to try to convince them that bad planning can affect new and current business growth,” Larson said. “Good planning can protect the environment, and help economic growth and tax revenue for the whole county. There are many good examples of this at Cherry Point right now – wildlife management, crops, and more.” But for now it appears the future of Cherry Point hangs in the balance.
ALCOA INTALCO WORKS Plant Manager Barry Hullett stands before a shipping pier, the likes of which is central to a controversial proposal by Whatcom County Council that could prevent construction of a fourth industrial pier at Cherry Point, even though it is permitted. (File photo)
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BUSINESS PROFILE: CUTTERS INC. ‘I’M VERY LUCKY to have hard-working and conscientious employees,’ says owner Steve Ershig (center) at Cutters Inc. in Bellingham. Here, he’s standing at the laser cutter with Don Juchau (left) and shop foreman Scott Wagter.
CUTTERS By Mary Louise Van Dyke
MAKE THE CUT S
teve Ershig of Cutters Inc. in Bellingham discovered something unanticipated while on an outing two years ago, with his daughter in Salt Lake City. He and Emily, then 19, visited a shopping 32 | BUSINESSPULSE.COM
mall and Ershig thought the decorative cuts made in exterior support columns looked oddly familiar.
The store and the directional signs inside the mall also looked as if…
Yes. Cutters had manufactured components for those signs and crafted those cuts. Ershig, the company founder and manager, appreciated discovering that his company had made the cut.
In 2002 Cutters opened in its current location at 3979 Hammer Drive in north Bellingham. The plant covers about 5,200 square feet and employs six, including Ershig. (He declined to share the company's annual earnings with the Business Pulse.) Ershig said he considers himself lucky to be located at the Irongate business park where many of his suppliers and customers operate nearby. That closeness “creates a great synergy,” he said, adding that the company's core customer base ranges from Blaine to the Seattle area. He slowly built up the business, starting with a water jet cutter
“There's not a day that I come to work that I'm not excited about what I do.” —Cutters employee Don Juchau.
Photos by Mike McKenzie
“We live up to our name every day,” he said. And in many, many unknown places, mostly regional but also nationwide and internationally. Cutters uses water jet and laser cutters and a press brake to manufacture and fabricate components for manufacturing businesses. The Utah discovery was unusual because “most of what we make . . . we don't see or know the final product
it will be part of,” Ershig said. Ershig got his start working for Ershigs, an industrial fiberglass company founded by his dad, Herb Ershig. In 2000, Steve decided he wanted to move on and launch a company of his own. He studied for his Master's of Business Administration at Western Washington University, and researched various types of cutting technologies.
machine. His dad worked with him for a short time, bringing in clients with architectural needs, while Steve Ershig concentrated on building a base of industrial clients such as machine shops and fabricators that require components for their products. Working together brought son and dad's business connection full circle. “It was a lot of fun to work with my dad,” Ershig said. Cutters now features six men employing their skills on the water jet, a laser-cutter, and a press brake. Each machine serves a specific function in reshaping tablets of raw materials that range from aluminum to titanium. Cutters also works with composite materials such as carbon fiber that is often used in aerospace applications. Some parts, for instance, wind up in Boeing airplanes. During a visit, gold sparks flare as laser machine operator Don WHATCOMBUSINESSALLIANCE.COM | 33
BUSINESS PROFILE: CUTTERS INC.
THE TECHNOLOGY of cutting with water was the starting point for Steve Ershig when he founded Cutters Inc. “It was our first machine,” he said. Here he demonstrated the technique, which produces sudden bursts of steam as it penetrates the metals.
Juchau operates the cutter to make intricate and precise cuts in sheets of steel and aluminum. “There's not a day that I come to work that I'm not excited about what I do,” Juchau said between cuts. His job involves programming and maintaining the laser cut34 | BUSINESSPULSE.COM
ter. Each cut starts with a mist of water sprayed onto the metal surface just ahead of the laser beam. That beam is invisible, Juchau said, and what viewers see are vapors from the material rising off the metal as it rapidly melts away. The finished accuracy is within .005 of an inch (or less) of the manufacturer's specifications. The waterjet cutter is the company's most versatile cutter with its ability to cut through just about any type of material from steel to composite materials and thicknesses up
to 5 inches, Ershig said. Shop foreman Scott Wagter has worked with Ershig since the company opened. Wagter said part of the challenge is figuring out how to efficiently cut as many components as possible from each sheet of raw material. Wagter shows how the waterjet cutter works by using water and an abrasive substance to slice through and shape material. The material to be cut is placed in a water-filled table about 6-1/2 by 13-1/2 feet, and the jet spray comprises water and garnet powder. The abrasive medium does the actual cutting and the water accelerates the abra-
sive particles that do the cutting at 55,000 psi, Ehrsig explained. A press machine adds another dimension to Cutters' manufacturing capabilities. The operator can program the angle of the bend(s) needed and the machine will automatically execute and control the bend to meet the client's specifica-
“We live up to our name every day.” —Steve Ershig, founder, Cutters Inc.
tions and requirements. While most of the products are destined to become part of another company's wares, visitors can view some of Cutters' products displayed in the company offices. A blackened steel (treated to resist rust) desk and chairs, a vase and statue, and decorative panels, designed by Ershig, lend a sleek, modern look to the rooms. The complete process from design to fabrication and finishing touches was done on-site, Ershig said. Asked about the biggest challenge, Ershig said it involves keeping busy, but not so busy that the workload overwhelms the staff and mechanical capacities. With a small business, that formula is challenging to figure out. Having equipment or staff sit idle, trying to rush through too many jobs to meet client's requirements in a timely way, neither is a recipe for making the cut. “I think I'm very lucky to have the employees I do,” Ershig said. “They're very hard-working and conscientious.” The day of the visit is drawing to a close. A pallet of materials is packaged and ready for pick-up. Other projects include a job for a Seattle-based manufacturer who will air-freight the components to Italy for use in a project there. Ershig said he is pleased with the company's growth. Since opening
BENDING METAL, not just cutting, plays a big role in manufacturing metal parts at Cutters Inc. Owner Steve Ershig works the bender control panel seen here.
in 2002, the company has steadily grown with each annual sales volume and customer base numbers better than the year before it. “We don't necessarily have any plans to
increase our business or get into any fabrication,” he said.
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ENTREPRENEUR ENTERPRISE -- MIKE ANDES AT AUGUSTA LAWN CARE SERVICES
The
Mike Andes E-quation Augusta Lawn Care Services LLC and two other startups, a book, a Business Bootcamp podcast, public speaking, webinars and workshops, and someday he wants to become a doctor…. by Mike McKenzie
M
ike Andes has been running his own business for 11 years. More than half his life. You read that line correctly. He turned 21 last September.
His core business – a mowing and landscape company, Augusta Lawn Care Services LLC (he’s a golfer, Masters fans) – grew out of his mowing neighbors’ yards at age 10 to pay for college. OK, so it wasn’t yet a crystallized formal business; rather lawn mowing evolved as a means to an end while he was moving through high school in his pre-teens and enrolling in college at 13. Augusta became a limited liability company in August of 2013 and got rolling – on mower wheels – the next year. Andes scaled it from $30,000 the first full year, 2014, to $200,000 in 2015. “It blew up that year,” he said. “We went from 28 customers to 70.” And it hasn’t slowed any since, nearly doubling in customer base and tripling in sales.
36 | BUSINESSPULSE.COM
MIKE ANDES offers pointers on creating and marketing a new business, and growing an existing business. He teaches lessons he learned along the way to his own four startups, appearing at seminars, on You Tube, and on his Business Bootcamp podcast. (Photo by Mike McKenzie) WHATCOMBUSINESSALLIANCE.COM | 37
ENTREPRENEUR ENTERPRISE -- MIKE ANDES AT AUGUSTA LAWN CARE SERVICES Last year pulled in $600,000 with Lawn mowing now comprises about 130 regular customers. Mike forejust 35 percent of the company’s Mike Andes studied cast “easily a million, pushing for two” business. Another 35 percent comes stock markets and this year. He has five full-time employfrom landscaping, and the remainees. He bills himself as the company 401Ks before he started ing 30 percent from supplying Estimator (code for CEO), and you’ll materials. “There are so many comKindergarten. He started panies in Whatcom County that still catch him on the riding mower. “I love mowing yards,” he said. “It keeps making money in grade do landscaping. I’m not the best me grounded.” designer, but what we offer and the But it doesn’t stop there for this young school by selling candy way we differentiate ourselves is man who labels himself in digital marwith our professionalism.” and then by mowing keting as a “serial entrepreneur.” All this, from early childhood lawns with his brother. interest in the facts and figures of In Fall 2015 the company added value-added services, the delivery of business. lawn care materials (varieties of mulch, His education began with home limestone, etc.), and in January ’16 Andes bought out schooling and accelerated rapidly from Kindergarten a company that was closing, Paradise Lawn Service in through 8th grade (skipping grade 7) at Bibleway Ferndale, expanding the customer base. “Landscaping Christian Academy in Cloverdale, located in Surrey, and lawn care have a direct correlation to mowing,” British Columbia. His father, John, is the minister Andes said. there. He made previous career moves in Kentucky,
DISCUSSING A PROJECT, before the truck pulls out: (l. to r.) Josh Rivas, estimator Mike Andes, and Nate Weimer. (Photo courtesy of Augusta Lawn Care Services)
38 | BUSINESSPULSE.COM
ENTREPRENEUR ENTERPRISE -- MIKE ANDES AT AUGUSTA LAWN CARE SERVICES
HIS COMPANY TITLE is Estimator, though Mike Andes is founder and CEO. Here he goes over a work order with Josh Rivas. (Photo courtesy of August Lawn Care Services)
Tennessee, and Arizona. Mike's mother, Sharon, hails from Australia. Mike attended a year at Blaine High School, and then, through Running Start, he enrolled in college courses at 13. He completed his bachelor’s degree at Western Washington University in 2013 with combining physical science, technology, and whole-body healthcare. And then, immediately he started work on his Master’s of Business Administration (MBA). “I’m still short on that,” he said during a recent, long conversation about the various entrepreneurial ventures he has going on. “I’ll probably finish so I can say I never quit. But when I’m making five times the average income as a first-year MBA, 40 | BUSINESSPULSE.COM
“I’m the worst employee in the world.” —Mike Andes, Millennial Entrepreneur
it’s hard to see the return on investment currently. Plus, I just hate the finance and statistics part of it. It’s hard when I’m doing real stuff….” That’s a 180-degree turn from when he was 4-5 years old. “At that age I was really into reading and memorizing the stock market,” he said. Again, confirming – he said 4 and 5, not 45. “Every kid has a passion about something, and mine was reading finance magazines and
learning about 401K retirement programs. When I was 5, I thought I’d be a financial advisor someday.” Not long after that, having begun grade school, Mike earned his first income. Simple plan: buy low, sell high with Halloween candy. “I started by trading snacks at school,” he said. “Then, during the week after Halloween, I’d buy bags of candy for $2 and sell them for $10 the rest of the year.” A few years later, about age 8 as he recalled, he became aware of an adult friend’s health problems resulting from surgery after an accident. “That’s when I decided to someday go into the medical field.” Which brought him to yet another remarkable adventure: “I went on a mission trip to Kenya and
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MATERIALS DELIVERY, taking up about half the shop space on Lincoln Road in Blaine, has become close to one-third of the company’s business of total lawn care, along with mowing and landscape. (Photo courtesy of Augusta Lawn Care Services)
performed medical procedures at an orphanage,” Mike said. “I was a teenager, but I was allowed to birth children, perform some minor surgical procedures, and so on. It was a super good experience that I couldn’t have had back here. “Bureaucracy, insurance, paperwork, etc., would have deterred me. Plus, at that time I didn’t want to go into a specialty, I wanted to practice general medicine. If I were to pursue my dream of becoming a surgeon, I’m interested in cardio, thoracic, heart, and brain. But now I’m more likely to enter the industry a different way – whole body health, technical and biomedical fields…at the intersection of science and health.” In and around enjoying normal boyhood experiences – i.e., he
“People always think of golf courses as great landscaping, so that’s how I came up with Augusta " became a good team golfer, and played some baseball – Andes dabbled at a variety of work experiences: Writing code for Apple, teaching classes (which continues even now) at Bibleway Christian Academy, and a year in insurance sales (State Farm) and credit card processing (Smart
Choice Payments) in Lynden. “I learned that I’m the worst employee in the world,” Mike said. “That’s when I made the decision to grow the mowing business.” He and his brother Tim bought their first equipment when Mike was 10, and began mowing neighbors’ lawns. Then the neighbors had them do some handiwork on their yards – planting, weeding, trimming, mulching, etc. They decided to call themselves Andes Mowing. They spent $500 to expand their client base -- $300 for a Toro push mower, $100 for a weed whacker, and $100 for a blower. They charged $10 an hour. Licensed and bonded, and going to places like Sea Links in Birch Bay, a condo development, upgrading WHATCOMBUSINESSALLIANCE.COM | 41
ENTREPRENEUR ENTERPRISE -- MIKE ANDES AT AUGUSTA LAWN CARE SERVICES 'TWASN’T THE SEASON: But he was jolly anyway, because activity bodes well for Mike Andes in 2017 within his business ventures. Here, he returned from public speaking appearances in Vancouver, B.C., for a photo shoot when it definitely was not the season for mowing customers’ lawns, all blanketed with snow. (Photo by Mike McKenzie)
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to $1,000 mowers and a wheelbarrow, and distributing about 200 flyers, they built up to 30 lawns. “When Tim got a driver’s license,” Mike said, “we bought an old junker Dodge Caravan, took the back seats out and put two mowers in the back.” He remembered that their first purchase from the money they made was for a trampoline in the back yard. “We had made about $4,000,” he said. “That was like a million to a 12 year old kid. We built the business together up to about $30,000 a year off a 1-2 days a week and the weekends.” Andes scaled from there on. He bought out his brother Tim. He created a Limited Liability Company (LLC) and went full-time. “I was driven – and I hate to say this – by fear,” he said. “Fear of failure, and fear of winding up like so many students coming out of college with heavy student loans and other debt.” He had long since decided as a 10 year old to save mowing money to pay for college. So all the while he was completing college coursework, he was growing his company to the point of the current brand. “People always think of golf courses as great landscaping,” he said. “So that’s how I came up with Augusta – the home of the Masters golf tournament in Georgia – as the name.” Next, the business expanded to delivery of lawn and landscaping materials. Plans call for opening another location by 2018, on Guide Meridian or in Fairhaven, and perhaps purchasing another company again. Now, if you go onto his website or Facebook page, you’ll find him spreading professional wings, flying daily from one venture to the next. He arrived at a photo shoot for this story straight from having conducted two seminars in Vancouver, B.C. He lists services as a small business consultant and Internet marketer. He teaches courses that he created online. He lists EDDM as an LLC, a direct marketing concept.
He sells Facebook ads, and teaches other businesses how. He cuts You Tube instructional and motivational videos. Then there are the 30 hours of podcasting and webinars that he records during the night, including one called “Business Bootcamp.” Last year he published a book that’s available on Amazon: “The Millennial Millionaire – How to Make $100,000 a Month Landscaping and Mowing Lawns… in 36 months!” He said it offers the five things that keep a business small, and a step by step recipe “to the success I experienced.” The marketing on the book says, “Save lots of dollars and years of wasted time while giving you a scalable business model that is tried, prove, and repeatable. The book basically tells how a young entrepreneur can break out of the middle class.” Ironically, for a young man constantly on the go, his various ventures give him the freedom he desires in his life. “Entrepreneurship, and especially e-marketing,” Mike said, “let me do a lot of things that I want to do.”
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INDUSTRY REPORT: DOG BUSINESS IN WHATCOM COUNTY
Dog industry booming locally and nationally Underwater therapy, dog massage are among traditional services VET MICHELLE C. SCHRAEDER, owner of Mountain Veterinary Hospital, oversees a golden retriever named Markus O’Malley on the underwater treadmill. (Photo by Cheryl Stritzel McCarthy)
Photos and Series by Cheryl Stritzel McCarthy
H
ow much is that doggy in the window? The largest portion of $63 billion.
That’s what experts estimate that Americans will spend on all pets this year. Ten years ago, it was $39 billion. The cost has spiraled up every year since the trade group American Pet Products Association (APPA) started keeping records in 1994 with just $17 million spent that year. Their records show: •Among pet-owning households, most (55 million) own dogs – a recorded 78 million dogs. (Comparatively, just under 43 million households own about 86 mil44 | BUSINESSPULSE.COM
lion cats.) • Dog owners spend an average of $1,641 every year on Rover, easily beating the $1,125 spent on Fluffy.
No figures are available on the aggregate revenue of the dog-serving industry in Whatcom County, but research into the scope of it all reveals that locally it appears to certainly match or surpass national trends. The proliferation and variety of these businesses tell the story. In Whatcom County these days, dogs can rehab bad knees and hips on more than one underwater treadmill, with choice of inclines. They can undergo hydrotherapy in a temperature-controlled, dogs-only pool. They can hang out with their owners in a new bar in Fairhaven, indoors as well as out, for a daily
LEE ANN KELLY, owner of City Dogs Grooming, with regular customer Paquena, a Shihtzu. (Photo by Cheryl Stritzel McCarthy)
or monthly membership fee. They can improve their well-being with dog-massage from a local practitioner, who has a full roster of canine clients and sees potential for becoming busier yet. “It’s becoming mainstream,” said Kelly Frere, who started ProDog Massage in 2011. She chooses to keep her business part-time, and makes $10,000 at it annually. “If I were to market myself, I could do this full-time.” Heather Kimber, owner of Pooch Palace & Kitty Kastle in Ferndale, sees the growth firsthand. “I had no idea people spent this much money on their dogs,” Kimber said. She bought the boarding and grooming facility three years ago from founders Nancy and John Ellis, who started it in 2007. “Some customers spend $350 to $600 a month, just for daycare,” Kimber said. That would be the canines who come in four, five, or six days every week. Those
daily regulars comprise 20 percent of Kimber’s business. Yet grooming and boarding, at more than $5 billion nationally, make up almost the smallest sector of what we spend on pets. Food eats
“I have a better ratio (of staff to dogs) than any preschool your kid has gone to.” --Lee Ann Kelly, owner, City Dogs Grooming
up most of our pet budget, at $23 billion. Vet care is $15 billion, and supplies and over-the-counter meds comprise an addition $14 billion. The smallest expense is our initial cost of owning pets: $2 billion. So, how much is that doggy? More, much more, than its initial
price tag. Locally, besides the spate of food production/sales and veterinary care services, consider toys, bowls, collars, leashes, electric fences or regular fencing, home crates and travel crates, training and obedience classes, boarding, dog-walking, dog-sitting, grooming, licensing, teeth cleaning, toenail trimming, treats, poop bags, flea/tick meds, heartworm meds, microchips, and spay/neuter surgery. That doesn’t include collateral costs such as carpet cleaning or replacement, ruined furniture, doors scratched, gardens unearthed, screens ripped, or the extra deposit landlords require. Across Whatcom County, dogowners have one reply: Worth it. We visited five canine-service providers—groomer, vet, boarding and daycare, massage therapist, and entrepreneur—who speak to the thriving industry’s growth. WHATCOMBUSINESSALLIANCE.COM | 45
INDUSTRY REPORT: DOG BUSINESS IN WHATCOM COUNTY GROOMER KECHA WHYTE trims the nails of canine customer Bailey as manager Jamie Oliveira assists at City Dogs Grooming in downtown Bellingham. (Photo by Cheryl Stritzel McCarthy)
THE GROOMER
C
ity Dogs Grooming in downtown Bellingham has grown 76 percent over the last eight years. Mostly, that’s the result of their 2010 move to their present location, a 2800-square-foot facility on the corner of East Holly and Ellis streets. Previously, business was constricted by their initial 800-squarefoot, somewhat hidden location on Lincoln Street, owner Lee Ann Kelly said. Today their sign, showing a dancing dog, is prominent on a downtown corner. Maybe the dog on the logo is pleased about getting groomed. That was a big reason Kelly started her own business in 1997. Kelly wanted to make dogs 46 | BUSINESSPULSE.COM
happy to be groomed, which would please owners and make the groomer’s job more pleasant. Before starting the business, Kelly had been employed at a dog-boarding facility in Fairhaven. “Like anyone who’s worked for others, I had ideas about doing things differently. Too many people thought their dog felt bad about getting groomed, and these dogs were getting groomed every four to six weeks. We had to change that.” Kelly got a $4,000 loan from her mother to launch her business. “My husband greatly encouraged me. He was fearless. I wasn’t. We had just gotten married and bought a house. It was bare-bones.” How did she get the dogs to enjoy grooming? “I did fewer dogs. I hired more people. Though, in the begin-
ning, I had to pay bills and build clients. “I have a better ratio (of staff to dogs) than any preschool your kid has gone to. It’s one employee to two dogs, sometimes better. I look for dog-crazy people to hire. It’s not enough to like dogs, or have grown up with a dog.” City Dogs Grooming now handles 30 dogs daily. How often is the average client groomed? Impossible to say, Kelly said. Some dogs come in once a week, some once a year. Costs depend on the amount of coat and matting. Add to that, the dog’s size, breed, and owner’s desired haircut, all affect the price. A haircut for a schnauzer or shihtzu, recommended every 4-6 weeks, might routinely be $55. If the dog is never combed at
home, it’s more work. Shop Manager Jamie Oliveira said, “We have to charge according to time and product.” National sources peg the average cost of grooming at $30-$90 a month. Kelly thinks Whatcom County had five grooming businesses when she started working for a local kennel in 1986. She was the only employee, not counting the owner. “They were (mainly) solo operations; I knew all the groomers. It was really hard to make a living back then. I remember big jobs that we priced out at $19.” Today Whatcom County has 25-30 grooming businesses, including a couple of mobile operations and two corporate representatives, PetSmart and PetCo. The amount and quality of equipment also has increased greatly, Oliveira said. The growth in the dog-serving industry is partly due to the economy’s growth over the last 30 years, plus increased leisure, which in turn fostered a sea-change in how we see our dogs. “It’s no longer eccentric to treat your dog as your child. No expense is spared. We have pet insurance now, and the dog food industry is huge,” Kelly said. In decades before 1950, most dogs were kept for work, such as hunting or animal herding. In those days, a household with a dog that didn’t work was the exception. The rich kept pets, Kelly said. Another sign of industry growth is the proliferation of grooming events. Groomers attend dog shows to update their standards, learn techniques, and shop for equipment. Today, City Dogs Grooming can subsidize employees’ attendance at an annual three-day grooming seminar in Tacoma. Other events include live grooming expositions with thousands in attendance. The national doggrooming team GroomTeam USA (yes, such a thing exists) competes internationally in Belgium, Brazil, or Japan. “These people are famous in
OWNER LEE ANN KELLY and Manager Jamie Oliveira with a labradoodle named Coconut at City Dogs Grooming in downtown Bellingham.
the grooming world,” Oliveira said. “At the expos you’ve got famous people working on a dog; you can talk to her and get advice. They’re accessible. It’s a neat thing. “You have to stay current. It’s like fashion. You don’t want to groom a poodle as they did 30 years ago.” What surprises them about this business? “How easy other people think it is,” Kelly said. Oliveira agreed. “Everybody thinks we just play with dogs all day. But this is labor intensive. Ten hours a day, you have to be on your game. You have to bring it, every day. It’s taxing, working on that many different personalities all day.” Oliveira worked an office job before joining City Dogs four years ago. “I’ve never had a job I loved as much as this one. I’m 31, and this is what I’ll do,” she said. “I’m not looking back.”
THE VET
L
ike others in the dog medical industry, veterinarian Michelle C. Schraeder, owner of Mountain Veterinary Hospital on Mount Baker Highway at Smith Road, has seen steady growth since she started here 31 years ago. She and her veterinarian husband, Ed Stone, bought the clinic that year from another vet who founded it in 1983. Schraeder and Stone hired their first employee in 1988. The clinic now employs a third veterinarian and seven veterinary assistants. They expanded their facility in 1994, and again in 2015. That speaks to industry growth, as well as the cultural shift over the last 30 years in how Americans view their dogs. Most telling of that massive change, though, is the range of advanced equipment inside WHATCOMBUSINESSALLIANCE.COM | 47
INDUSTRY REPORT: DOG BUSINESS IN WHATCOM COUNTY
NIKKI, A GERIATRIC PIT BULL/LABRADOR MIX, undergoes acupuncture for kidney issues as her owner Sharon Smith of Deming looks on, and veterinarian Dr. Michelle C. Schraeder administers. (Photo by Cheryl Stritzel McCarthy)
Mountain Veterinary Hospital. High-tech gear includes an underwater treadmill with a variety of inclines, and therapeutic laser. Treatments have expanded exponentially, too. In 1997, the clinic added acupuncture, followed by Chinese herbal medicine, and then massage. Stem cell/plateletrich plasma therapy for dogs with joint problems is a more recent addition. “A huge impetus to add new services was one of our own dogs, Bones (a Yellow Labrador),” Schraeder said. “He developed problems in both knees when he was seven. As his knees worsened, we looked for other treatments beyond what we already used. “We still offer standard medical and surgical procedures and prob48 | BUSINESSPULSE.COM
ably always will, because they are effective, and are what many owners want. This accounts for more than half the patients we see.” Alternative treatments comprise about one-third of their patients.
“People love their pets and want what’s best for them, and services have grown as a result.” -- Michelle C. Schraeder, owner, Mountain Veterinary Hospital
“I encountered cases where conventional medicine by itself was not helpful,” Schraeder said. “This led to my interest in alternative medicine. I had sent patients
with back problems to Vancouver, B.C., for acupuncture, and they responded well. I pursued that, and loved learning and practicing it.” Schraeder now lectures on acupuncture and traditional Chinese medicine nationally and internationally. “Geriatric cases often respond better by adding the alternative, holistic approach…,” she said. “It’s less about ‘alternative,’ and more about having multiple options, and deciding which specific option or combination will best serve the patient. “Initially, the public was more accepting than the veterinary profession.” That’s changed over the years, as more vets see pets respond positively, or learn about it in veterinary colleges, Schraeder said. The variety of pet services
throughout Whatcom County has grown immensely since they moved here in 1986, Schraeder has observed. That includes boarding kennels, day care, pet sitters, pet supply stores, and more veterinary clinics. “There is even an indoor, heated, dog-only swimming pool in Lynden, for therapy or recreation when it’s too cold outside.” That pool, K9 Lap of Luxury on Pangborn Road, that offers hydrotherapy for dogs, opened in 2009. A 30-minute session in warm water, one-on-one with a coach, costs $45, with multiplesession packages ranging from $255-$480. Their schedule is full, owner Carrie said. The sessions can include massage and range-ofmotion stretching. “People love their pets and want what’s best for them, and services have grown as a result,” Schraeder said. “Thirty years ago, the pet was not seen as much of a family member as today. As pet lovers, we see that as a positive.” Louise Murray, vice-president of the American Society for the Prevention of Cruelty to Animals, has said owners will likely incur at least one $2,000-$4,000 vet bill for emergency care during their pet’s lifetime. As procedures become more advanced, people are less likely to have their pet euthenized when it gets severely sick or injured. “Operating a clinic is a very expensive endeavor,” Schraeder said. “Medications are expensive, equipment is expensive, and personnel have a right to a decent salary. Add to that, new graduate veterinarians can have a student debt load in excess of $150,000. “For us to provide the quality of service people expect, we must charge for it, otherwise we could not exist. We work to create a treatment plan for each pet that the owner can afford, and I think most veterinarians do the same. Most people want to help their pet and will treat, if there is a reasonable chance of success and it’s within
their means.” The American Kennel Club pegs the average cost of dog vet care at $650 a year, plus $389 for preventive medicines. Schraeder said that’s likely higher than in Whatcom County. “Other areas may have a higher prevalence of disease. In the south, fleas are much worse, intestinal parasites are much worse, and they have heartworms, which we don’t have here. Also, in urban areas, veterinary care is much more expensive.”
What costs do new dog owners often not foresee? “What most people are not prepared for has nothing to do with the cost of care, but the time that’s required to be a responsible owner,” Schraeder said. “That includes time for proper training, socialization with other dogs and people, and the time it takes to provide a decent home life. It is not acceptable to let a dog roam the neighborhood or be tied to a chain.”
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WHATCOMBUSINESSALLIANCE.COM | 49
INDUSTRY REPORT: DOG BUSINESS IN WHATCOM COUNTY
The Price of Pets The American Pet Products Association (APPA), the trade group of pet product manufacturers and importers, lists results of surveys on the dog industry in the U.S., citing that dogs “tend to be the most expensive domestic animal…with basic annual expenses per dog expected to reach $1,641.” According to the 2015-2016 APPA National Pet Owners Survey, 65% of U.S households own a pet, which equates to 79.7 millions homes. Total U.S. Pet Industry Expenditures Year Billions of dollars 2016 $62.75 Estimated 2015 $60.28 Actual| 2010 $48.35 2006 $38.5 1994 $17 2015-2016 APPA National Pet Owners Survey Number of U.S. Households that Own a Pet (millions) Bird 6.1 Cat 42.9 Dog 54.4 Horse 2.5 Fish 13.6 Total Number of Pets Owned in the U.S. (millions) Bird 14.3 Cat 85.8 Dog 77.8 Horse 7.5 Freshwater Fish 105 Actual Sales within the U.S. Market in 2015 $60.28 billion spent Breakdown: Food $23.05 billion Supplies/OTC Medicine $14.28 billion Vet Care $15.42 billion Live animal purchases $2.12 billion Pet Services: grooming & boarding $5.41 billion Average costs of care annually: Dogs Cats Surgical Vet Visits $551 $398 Routine Vet $235 $196 Food $269 $246 Food Treats $61 $51 Kennel Boarding $333 $130 Vitamins $62 $33 Groomer/Grooming Aids $83 $43 Toys $47 $28 Survey did not ask what they spend on their dog or cat annually. [All these figures have been cited in reports by NBC News and Esquire, among others.] 50 | BUSINESSPULSE.COM
BOARDING AND DAYCARE
I
n 2007 the first owners of what’s now Pooch Palace & Kitty Kastle took a single dog, a terrier named Bailey, into their home while its owner was on vacation. That dogsitting favor at home has turned into a quarter-million dollar business for Heather Kimber. A decade later Kimber owns and runs a dog and cat care business in a 7,000-square-foot boarding facility, spread over three buildings, at the Grandview Business Center on Peace Portal Way in Ferndale. Kimber bought Pooch Palace & Kitty Kastle three years ago. Her first year, she took in $150,000; second year, $200,000; last year, $250,000, and she projects continued growth. She has five employees, counting herself. Dogs account for 90 percent of her business. About 70 percent of that comes from boarding dogs whose owners are on vacation. Another 10 percent of her canine clientele drop in for daycare once a week. The other 20 percent come four or more days a week. “We are cage-free,” Kimber said, and therefore will not accept aggressive dogs. “We have a different concept. It’s more like a home environment, less like a kennel.” Within the building, little condolike living areas have sliding glass doors or big gates. Dogs lounge on couches in their rooms. Staff members assess canine personalities before making night-time assignments. Eight or 10 small dogs might share a room at night; large dogs sleep one to four to a room. Kimber calls that bunking with a friend. At Pooch Palace, utilizing four condos and six living rooms and the great outdoors with a capacity of 50, Kimber said they invoice monthly about 20 dog owners who bring their pets in 3-5 days a week, and take in 20-25 on a drop-in basis. During holiday seasons they max out at
about 40 daycare dogs. Rates range from $5 hourly to half-day, full-day, and overnight stays for $17-$27. They offer package rates, $110 to $360, and multiple dog discounts, plus they offer grooming services. What costs do new owners overlook? The extent of destructive chewing, especially from puppies, Kimber said. “Shoes, kids’ toys, furniture. That’s every day here.” She told of a dog that behaved angelically during the day, but turned into an escape artist at night, chewing up wood trim and door handles to free his buddies from their condos. “It’s harder than people think to deal with animals,” Kimber said. “You have to deal with attitudes, older dogs needing medication, dogs that get stressed without their owners. The full moon affects animals. At the end of the day, though, it’s good. “Sometimes when one dog is sad, another will go up and lick its ear.
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INDUSTRY REPORT: DOG BUSINESS IN WHATCOM COUNTY Those are sweet moments. Then there are days when a dog is running out the door, steps in poop, and his foot throws it back on you.” Her family has two dogs, bulldog Brooks and blue heeler/shepherd mix Diesel, but they stay strictly at home.
THE MASSAGE THERAPIST
“I
have no trouble getting dogs,” said Kelly Frere, owner of Bellingham’s ProDog Massage. “It’s all word of mouth. If I marketed myself, I’d get more than I can handle. “Bellingham is phenomenal for dog services, and it’s growing.” Frere, a sole practitioner, focuses on therapeutic and rehabilitative massage. She averages five to eight dogs a week, and charges $55 each session. “There was a time when I was doing six to eight dogs a day. I found I couldn’t give the dogs the energy I wanted to. Now I do no more than four a day.”
“Bellingham is phenomenal for dog services, and it’s growing.” -- Kelly Frere, owner, ProDog Massage
Frere knows of a handful of other animal massage therapists in Whatcom County. Some are employed by vets, and at least one specializes in equines. Frere is a board-certified, statelicensed animal massage therapist. She studied with the Northwest School of Animal Massage, headquartered on Vashon Island, which offers distance learning and satellite campuses around the country. Frere’s practical study included stints at the Oregon Humane Society, and at a farm in California, which offered work with other 52 | BUSINESSPULSE.COM
KELLY FRERE, owner of ProDog Massage, works in her makeshift garage space on a table or the floor, or goes mobile into the client’s home or office. She’s seen here with Sky, her 7-year-old Lab/Border Collie mix. (Photo courtesy of Kelly Frere)
animals, too. She worked for a time with Bellingham’s Tails-AWagging training and daycare, and credits them for helping her launch her business. Today, she goes mobile. She works on dogs at their owner’s home or office, or in her own home. “I go where the dog will feel most comfortable. I built a little dog room in my garage, with a padded table.” Mostly, though, she uses the floor, requiring enough space only for herself, the dog, and a chair for the owner. The number of sessions depends on what injury the dog is rehabbing. “I often work on compensating muscles that are overworked if a leg is out. You know the benefits of massage for people. It’s the same for dogs. (An injured dog) won’t be exercising as much, so massage helps stimulate muscles. It helps with the immune system. It’s great adjunctive therapy to other rehab work, too.” She markets her techniques as a physiological benefit that affects
every system in a dog’s body. ““All I need is the dog, and my hands. I just love dogs, and feel blessed that my work fosters that.”
THE DOG FLAG ENTREPRENEUR
K
ristin Valgardson of Sudden Valley had a greyhound with a quirky personality. When she took him for walks, she noticed a repetitive dialogue protocol among dog-walking folk. One owner would say, “Yes, my dog’s friendly.” Another, “Please wait until I pick him up.” Or, “Don’t approach, please, my dog’s in training.” Valgardson had an idea. What if a dog could wear a flag that communicated his message? Her husband, Val Valgardson, had a home-based business (suburbanartworks.com) creating realistic computer images for inventors and architects. In 2011, working with him, Kristin designed fabric dog flags with various messages. The
flags are 5-by-5-inch squares, with a seam that slides onto a leash. She then created a home-based company, Dog Flags LLC, with a website, and sourced the manufacturing in China. Different colors and designs included “Adopt Me,” “Ask Before Approaching,” “I’m Friendly,” “I’m Shy,” “Special Needs,” and “In Training.” She sold through mail order and retail stores.
“I made money every year. When I sold the business, I sold at a profit.” – Kristin Valgardson, former owner, Dog Flags LLC (now part of Coupaw.com)
Valgardson ran the business by herself. Within the first year, she’d paid for all her merchandise, and in ensuing years, turned a profit. “I made money every year. When I sold the business, I sold at a small profit. I ended up with zero merchandise left over. Many inventors are left with a garage-full of unsold merchandise. “Over the whole experience, I realized a net gain. I was happy with that. It wasn’t send-yourkids-to-college money. It was extra money for our home. I got everything back, plus some.” She sold the business to Coupaw. com, which is like Groupon for dog owners. She liked their channel for selling nationally. “Most new products last only a few years. I felt the time was right to sell.” Coupaw.com is still selling the flags, with the tagline, “Encountering other dogs while out on a walk with your pup is a given, so wouldn't it be nice to know what kind of dog you are encountering?” They cost $6.95-$7.95. In Whatcom County, just as across the nation, you’re likely to encounter a dog that’s well served by a vast, burgeoning industry.
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INDUSTRY REPORT: DOG BUSINESS IN WHATCOM COUNTY
The
Encyclopedia of Larry Article and photos by Mike McKenzie
The staff at Clark Seed & Feed provides food (and its science) for an estimated one-fourth of Bellingham dog owners LARRY OLTMANN, Clark Feed & Seed, dwarfed by walls of “stuff” for pets.
54 | BUSINESSPULSE.COM
L
arry Oltmann was an Iowa farmboy, attending college, when he ventured this way with a college buddy to attend the World’s Fair in Seattle back in 1962. They then went to work on the friend’s family’s farm, Twin City Foods in Stanwood, for the summer. He was hooked, and he moved out here and hired out to J.C. Penney. Fifty-five years later he owns and operates Clark’s Feed & Seed on Railroad Avenue – the longestrunning business in the same location, he tells, in all of Whatcom and THEY KNEW immediately where to go! Sasha and Rags, both 5 and of the Cuban breed Havanese, headed Skagit Counties. Since he took over the company 40 years ago, Clark’s has straight to bins of treats when Donald Simpson brought them into Clark Feed & Seed recently. He said he has frequented Clark for 15 years. narrowed its focus from a full-blown livestock, garden, and pet store to just the pets. probably some things you haven’t thought of. But it’s not just any pet store. Its Facebook page labels He estimated that they serve about 24% of the dog it a “health food” store for pets. And, a “Zoo.” (Indeed, households in Bellingham. And regular customers travel a parade of kids is a common sight at the store). Clark’s from all over Whatcom and Skagit Counties. carries dog food for but one manufacturer in Canada, and Asked about how many products they carry for dogs he and his staff have become fully versed on explaining only, Oltmann replied, “Thousands.” He said that regular its grain-based benefits to your dog (or cat). dog-owner customers visit about every three weeks, on “We don’t view the big-box average. “Some have been comstores as competition,” Oltmann ing to us ever since we opened. said. “Our core customers are came with their parents.” “We don’t view the big-box stores Many looking for a different answer.” They keep a staff of seven fullas competition. Our core customers time and two part-time workers And whatever your question, he’s got the answer, delivered Plus Larry. are looking for a different answer.” hustling. adamantly and assertively, to So how did this come about, finite detail. One regular cusexactly, for a kid from outside – Larry Oltmann, owner, Clark Seed & Feed tomer calls the experience the of tiny Allison, Iowa, “…where “Encyclopedia of Larry.” we learned how to feed cows so Clark’s Feed & Seed received an award during 2015 they’d stay healthy and bring the highest dollar?” at an association trade show. What award? “It didn’t Oltmann met his future wife, Mary Jo, when they have a name,” Oltmann said, “because it was the first both worked for J.C. Penney locally, which bounced him time they’d given it. It was in recognition of our business to Seattle and then to Los Angeles in management. After model. The conversations we have are about the prepajust two years there, when Larry and Mary Jo had started ration of the dog’s food, not based on advertising and a family, they preferred raising children here rather than price.” L-A. The award had no trophy or plaque to go with it, “I sent my resume to every business in Bellingham’s either. “They gave us a bottle of aged Kentucky bourbon.” Yellow Pages,” he said. “Clark’s was the first response and This business model has worked wonderfully for asked if I was interested. I accepted. It made sense to me. Clark’s, according to Oltmann’s analyses and Mary Jo’s You don’t have to wear a suit to work at a feed store.” bookkeeping. Their No. 1 product is fish, but after that, In the ‘70s when the owners decided to retire, dogs, far and away. So their very-high, floor-to-ceiling Oltmann said, “They found someone dumb enough to shelves display everything you can think of for dogs, and buy the business. That was me.” WHATCOMBUSINESSALLIANCE.COM | 55
INDUSTRY REPORT: DOG BUSINESS IN WHATCOM COUNTY
BAKER, THE OFFICIAL store “mascot” symbolic of the popular Black Labrador breed, came down from his perch overlooking the checkout area at Clark Feed & Seed to pose with staff (l. to r.) Daniel Schmidt, who’s been there 51/2 years; Larry Oltmann in his 40th year of ownership, and newcomer Sarah Fiskin.
He acquired knowledge from the Clark family that had built a powerhouse brand over decades of personal service (“I followed Bob Clark around with a notebook for two years”), and by attending clinics and seminars. “But mostly,” he said, “customers taught me. They bring us their stories, and we pursue the ‘why’ behind them. It’s all about listening and adjusting.” At first he became an expert in gardening, and when Bob Clark retired he turned his weekly gardening radio show over to Oltmann. When the store scaled back from livestock and gardening, that went away. 56 | BUSINESSPULSE.COM
Nowadays you’ll find him at the store about 10 hours a day, six days a week (Sunday off). And Oltmann, as much a fixture as the original old walls, will pontificate to no end about the benefits of the Orijen dog food line (and a fairly recent addition, Acana, from the same company – Champion, a family-owned operation in Canada). Customers offer testimony after testimony – check out Facebook – about how his insights keep their dogs (and cats, and fish, and even a few reptiles, gerbils, etc.) . And he’s adamant about it. The staff, selected based on their vision for obtaining an advanced education
– “the desire to make something of their lives,” Oldman said – follows his lead, detailing the science of grain-based dogfood, and their newest products – tripe, and frozen supplements. The Oltmanns have a 12-yearold White (English) golden retriever. On feeding dogs, Oltmann concluded, “I believe there’s a connectivity when you’re feeding your dog properly and with care. I think it’s thinking, ‘Hey, Dad’s fixing my dinner.’” And his, gets fed by (forgive the pun) the Dogma of Larry…
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WHATCOMBUSINESSALLIANCE.COM | 57
STEP UP CAMPAIGN
BUSINESS LEADERS lined a wall at Bellingham Golf & Country Club last fall, sporting their new “Step Up!” caps as they helped launch the Whatcom Business Alliance’s kickoff campaign to educate the public on issues confronting business. (Staff photo)
Local businesses stepping up together to make a difference By Business Pulse Staff
T
he Whatcom Business Alliance (WBA) recently launched its Step Up for Business Advocacy Campaign – or “Step Up,” as it has become known. “Step Up is the answer to numerous requests and long Board [of Directors] conversations about how to substantively improve the business climate in Whatcom County,” WBA President Tony Larson said.
The Step Up Campaign utilizes resources from the business community for local business and economic research, education, and business advocacy. At the WBA kick-off event last September, local businesses of all sizes were challenged to make a regular monthly contribution to the Step Up efforts. “It doesn’t matter whether you’re a small local business struggling to meet the day-to-day operational demands, or a larger 58 | BUSINESSPULSE.COM
company taking it to the next level,” Larson said. “The WBA Step Up program is designed to pay attention to the issues that impact your business, and that you don’t have time for.” According to Larson, the board led campaign came about as a result of feedback from more and more WBA member businesses concerned they were unable to keep up with the increasing number of policy issues that were negatively impacting their businesses.
“Important decisions should be made based on facts, not simply good intentions.” -- Tom Kenney, Regional President, Washington Federal Bank
To be successful, business owners must focus their time on their customers, employees and operations. As part of the campaign, the WBA will identify problem issues on behalf of their members and give business owners advance opportunity to engage before the enactment of policies that impact them.
“Unfortunately, Whatcom County has developed a reputation as a place where employer mandates have become the norm, and where it is very difficult to get new and expansion projects permitted,” Larson said. “Some projects deserve extra scrutiny for sure, and we support that. “But we’ve hit a tipping point where investments that most would consider the sweet spot for local economic development might not even be considered because of excessive time and permitting costs associated with the effort.” Proposed employer mandates have concerned many local businesses of all sizes, as well. During 2015 the WBA received calls from many concerned small businesses regarding an ordinance proposed by the Bellingham City Council. It focused on mandatory sick and safe leave for businesses either located or doing business in the City of Bellingham. “This would have been particularly onerous on small businesses, but would have added several levels of compliance issues for companies already offering benefits that exceeded the regulatory requirements,” Larson said. In the end the WBA mobilized a group of business stakeholders who clearly voiced their concerns to the Bellingham City Council. The final ordinance was not passed. Unions later funded a statewide ballot referendum that included mandatory sick and safe leave, along with phasingin minimum wage increases (read Erin Shannon’s column on page 68). It was passed by voters at the State level in the November election and goes into effect in January. Jane Carten, CEO of Saturna Capital and chair of the WBA Board of Directors, said: “The WBA board believes we can support smart regulation and environmental protection while still focusing on growing our community prosperity and family wage job opportunities. But there needs to be a balanced approach in that conversation. The
business community can ‘step up’ and provide that balance.” One way the WBA brings balance to the conversation is by commissioning unbiased research and sharing that research with the community and with policy makers. The WBA has a close working relationship with Western Washington University’s Center for Economic and Business Research (CEBR). The WBA commissioned the CEBR along with the University of Washington to produce an Economic Impact Study on
Cherry Point. The WBA will continue looking at the overall impact of other key industries to Whatcom County through the Step Up campaign. In their meeting Aug. 9, 2016, the Whatcom County Council instated an "emergency ordinance” that imposed a moratorium on the acceptance and processing of applications and permits for new or expanded facilities in the Cherry Point urban growth area (UGA). The goal was to ban the shipment of unrefined
JANE CARTEN, CEO at Saturna Capital and chair of the WBA Board of Directors, introduced key speakers at the alliance’s breakfast kickoff of its campaign “Step Up for Business Advocacy.
WHATCOMBUSINESSALLIANCE.COM | 59
STEP UP CAMPAIGN because we believe it is too important not to do so. Unfortunately, even with their (the Council’s) perceived good intentions, when implemented the actions can have a detrimental impact on our shared goal of balancing environmental protection and creating greater community prosperity. “Education can help bring people together to better understand the trade-offs of various initiatives proposed by our local governing bodies. Important decisions should be made based on facts, not simply good intentions.” Hart Hodges, the director of Western’s Center for Economic and Business Research, agreed: "With the analysis of the data we collect, we want to answer the "Now what?" and "So what?" questions. Data isn't very helpful until you understand its context and find a TOM KENNEY (R.) visits with Andrew Gamble from Petro Gas Inc. at the “Step Up” campaign. Kenney, Regional meaningful message." President of Washington Federal, serves on the board of the WBA, which continues the campaign drive. During 2016 a group of concerned To participate, call Tony Larson, 360.746.0411 business owners in eastern Whatcom County became aware of what they fossil fuels not processed at Cherry Point. called “unnecessary regulatory overreach.” It centered Larson said this action and its unintended conseon Critical Areas Regulations that attempted to restrict quences must balance with the significant positive impact future permits as a result of an eruption of Mt. Baker – a that Cherry Point industry has on our community. The highly unlikely event, estimated by scientists as a 6,000Economic Impact Study determined that in addition to 14,000 year event. providing 10,000-plus family wage jobs, Cherry Point Any business in the “LAHAR Inundation Zone” – employers contribute more than $200 million to the local which essentially runs down the Nooksack River from tax base, which supports education and public safety Mt. Baker to the mouth of Bellingham Bay – would fall throughout our entire community. subject to building restrictions. Organizations that serve The Whatcom County Council is working on an more than 100 people would have been amendment to the Cherry Point UGA declared non-conforming. section of the County Comprehensive “With the analysis of This would have included existing Plan that includes new language makthe data we collect, we businesses, Bible camps, churches, ing the moratorium permanent. stores, and more, entities that Through the Step Up campaign want to answer the "Now grocery have operated for years. The proposed the WBA has organized a group of what?" and "So what?" legislation would have tied their hands Cherry Point stakeholders to share on any expansion plans or possibilities. publicly their concerns about the questions. Data isn't Concerned community members conproposed policy. Additionally the very helpful until you tacted the WBA to ask for advice and WBA submitted its own collaborative on how to engage their comamendment to the Council striving understand its context assistance munity and make their concerns known to reach a balanced compromise. The and find a meaningful to the County Council. Council is expected to take that up in As part of Step Up, the WBA orgaearly 2017. message."” nized a town hall meeting at Kendall “Education is the key to the sucElementary School and worked with -- Hart Hodges, Director of WWU’s Center for cess of the Step Up campaign,” local businesses to develop a strategy to Economic and Business Research Board member Tom Kenney said. bring common sense to public policy. Washington Federal was an early The group then attended the Council supporter of Step Up and a leading meeting, spoke up, and convinced sponsor for the kickoff event. the lawmakers that the policy was inappropriate. They “Why is Washington Federal sponsoring the WBA Step amended language in the proposal to accommodate the Up campaign?” Kenney said at the event. “Pretty simple – 60 | BUSINESSPULSE.COM
concerned citizens. Had the WBA not intervened, this action would have negatively impacted hundreds of businesses, many of them even unaware of the threat. Derek Parris, the manager for Mt. Baker Bible Camp, expressed his appreciation to the WBA: “Today our community, once again, has the opportunity to grow and invest in our homes and businesses. Thank you [WBA] for being on point!” A resonant theme of Step Up is that successful local business supports a vibrant and giving community. The businesses that have stepped up to support the advocacy campaign want to assure the community that there are actual people behind these corporations. “At the end of the day the success or failure of our businesses translates to the livelihood of our employees and their families,” Jane Carten said. “We are business owners, but we are also citizens of Whatcom County who pay taxes, worry about our school districts, public safety, housing prices, and the quality of life we all share in Whatcom County. “Through this program, we are encouraging the business community to Step Up and become part of the solution.” The WBA actively works to grow the participation in the Step Up program. Any business or individual can participate. “We believe there is strength in numbers and that when the business community Steps Up together to engage on issues of importance, we can make a positive impact on the business climate and quality of life in Whatcom County,” Larson said. “We want to ensure that our local governmental bodies work together in the best interest of all of the people – not just a vocal, well-funded few.” Information on how to join the Step Up campaign is available on the WBA website: whatcombusinessalliance.com.
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STEP UP PERSONALLY CAMPAIGN SPEAKING: HANS ERCHINGER-DAVIS
We Support Cherry Point Industry …and the Family Wage Jobs and Economic Benefits They Create for our Community
At a time when good family wage jobs are needed more then ever in our community, why would the Whatcom County Council be limiting the ability for Cherry Point industry to succeed? We are GRATULATIONS all Cherry Point stakeholders. Contact your Whatcom County Council Member and ask them to Whatcom Women support the people, jobs and economic activity at Cherry Point.
OUR CONGRAT
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• Cherry Point industry is responsible • Cherry Point industry generates • Cherry Point industry contribute for 2,100 + direct family wage over $200 million in tax revenues more than $1 million in annual jobs, as well as more than 7,000 that fund our schools, emergency local charitable contributions that jobs they create indirectly for services and other important sosupport some of the most escontractors and other vendors. cial services. sential charities in our community like the Boys and Girls Club, the United Way and Red Cross, as well as providing thousands of ine, and the following companies hours of volunteer work to help n business and thank them munity prosperity make our community strong.
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GUEST COLUMN: AFFORDABLE CARE ACT Roger Stark MD (ret.) | Healthcare Policy Analyst Washington Policy Center Dr. Stark is a retired cardiothoracic surgeon. He is the author of two books on national healthcare issues, including Our Health Care Crisis, How It Happened, and How We Can Fix It, and an in-depth study on the impact of the Affordable Care Act (ACA) in Washington state. He has testified before three Congressional committees on the ACA. He graduated from the University of Nebraska College of Medicine, served residencies in Seattle and the University of Utah, practiced in Tacoma, and became a co-founder of the open-heart surgery program at Overlake Hospital in Bellevue.
Where, oh where is Obamacare? (Answer: tanked.) "If you like the (health insurance) plan you have, you can keep it. If you like the doctor you have, you can keep your doctor, too. The only change you’ll see are falling costs as our reforms take hold."
– President Barack Obama (June 6, 2009)
“We have to pass the bill so you can find out what’s in it...”
– Former Speaker of the House of Representatives Nancy Pelosi (D-CA) March 9, 2010
"Obamacare is “the craziest thing in the world.” "The Affordable Care Act is “no longer affordable.”
A
mericans have had six years of experience with Obamacare, or the Affordable Care Act (ACA). It is no more popular today than it was in 2010 when it barely passed Congress, with all the Republicans and many Democrats voting against it.
In no way has the law achieved the goals of its proponents. It has not provided universal health insurance coverage. It has not slowed the ever-rising cost of health care. It has not improved the quality of health care experienced by patients. What Obamacare has done: • Increase the cost of health care for all Americans who do not receive health insurance as a government entitlement. • Increased the regulatory burden on all employers and individuals who purchase health insurance. • Made the health insurance 64 | BUSINESSPULSE.COM
– Former President Bill Clinton (October 3, 2016) –Minnesota Governor Mark Dayton (D) (October 12, 2016)
More than 367,000 Washingtonians lost their existing health insurance…. USA Today reported that last year in the ACA exchanges the average family deductible in Washington state rose 76 percent, or about a $3,500 annual increase. Our average health insurance premium in the individual market increased by 13.5 percent. Estimates run double that nationally this year. industry more complex. • Increased taxes for millions of Americans. • Put access to health care for seniors in Medicare and for lowincome people in Medicaid at risk. To date, Obamacare has undergone 70 significant policy changes,
including important deletions and delays. The Obama Administration unilaterally made 43 of these policy changes; Congress passed and the president signed 24 policy changes, and the U. S. Supreme Court made three significant rulings on the original law. Even the ACA’s strongest supporters now admit the law was seriously flawed when it was enacted. Proponents of the law argue that 20 million people now have health insurance because of Obamacare. Before the ACA became law, nearly 50 million Americans did not have insurance. Consequently, just 40 percent of those uninsured now have insurance. Of those 20 million newly insured, approximately half were forced into the Medicaid entitlement, where studies show that medical results for enrollees are no better than outcomes for people without insurance. The number of people nationally who lost their health insurance because of Obamacare is a moving target, but runs into the millions.
In Washington state, the Insurance Commissioner’s figures show that more than 367,000 Washingtonians lost their existing health insurance and were forced into either the Medicaid entitlement program or the state government exchange. Although Obamacare is costing us billions – if not trillions – in public dollars, private health care costs continue to rise for individuals and families. USA Today compiled data from the Obama Administration and reports that for 2016 in the ACA exchanges the average family deductible soared, including Washington state where it is up 76 percent, or about a $3,500 annual increase. In Washington state the average health insurance premium in the individual market increased by 13.5 percent. The national average estimated increase for premiums in 2017 stands at 24 percent. Even in the employer-based market, health insurance premiums
continue increasing much faster than general inflation. The average family plan with employer-paid insurance now costs $18,000 a year, which is $4,400 more than before the ACA was enacted. Almost 40 percent of Americans have enrolled in Medicare or Medicaid entitlement programs. The Congressional Budget Office reports that Medicare spending will double by 2026 to $1.29 trillion annually and that federal Medicaid spending will increase by 75 percent to $621 billion over the same time period. Many state exchanges are now at risk of closing. States that close their exchanges, of course, can push their residents into the federal exchange. This puts federal taxpayers at greater risk, not only for increased premium subsidies, but also for the higher overhead costs of running the exchanges. Access to health care is a grow-
ing problem, especially for people in the Medicaid and Medicare entitlement programs. Just having health insurance on paper is no longer a guarantee of access to health care in practice. Everyone agrees that the health care system was dysfunctional before the ACA became law. Going back to the situation as it existed in 2009 is not a solution. The country has two choices at this point – imposing more government control, or moving toward more patient control. In November, Americans clearly voted for a change in direction of the country. Health care accounts for 18 percent of our economy and is vitally important for all of us. Instead of more government control, Americans are ready for a system change to more patient control which would maintain quality, access, and decreased costs.
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GUEST COLUMN: ENVIRONMENT Todd Myers | Environmental Director Washington Policy Center The Washington Policy Center is an independent, non-partisan think tank promoting sound public policy based on free-market solutions. Todd Myers is one of the nation’s leading experts on free-market environmental policy and is the author of the 2011 landmark book Eco-Fads: How the Rise of Trendy Environmentalism is Harming the Environment. His in-depth research on the failure of the state’s 2005 “green” building mandate receives national attention. He contributes to The Wall Street Journal.
Forest health: How to assess our new state Lands Commissioner
“W
e need to be taking a more proactive role in restoring our forest health.” These words from newly-elected Commissioner of Public Lands Hillary Franz highlight something people do not typically associate with forestry politics: scientific consensus.
Quietly, over a decade, the last two lands commissioners – one from each party – have recognized that the primary challenge facing our forests is restoring their health. Many lie in an unnatural state. Humans created much of the problem. To protect communities near forests, our forest managers fought fires that previously kept forests healthy by reducing the number of small trees competing for sunlight, water, and nutrients. Forest politics, however, intervened and made it difficult to replace fire with thinning that would have simulated the effect of natural forest fires
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and created healthy forests. When I was an official at the Department of Natural Resources, we repeatedly argued that forests needed thinning, only to have environmental groups oppose those treatments and also responsible timber harvests that could have helped fund thinning. Lack of funding constrained our efforts to address forest health. Now the challenges facing Commissionerelect Franz are even more serious. Many of the forests in eastern and western Washington are in a status known as “competitive exclusion” – a condition more prone to fire, and less suitable as wildlife habitat. To be sure, some forests in this category produce high volumes of environmentally-friendly timber, earning revenue for the state and creating jobs. However, without responsible managements these forests can become fire-prone. Fortunately a good plan is in place to reduce the amount of forest in competitive exclusion in western Washington from more than 70 percent down to 60 percent or less in the next 30 years. This would also double the amount of older forests, providing good habitat for wildlife. Achieving this goal won’t be easy. In her remarks to the Washington Forest Protection Association, Franz noted, “We know we are only going to see greater challenges environmentally with climate change.” Whether natural or human-caused, temperatures have been higher in recent years and unhealthy forests are extremely prone to the type of catastrophic fires we saw in 2014 and 2015. The biggest challenge, however, will be where to find the money. Relying on the legislature is simply not an option. Whatever funding that might be available will get swept up quickly due to direction from the state supreme court to spend more on education. Environmental groups who supported Franz’s election say they want a tax increase, but only to fund green energy subsidies, not forest management.
The only option is to earn revenue by managing Second, she will have to overcome the 1970s mindstate forests, producing timber for sale. This approach set of many people in the environmental community. earns money the state desperately needs to fund enviMany Seattle-based activists earned their stripes fightronmental restoration and creates jobs in rural coming the “timber wars.” Despite today’s scientific conmunities. sensus on healthy forests, many greens remain stuck in Four years from now a fight that is decades old. this is the metric by which Outgoing Lands The metric by which to judge new state Land Commissioner Peter we should judge Hillary Franz – did she make forests Goldmark wisely chose sciCommissioner Hillary Franz: Did she make healthier, or are they more ence over politics. Franz forests healthier, or more fire-prone? She will should too. fire-prone? She will need to show When it comes to creatneed to show courage to follow the forestry courage to follow the foresting habitat and making our ry science and avoid partisan science and avoid partisan forestry politics of her forests resistant to increased forestry politics. biggest campaign donor and ‘greens’ stuck in the fire risk, the test will be First, she will have to whether the incoming lands past “timber wars.” stand up to her biggest camcommissioner puts forests on paign donor, one who opentrack to health. Doing that ly advocates to dramatically means generating revenue reduce sensible management of state forests. Between to do the necessary work, rather than hoping the legFranz’s campaign and the independent expenditure islature will find money in the midst of so many other that supported her, that donor contributed about onespending pressures. quarter of her campaign funds. That one Seattle enviHer decision on that single basic question will deterronmentalist hopes his contributions mean more than mine whether forest habitat is stronger or weaker four the advice of forestry scientists. years from now.
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GUEST COLUMN: SMALL BUSINESS Erin Shannon | Director, WPC for Small Business Erin Shannon became director of the Washington Policy Center for Small Business during January 2012. She has an extensive background in small business issues and public affairs. The Center improves the state’s small business climate by working with owners and policymakers toward positives solutions.
Voters approve $13.50 minimum wage, paid sick leave laws…so what happens now?
T
he Nov. 8 national election results included some surprising upsets (understatement of the year), but here in Washington outcomes were a little more predictable.
As expected, voters approved Initiative 1433 to gradually increase the state’s minimum wage to $13.50 an hour, and to mandate paid sick leave for every worker. It passed by a comfortable 58 percent of the vote. This, despite daily newspapers from around the state urging voters to reject the measure. And researchers at the University of Washington warned that a higher minimum wage could hurt rural regions with lackluster economies. Here’s what happens next.
MINIMUM WAGE Effective Jan. 1, 2017, the state’s minimum wage will begin phasing in over four years to $13.50 an hour. It will start at $11 next year, up 16 percent from the current $9.47. In 2018 the minimum wage will bump to $11.50, then to $12 in 2019, and finally to $13.50 on Jan. 1, 2020. Every year thereafter the minimum wage will increase automatically based on Seattle-area inflation. Many people do not realize that the state’s minimum wage laws apply only to workers 18 years and older. The minimum wage of workers under 18 is set by the state 68 | BUSINESSPULSE.COM
Department of Labor & Industries (L&I). Currently, L&I requires workers 16 and older to earn the state minimum wage, while allowing 14-15 year-old workers a “training wage” that is 85 percent of the minimum wage. Under I-Ω1433, L&I will continue to have the authority to set the minimum wage for employees under the age of 18. In its endorsement of Initiative 1433 The Seattle Times encouraged L&I to expand the lower training wage to all workers under 18. If the agency does not do this, The Times urges lawmakers to pass legislation to the same effect. Since Initiative 1433 does not restrict wages for workers under the age of 18, passage of a teen training wage would not run afoul of the two-year moratorium on amending voter-passed initiatives. A lower minimum wage for teen workers – a long-standing recommendation of the Washington Policy Center – would help reduce some of the harm an artificially high wage has on job opportunities for young workers who have no experience or skills. Lawmakers have tried to pass training wage bills; some versions applied to teen workers only, while others were temporary training wages for all new workers. Whether the issue will be resurrected during the 2017 legislative session remains to be seen, but such a policy would provide employers with a much-needed incentive to take a chance on hiring young, unskilled, and inexperienced job applicants.
The Times also opined that lawmakers should further tweak Initiative 1433 by passing legislation that would allow for a slower phase-in of the $13.50 minimum wage for the state’s rural areas. This approach would follow in the footsteps of Oregon, which earlier in 2016 passed landmark legislation adopting a phased-in, three-tiered approach to increasing the minimum wage. Oregon’s new law increases the minimum wage over the next six years and sets different wage rates based on a region’s population density. 1. The minimum wage is set at $12.50 for rural counties. 2. The second tier will be $13.50 for mid-size urban counties. 3. And the third tier will top out at $14.75 for the greater-Portland area (people living within Portland’s urban growth boundary). Washington lawmakers could establish a similar, tiered phase-in based on region, but would require a two-thirds vote in the legislature or waiting two years for expiration of the moratorium on amending voter-passed initiatives.
PAID SICK LEAVE The paid sick leave provision of Initiative 1433 will go into effect in 2018. Workers will receive one hour of paid sick leave for every 40 hours worked, and they can begin using the leave after 90 days of employment. Employees of any size business in our state will be allowed to carry
over 40 hours of unused paid sick leave every year, with no limit to how many days of paid leave can be used in a given year. Since Washington does not have any paid sick leave requirements, L&I will adopt, implement, and enforce the new paid sick leave rules. L&I managers will determine the procedures employers must follow to notify employees of the new laws and the records employers must keep, and other details of implementation. While three cities in Washington already have paid sick leave laws with limitations – Seattle, Tacoma, and Spokane. Provisions in Initiative 1433 are more generous and more broadly applied, in varying ways. For example, Seattle exempts small businesses with fewer than four employees, and new companies with fewer than 250 employees are exempt from the paid leave requirement for 24 months after the hire date of their first employee.
Workers in Tacoma can receive up to 24 hours of paid sick leave annually, may carry over 24 hours, and are limited to using 40 hours a year. The law in Spokane provides newly-licensed businesses with a one-year exemption from providing paid sick leave, designates different leave requirements based on employer size, and only allows up to 24 hours of earned paid leave to be carried over. In contrast, under Initiative 1433: • There is no accommodation for small businesses. A business employing two workers would have to give the same amount of paid sick time as businesses with 5,000 workers. • There is no maximum limit on how much paid sick leave could be accrued. • There is no maximum limit on how much paid sick leave an employee could use in a year. • Up to 40 hours of unused paid leave could be carried over to the following year.
Officials in Seattle, Tacoma, and Spokane must now change their paid sick leave laws to ensure that they comply with the new mandates imposed by Initiative 1433. The changes are particularly difficult for people in Spokane, where new sick leave laws were scheduled to go into effect on January 1. City officials now wonder if they should scrap their law entirely and wait for Initiative 1433 in 2018, effectively delaying paid sick leave another year. Or, they might implement their law and then saddle Spokane’s employers with a whole new set of rules next year. Or they could amend their law to reflect the provisions of 1433 and implement it immediately, thereby imposing the mandates of 1433 a year early. Whichever way the major cities go, employers across all of Washington are in for quite a few changes over the coming years, as local labor markets adapt to the heavy burden of Initiative 1433 mandates.
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GUEST COLUMN: LEAN OPERATIONS Randall Benson | Lean Operations Randall Benson is a management consultant, author, and Lean master based in Whatcom County. You can visit his blog “The Lean Heretic” at www.leanheretic.com, and his website at www.bensonconsulting.com.
Visual Management: The wicked question
T
wice recently I was hit by a similar question: “If front-line people already know what’s going on, why should they waste their time updating a visual management board?”
This question was first posed by a production manager who was struggling with visual management tools (VM), and then by a visitor to my booth at the Whatcom Business Alliance’s NW Business Expo. It’s a wicked question because it cuts right to the heart of the purpose of VM. It’s also wicked because there’s no simple answer. Sure, there’s a flippant answer that is simple enough: “VM is part of being Lean — if you want to operate a Lean organization you need to do it.” Obviously, that’s not much of an answer for a machine operator or customer service representative who takes pride in personal competence and doesn’t need someone looking over his or her shoulder. They deserve a more thoughtful answer. A better, but general answer: We use VM everywhere else in our lives, so why not here in the workplace?” It’s true, we visually manage throughout basically every aspect of our lives – traffic signs and signals, stripes on parking lots, forest fire danger gauges, silverware 70 | BUSINESSPULSE.COM
drawer organizers, mail box flags, and on and on. In effect, visual signals let us put our lives into some semblance of flow, helping us avoid hassles, roadblocks, disruptions and risk in our daily routines. VM helps in the workplace
If the workforce can instantly see abnormal conditions then they can take immediate steps to restore flow and get back on track. too. Over-area signs, floor tape to mark area boundaries, designated equipment and material locations, and safety signs – all effective VM examples. Yet that answer still is incomplete; it doesn’t speak to why the status of a front-line employee’s work needs to be visible in the workplace. Front-line people will push back with, “I’m not against making some things visible, but I have the information in my work area to do my job — making that information visible is redundant and wastes my time.” Under some conditions they may be right. In traditional batch production, work is disconnected, therefore making local information visible was less important. But the
hallmark of Lean is closely-coupled flow where work is coordinated and synchronized. If that flow begins to break down, everyone is affected. But, if they can instantly see the abnormal conditions then they can take immediate steps to restore flow and get back on track. I recall visiting a Pioneer Corporation factory in Japan when a warning light and audible alarm went off, signaling that a production machine had stopped unexpectedly. Managers and engineers literally dropped what they were doing and ran across the factory to the alarm. Even some executives excused themselves from meetings and hurried to the shop floor. After thanking the operator for sounding the alarm, they asked the operator a version of the Eight Magic Words of Visual Management: “What do you think? How can I help?” Then people worked together to quickly restore flow. The operator would never be expected to handle the problem on his own. As with Pioneer, great Lean organizations employ a variety of visual devices to make abnormal conditions visible. VM is designed primarily for staff, permitting them to take autonomous action to restore work flow. No one should have to ask their boss what to do. Great organizations committed to Lean resist the temptation to design VM boards just so managers
can display retrospective statistics. Instead, they design VM boards with the vital information employees need to immediately identify abnormal connotations and to restore flow. A manager’s role is to support the front line (e.g., Pioneer). If an organization isn’t interested in Lean (i.e., no flow), then local awareness of performance might be good enough.
Whatcom Business Alliance Facilitating Business Success and Community Prosperity
REASONS TO UPDATE YOUR VM BOARD If your organization is, or aspires to become Lean, good answers to why an updated VM board is beneficial: • So everyone can instantly identify abnormal conditions that disrupt flow. • So we can easily involve everyone in rapidly restoring flow. • So we can quickly find out what the front-line employee thinks and how others can help. • And finally, so we can preserve the memory of the problem for further improvement.
WHATCOMBUSINESSALLIANCE.COM | 71
GUEST COLUMN: SMALL BUSINESS DEVELOPMENT CJ SEITZ | Executive Director Small Business Development Center CJ is the executive director. For 33 years the SBDC has enabled Western Washington University to give back to the business community and has helped to shape the economic future of Whatcom County. The SBDC provides free, confidential advising, technical assistance, and research to business owners and managers in an effort to help businesses thrive throughout Whatcom County.
A case study: Questions to ask in the hiring and/or retaining of an employee
H
ere’s a common question we hear at the Small Business Development Center: “How do I recruit and retain great employees?” What we sometimes find lurking behind this question is a workplace impasse, dispute, or just a simple disagreement. Any of these can either cause a team member to question their future with an employer...or leave the employer wondering if they made a bad hiring decision. In that scenario the underlying question becomes: “When should I retain an employee, or not?” Some workers choose to move on at the first sign of trouble. Such early exits can be costly to both the employer and the departing employee. And on the other side of the coin, if an employer does not choose to address the problem head-on they could find themselves keeping a team member who stays longer than they should. Recently we met with Shelly, someone struggling with a situation involving difficulties between a newly-hired team member and the rest or her team. 72 | BUSINESSPULSE.COM
Shelly is a high-performing business owner leading what a seemingly well-functioning team that is guiding the company through a period of critical change. Both she and the team had spent many hours discussing an open position and interviewing each candidate to assess if the new team member in question was a good fit for the position.
An old saying goes that if you want to make things better you need to care enough to confront. However, most of us feel ill-prepared for the difficult conversions and critical self-reflection stemming from confrontation. After reviewing company needs, job description, and necessary skills, the team settled on a decision, made an offer, and brought the new team member on board. Unfortunately, after a just few months in her new role it became
clear that this new team member had over-promised on a project and the team as a whole was not going to meet a critical deadline. You can imagine some of the finger pointing that was going on behind the scenes. Shelly knew something had to be done to remedy the situation and to get all hands on deck and pulling in the right direction. Fortunately for Shelly and her team she made the choice to seek outside help from her trusted business advisor at the Small Business Development Center. They worked together and devised three plans with anticipated favorable outcomes that Shelly then presented to her team as paths forward to consider. By working with her adviser Shelly discovered the different aspects of the situation that she needed to address: • Did Shelly and the company make a mistake in hiring this new person? Was this really a good fit for the company, for the new hire, and for the team members she would be working with? • Was the problem with the new employee, the team, Shelly’s leadership…or a combination of all three? •Or, was as her confusion about the project itself?
The SBDC worked with her to develop an action plan. As part of her plan Shelly decided she would ask her team to meet and discuss how things were going after an initial course correction selected from among the three identified options. Shelly’s carefully-planned conversations helped her better understand the impact of her management style and helped her reconsider her approach to leading her team. She truly listened to employees and left them with the feeling of being heard. She also took the admirable step of telling all of the persons involved that she was sorry for letting things get to such a point of contention. Shelly committed to giving the new team member a further opportunity to do better while at the same time restoring a sense of calm and order in the company. Our hope is that Shelly, her team, and the new hire all continue to hold each other accountable. An old saying goes that if you want to make things better you need to care enough to confront. However, most of us feel ill-prepared for the difficult conversions and critical self-ref lection stemming from confrontation. Most of us do our best but sometimes we need the gift of being invited to be better. I hope you will join me in challenging ourselves to do better in the coming year – to be better listeners, to seek feedback, and to truly hear the gifts we are being given. And, to be brave enough to remember that it is a gift to ask for what we need.
Words fall short.
Our chocolate never does.
Celebrating our 30th year on the Guide. Thank you. Factory store 4600 Guide Meridian 360.676.0589
Chocolate Necessities & Gelato 1426 Cornwall Avenue 360.733.6666
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Experts at Tech Help in Bellingham, a division of Big Fresh, provide answers to the questions that are trending among clients. If you have a tech question for our experts, send an email to getanswers@gotechhelp.com
Riding the wave of the IoT
T
he “Internet of Things” (IoT) has become a growing topic of conversation both in the workplace and outside of it. IoT is a concept that not only has the potential to impact how we live in significant ways, but also how we work.
The IoT refers to the ever-growing network of devices that connect to the internet and collect useful data with the help of various existing technologies, and then autonomously flow the data between other devices. All with very little human intervention. The “Things can refer to a wide variety of devices.
WHAT ARE IOT DEVICES? Market examples include home automation (also known as “smart” home devices) such as the control and automation of lighting, heating (like a smart thermostat); heating, ventilation, air conditioning systems (HVAC), and appliances such as washer/dryers, robotic vacuums, air purifiers, ovens, or refrigerators/freezers that use Wi-Fi for remote monitoring. While these things can certainly make our day-today life easier and more efficient, there are concerns about having our devices ever-more connected. Perhaps the biggest concerns center on their security.
SECURING THE IOT. Users must trust that IoT devices and related data services are secure from vulnerabilities, especially as this technology becomes more pervasive and integrated into our daily lives. Poorly secured IoT devices and services can serve as potential entry points for cyber-attack and thus exposing user data to theft. On October 16, 2016 we witnessed perhaps the largest scale attack carried out by hackers that specifically used security exploits in these connected devices. This large-scale attack took down Dyn, one of the largest companies that help people connect to websites. While most of the impact was to the East Coast and didn’t impact us much here on the West Coast, there still remains a large concern with how these devices can be secured to prevent attacks like this or on an even larger scale.
WHERE DO WE GO FROM HERE? While we are still in the early phases of the growth of such connected devices, it is extremely important that businesses think twice before implementing connected devices into their day-to-day lives without understanding the security of these devices. 74 | BUSINESSPULSE.COM
5 APPS TO SUPPORT HEALTH & FITNESS RESOLUTIONS
W
ith the New Year upon us, apps to help you with those pesky resolutions: 1. T RACKING FOOD AND WEIGHT:
MyFitnessPal (iOS and Android) is perhaps the best app when it comes to helping you with that weight tracking. It makes calorie tracking easy, with a database of over 5 million foods. If something’s not there, enter it manually or scan a UPC code. But it’s the integration with fitness-tracking apps and devices that really makes it a winner and gives users an overall picture of calories in, calories out.
2. GETTING FIT: If you just want to tone up, forget the jokes about gym fees gone to waste. Pact (iOS, Android) puts your money directly on the line by paying you when you go to the gym and taking money out of your pockets when you don’t. If slimmer thighs don’t motivate you, a slimmer wallet will. For meeting fitness goals, there’s FitStar (iOS, Android). Complete with custom workouts, HD video, connectivity to fitness trackers, the app and a little determination can help you get in shape.
3. EXPANDING YOUR LEARNING: There’s no wisdom like the wisdom of experience. At TED Talks around the world, experts in every field showcase their experience in easily digestible segments. You can get that directly on your phone (iOS and Android) to get smart on the go. For more traditional lessons in a variety of fields, you can listen to lectures on iTunes U or take classes on Coursera (iOS, Android). If you’re looking to expand your horizons by learning a new language, then Duolingo (iOS, Android) is the way to go. Each lesson is short and to the point and interactivity reinforces what you learn.
Whatcom Business Alliance Facilitating Business Success and Community Prosperity
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GUEST COLUMN: PERSONAL INVESTING Jacob Deschenes | Owner Era Capital Management LLC Jacob is a licensed investment advisor and owns Era Capital Management LLC, a registered, fee-only investment management firm serving individuals, wealth advisors, and corporate clients throughout the United States. He uses contrarian methodology with uniquely-developed matrices and mathematical and statistical analyses. Visit www.eracapitalmanagement.com.
Is diversification enough anymore?
I
t is of common belief that diversification is seen as the only free lunch for investors. It’s an easy concept for clients to grasp, a simple tool to implement. And many financial advisors have steadfastly used it for decades as their primary tool in avoiding concentrated risk while also reducing risk to any given security or asset class.
So what’s the problem? Unfortunately, most financial and investment professionals are sales-driven rather than outcomeoriented, and their main value proposition is to help you diversify your portfolio because it's all they understand. The term diversification often is referred to as Asset Allocation or Modern Portfolio Theory (MPT). I call this building an investment pie – the least tasty kind of pie. Basically, Asset Allocation is how a majority of 401(k) plans invest your retirement assets using agebased rules such as 80/20 (80% stocks, 20% bonds) for young individuals and 30/70 (30% stocks, 70% bonds) for retirees. Diversification gets overused as a method to soothe clients’ desire for risk aversion. Discussing invest-
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Portfolios should be designed in a threedimensional matter where we bring together new techniques and management styles. ments is a heavy-jargon topic that’s complicated and even daunting for many clients who want to plan their retirement. The feeling of anxiousness in making your money work for you toward a payout in 25 years needs
a salve. The problem is that overdiversification waters down the gains with losses over time. This leaves clients’ accounts vulnerable to broad economic systemic risks (undiversifiable risk). Why? Our economy and financial system is significantly different today due to monetary, fiscal, regulatory and other forms of government intervention or manipulation. An amount of undiversifiable risk will always be present in the market regardless of the amount of diversification in a portfolio. This means risk will also be present at the port-
folio level, no matter what. It would be irresponsible to assume that what worked 20 years ago will work today. When striving to elevate clients’ investment portfolios we need to go beyond simple diversification alone. In order to do so requires extensive time, research, and analysis which might be why it’s not as common. Most portfolios feature flat, two-dimensional designs with no ability to adjust or adapt to risks and opportunities. Portfolios should be designed in a three-dimensional matter where we bring together new techniques and management styles to portfolios, and not just use different assets classes. A three-dimensional portfolio incorporates active management styles such as momentum or contrarian
Leading off with Tony Larson
(continued from page 10) However, regarding business confidence, isn’t it a no-brainer? It’s not about whether you’re a Trump fan or not. It’s about policy. Most small business owners I talk to feel like we’ve reached a tipping point regarding regulatory overreach. Employer mandates, federal, state and local taxes, regulations gone wild, Obamacare. These are things that impact the ability for businesses to compete and succeed in real ways. According to the Government Accountability Office (GAO), the office that provides information to Congress and the Whitehouse, we’ve added 20,642 new rules and regulations since Pres. Obama took office in 2009. They estimate the cost of those rules and regulations at more than $108 billion annually. Think about that! How many of those 20,642 rules are stifling business success? You only know if you are operating a small business. And by the way, this is not just an Obama thing. While George Bush was somewhat constrained during his first term, his second term wasn’t much better than the last eight years. In Whatcom County the WBA has worked hard to listen to the concerns of local businesses on these matters. The result this past year was the launching of our
strategies, but passive investing methods as well. This is an important concept because no single strategy is the Holy Grail. Personal investing is all about building a portfolio of different buy/sell mechanisms to either take advantage of opportunities or protect against risks. If the goal of diversification is to smooth out returns, it’s my belief that simple portfolio allocation falls short. The value added from using a multiple-strategy, three-dimensional framework is what clients expect, but too few get offered that.
“Step Up for Business Advocacy Campaign” in September. We report on that in this edition (see page 58). I encourage you to read it and give me a call if you are interested in learning more. Our belief is that business success drives community prosperity. We want to facilitate your business success in any way we can. Part of that is by bringing many businesses of all sizes together to engage on
2034 King Street, Bellingham (360) 734-6140 Your Local Authorized
issues important to our community. We, too, are confident that 2017 is going to be an exciting year. If you are not part of our growing leadership group, I personally invite you to join us. Wishing you all a healthy, joyful, and prosperous New Year!
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SCENE ON THE STREET: HOLIDAY INN & SUITES AT BELLINGHAM AIRPORT
Scene on
the Street
HOLIDAY INN & SUITES at BELLINGHAM AIRPORT Photo and Essay by Mike McKenzie
A
NY DAY NOWyou’ll see 153 rooms, 7,500 square feet of meeting space, and a restaurant called northwater (that’s right – no capital letters) open at an airport near you.
This is what construction looked like as the 2016 holidays approached. Oh, and that hopeful opening sign– oops, make that Winter 2017. The Holiday Inn & Suites at Bellingham Airport— after four years of ups and downs— will stage a grand opening soon. Labor shortages, permitting delays, and some occasional inclement weather postponed original plans dating back to June 4, 2013, the day that the owner of the 3.77 acres under development 78 | BUSINESSPULSE.COM
– the Port of Bellingham – agreed to lease the property to Hotel Services Group. The original contract called for opening by Nov. 15, 2015. Delays pushed groundbreaking to May 2015 with a projected opening pushed to September 2016. And here we are. And the end result appears grand. Dan Mitzel, a managing partner in the ownership group, said at the groundbreaking that this Holiday Inn & Suites will target “inbound groups….(and help) make Bellingham a destination for out-of-area conferences.” Ragan Humphrey is general manager, Therese Lundvall director of hotel operations, and Randi Axelsson director of sales and marketing. The Holiday Inn & Suites at Bellingham Airport has joined the Whatcom Business Alliance.
M A G A Z I N E
Business Pulse brings you information regarding the people, companies, ideas and trends that are shaping our county. Business Pulse is the official magazine of the Whatcom Business Alliance (WBA) and is a quarterly publication.
The Publication of The Whatcom Business Alliance
SUBSCRIPTION FORM (Please print clearly)
Please complete and mail to: Or, subscribe online at: www.businesspulse.com
Business Pulse Magazine 2423 E. Bakerview Road Bellingham, WA 98226
Company Name:________________________________________ Title:_________________________ Full Name:___________________________________________________________________________ M A G A Z I N E Mailing Address:______________________________________________________________________ The Publication of The Whatcom Business Alliance City:______________________________ State:__________________________Zip:_______________ Email:____________________________________________ Phone: (___)_______________________ Subscription Type:
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ADVERTISER INDEX Alaska Airlines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Anderson Paper & Packaging . . . . . . . . . . . . . . . . . 32 Archer Halliday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Barkley Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Bellingham Bells Baseball Club . . . . . . . . . . . . . . . . 61 Bellingham Cold Storage . . . . . . . . . . . . . . . . . . . . . .83 Big Fresh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Birch Equipment Rental & Sales . . . . . . . . . . . . . . . 19 Capstone Health Services Inc. . . . . . . . . . . . . 15 & 25 Care Medical Group/Express Care . . . . . . . . . . . . . 54 Chmelik Sitkin & Davis . . . . . . . . . . . . . . . . . . . . . . . . 59 Chocolate Necessities . . . . . . . . . . . . . . . . . . . . . . . . . 85 Data Link West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 DeWaard & Bode . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Faber Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Finestrino Film, Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Four Points By Sheraton Bellingham . . . . . . . . . . 69 Haggen Market Street Catering . . . . . . . . . . . . . . . . 7
Hardware Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Heritage Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Holiday Inn Bellingham Airport . . . . . . . . . . . . . . . 31 Industrial Credit Union . . . . . . . . . . . . . . . . . . . . . . . . 17 Inn at Lynden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 La Jolla Booking Agency . . . . . . . . . . . . . . . . . . . . . . 51 Larson Gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Laserpoint Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Ludtke Trucking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Lyndale Glass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Lynden Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . 46 Mills Electric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Moncrieff Construction . . . . . . . . . . . . . . . . . . . . . . . . 9 Northwest Propane . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 PeaceHealth St. Joseph Med Center . . Back Cover Peoples Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Perry Pallet Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54 Ponder + PEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Print & Copy Factory . . . . . . . . . . . . . . . . . . . . . . . . . . 87 ReBound Physical Therapy . . . . . . . . . . . . . . . . . . . . 25 Roger Jobs Motors . . . . . . . . . . . . . . . . . . . . . . . 39 & 44 Saturna Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Savi Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Silver Reef Casino . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Skagit Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Skagit Valley Casino Resort . . . . . . . . . . . . . . . . . . . . 21 Technology Alliance Group . . . . . . . . . . . . . . . . . . . 11 VSH (Varner Sytsma & Herndon) . . . . . . . . . . . . . . 36 Washington Federal . . . . . . . . . . . . . . . . . . . . . . . . . . 63 WECU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Whatcom Women In Business . . . . . . . . . . . 33 & 47 Whirlwind Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Yorkston Oil Company Inc. . . . . . . . . . . . . . . . . . . . . 82
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