Business Pulse Magazine: Winter 2013

2012: Headlines & Dreadlines

New Exec Named

Port leadership vacuum

‘Fixed’

MAGAZINE Winter 2012/13

Nancy Steiger, CEO and Chief Mission Officer PeaceHealth St. Joseph Medical Center, and CEO of NW Network

Health Care Experts tell what it means to YOU

takes Center Stage

How politics

hurts

environment, charity

Economic Forecast

the

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TABLE OF CONTENTS

THE FEARLESSLY FORECASTING FIVE: (from left) Dennis Murphy, Hart Hodges, John Mitchell, Chris Lawless, and Michael Parks. (Staff photo)

2013: ‘Smell of fear’

12

That’s one way to look at 2013—Dennis Murphy’s way—in our economic forecast package. Everything doesn’t spell gloom (Canadian dollar, Lone Ranger returning) as a familiar panel shares its crystal ball for a baker’s dozen in search of a lucky ’13.

Heart, Head, and Heart

18

That transformative phrase is the core of a “language of caring” program—one among scores of innovative, ever-growing methods and services at PeaceHealth St. Joseph Medical Center in Bellingham. The phrase suits CEO Nancy Steiger, our Personally Speaking subject this month. A clinical nurse at heart, she is the head of the NW group that includes Whatcom’s largest employer, where the heart of the mission turns nobody away. Her story weaves a life of service to health care, a leap from caring for ill parents to tending a huge budget to support a huge mission, “every time, every touch.”

4 | BUSINESSPULSE.COM

Obamacare fallout -?, ??s, and more ???s

48

Reality check: It’s here to stay. No more wondering, yet only wondering.

Checking in with several professionals who know their stuff – in fields of insurance, accounting, health care, CEOs – to examine the impact of the Affordable Care Act, the one predominant outcome sums up as, “Who knows?”

Here is a compelling compilation of top-drawer insights into what you need to know about what lies ahead with your health care options, and an upcoming opportunity to explore further.

Latest scoop on scoping

54

As public input draws to a close, government agencies take the scoping process for the proposed Gateway Pacific Terminal at Cherry Point to the next level. They will scour a mountain of issues raised on both sides of the issue of whether the economic thrust of shipment of coal and other cargo through Whatcom County outweighs environmental concerns, or can mitigate them.

Relax. This will take a while.

WHATCOMBUSINESSALLIANCE.COM | 5

TABLE OF CONTENTS

Profound profiles

24...

Who doesn’t love a success story? Here are several for your enjoyment: From a $7 start to a $200M a year international force, organic cereal magnate Arran Stephens follows Nature’s Path (p. 24)….Cosmic Comics finds Magic across a game-playing universe (p. 28), and Deb Slater brings it home live on the ‘Net (p. 32).

Guest columns

72...

Often, political “feelgood” decisions create unintended consequences rather than doing the good that’s needed. Three great examples receive treatment by business analysts on p.

72, p. 74, and 78. For entrepreneurial fever, go to p. 62 for a ‘Kickstarter’ and p. 64 for the passion of “the best job on earth.”

2012 Retrospective: Headline and Dreadlines

66

Waving bye-bye to 2012, we gathered from a multitude of sources an a-maze-ing trail of news stories that grabbed widespread attention by the various ways it sent a jolt through the economic fabric of Whatcom County. With a big assist from economist Hart Hodges, you can see 12 for ’12 (and a couple of halves thrown in) that resonated in significant ways, led by a port, a hospital, and two iconic community shutdowns.

New Skyline 2012: Bellingham Cold Storage Ice House $4.5M, 470 tons a day, 1,000 pounds in 30 seconds

Philanthropy thrives on housing

36&44

With a touch of economic irony, Catholic Community Services utilizes real-estate tax credit funding to provide affordable housing and a ton of other services throughout the county and western Washington (p. 36)…And, New Way Ministries in Lynden has a special house, too, supported only by private funds (p. 44).

Managing Editor: Mike McKenzie Graphic Designer: Jason Rinne Subscriptions: Janel Ernster Administration: Danielle Larson Feature Writers: Amanda Baltazar John D’Onofrio Steve Hortegas Allysun Kirkham, Intern Cheryl Stritzel McCarthy Allysun Kirkham, Intern

6 | BUSINESSPULSE.COM

M A G A Z I N E The Publication of The Whatcom Business Alliance

Special Contributors: Laura Bostrom Don Brunell Debbie Granger Hart Hodges Tony Larson Chris Lawless Ted Mischaikov John Mitchell Dennis Murphy Todd Myers Michael Parks Bob Pritchett Erin Shannon Joel Townsan Big Fresh Media

Cover Photo: Courtesy of PeaceHealth St. Joseph Medical Center Photography: Steve Hortegas Cheryl Stritzel McCarthy Mike McKenzie Photos Courtesy Of: Bellingham Cold Storage Bellingham Technical College Bob Jones Photography Lummi Nation and Silver Reef Hotel Casino & Spa Lynden Jensen Art Center The Lynden Tribune Nature’s Path PeaceHealth St. Joseph Medical Center Procreate Brands

For editorial comments and suggestions, please write editor@businesspulse.com Business Pulse Magazine is the publication of the Whatcom Business Alliance. It is published at 2423 E. Bakerview Rd., Bellingham, WA 98226.

(360) 671-3933. Fax (360) 671-3934. The yearly subscription rate is $20 in the USA, $48 in Canada.

For a free digital subscription, go to businesspulse. com or whatcombusinessalliance.com. Entire contents copyrighted © 2012 – Business Pulse Magazine. All rights reserved.

POSTMASTER: Send address changes to Business Pulse Magazine, 2423 E Bakerview Rd., Bellingham, WA 98226.

WHATCOMBUSINESSALLIANCE.COM | 7

Dave Adams, President Emergency Reporting

Randi Axelsson, Sales Manager Silver Reef Hotel, Casino & Spa

Janelle Bruland, President / CEO Management Services NW

Kevin DeVries CEO Exxel Pacific, Inc.

Greg Ebe President / CEO Ebe Farms

Andy Enfield Vice President Enfield Farms

Brian Gentry, Manager Community & Business Services Puget Sound Energy

John Huntley President / CEO Mills Electric, Inc.

Sandy Keathley Previous Owner K & K Industries

Paul Kenner Executive VP SSK Insurance

Becky Raney Owner Print & Copy Factory

Jon Sitkin Partner Chmelik Sitkin & Davis P.S.

Doug Thomas President / CEO Bellingham Cold Storage

Kathy Varner CEO VSH, Certified Public Accountants

Karen Winger Senior VP, Commercial Banking Wells Fargo Bank

Not Pictured: Guy Jansen, Director Lynden Transport, Inc.

8 | BUSINESSPULSE.COM

WBA, 2423 E. Bakerview Rd, Bellingham, WA 98226 • 360.671.3933

WHATCOMBUSINESSALLIANCE.COM | 9

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.

Have We Passed the Tipping Point?

Time for business leaders to engage

H

appy New Year.

Welcome to 2013.

We’ve all heard the definition of insanity. Continuing to do what you’ve done, and expecting a different result. That sums up the November election in a nutshell… status quo. Instead of bringing certainty and confidence to the marketplace in 2013, the election seems to have brought the opposite.

A remarkable panel discussed this and many other issues at the 24th annual Whatcom County Economic Forecast breakfast, hosted by US Bank and held at the Bellingham Golf and Country Club in December. Dr. Dennis Murphy, former dean of the college of Business and Economics at Western Washington University was the moderator. Murphy has been involved in the event from the beginning, and he thoughtfully provided the theme for 2013, “The Smell of Fear.”

Each speaker addressed a different aspect of the economy, exploring Whatcom County, Washington State, the national scene, and the impact of Canada on our region.

The fiscal cliff, deficit spending, the national debt, Obamacare, entitlement reform, tax policy, and how each would likely impact the growth of our economy–all covered. We provide a summary in this issue, along with some of the 10 | BUSINESSPULSE.COM

biggest business issues that came up in 2012 and a preview of what to watch for in 2013.

The two local panelists, Dr. Murphy and Dr. Hart Hodges, have joined our lineup up guest columnists and will add to insights and follow up on big questions facing business and commerce this year.

Experts are scrambling to make sense of the details (of Obamacare) as business people cautiously prepare their budgets and proformas. If you call the IRS (enforcement) a voicemail directs you to their website.

Health Care takes Center Stage Polling during the election showed majority support for repealing in its entirety the Patient Protection and Affordable Care Act (PPACA), known as Obamacare.

Health care now takes center stage for businesses, particularly as we begin to see a rollout of elements of the bill that we needed to pass to find out what’s in it.

Experts are scrambling to make sense of the details as business

people cautiously prepare their budgets and pro-formas. What are the tax consequences, penalties, impact on hiring, impact on employees, etc.? All these questions have yet to be answered.

If you call the IRS, the agency charged with enforcement of the PPACA, you get a voicemail that directs you to their website.

We connected with a number of experts and business leaders to get their thoughts about what is known so far. We’ll have more for you soon, too. The Whatcom Business Alliance and Bell-Anderson have put together a panel of experts for breakfast and a discussion of Obamacare on Wednesday, Feb. 13, 7:30 a.m., at the Bellingham Golf and Country Club. We hope you can join us.

Not only will you hear from the panelists who all specialize in understanding the complexities of the PPACA, but you’ll get a chance to connect with other local business leaders facing the same challenges you are.

We’ll discuss the potential impacts on businesses of all sizes, workers and individuals, tax and compliance issues, and allow time for questions and an opportunity to network. You can join us with an R.S.V.P. to Shannon at 360746-0418.

Actions have consequences I’ve talked to a number of people who wonder if we’ve passed

the tipping point on deficits, debt, engage business leaders on issues prosperity, and serving as an honand out of control spending? of importance in Whatcom County, est broker on issues of importance Whether our current economic some of which have significant to the community. circumstance, reflected in slow impacts on them, their employees The WBA encourages, supports, growth and high unemployment, and the entire community. The facilitates, and advocates on behalf is the new normal? Whether polibusiness leader perspective is of all businesses in Whatcom ticians understand or even care extraordinarily valuable, yet often County, with emphasis on all. We about the consequences of their missing from community dialogue. are bringing local business owners, actions on the people they claim I believe the absence of this company presidents, CEOs, and to serve? Whether elected officials voice comes from a feeling that other top executives and entreprewill have the backbone to make one voice doesn’t matter, perhaps neurs into the discussion of how principled decisions based on what a fear of negatively impacting to create a vibrant business comprovides the best results, munity. rather than on political When local businessexpediency? es are strong, so is our Do voters make it too community. Businesses easy on elected officials employ people, pay by not making them taxes, fund nonprofits, accountable for the and contribute to the results of their actions? community in ways that I’d point you to some serve us all. of our columns that The WBA is privateserve as examples of ly-funded and the board unintended consequencof directors comes 100 es. On page 76, Don percent from the private Brunell writes about sector. All board memproposals that likely bers have track records will have a negative of success in startimpact on charitable ing, owning, operatThe fiscal cliff, deficit spending, the national debt, Obamacare, giving and those who ing, managing, turning entitlement reform, tax policy, and how each would likely impact the benefit from it. On page growth of our economy–all covered. around, and/or selling 72, Todd Myers talks companies. They and about the harm to the their companies give their business by expressing their environment when we make deciback to the community in large thoughts. Mostly business leaders sions based on politics rather than measure. They represent what are busy managing their busiresults. On page 74, small business we want to encourage more of in ness, raising their families, and expert Erin Shannon talks about Whatcom County. finding time for worthy causes in how a higher minimum wage in If you are a business leader in the community and other interforce this month in Washington Whatcom County, we invite your ests. How can you do all this and hurts workers. company to join our Alliance. In still engage in community issues? addition to being part of our comLeadership and the WBA That’s where the WBA comes in. munication network, we have a It celebrates business in number of events planned that Despite what can be characWhatcom County. You can see that will allow you to connect with terized charitably as a less than throughout our story lines as we other business leaders. These optimistic 2013 economic forecast identify wonderful success stories, include our speaker series, panel there are lots of local high notes, as well as address critical matdiscussions, award dinners, indusone of which was the formaters of importance to the business try tours, VIP President’s Club tion and steady growth of the scene. events and others. Give me a call Whatcom Business Alliance in The WBA is a non-partisan directly if you want to learn more, 2012. The WBA is a local member organization of business memor go directly to our website and group of business leaders from bers focused on keeping business find out how easy it is to join us. every industry and from businessleaders up-to-date on important Wishing each of you a healthy, es of every size. This magazine community issues, improving the happy, and prosperous 2013. is the official publication of the local business climate, fostering Enjoy the issue! organization. business success and community The WBA was created to re-

WHATCOMBUSINESSALLIANCE.COM | 11

THE FEARLESSLY FORECASTING FIVE: (from left) Dennis Murphy, Hart Hodges, John Mitchell, Chris Lawless, and Michael Parks. Staff photo

2013 Economic (Fuzzy) Forecast Not rolling in clover, but might we catch a little luck with ’13?

Compiled by the Staff of Business Pulse Magazine

W

e don’t have a crystal ball in our office. So we borrowed one. Or five, depending on how you look into it – globally, so to speak, or from various angles. When you look into these crystal balls, we recommend sitting down.

You could get dizzy, because the forecast they hold often is blurred in a morass of fiscalcliffshrinkingdollarglobalmessAmazo nrocksFeddoesn’t swirly stuff like those little snow globes you shake.

(Eventually those clear up to reveal a lovely scene. Let’s hope.)

The prescience we sought comes from five preeminent, professorial sources in the field that we will, pun intended, write capitalized: Economics.

Over the last quarter-century or so during December, banking giant US Bank regional administration has presented a panel discussion in Bellingham of the Annual Economic Forecast. On Dec. 11, 12 | BUSINESSPULSE.COM

2012, assessing the 2013 outlook the title was “Facing the CliffPlayers in Place.”

Dr. Dennis Murphy, Dean Emeritus of the College of Business & Economics at Western Washington University and still working the classrooms he has filled since 1983, has served as emcee and narrator of the event every year. He leads us off.

The panelists consisted of three who have done them all—Christopher Lawless speaking on British Columbia and Canada issues, Michael J. Parks on Washington state, and Dr. John W. Mitchell on the regional and national scene— and one who joined them about halfway along the trail, Dr. Hart Hodges, on Whatcom County matters.

To list their full credentials would fill this entire magazine. In the reader’s digest version: • Hodges wears two hats -- Director of the Center for Economic and Business Research at WWU, and local business co-partner

at Waycross Investment Managing Company.

• Lawless serves as chief economist for the B.C. Investment Management Corp. in Victoria, B.C. • Parks is editor emeritus of Marple’s NW Business Letter in Seattle and has a long-time newspaper background in business reporting.

• Mitchell represents US Bancorp out of Portland, Ore., as a former economist for the company’s western region.

They graciously loaned us their future-gazing power points, with cooperation from Ann Caldwell, President of the Northwest Washington Region of US Bank.

We took notes at the event, culled highlights from their presentations, and condensed a veritable plethora of information into your CliffsNotes package.

The singular conclusion of their highlights, lowlights, and in-between lights when shined on 2013 could best be summed up as gloom short of doom on a long, slow, winding road toward (but still shy of) recovery.

None on the panel qualified as a pure, out-and-out pessimist. But their forecasts ran similarly fuzzy, and the overriding theme of the expertise of these men who know was, “Who knows?”

Dr. Murphy set the tone with his introductory remarks, and then we undertook the difficult chore of highlighting summarized versions of the panelists’ points.

Editing a wealth of good, interesting charts, bullet points, and notes of their spoken presentations made for difficult choices – it was all compelling.

We borrowed from different parts and combined them into one to create an economic outlook premise of 13 for ’13.

The Smell of Fear

By Dr. Dennis Murphy

This notorious (fiscal) cliff does not represent a jump to the death, but it no doubt will be disruptive. More disruptive than the current level of uncertainty? That, as 2013 began with a precarious Congressional showdown, remains unclear.

F

ranklin Roosevelt famously declared, in his most remarkable First Inaugural Address, “The only thing we have to fear is fear itself.” He went on to call it “…nameless, unreasoning, unjustified terror.”

Today, approaching the presi-

dential inauguration day of 80 years later, we sense fear that has a name, several even—read on, a fear that is neither unreasoning nor unjustified. We have had a little respite from the emotion since the demise of Lehman Brothers, Bear-Stearns, Washington Mutual, and so on, but like the steady drip, drip, drip – it is back. Fear itself.

The U.S. continues to muddle along, making little progress against

stagnant economic conditions that reporters insist on calling a recovery. Every spark of good news is soon doused with a pail of cold bad news. A look ahead definitely begs rose-colored glasses.

• Unemployment is down – if we don’t look too closely at the workers that recently fell out of the numbers. We are far from gaining back the number of jobs lost. And if you plan on stopping by Sears to buy a new battery for the car on your way to Semiahmoo, well forget about it!

EDITOR’S NOTE: Sears in Bellingham and the Semiahmoo Hotel in Blaine closed, costing a combined 316 jobs in Whatcom County. Read our 12-for-’12 retrospective on pp. 66.

• Growth rates of the U.S. economy have been anemic. An upward revision late last year showed growth was accounted for by inventory accumulation

WHATCOMBUSINESSALLIANCE.COM | 13

ECONOMIC FORECAST and exports. Both business spending and retails sales were down. Will they rise in 2013?

• Estimates of growth rates in Eurozone have been revised downward and now show a recession for the next two years. Will the recession jump the Atlantic?

• Growth rates in Asia are muchreduced. Japan ran a trade deficit for the first time in 30 years.

China showed reduced growth.

Will this bad economic news jump the Pacific?

• Fiscal Cliff, ad infinitum. We don’t know who originated the clichéd term in the context of U.S. economics reportage. It might have been a journalist, but it also might have been a Goldman economist. In any case it has all the sound of impending doom. Perhaps they should have called it a buffalo jump, portending actual, rather than metaphorical doom.

This notorious cliff does not represent a jump to the death, but it no doubt will be disrup-

tive. More disruptive than the current level of uncertainty?

That, as 2013 began with a precarious Congressional showdown, remains unclear.

• Deficits. Everyone talks about them, but no one does anything about them. Current proposals approach risible as the accumulated debt is forecast to pass 100 percent of Gross Domestic Product (GDP). We will soon need to practice our whistling as we wander through Club Med! • The stock market. It continues to reach for heaven as the only other game in town. A graph of returns in the stock market compared to returns in the bond market looks like the open jaws of an alligator. The only question is which jaw moves as it clamps shut – the bottom, up…or the top, down?

• Inflation. Chairman Bernanke at The Federal Reserve calls 2 percent inflation price stability.

Meanwhile the Fed continues to grow its assets by purchas-

1 13 for ’13

ing treasuries and collateralized debt obligations, a.k.a., CDOs – which, in turn, represents socalled Quantitative Easing, or QE. Janet Yellen, vice chair of the Fed board, has suggested that this policy is warranted until at least mid-2015. To say this is unprecedented is a caricature of understatement. I know of no historical examples where unwinding such a position did not result in substantive inflation.

• Democracy. Here’s the biggest question of the hour from Day 1 in 2013: How much stress can the fabric of a democratic society withstand before something irreparable happens?

Unemployment rates estimated to rise substantially in Eurozone and into the 40 percent range in Greece make it difficult to reconcile with democratic institutions.

If the fabric of society rends, what authoritarian solution will be voted for?

Sprees, BRICs, and the ‘Great Disrupter’

The outlook in the Seattle marketplace, unlike the one seen while staring out the window: “Relatively optimistic, despite the rain and clouds.”

Foundations for growth: • Aerospace: Hiring spree plus seven-year backlog of airplanes on order at Boeing.

• Diverse/growing high-tech sector.

• Farm and factory, food and products for a growing global middle class. Major emphasis on growing • Amazon.com: Hiring and building sprees by the “Great Disrupter.”

– Michael Parks

14 | BUSINESSPULSE.COM

2

Our dollar is in demand. But all is not rosy on the Northern front. Not enough farms to go around.

And, next to Norway, our debt-to-GPD is the lowest in the world. Our growth engines have stalled: the BRICs (Brazil, Russia, India, China) that drive our economy were slow in 2012….and exports and housing investments have decelerated. – Chris Lawless

3

It is not a good time to say, ‘Don’t worry,’ or ‘This, too, shall pass.’ Bad things are happening. We (Whatcom) need population growth… remember how large we are, or

“The one most predictable thing: The next turn will be down.”

John Mitchell, US Bancorp

rather how small, comparatively (204,000). We only have 85,000 jobs— nowhere close to the levels of the late ‘90s. – Hart Hodges

4

The ‘Fiscal Cliff’ is front page, but it is not new. It’s been sitting out there in the news for over a year, and it’s been around a very long time. – John Mitchell

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Jeff Bezos, the creator and leader of Amazon.com, has pretty much said to anybody out there, “If you have a product that is selling, I want to buy your business.” Look on line at their site’s list of jobs-available. You’ll find 150 pages, 10 to a page, and they’re virtually all six-figure salaried jobs in Internet tech and design. – Parks

6

Slower population growth suggests slower

growth in retail sales and construction. Our labor force has gotten smaller and older. We’re way down in the long-term averages on a smaller base. – Hodges

7

Gas pump prices in B.C. have eased slightly, but Canadians will still line up for it in Bellingham because shopping in Whatcom County will still be in high demand for dairy products.

“Our dollar is in demand.

But all is not rosy on the Northern front. Not enough farms to go around.”

Chris Lawless, B.C. Investment Mgt Corp.

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ECONOMIC FORECAST Keep the milk and cheese coming.

– Lawless

8 9

Bellingham Costco reports that about 50 percent of its sales come from Canadians.

Walmart, about the same. Target and Fred Meyer say between 30-50 percent, fluctuating. The exchange rate and border crossings work in our favor. – Hodges Most noticeable points since the 2012 elections: • Only a slightlyaltered cast (on Capitol Hill).

• Upturn in Year Four since the downturn of ’09.

• 4.17 million jobs below

• • • • •

January, 2008 and 4.61 above the trough of February, 2010 (“we have a ways to go just to get back to where we were) Global weakness.

Fiscal cliff Housing strength after years of drag.

Rampant uncertainty.

And, Twinkies are gone.

But I went to the movies recently and saw a preview; the Lone Ranger is coming back. – Mitchell

10

Maybe we should just be asking important questions, and then finding answers and solutions, rather than forecasting. Let’s fol-

“I call Amazon.com the ‘Great Disrupter.’ They’re on building and hiring sprees. Bezos wants to buy everybody’s sales business…on their website they have 150 pages of job listings.”

Michael Parks, Marple’s NW Business Letter

Newskyline2013:

BTC Fisheries & Aquaculture Center

low these all year: • How can we stimulate population growth? That’s the key to job growth.

• Which jobs are gone forever, and which might come back, depending on the structure of economy and productivity? Look for answers in construction and technology advances.

• Can we compete for highpay job growth? We need more in areas of strength – professional and technical, information technology, finance.

• What about how rapidlychanging technology – examples of equipment, software –affects business and jobs? – Hodges

11 12

A strong point – Washington’s leading farm commodities in revenue produced (ranked 1-8): Apples, Dairy, Wheat, Potatoes, Cattle and Calves, Cherries, Hay, and Greenhouse/ Nursery. We produce 65 percent of the nation’s apples, and 59 percent of its cherries. – Parks This is an incredibly exciting time to be an economist and to observe the national picture. The one most predictable thing: The next turn will be down – Mitchell

13

What all must happen so that we can call it a healthy, recovering, or a lucky ’13? – Hodges

Bellingham Technical College (BTC) construction on the Perry Center of Fisheries and Aquaculture Sciences is scheduled for completion in time for classes in Fall 2012. With $2 million in contributions from businesses, individuals, private/public foundations, civic groups, plus a matching $2 million state grant, the new building opens for classes in Fall 2013. The college donated $500,000. A donation by Chuck Bundrant, owner of San Juan/Trident Seafoods, gave him naming rights, and he named it in honor of Virginia and Edd Perry, the company’s long-time manager.

The center turns out graduates—more than 1,000 during the last 33 years—who work throughout the Northwest and Alaska as fish culturists and biologists. Photo courtesy of BTC 16 | BUSINESSPULSE.COM

NewSkyline2013: Silver Reef Convention Center

Construction of Silver Reef Casino Hotel & Spa’s new convention center is scheduled to open this spring on Haxton Way, according to Lummi Nation officials. The expansion includes a 10,000-square-foot Event Center, and a seminar theater featuring state-of-the-art audio/visual technology and 150 tiered seats. Other elements: Silver Reef’s eighth restaurant, The Cantina (the property’s 8th restaurant, seating 50 in the dining room, 25 in the lounge for casual Mex cuisine); 225 new gaming machines, and more than 300 paved parking spaces. Silver Reef began the year with more than 550 employees, and expects to add about 50 when the new addition opens.

Photo courtesy of The Silver Reef

The Culinary Arts Program at Bellingham Technical College

[visual exposure] d i a n e p a d y s p h o t o g r a p h y. c o m

“Diane was able to capture the essence of our students... and bring out the beauty of color, motion and ambiance in each photograph.”

WHATCOMBUSINESSALLIANCE.COM | 17

TITLE

Personally Speaking ... with

Nancy Steiger

Photos courtesy of PeaceHealth St. Joseph Medical Center

Her path from clinical nursing background to CEO chair

H

ow can you condense into 10 words or less a description of heading two organizations, traveling thousands of miles a year over dozens of days, and managing the largest employer in Whatcom County with almost $200 million in payroll? PeaceHealth St. Joseph Medical Center did it this way in the title for Nancy Steiger: CEO & Chief Mission Officer, and CEO of the Northwest Network.

That means she is responsible not only for the Bellingham hospital, but also the parent health-care system’s operations in SE Alaska, Sedro-Woolley, and San Juan Island properties, plus serving on the board of directors for the system in Vancouver, Wash. The scope of her work just in Bellingham: more than 2,700 employees, 400 doctors, 400 volunteers, 253 bed-hospital operation with 19 major services, 19 specialty services – the ongoing mission of the Sisters of St. Joseph of Peace over the last 121 years as a non-profit that declines nobody who needs health care.

During a one-hour session with Mike McKenzie, managing editor of 18 | BUSINESSPULSE.COM

Business Pulse, Nancy revealed that the role she identifies most closely with from her life’s work in health care is oncology nurse.

At the center of the management, research, teaching, and authoring, she said, “I’m a clinician at heart.”

That started at home, which is a good place to start among wideranging topics as she speaks to you personally….

Your path to nursing My family settled from Europe in East Rockaway on Long Island.

I was driven to learn about health care because both of my parents were quite ill, and I was involved in their care. My mother was busy–a dental assistant, raising us, and she was artistic. My father was CEO of a hardware distributor. I am the youngest of four, by seven years, and when my parents became ill I was the only one left at home to help with their care.

My father had a heart attack when I was 10 or 11, and my mother became ill later. And in taking care of them I didn’t know the questions to ask. So nursing became something I felt called to do. That’s when I entered New York University.

Your educational path I started college at Emerson in Boston. But, given my parents illnesses I couldn’t stand being away from them so I moved back home.

I hadn’t thought about nursing yet, and transferred to Hofstra where I had a psychology major.

At NYU I received a B.S. with a major in nursing. After NYU, I was a dialysis nurse and recovery room nurse, and eventually got my master’s degree in nursing at the University of California at San Francisco and had been accepted into the doctoral program there.

But I never attended it, because the opportunity arose to become chief of nursing at a major hospital. That was the springboard to my career in management.

Administrative Assistant Heather Flaherty and CEO Nancy Steiger

Moving to California Right after my last exam at NYU, I got on a plane and flew to Palo Alto to visit my sister. I met my husband , Jackson, there. He’s lived

“In taking care of (parents) I didn’t know the questions to ask. So nursing became something I felt called to do.” in many places, but New York was not going to be one of them.

During graduate school I continued clinical nursing, including oncology, and also taught at UCSF. I’m really a clinician at heart, which is how I identify.

We moved to Santa Rosa and I had been accepted into the doctoral program there. But I never attended it, because the opportunity arose to become chief of nursing at a major hospital. That was the springboard to my career in management.

Shifting into administration It came about while working 15 years at Santa Rosa Memorial

Hospital. That was my first exposure to faith-based health care. I was immediately drawn to it and felt very connected to it. After obtaining my master’s the CEO asked me to apply for the position of chief nurse….because he knew me and liked who I was, not what I did, and I became chief nurse for eight years.

New and different assignments I was asked to go to St. Joseph in Eureka to help ensure compliance and to restart the heart surgery program….a new opportunity to see my skills at work. Returning to Santa Rosa, some new and challenging assignments arose for integrating care between different hospitals within the system, as well as a new medical group.

Then the time came to leave for my first position as a CEO, at a public hospital in San Mateo. While the publically-run system had a deep and compelling mission—we did really important work during my five years there--I missed the faith-based values and vision.

Opportunity in Bellingham What first endeared me to PeaceHealth was the position title–chief mission officer. My first WHATCOMBUSINESSALLIANCE.COM | 19

NANCY STEIGER the voice of a dog; I’m an animal lover.

Your family

Artwork adorns the walls of a wing of PeaceHealth St. Joseph Medical Center in Bellingham.

reaction was that I wasn’t really interested in leaving California—we lived in a really nice spot (San Mateo). But the title made me look more closely at the position, and I thought, ‘This is the right work, the right mission and values, the right vision, and the right organization.’

During my visit here everyone I met impressed me. I’d never met people who cared more about their community than themselves. The mission here is amazing. Truly, I felt called to move here.

Your Leadership style I’m very committed to transparency as a leader. I do as much face-to-face communication as possible and spend a lot of time being present. I’m known for having a lot of ‘Nancy sayings’ with staff closest to me.

We’re also team-focused, not quarterback-focused. I have a fantastic team. Our staff is very facile.

That’s what it takes to run an organization like this. No organization can rely on one person.

We are implementing many changes to improve the care and services. Most recently we started the Language of Caring program – heart, head, and heart – as our 20 | BUSINESSPULSE.COM

fundamental communication and patient experience structure. My hope is that it will transform the care we give.

Consistency with personal style My goal is to be the same person wherever I am, to be consistent.

Family comes first. Personal health and well-being is essential. You can’t take care of anyone else if you don’t take good care of yourself.

Some might think that’s selfish, but you have to in order to be effective.

I work hard on improving myself. Exercise a lot. I have fun in my garden with a lot of flowers. We love to hike. Read.

Movies. Whether at work or play, though, I live my life the same way. I don’t have a work life and a home life, two separate things.

I have a life.

What’s on your book shelf Books on health care and on leadership, mostly. I’m reading Christensen’s How Will You Measure Your Life, and re-reading The Fifth Discipline by Senge. It was written around 1980 about vision and strategies. In fiction, I loved Racing in the Rain, told in

My husband, Jackson Helsloot, is an artist and he also has had a sign and graphics business. He’s a true Renaissance man, and he takes care of me. And we have Quinn, a yellow Lab. Our daughter, Shaine Helsloot, is a graduate student at University of San Francisco in organizational development. She works at the UCSF Center for Health professions in a leadership program for nurses, doctors, and other health care professionals. Our son, Jordan Helsloot, recently returned from living in Barcelona, Spain, and will be attending San Francisco State Univeristy.

Personal values Everything is about choices.

Your checkbook and your calendar become a statement of your values.

Jackson and I made our largest contribution last year to the new PHSJ cancer center. I’ve always contributed to my employers’ philanthropic causes, but last year that was our value statement – a project that happened in large part because of the community’s philanthropic contributions.

Lessons learned from oncology background We’re in an age that we live like we have forever, especially our generation of Baby Boomers. But life is terminal; no one gets out alive.

Working in health care makes you appreciate every single day. It’s so emotionally engaging. You become acutely aware of being grateful.

The business side of your role No margins, no mission. It’s that simple. If the money is okay, we can focus on what matters most, what I care about most – patient care. If there’s no money, we can’t focus on anything important.

The question for us as a business becomes, to what end? The reason I care about money is so we can carry on our mission.

Every dollar we raise or earn goes back into the programs and services. We have no shareholders.

We provided $40 million last year in uncompensated or under-compensated care and in community benefits, working with organization like Interfaith Clinics, WAHA (Washington Alliance for Health Advancement), and many others.

To do all that you have to make enough money to care for all who need our care.

Thinning of the ranks Regrettably, we had to eliminate around 80 positions. Most were through attrition, and we were able to retrain most everybody else so that we wound up with minimal actual job loss. That, and focus on other cost reduction

efforts improved our financials significantly.

Addition of facilities and services We grew hundreds of positions through acquisitions the last few years–Madrona Medical Group, North Cascade Cardiology— and the building of Peace Island Medical Center on San Juan Island, and opening the Hospice House. Many of our positions are high-paying. We have about 2,700 employees making more than minimum wage, another thing we feel very good about. Our payroll was about $196 million to Whatcom County caregivers for 2011.

Nancy Steiger and her husband, Jackson Helsloot, at a fundraiser

WHATCOMBUSINESSALLIANCE.COM | 21

NANCY STEIGER Impact in the local economy We calculate that we spend about $150 million a year in the community as “ripple” associated with the hospital and PeaceHealth Medical Group. The food we buy direct from farmers. Goods and services—gas, food, vendors, vehicles, flowers, and so on. We drive a lot of commerce. Last fiscal year we treated 5,000 patients who don’t live in Bellingham, and when they came to Bellingham they paid for gas, lunch, perhaps a taxi, and stayed somewhere.

Managing the costs of care Health care is expensive. And you and I demand the best care, the best pharmaceuticals, the best radiology equipment, the best everything. We struggle, too, just like everybody else, but we’ve got to have a healthy bottom line to continue providing the care that is needed

we’ve spent $2 million upgrading our cardio-vascular unit, and $4 million on emergency-care facilities.

Last year (2012) our new cancer center cost $30 million, and about $10 million of that came from philanthropy. And the new San Juan hospital was the same, a $30 million project with $10 million coming from fundraising.

Methodology for operations We try to run our business in a fiscally conservative way so that we can make more than we spend. We absolutely can’t operate any other way because costs are going up at a staggering rate. For example, we work hard at being energy efficient with our equipment and service agreements, and recently received recognition for that.

Order of St. Joseph mission

I feel that the Sisters were called to Bellingham. They inspired us to follow their mission. Young women in their teens and 20s came to a Major outlay for expansion community of loggers and miners, In recent years, for example, and simply listened to their community. They wrote the road map for us.

The paths certainly are far different from those times, but we are On behalf of PeaceHealth St. Joseph Health still seeking what they Center, caregivers and Resource Conservation sought. We’re listening, Manager Scott Dorough accepted the 2012 and responding to the Northwest Clean Air Agency “Partners for needs of the commuClean Air” Platinum Award. From a field of nity.

‘CLEAN AIR’ AWARD FOR ENERGY REDUCTION

42 applicants throughout Whatcom, Skagit and Island counties, the Bellingham hospital received the top honor for initiatives and measureable results in several areas: Energy use reduction; air emission reductions; incentivizing caregivers to use transportation alternatives; eliminating use of mercury; utilizing a certified recycler; using food service paper products that contain recycled and chlorine-free processed content; eliminating use of hazardous housekeeping chemicals and disinfectants; working with suppliers to reduce packaging; reducing landscape maintenance and water use by installing a native garden, and increased use of organic fertilizer.

22 | BUSINESSPULSE.COM

The hospital’s philosophy We are all about the mission. I love our mission statement: “We carry on the healing mission of Jesus Christ to providing personal and community health, relieving pain and suffering, and treating everyone in a loving and caring way.” This is a powerful statement

whether you believe in Jesus Christ or not. It’s very inclusive.

The impact of health-care reform We’re still figuring that out. The Affordable Care Act, what everybody is calling Obamacare—our goals are very aligned with it. It addresses coverage for everyone, better access, higher quality care for a lower price, so it’s driving value.

But government regulation drives us, too. We don’t know the ultimate impact and outcomes. Today, volume drives business. In the future world, we’ll be paid for bringing positive health care outcomes, not for volume. Today we’re paid for what we do for individuals and episodes, tomorrow we will be paid for managing populations over time.

It’s a perfect storm. Medicare and Social Security are going to be broke. Some say we have one foot on the boat and one on an iceberg.

I think we have one foot on the boat, one on the dock, and the boat is pulling away.

Primary concerns among the confusion The concern about health-care reform is that the major emphasis shifts from utilization to emphasis on value and outcomes. This generation, we want it all, we want everything. So we utilize, utilize, utilize.

There’s a lot of thinking that more is better. But we’ve got to figure out how to do it right. More care is not necessary; the right care is necessary. The right care, for the right person, at the right time. That is very individual.

PeaceHealth’s ‘every individual’ policy We turn nobody away. Social justice for the poor and vulnerable is a large part of our mission. Part of our mission statement speaks to our personal care: “Every time, every touch.”

Who doesn’t buy into that?

NewSkyline2012: Cancer Center at PeaceHealth St. Joseph Medical Center

This $30 million project, one-third of which community donations paid for, stands as one of just two cancer-care programs in the northwestern United States ranked among the nation’s best-accredited programs by the Commission on Cancer (CoC) of the American College of Surgeons. The center opened Dec. 10, and for the first time all local PeaceHealth cancer services became available in one location— consultation with specialists, chemotherapy, radiation (late March 2013), and support services.

Photo courtesy of PeaceHealth St. Joseph Medical Center

WHATCOMBUSINESSALLIANCE.COM | 23

NATURE’S PATH

Nature’s Path From a $7 investment to open a vegetarian café, Arran Stephens & family have built a $200M-a-year enterprise with a conscience about earth and breakfast.

By John D’Onofrio Photos courtesy of Nature’s Path

24 | BUSINESSPULSE.COM

B

ack in the 1930s, on the heels of the Great Depression, times were hard everywhere. Farmers, in particular, had a tough go of it.

Money flowed in short supply. On his 89-acre Vancouver Island berry farm Rupert Stephens had some unorthodox ideas, born of the necessity to conserve resources.

One of these involved using sawdust as mulch—a practice he refined and developed with great success. In 1951 he published Sawdust is my Slave, a treatise describing his unique approach to farming.

Rupert’s son Arran grew up on that farm and took it all in. He learned much from his father and developed what would become a life-long passion for growing healthy food using environmentally friendly methods.

Arran was headed for a life as a painter and poet when a trip to India during his teens greatly impacted his world view. He beagan thinking about the importance of food and a healthy diet. He returned to Canada, and in 1967 he opened Canada’s first vegetarian restaurant with an investment of $7.

The next year he returned to India, where he married his life partner, Ratana. Back in Vancouver, the restaurant flourished and in 1971 Arran Stephens opened Canada’s first largescale organic supermarket, Lifestream, also in Vancouver.

Stephens soon began market-

ing organic products under the Lifestream brand, starting with stone-ground organic whole wheat flour, a successful endeavor that culminated 10 years later in the sale of the brand to Kraft/Philip Morris.

(In keeping with his fiercely independent disposition, Stephens said he bought back the Lifestream brand from Kraft in 1995 to ensure that the quality of the product met his high standards.)

In 1985 Stephens launched a second brand, Nature’s Path, out of the back of his restaurant. He quickly found new success as the organic foods movement gained traction in the consciousness of consumers. Nature’s Path became the first cereal company to become certified organic.

Today, Nature’s Path is North America’s largest producer of organic cereal with annual sales in excess of $200 million. The company, based across the border from Whatcom County in Richmond, B.C., operates two U.S.-based production facilities—in Blaine, Wash., and Sussex, Wis.–that employ some 350 workers. The Blaine facility went online in 1992.

Stephens explained how the Blaine connection came about through a friendship. “Dieter Schugt, the late and former mayor of Blaine, was a good friend of mine,” he said. “He helped us locate the land and facilitate the red-tape process of establishing a state-of-the-art production facility. We liked the location, being in the State of Washington, yet still very close to Vancouver and the Canadian marketplace.”

The plant in Blaine employs about 200 of the Nature’s Path staff. “We’ve had lots of challenges over the years, but all in all, we have a great team in Blaine, and we’re very proud of what we’ve been able to achieve together,” Stephens said. “Our Blaine facility complements our other big plant in Wisconsin, with both serving

The Stephens Family (left to right: daughters Jyoti and Gurdeep, Arran and Ratana, daughter-in-law Rimjhim and son Arjan

our markets on either side of the Rockies. We’ve been blessed with great people, with great organic, delicious products, and with wonderfully supportive customers.”

The Blaine facility produces flaked cereals, granola, and snack

“We, in North America, are human guinea pigs in the biggest experiment in human history. Sixtyone other countries have GMO labeling laws, but the people of the USA and Canada do not.”

Arran Stephens, founder of Nature’s Path

bars, and business has never been better. As demand for non-GMO (genetically modified organism), gluten-free, and certified organic food has mushroomed, the company’s growth has been one of the biggest success stories in the worldwide consumer food market.

According to Maria Emmer-Aanes, the director of marketing for

Nature’s Path, the company has experienced “double-digit growth year over year.”

Stephens said that growth rate isn’t limited to North American markets. “We also export to 40 countries,” he said. “The organic industry has been the fastestgrowing sector in the food business.”

It’s an example of being in the right place at the right time with the right product.

U.S. sales of organic food and beverages grew from $1 billion in 1990 to $26.7 billion in 2010. Sales in 2010 represented a 7.7 percent growth over 2009, according to the Organic Trade Association’s 2011 Organic Industry Survey.

In particular, the growth of nonGMO food has been astonishing. In California last year Proposition 37 would have mandated the labeling of GMO ingredients; voters narrowly defeated it in November, but the support for such labeling remains strong. A similar initiative in Washington state, I-522, is in the signature-gathering phase, with an eye toward placement on the ballot in November 2013. Most of Europe requires labels on GMO WHATCOMBUSINESSALLIANCE.COM | 25

NATURE’S PATH food products, and some countries, Prop 37 in California. and marketing. such as Switzerland, have banned “We firmly support GMO labelWhile developing into a food GMOs outright. ing,” he said, “and it won’t cost industry powerhouse, the company Closer to home, the demand you a dime. Support Washington’s has stayed true to its values, earnfor non-GMO foods is skyrocketGMO-labeling initiative 522 so ing considerable respect throughing. From 2010 to 2011, sales of you can make informed choices out the industry. All employees, certified GMO-free products rose about what you want to feed your called ”team members” in comby more than $1 billion. Last family. You’d think that (choice) pany parlance, receive sustainyear, sales of products carrying would be your democratic right, ability training wherein they walk the Non-GMO Project seal in the right? We are passionate about through the entire production natural foods channel increased this issue, and we are fighting on process--starting with the farmby 53 percent, ing and carrying while sales of through to the these items in packaging. The conventional employees maingrocery distritain an organic bution grew by garden and share a staggering the food it pro328 percent. duces.

Arran The notion Stephens gets of sustainabilfired up about ity permeates this controvereverything that sial topic.

Nature’s Path “Knowing does. For examwhat is in ple, the company our food is a reduced the size basic citizen’s of its cereal right,” he said. boxes by 10 per“Currently, cent, an initiative more than 80 that saved more percent of foods than 70 tons of in your local paperboard, 2.6 supermarket million liters contain genetiof water, and cally-engineered 500 kilowatts of ingredients. energy annuThey never ally. The smaller have been put boxes also mean through any that delivery human or even trucks can carry long-term ani- A glimpse inside the Nature’s Path plant in Blaine that employs about 200 more each load, mal safety tests. thus reducing But you have no way of knowbehalf of all who value citizen’s fuel consumption. And, of course, ing because these GMOs are not rights and our precious Earth.” all of this was good for the bottom labeled. We’re not asking for a ban Despite its large size Nature’s line. on GMOs, just a simple label.

Path remains a family business.

Nature’s Path also has estab“We, in North America, are Arran’s wife, Ratana, is his colished itself as a source of phihuman guinea pigs in the bigchief executive officer and chief lanthropy through numerous gest experiment in human history. operations officer. Two of his initiatives, including the donation Sixty-one other countries have daughters are involved in manageof 1 percent of sales from the GMO labeling laws, but the people ment: Jyoti serves as director of company’s popular Envirokidz of the USA and Canada do not.” human resources and sustainabiliproduct line to a variety of enviStephens has put his money ty, and Gurdeep serves as property ronmental non-profits, includwhere his mouth is. Nature’s Path manager. Stephens’ son Arjan is ing Defenders of Wildlife and contributed $660,000 to support executive vice-president for sales the Amazon Conservation Team.

26 | BUSINESSPULSE.COM

Envirokidz products include popular breakfast cereals with such whimsical names as Koala Crisp and Leapin’ Lemurs.

The company prides itself on continually developing new products. During 2012 they introduced Qi’a--a new “superfood” cereal consisting of chia, buckwheat, and hemp. A plan was in place to roll out a new line of gluten-free granolas, bars, and cereals early in 2013.

In an industry that has long flooded the market with countless new product variations, most of which fail, according to Stephens, Nature’s Path has an outstanding track record of success. Their newproduct introduction success rate runs 85 percent.

To manage the company’s meteoric growth, Stephens embraced lean-operations principles that Toyota made popular after World War II—kaizen (meaning “ improvement,” or “change for the better”). These methods have served the company well, identifying and addressing opportunities to reduce waste, and streamlining and refining production processes.

Waste is problematic for Nature’s Path in two ways: it consumes resources in violation of the company’s conservation ethic, and also hurts the bottom line.

The company and Stephens have been honored repeatedly for their ethos and well-managed growth. In 2002 Stephens became Ernst and Young’s Entrepreneur of the Year, and in 2010 Nature’s Path received the first-ever Sustainability Award by the British Columbia Food Manufacturers Association.

For Arran Stephens, doing well is all about doing right. Nature’s Path success story serves as a model for entrepreneurs everywhere who believe that they have an obligation to—as patriarch Rupert Stephens liked to say— always leave the soil better than you found it.

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Cosmic Comics Card tournaments all the rage, along with books, toys, and discs for golf flinging

By Linda Partlow

28 | BUSINESSPULSE.COM

W

orlds of fantasy have become successful bases and building blocks for Cosmic Comics, a small business in Bellingham with a broad reach. The company wrapped up 2012 by celebrating its 20th anniversary with events involving comics, a mystical card game, and disc golf—their three core markets.

TJ (Tom Junior) Tipton, 22 at the time, and Jeff Jones, then 25, opened Cosmic Comics during the last weeks of 1992 to service avid collectors. Tipton said comics have been in his blood since his mom gave him his first one when he was 2. He also worked at another comic store before taking the leap into owning his own business along with Jones.

Aaron Wallace, store manager (l.), and co-owner TJ Tipton and their wall of discs.

Staff photo

Tipton’s love of comics shows on the store’s interior walls, which are lined with racks full of comic books, graphic novels, and trade paperbacks splashed with colorful representations of Batman and The Joker by DC Comics,

Marvel Comics’ Spiderman and Hobgoblin, and many, many more.

The business owners eventually expanded the store’s fantasy offerings and increased their sales by stepping into the internationally popular realm of Magic the

WHATCOMBUSINESSALLIANCE.COM | 29

COSMIC COMICS

Tipton’s Cosmic store boasts 50,000 comics. Staff photo

Gathering (MTG), a collectible trade-card game of wizards fighting various bad guys and creatures. The tables and chairs at the center of Cosmic Comics provide a weekly gathering place for MTG players who engage in competitive tournaments.

“Two years ago ‘Magic’ finally outsold comics for us,” Tipton said of MTG, which also celebrated its 20th anniversary last year. “This year (2012), again, ‘Magic’ will be our highest-revenue maker. We get into the 16-to-36 range (number of players), depending on the type of tournament.” The store has the ability to offer six pre-release events annually.

When Cosmic Comics introduced MTG, Tipton said only one other shop in town offered the cards. Today, the constantly changing cards sell in big-box stores such as Target, which Tipton credits to the buyout of the regional “Magic” operators

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Wizards of the Coast, based in Seattle, by industry-giant Hasbro, based in Pawtucket, R.I. Tipton and Jones developed a niche that keeps them competitive: they offer the sale of individual cards – not just packs – to fill the voids in players’ collections.

In the comic book section Cosmic Comics displays nearly 50,000 comics on hand, including new releases that arrive every Wednesday; back issues of the Golden (1934-1955), Silver (19561970), Bronze (1971-1985), and Modern (1986 to today) eras, and trade paperback collections of three-to-six comics comprising only one story line. TJ’s top sellers are Walking Dead, Avengers, and Amazing Spiderman.

“We have a lot of Silver-Age comics to current (comics) but not tons of Golden-Age comics, which are 60 years and older,” TJ said.

Comics corner a huge market among collectors: North American sales for comic books more than doubled from $300-$320 million in 1997 to $660-$690 million in 2011, according to research statistics at www.comichron.com.

Cosmic Comics began catering to disc golf enthusiasts 13 years ago, and today, that niche lands about 15 percent of the store’s revenue. And last, but not least, the front of the store offers a glimpse back in time through original and later-released additions of toys, especially Star Wars items.

The owners wrapped all of their specialties into a package of year-end anniversary events that included a Friday of “Great Magical Happenings,” a Superhero Saturday, a Colossal Cosmic Clash, and Disc Golf at Cornwall Park.

Most days, weather permitting, the modest storefront across from Bellingham High School is one of the most visible in the area.

The Hulk, inflated in all its garish green persona, stands out front as a comical lure to the fantasy magic within Cosmic Comics.

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Magic

The Gathering

Live, from around the world, former Lynden resident and radio/TV personality Deb Slater brings fantasy-based card game to tens of thousands by live-stream Internet

By Allysun Kirkham, Intern

Deb Slater, production supervisor for MTG, who has traveled to Switzerland, Japan, and Spain among many sites for international card-game competition

32 | BUSINESSPULSE.COM

O

ne of the world’s hottest games – Magic the Gathering (MTG), played with collectible trading cards – has lured players and raked in revenue at breakneck pace since its creation about 20 years ago. Its publishing company, Wizards of the Coast in the Seattle suburb of Renton, states on its website that MTG involves 12 million players worldwide.

Magic has local ties. Up to three dozen players engage in tournaments every Friday night at a Bellingham store, Cosmic Comics, and the game in recent years has supplanted comics and disc golf as the No. 1 selling product there.

Also, former Lynden resident Deb Slater produces live-stream Internet and video recordings of international championship competition.

(Business Pulse first heard about the wildly popular game in a phone call to inquire about the giant green inflatable Hulk outside Cosmic Comics’ building on Cornwall Avenue. “Every Friday is Magic Night,” store manager Aaron Wallace said. An editor said, “You mean if we perform the best magic trick, we win?”

Wallace replied, “No, it’s a card game.)

A long-time local radio/TV and

Thomas Kiene, a longtime former Bellingham resident, started playing Magic as a teenager and he achieved high national ranking with a 2nd place finish in a tournament of 1,200 in Portland. commercials personality, Slater very suddenly jumped into the Magic gaming craze in 2007, after having narrowed her work on the air to the voice in commercial ads, and she has traveled the world ever since on behalf of MTG. A graduate of Lynden Christian School whose family still resides in Lynden, Slater has moved to Seattle.

In an interview at the offices of Business Pulse, she recounted how she got started with the wizardry of Magic: The Gathering: “I

was a voice-over artist, and one day John Mortinson—a friend who works with Thinkatron—called me and said, ‘Do you have a passport?’ I said yes, and he said, ‘Would you like to go to Geneva?’”

Thinkatron, the contracted production company for the live streaming and video-taping at championship events, has sent Slater to Japan three times, Spain twice, and to U.S.-hosted events

in Memphis, Austin, San Diego, and New York, among others.

To understand the ever-expanding MTG phenomenon, flash back to the early ‘90s when a doctoral candidate in combinatorial mathematics at the University of Pennsylvania created a card game, called it Magic, and exposed it to fellow students as playtesters.

Richard Garfield, who, according an article in Dragon Magazine (1997), is a great-great-grandson

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Magic the Gathering to President James Garfield, was trying to get an earlier game published that he invented, RoboRally.

(Later, it was.)

Wizards of the Coast discovered Garfield and spent about two years developing his concept, the first-ever game built on collectible trading cards. The gaming company released MTG in 1993, the same year Garfield became a professor at Whitman College in Walla Walla, Wash. A year later,

he went to work for Wizards, and today he is a preeminent, independent inventor with more than 18 published games, including Dilbert: Corporate Shuffle, and Star Wars Trading Card Game.

Magic: The Gathering combines collectible trading cards with games based on strategy.

Players, called Planeswalkers, are powerful wizards who fight other Planeswalkers for glory, knowledge and conquest. Buyers have

no idea what cards will appear in their booster packs, which means trading with other players allows the game to change continually. It became an instant winner, and he sold it to Renton-based Wizards of the Coast, which also bought the rights to the renowned brand Dungeons & Dragons.

MTG’s meteoric rise attracted Hasbro and they bought Wizards of the Coast and MTG for a reported $300 million. The primary players and target market for residual products (books, video on X-Box, collectible action figures, etc.) is high-school to college age, and mostly male.

According to Cosmic Comics co-owner TJ Tipton, Magic has spawned more than 80 sets of collectible trading cards, offered

“We have two studios… (at) each tournament.

We have multiple cameras, and cords that stretch for miles.” in 14 languages. Sales have expanded from small stores like his to many big-box chains, such as Target. “Anyone who enjoys games, I think, would enjoy Magic,” Tipton said. He likens the game somewhat to the renowned fantasy world of Dungeon & Dragons—the inventor’s inspiration, he said in published reports, from his late ‘70s teen years—but with more concrete rules.

Although Wizards of the Coast now employs many European artists to create Magic: The Following’s detailed and colorful fantasy cards, Comic Comics employee Todd Moore said the art originally included more work from regional Northwest artists.

As telecast producer Slater enters the MTG arena by managing live, online tournament 34 | BUSINESSPULSE.COM

coverage and taped action and interviews from two studios. One features the tournament action, and the other is a “go-between area” for interviewing, she said, “Both studios are set up in the area of each tournament. We have multiple cameras, and cords that stretch for miles.”

Each show – about four a year – covers a three-day championship competition. Slater creates graphics, works in wardrobe and make up, and culls players to be interviewed by the announcers.

She said she’s been told that tens of thousands tune in. “The videos we create of action that isn’t streamed live are a compilation of the best moments of the tournament, and interviews with outstanding players,” Slater said.

According to the DCI (formerly, Duelists’ Convocation International), the official sanctioning body for competitive MTG play and other Wizards of the Coast games, the world rankings include players mostly from the United States, Japan, Germany and the United Kingdom. A Bellingham player has climbed near the top in world rankings.

“The highest-rated person I know of personally is Thomas Kiene, a long-time Bellingham resident,” Tipton said. “He started coming into this store when he was 14 or 15.” Kiene qualified for some professional tours and was ranked No. 4 in the U.S., Tipton said, and he finished second in a field of some 1,200 players at a tournament in Portland, Ore. Professional level players compete for high stakes, Slater said, “In the competition where the top eight (pro players) compete, the grand prize for the winner is $40,000.”

She neither plays nor even understands the game of Magic, she said. “The announcers for our show talk a language all their own.”

A language spawned in a

fantasy world has spread across oceans, in homes through the Internet or a game console, and at local host sites for competition such as Friday Magic Night at Cosmic Comics.

Allysun Kirkham is a student in journalism at the University of Oregon. As an intern at Business Pulse last fall, she conducted interviews with Deb Slater, set up by staffer Janel Ernster. Linda Partlow, a free-lance journalist, interviewed

Cosmic Comics co-owner TJ Tipton and Cosmic Comics employees. Staff contributed to the research.

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Where altruism intersects with real (estate) capitalism Catholic Community Services cuts a wide swath in Whatcom human services and, oh yes, economic stimulus

By Cheryl Stritzel McCarthy Catholic Community Services and Catholic Housing Services staff administers Kateri Court Apartments and Mt Baker Apartments in Bellingham, which allows low-income tenants to live near public transport and other services. (l. to r.) Rhoderick J. Elin, retiring regional chief of operations; Will Rice, associate chief of operations and director of the Recovery Center; Kathy McNaughton, chief of operations, and Steve Powers, division director of Catholic Housing Services. Photo by Cheryl Stritzel McCarthy

36 | BUSINESSPULSE.COM

W

hat’s the economic power of non-profit agencies in Whatcom County?

The actual economic value of what non-profits create dwarfs the measurable bottom-line numbers, according to a report

by Greg Winter, research director of Cornerstone Strategies in Bellingham.

The monetary value is real and sizable of services that lead to a healthy child, a teen who changes for the better, or elders who can remain in their homes, though that value-added doesn’t show up in financial reports or pie charts.

A study of one of the largest Whatcom County non-profits, Catholic Community Services (CCS) in downtown Bellingham, illuminates this: • A payroll of $4 million annually within the county.

• More than $750,000—roughly 10 percent of budget—in purchases from local suppliers in 2011.

• 125 local employees in higher than minimum-wage jobs with benefits.

• $7.5 million operating budget for Whatcom County outreach services.

• Property owner and manager for qualified residences, offices, and small businesses as a revenue-generating source.

That’s what Catholic Community Services, a nonprofit agency, looks like in contribution to the local economy. CCS is a private 501(c)(3) corporation that serves the public.

Yet, CCS has brought in $10 million of outside private-sector investors’ dollars to Bellingham through tax-credit funding that

enabled the refurbishing and construction of the agency’s three downtown buildings.

“Those investors came on board because they know us as a competent and successful organization,” said Rhoderick J. Elin, retiring regional chief of operations at CCS. CCS began in Western Washington 94 years ago based on the Catholic social-teachings imperative to love one another,

as mandated by the founding archbishop. The organization has been in Whatcom County since 1938. CCS moved into downtown Bellingham offices 15 years ago, purchasing and re-modeling the vacated Washington Grocery building at the northwest corner of Railroad and East Chestnut streets.

The building had been a grocery warehouse and a furniture warehouse, and it stood vacant for

Throughout Western Washington, Catholic Community Services serves about 80,000 people through 150 programs. Nobody, by decree of the founding sisters, is turned away.

Ninety-two cents of every dollar raised go to persons in need. Of a budget of $119 million, 33 percent goes to the aging and disabled, 33 percent goes to children and families, 21 percent goes to housing, 8 percent goes to administration/fundraising, and 5 percent is kept as reserve capital.

WHATCOMBUSINESSALLIANCE.COM | 37

CATHOLIC COMMUNITY SERVICES

Cutline

A rendering of the future Cornwall housing project. Courtesy of CCS

many years before CCS bought it.

“It was a dump,” Elin said, cheerfully. “We brought it back.” The building now houses CCS offices, a reception area, two retail spaces rented by a coffee shop and a day spa, and, on the upper floors, 36 units of affordable housing.

As a real-estate developer for affordable and homeless housing, CCS provides 150 permanent housing units and space for nine businesses in three buildings—all in downtown Bellingham. “Our tenants get an affordable place to live in the city center where they can work without having to own a car, and downtown businesses get a pool of potential workers,” Elin said.

Refurbishment and occupation in CCS buildings have, according to Elin, “increased the value of

CORNWALL PROJECT WILL HOUSE CHRONIC HOMELESS, OFFICES Stirs controversy over county funding

By Cheryl Stritzel McCarthy and Business Pulse Staff A new Catholic Housing Services downtown building project under way illustrates the positive economic boost that a non-profit agency can deliver to the community.

CHS will break ground soon on the four-story , 42-unit housing complex that includes office space on Cornwall Avenue between Chestnut and Maple streets. Catholic Community Services has owned the property since 1998, using it previously for staff parking.

The $9.2 million project moved through development over a normally long period of permitting, architectural planning, fundraising, etc., about two years. Now, as one agency representative said, “The train is on the track.”

Primary funding came together from two outside sources covering $8.3 million. A controversy arose as ground-breaking neared in 2012 after the agency approached Whatcom County about allocating some county funds to the housing project.

Several downtown business owners protested to both the City of Bellingham and to the County Council, and organized a unified support group that continues to meet regularly, because of concerns over negative effects of the qualified residents.

Washington state has a priority to house the chronic homeless, and 20 of those 42 Cornwall Street apartments will house those tenants qualified as chronic homeless. Some nearby company owners have cited bad experiences with other CHS tenants that they say disrupt their business.

Rod Elin, who is in charge of community relations for

38 | BUSINESSPULSE.COM

the project’s partner organization, Catholic Community Services, said that open, positive communication must take place between the CHS/CCS project staff and the concerned businesses. “We must focus on solutions to problems,” he said. “We always want to be good neighbors, and have a good track record for helping resolve situations with our own many business tenants and with others around us.”

The new Catholic Housing Services building will include case managers and other support staff on site 24 hours a day, seven days a week, serving clients in their building and their apartments.

Of the project’s $9.2 million costs, $7.5 million comes into Bellingham from outside investors through tax credit funds, and another $800,000 comes from the state housing trust fund. “It’s a good example of government letting the private sector take a bigger role,” said Will Rice, CCS regional associate chief of operations who works out of the agency’s Recovery Center as the Director of that program on Lakeway Drive in Bellingham.

Elin assessed the economics of the new project thus: “The county’s return is far greater than the investment. When the chronic homeless are in supported housing, they’re not a drain on police or emergency services.”

Another CHS building is in preliminary planning stages on Cornwall, and that project lies upward to five years from completion. The land for it, now a parking lot, sits adjacent to the current ground-breaking project on the west side, sold by the City of Bellingham. Eventually, it will provide low-income housing for downtown workers, not the chronic homeless, and contain other ????

our buildings and the buildings around us.” The addition of retail spaces in its downtown buildings creates multiple income streams for entities outside of the organization; i.e., the nine retail and office tenants.

Throughout Whatcom County, CCS hires therapists, family counselors, caregivers who help seniors and disabled persons stay in their homes, and teachers of classes that assist parents of children with special needs. Besides consulting services, the annual budget covers office machines, supplies, and maintenance, plus trades such

“Our tenants get an affordable place to live in the city center where they can work without having to own a car, and downtown businesses get a pool of potential workers.”

Rhoderick J. Elin, Catholic Community Services regional chief of operations

as building contractors, painters, plumbers, electricians, and flooring suppliers.

A core of about 75 CCS volunteers contributes thousands of hours to the county, with an evaluation by the state of Washington labor and industry board at $21 an hour.

The positive economic impact of Catholic Community Services on the local economy can’t be entirely quantified, Elin said.

When CCS efficiently serves needy people, they generally decrease the use of expensive community resources such as police services or emergency room care.

Last year, CCS counseled 825 children and their families in Whatcom County as the largest provider of its community mental health services for children.

STREET OUTREACH MAKES A DIFFERENCE

By Cheryl Stritzel McCarthy He was a big, burly guy who hung around the Lakeway exit by I-5 in Bellingham.

He kept three rusty shopping carts, overflowing with his stuff. He’d push one while dragging another, then go back for the third.

When a couple of women volunteers from Street Outreach, a program within Catholic Community Services, approached him offering a packed lunch and clean socks, he glared and shouted and swore. But he took the lunch and socks.

The women kept coming, kept offering. He kept accepting.

They found out the giant, filthy, scary man’s name was Stephen. They connected him with mental health services. Stephen was admitted to a hospital near Tacoma as a paranoid schizophrenic. When he was discharged six months later, his condition stable and controlled, the volunteers worked to find him temporary housing.

They got to know him. One surprise was that Stephen held a graduate degree in statistics.

“What do you want?” they asked. “Where do you want to go?”

“Home to New York,” Stephen said. “I have a brother there.”

The volunteers were able to find his brother, who was happy to hear from them.

For eight years, he hadn’t known where Stephen was.

Street Outreach dealt with the legal issue of getting Stephen ID, so he could fly to New York.

Now the CCS volunteers have a photo of Stephen, surrounded by his brother’s family. It’s hard to believe the smiling man at this family table is the same scary guy who used to hang around Bellingham, causing problems and police calls.

Today, with support services, Stephen lives independently near his brother.

Bellingham CCS Street Outreach volunteers keep in touch.

Every year, CCS serves between 1,000 and 1,200 drug- and/or alcohol-affected teens and adults, plus an additional 160 likewise affected pregnant or parenting local women.

“If they become clean and sober, they can become gainfully employed, contributing people,” Elin said. “We don’t have a way to quantify it, but it makes a safer, more stable community.”

Besides parent education and home care for elders and disabled, CCS provides supervision of visits in court-ordered monitoring programs, allowing parents to maintain contact with their children.

“We’re part of the solution,” said Kathy McNaughton, CCS chief of operations. “We’ve been here 74 years. In our building in downtown Bellingham we serve children and families. Our employees work here (in the county). We serve 6,000 people every year just at Hope House.”

Hope House/Street Outreach is a collaborative program among CCS and Assumption Catholic and St. Paul’s Episcopal churches in Bellingham, operating with volunteers. Individuals and families shop free at Hope House for clothes, shoes, laundry detergent, diapers, personal hygiene items, and other necessities.

The Hope House/Street Outreach volunteers drive among Whatcom County’s homeless, putting them in contact with services, as well as giving out sack lunches and clean socks.

“Our mission is compassionate care,” Elin said. “Everything we do is mission-driven.”

Cheryl Stritzel McCarthy is a Bellingham-based freelance journalist who writes for national publications.

WHATCOMBUSINESSALLIANCE.COM | 39

TECHNOLOGY TRENDS

Life in the Tech Lane Differences in the new Windows 8 OS lineup

W

ith the release of Windows 8 some confusion quickly arose over the differences among the available versions.

For PCs powered by x86 processors (both 32 and 64 bit) Microsoft offered three editions:

• Windows 8, Windows 8 Pro, and Windows 8 Enterprise for PCs. For tablets powered by x86 processors, two editions: • Windows 8 and Windows 8 Pro. For tablets running ARM processors, a single edition: • Windows RT. More choice is always better, right? Not so fast. The problem you’re going to run into is that

the gap between RT and the desktop versions is wide.

Differences between the Windows suites First, Windows 8 is the official product name for the Intel/AMD editions of Windows. Windows RT is based on Windows 8, with the new Windows 8-style user interface, but it will not run traditional desktop applications like its counterparts — an important difference to understand.

A brief description of each: Windows 8. This version targets traditional home PCs, supports upgrading from Windows 7 Starter, Home Basic, or Home Premium, and provides all of the basic Windows 8 features. This version is perfect for the standard

home user.

Windows 8 Pro. This version provides all of the features from the basic Windows 8 version and adds BitLocker and BitLocker To Go, Boot from VHD, Client Hyper-V, domain join, Encrypting File System (EFS), Group Policy, and Remote Desktop (host). If you are an enthusiast or you want to use your PC in a business environment, you will want Windows 8 Pro. Windows 8 Enterprise. This version includes all the features in Windows 8 Pro “plus features for IT organization that enable PC management and deployment, advanced security, virtualization, new mobility scenarios, and much more.” This version will be provided only to those corporate customers with Software Assurance agreements.

Google Nexus 10

Apple iPad (4th gen)

Microsoft Surface RT

Price and storage

$400 16GB, $500 32GB

$500 16GB, $600 32GB, $700 64GB

$500 32GB, $600 32GB with touch cover, $700 64GB with touch cover

Operating System

Android 4.2 Jelly Bean

iOS 6

Windows 8 RT

Dimensions and weight

10.4 x 6.9 x 0.35 inches, 1.33 lbs

9.5 x 7.31 x 0.37 inches, 1.44 lbs

10.81 x 6.77 x 0.37 inches, 1.5 lbs

Screen Size

10.06 inches

9.7 inches

10.6 inches

Screen Resolution

2560 x 1600 pixel, 300 ppi

2048 x 1536 pixel, 264 ppi

1366 x 768 pixel, 148 ppi

Speakers

Dual, Stereo

Single, Mono

Dual, Stereo

Avg. Battery Life

10 hours

10 hours

10 hours

Processor

1.7 Ghz Samsung Exynos dual 1.5 Ghz A6X dual core core

1.5 Ghz Nvidia Tegra 3 quad core

RAM

2GB

1GB

2GB

Cameras

Back: 5MP photo/1080p video, with LED flash; Front: 1.9MP photo/720p video

Back: 5MP photo/1080p video; Front: 1.2MP photo/720p video

Microsoft hasn’t yet said what the photo resolution of the Surface’s cameras are, but both shoot 720p video

40 | BUSINESSPULSE.COM

Windows RT. This version will only be available pre-installed on ARM-based PCs and tablets.

Windows RT will include touchoptimized desktop versions of the new Microsoft Word, Excel, PowerPoint, and OneNote 15.

Note: Outlook is not included, therefore you’ll have to use Mail and Calendar to sync up with Exchange.

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WHATCOMBUSINESSALLIANCE.COM | 43

Jim Grennell, executive director of Christian Hope Association, joins volunteer Cora Seigman in the Project Hope Food Bank. CHA and its ministries survive in major part because of more than 150 volunteers like Cora.

Photo courtesy of The Lynden Tribune

New Way Ministries – shelter from life’s storms Project Hope gets word out to its donations-only support base for Food Bank, Hope Chest, seafarers, and homeless women and their children

By Amanda Baltazar

C

hristian Hope Association in Lynden provides shelter and basic human needs as primary missions. A huge part of the work among these organizations’ staffs centers on educating the public on why and how to support them.

This is because its outreach, such as Project Hope and the New Way Ministries and its transitional living residence for abused and/or homeless mothers and their children, relies totally on private dona44 | BUSINESSPULSE.COM

tions for its $450,000 budget. That self-reliance is rare among similar social services organizations that benefit from grant and government funding sources.

The community wouldn’t be aware of Project Hope—the Hope Chest (donated clothing), the Food Bank, the Seafarers Ministry, or the New Way Ministries—if the staff and huge bank of volunteers didn’t spread the word effectively.

The New Way shelter and services such as counseling command a $230,000 budget on their own.

Jim Grennell, the executive director of the Christian Hope Association that began 43 years

ago, underscored the necessity of informing the community because competition is tough for federal, state, county, and United Way monies. “We don’t have a big staff of grant writers or administrative people,” Grennell said. “Plus, grants are really drying up and are competitive. So our approach has been to target the local community, because we can access that more easily.”

With a background in social services, including 15 years with the Salvation Army in southern California, Grennell operates with just one other full-time employee – Jan Ruiter as the director of

New Way Ministries – and nine part-timers. With CHA as the umbrella organization, about 150 volunteers help the staff carry out the fundraising functions.

As an example, about 70 volunteers staff a booth at the Northwest Washington Fair in Lynden every August, and the nonprofit fair makes a contribution back to the ministry for the hours provided. The volunteers clean tables or manage the lost-and-found booth, among many tasks, preventing the fair from having to hire. “So,” said Grennell, “that gives us a shot in the arm in the summer.

Every November over the last eight years the New Way Ministries has held a fundraising spaghetti dinner. This typically has brought in around one-third of the funds required to operate New Way Ministries annually.

Last year a big change occurred with the spaghetti dinner:

Alvin Bajema (left), a volunteer, joins director Jim Grennell at the Project Hope Food Bank in Lynden. Photo courtesy of The Lynden Tribune

Management Services Northwest (MSNW) came on board, offering lead sponsorship, volunteer time

(around 500 hours), and additional creative ways to raise more money. This included the addition

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PHILANTHROPY

Mother and child, victims of abuse, enter an apartment provided by New Way Ministries.

of a fun dessert dash in which tables bid on donations from local bakeries and cooks. One table last year bid a whopping $860 for a chocolate concoction.

Management Services Northwest also has, for the last two years, added items to the

dinner’s silent auction that were higher in value. This year even included a pair of diamond earrings (which garnered $1,600 from a bidder, well over the retail selling price)—so the event intake exceeded the past dinners all the more.

And the company has helped expand the ministries’ reach, since MSNW’s business spreads further afield than New Way, helping find more sponsors for the dinner both within Whatcom County and far outside it. Grennell said, “Management Services Northwest has probably helped us increase our dinner money by 30-to-40 percent over what we were doing before, so their help has been tremendous.”

The remainder of the money that Project Hope needs to survive comes from elsewhere throughout the community.

“There’s a lot of competition for the charity dollar out there.

We stand out by (our) results. With the New Way Ministries we offer the women and their children a roof over their heads, transitional skills, and a safe environment….That’s a good emotional tie.”

Jim Grennell, Executive Director, Christian Hope Association

Contributors range from individuals who give $25 a month, to businesses, churches, schools, or couples who give a once-annual gift of $4,000. Generous business supporters include Phillips 66 and TK. “There’s a lot of competition for the charity dollar out there,” Grennell said. “But I think we stand out by the kind of results we have from our program. With the New Way Ministries we offer the women and their children a roof over their heads, transitional skills, and a safe environment.”

At any given time, Project Hope 46 | BUSINESSPULSE.COM

takes care of 13 mothers with children. Along with housing and food, the program provides counseling, such as parenting classes, and opportunities to help the women get out into the workforce and become self-sufficient for their children.

“Around half of families take six months to get their lives back on track and to move back into the community again,” Grennell said.

“People in the local community see that, and we get good press.”

That good press plays a huge part in getting the word out, but the simple education of the community by staff plays a huge role.

“We let them know that we’re filling a need and people could otherwise be on the street,” Grennell said. “So that’s a good emotional tie.”

New Way Ministries gets the word out about Project Hope using flyers, a website, and individual contact with businesses. Over the

years this grass-roots methodology has established relationships. “They put us right in their monthly budget and have us on their giving list every year or month,” according to Grennell.

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CHRISTIAN HOPE ASSOCIATION AND NEW WAY MINISTRIES OPERATIONS From Executive Director Jim Grennell: CHA has a budget of about $450,000.

New Way Ministries commands about $230,000, or roughly half. New Way requires 6-7 for round-the-clock, all-year management for facilities and casework due to the necessity of night and weekend staff, each working 15-25 hours a week. That is why such a high budget. We actually do much better than the national average for number of families in proportion to staff and operational budget expenses. Volunteers add a huge “gifts in kind” financial blessing. And we leverage lots of material donations like personal hygiene, laundry items, paper good, etc.

CHA has a Corporate Executive Board of Directors, and New Way has its own sub-committee board giving specific support and policy guidance. Uultimately, all organizational oversight and policy standards are approved and directed for staff implementation by the CHA Corporate Board. The New Way Board/ Committee Chair serves as a liaison to the CHA Board.

WHATCOMBUSINESSALLIANCE.COM | 47

e r a C Health

The Fiscal Cliff Will the Affordable Care Act really be affordable?

That however-many thousand-dollar question has the business community in the dark, rattled, and riled up Story and photos by Steve Hortegas

I

n 2010, President Obama signed into law the Patient Protection and Affordable Care Act (ACA) and, along with the Health Care and Education Reconciliation Act of 2010, set forth sweeping changes in the U.S. health care system effective in 2014.

Employers with 50 or more fulltime employees will have to provide health care coverage, and those with fewer than 50 will not.

Individuals not covered by a plan will have to provide their own.

Both employers and individuals face penalties for non-compliance.

48 | BUSINESSPULSE.COM

As the calendar turns closer toward the reality to what commonly has become known as Obamacare, almost as universal as the health-care coverage it proclaims is the uncertainty and mystery about how it will work.

Or not.

Business Pulse found several examples. One local business owner revealed the possibility that he might reduce as many as half of his company’s full-time employees to part-time to avoid penalties imposed by the ACA for companies with 50 or more employees.

Kathy Varner, a partner in the certified public accountants firm of VSH that is staging seminars

on the topic, reported that she has heard of three companies who have sold out during the last two years because of their concerns about health care.

Another owner, speaking with a request for anonymity, declared that the company would simply pay the stiff $2,000 fine per employee for non-compliance with ACA requirements. He’s talking about more than 100 workers, therefore over $200,000 in fines would be less expensive than the imposed benefits of the ACA because the workers are seasonal temporary, albeit fulltime, hires.

Just these few examples, drawn from a deep pool of open discussions at seminars, panel presen-

tations, and individual contacts, raise multiple simple questions about an obviously complex issue.

The main one is: Does anybody comprehend this angst-creating law that looms over the uncertain future of businesses and their work force? Interviews with Andy Billingsley with The Unity Group, with Chief Operating Officer Ted Mischaikov of Absorption Corp, and with Varner and VSH staff CPA Tessa Ebbesen underscored the mystery of it all as the potential impacts of the looming ACA make themselves felt.

“The underlying intention of wanting to provide health care to everyone is noble, but what’s missing is controlling costs. There is little, if anything, that will reduce costs for those individuals and organizations that already have insurance coverage.”

Andy Billingsley of The Unity Group says individual health insurance plans will become much more expensive.

Andy Billingsley, Partner in The Unity Group

......................

“President Obama wants to help people get care, and people should have access in an efficient and effective way,” Varner said, “But the way it is working out is going to result in unintended consequences, especially for small-tomedium-sized business owners…. more than larger companies who already have less-costly employee medical premium plans.”

Mischaikov represents the latter.

He said his concern lies with the possibility, perhaps probability, of limiting options for Absorption Corp’s employees. (Read his Q&A comments on page 50.)

“I attended an outstanding and in-depth presentation by an

2013: Electronics Technician

WHATCOMBUSINESSALLIANCE.COM | 49

HEALTHCARE exceptionally qualified tax attorney who has shifted his practice to understanding the implications of the act as it applies to business,” Mischaikov said. “The takeaway was that certain industries will have a greater cost shift associated with health care.”

The speaker, Mischaikov said, pointed to food service and construction at the top of the most-

negatively impacted—industries with large numbers of temporary employees. Mischaikov concluded, “As for individuals, it appears to me in talking with people in our community that there is little understanding of the ramifications of the act on a personal level. So I don’t think it is just the (company ownership and management) who are still in wonderment.”

Andy Billingsley’s industry, the insurers, has undertaken massive study into the complexities of the ACA. He made note of one phase that appears misleading— the impression that individuals will save money. “The underlying intention of wanting to provide health care to everyone is noble, but what’s missing is controlling costs,” Billingsley said. “There is

MISCHAIKOV sees need for reform already Solution: Get politicians out of the way, and let market-driven America get it right Ted Mischaikov, CEO of Absorption Corp., spoke to Business Pulse about the possible impact of the Affordable Care Act on his and others’ business. His responses in an interview with freelance reporter Steve Hortegas: What impact will it have on your business?

It is not clear on a company like ours.

But it is clear that the health care options provided to our employees will change. I do not know if the changes will be generally positive, generally negative, or inconsequential. That will become clearer when the new systems have been operating for some time, such as the state-level insurance exchange.

Do you have any concerns or hopes for your company and employees?

We pride ourselves on providing a very good health benefits package for our employees. My greatest concern is whether the new system will create disincentives in providing our employees with the same or better benefits into the future.

Photo by John D’Onofrio

What are you hearing from others?

I have spent a lot of time with friends in the health care industry on a variety of levels – surgeons, technicians, insurance providers, and long term health care providers. They tell me there is no universal agreement, no absolute consensus on a clear path forward.

These are bright, informed, and caring people that have the best interest of our society and their profession in mind who are telling me improvements will be difficult. There is,

50 | BUSINESSPULSE.COM

however, absolute consensus that the health care act already needs reform. But there is certainly no silver bullet. And, of course, politics and bureaucracy are barriers to progress.

Not a single person I have talked with is able to tell me with certainty what will happen to their health care, and that is concerning.

What is your big-picture hope for health care?

That U.S. citizens are freed up from the constraints of health care coverage concerns when making decisions on where to work or live.

Nationwide coverage should increase labor mobility, encourage entrepreneurialism, and bolster small enterprises. An important component of freedom is to be able to locate anywhere in the U.S. and know that your health coverage is reasonably sufficient—at least catastrophically, which perhaps is the way we should be structuring it.

America is innovative and market-driven, and those attributes should be leveraged.

Now that the Act is adopted, the politicians should step aside and enable panels of informed industry leaders to roll up their sleeves and get to work providing real solutions. Think Simpson Bowles.

I want America to do this right - that is my hope.

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Interview by Steve Hortegas

little, if anything, that will reduce costs for those individuals and organizations that already have insurance coverage.”

His concern focuses on the ACA’s increased, not decreased, premiums; on mandated fees and penalties; on extra required paperwork, and on unintended consequences for larger companies, small to mid-sized companies, and individuals.

“No one understands it, where to start, what questions to ask. The more questions you ask, the more questions you have.”

Tessa Ebbesen, CPA with Varner Systma Herndon

A business owner told Billingsley that if health benefit costs go up, the company will have to reconsider giving raises, bring fewer people into the work force, and cut spending on new equipment. “He feels everyone will suffer,” Billingsley said, “…and that ‘we as owners will continue to put in 60 hours a week and by the end of the year, make less.’”

Lack of Awareness and Understanding Billingsley said that local employers are getting their information from national sources and panicking. And Varner suggested that “businesses are ignoring this issue a bit.”

One business owner, when asked about the changes, said he did not have the time and resources to “read all that stuff and understand it. What will be force-fed will be force-fed, and I will deal with it when it comes to me.”

In the Personally Speaking interview for this publication, Nancy Steiger, the head of

Kathy Varner and Tessa Ebbesen,VSH Photo by Steve Hortegas

PeaceHealth St. Joseph Medical Center whose vast network stares the ACA squarely in the face as a conundrum for ongoing operations, addressed the matter with a shrug and said, “Who knows?”

A feeling seems to prevail that nobody knows answers to a gazillion questions about it.

“Not a single person I have talked with is able to tell me with certainty what will happen to their health care, and that is concerning,” Mischaikov said.

Varner said this is the lack of understanding is the one thing understandable. “The Act is

extremely complicated,” she said.

“The laws are still being written.

People are confused and overwhelmed.”

One of her company’s CPAs, Tessa Ebbesen, agreed. “No one understands it, where to start, what questions to ask. The more questions you ask, the more questions you have.”

The Facts (or at least some of them) Informed or not, workers have begun to experience impacts, and they most assuredly will continue in 2013, 2014, and beyond.

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HEALTH CARE

PANEL TO ADDRESS OBAMACARE FOR BUSINESSES OF ALL SIZES You are invited to join the Whatcom Business Alliance and Bell-Anderson Insurance on Wednesday, February 13, at 7:30 a.m., for breakfast at the Bellingham Golf and Country Club as they bring a panel of experts together to provide business owners and leaders with the most comprehensive and up to date information regarding the impact of the Patient Protection and Affordable Care Act (PPACA), commonly called Obamacare.

If you’re still confused about the effect of Obamacare on your business, despite the outcome of the Nov. 6 election, this is a must event for you. The panelists all specialize in understanding the complexities of the (PPACA). They’ll discuss its potential impacts on businesses of all sizes, workers and individuals, tax and compliance issues. They will leave lots of time for questions and an opportunity to network with other local leaders from businesses of all sizes.

Seating is limited. To reserve either an individual slot or a table of eight, call 360-746-0418, or visit www.WhatcomBusinessAlliance.com.

Billingsley gave a simple, quantifiable example. “Premiums have increased.” He attributes the increase to elimination of cost-sharing for individuals on preventative care, on pre-existing conditions for children, and on limits on lifetime and annual caps. “That is in addition to the ongoing 6-to12 percent inflation rate for health care,” he pointed out.

Billingsley explained how the impacts will be “circumstantial,” citing a “few extra percentage points” for employers of 50 or more that already offer a credible health-care plan.

Companies of 50-plus that do not already provide benefits now are required to purchase coverage or pay a fine. Under-50 companies that do not offer benefits can continue as is.

“Without a doubt, individuals will be hit hardest,” Billingsley said. “The largest health insurance company in Washington that offers individual plans said these rates will go up 50-70 percent.”

He said that most individuals will need to obtain acceptable health insurance coverage, or pay a penalty of $95 for 2014 and increasing each year, up to a specified 52 | BUSINESSPULSE.COM

cap of the national average plan premium in 2016.

Other considerations also factor in: • A Comparative Effectiveness Research (CER) fee of $2 per employee begins this year, and an insurance premium tax of over 2 percent in 2014 that increases thereafter.

• Employers must meet minimum levels of coverage as mandated and defined in new government quality standards.

• Employees will receive health insurance coverage, no questions asked, whereas before they had no guarantees because of health conditions.

• The new-hire probationary period will be mandated at a maximum of 90 days.

• Any company in which even one employee obtains insurance from the new insurance “exchange” (where they could be eligible for federal assistance) will be fined $2,000-$3,000 annually for each employee in that circumstance, each year.

• Penalties will be measured on a monthly basis, requiring more record-keeping.

• Unintended negative impacts.

Example 1: “If a (mandatory) employer with a limited operating budget does not have the money to pay premiums for everyone,” Billingsley said, “there will be the temptation to reduce some to 29 hours a week.” Those part-timers then would have to buy insurance for themselves.”

Example 2: Stifled growth. “It can kill the larger of the smalland medium-sized businesses,” Varner said. “They will have to pay more, which lessens their resources to compete with larger companies already benefit with lower group insurance rates. Some may cut employee hours, cut pay, cut the number of people, or go out of business.

“And since this only affects businesses with over 50 fulltime equivalent employees, why would a company with 49 want to grow?”

What to Do Now, and Next Health care reform is here to stay. How businesses and individuals handle the changes can help save jobs, preserve profitability, and manage costs through creative and careful planning, clear thinking, and collaborative response.

The final word is there is no final word.

That’s why Varner stresses appropriate planning. She strongly recommends conferring with a professional adviser. “What you do in 2013 will impact you in 2014,” she said. “Ignoring it is not the answer. It will hurt you.”

Steve Hortegas has 20 years of local experience in stakeholder engagement, market research, and communications.

Unity Group and Business Pulse staff cntributed to this article.

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What’s Next Step for the Gateway Pacific Terminal?

Scoping process deadline ahead for public to present issues for economic impact review, with end game years away Prepared by The Staff at Business Pulse Magazine Photos courtesy of Bob Jones Photography

T

housands of local citizens have packed into high schools and auditoriums and have stuffed mailboxes, all to make their voices heard on one project — the Gateway Pacific Terminal (GPT) at Cherry Point.

Often carrying signs of pro or con and wearing ‘message’ 54 | BUSINESSPULSE.COM

or color-coded shirts, the hordes participated in seven public meetings of a scoping process that continues, with written comments only, through Jan. 21. SSA Marine – Stevedoring Services of America – established the scoping methodology to meet requirements for an Economic Impact Study (EIS).

Gov. Christine Gregoire stated that she’s never seen people so engaged in an issue in her eight years in office. Residents have bus-

ied themselves with an onslaught of yard signs, letters to the editor, and heated debates dividing much of Whatcom County’s populace.

Project proponents say that public opinion polls continue to show broad support for the project, while opponents appeared dominate much of the public scoping meetings.

So what’s next on the agenda for one of the most contentious projects ever proposed in Whatcom

County? A lot of public input, a to archaeological and historical down to the Whatcom County lot of review, and a lot of waiting. resources at the site. This document Council several years from now.

Since last Sept. 24 the agenwill eventually be used to inform Public comments could be stated cies co-leading at one of the seven the environmental scoping meetings, or review —Washington submitted in writing State Department (until Jan. 21) to the of Ecology (DOE), EIS website (www.eisU.S. Army Corps of gatewaypacificwa.gov), Engineers (USACE), by mail, or by email. and Whatcom The lead agencies County Planning and made it very clear that Development Services regardless of whether — have collected the comment quietly comments from the appears in a mailbox public. These comor was shouted from ments will help shape the pulpit at a public what’s included in meeting, all comthe Environmental ments receive equal Chris Johnson (center) speaks to the crowd at the SSA Marine scoping Impact Statement review. And thanks to meeting in Ferndale, flanked by Mark Lowry (left) and Ferndale Mayor Gary (EIS) — a phonebook- Jensen (right). Johnson, as business manager, and Lowry, as president, repre- the marvels of modern sented the NW Washington Central Labor Council. Business Manager of the sized analysis of the technology, an unprecWashington Central Labor Council, AFL-CIO, and Johnson also potential impacts and Northwest edented number of serves as co-chair of the Northwest Jobs Alliance. appropriate mitigacomments had poured tions for the project. local government decision-makers in by mid-December —7,000 and The EIS will examine everything on whether to grant permits to the counting. from air quality to vessel traffic project — a vote that will come “We want a shot at being able to

WHATCOMBUSINESSALLIANCE.COM | 55

COAL TERMINAL SCOPING prove that this project will be built exporting coal — the main prodDespite the overt displays of to the state’s high environmental uct among commodities slated for anti-GPT vs. pro-GPT at the public standards,” said businessman Craig shipment from the Gateway Pacific meetings, the scoping meetings Cole, a spokesperwere not intended son for the Gateway to debate the merPacific Terminal and its of the project or a former member of to gauge the level the Whatcom County of public support Council. “There have or opposition. The been extensive opporscoping process was tunities for public designed to detercomment to ensure mine the extent of a fair and thorough what the lead agenenvironmental review cies need to examine process.” for the environmenMost of the seven tal impact statement. scoping meetings For example, projtook place outside of ect opponents are Whatcom County— advocating for the Mount Vernon, Friday EIS to examine the Craig Cole, the senior consultant for the Gateway Pacific Terminal and Harbor, Spokane, impacts of the GPT supporters delivered boxes of more than 10,000 petition signatures to the Vancouver, and from the Powder Whatcom County Courthouse office of County Executive Jack Louws in support of the project.

Seattle. Bellingham River Basin in and Cherry Point’s Montana, where the locale, Ferndale, also hosted Terminal — and on potential jobs coal is mined, all the way to Asia, meetings. Comments centered and tax revenues that the GPT where the coal will be burned. on impacts to the climate from might generate.

Project proponents, on the other hand, are advocating for a sitespecific review of the project at Cherry Point to ensure permits are issued sooner rather than later.

So which side will win out? The U.S. Army Corps of Engineers has shown reluctance to a wide-reaching EIS, although the public won’t know the ACE’s decision for sure until after scoping is complete.

This waiting game isn’t sitting well with many industry and trade organizations around the state; they have expressed concern that the process on this project might alter the environmental review a month! process for future industrial developments.

The Washington Public Ports Association, for instance, weighed ads for non-profits in on the issue during June 2012, stating in a letter to the U.S. Corps Interested in placing an ad or hosting a screen? of Army Engineers that expanding the scope of the EIS could “set a dangerous precedent” for future port and transportation infrastruc2001 Masonry Way #101, Bellingham ture projects.

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Commerce, and Washington State Labor Council also have submitted letters to the Corps asking that it avoid widening the scope of the EIS for fear it would delay, and ultimately halt, future job-producing industrial developments.

Following the scoping period, all public comments will be summarized by the lead agencies and made available publicly in a scoping report. Then the agencies, along with the EIS consultant, CH2M Hill, will begin research on potential impacts from the Gateway Pacific Terminal, as well as alternatives and mitigation measures.

few years out, spokesperson Cole said development at Cherry Point has been decades in the making. “The GPT coincides with the county’s long-term planning in creating a strong industrial base at Cherry Point,”Cole said. “Industry creates family-wage jobs, and it’s these types of jobs that truly make a community sustainable.”

The proposed Gateway Pacific Terminal would be a multi-commodity cargo handling facility.

SSA Marine — a company that started in 1949 as the Bellingham Stevedoring Company–now is based in Bothell, near Seattle, and ranks as one of the largest shipping terminal operators and stevedores in the world. With 125 operations across the globe SSA Marine employs 13,000, including about 1,100 union and non-union employees in Washington.

SSA states that its proposal represents a $665 million private

“We want a shot at being able to prove that this project will be built to the state’s high environmental standards…. extensive opportunities for public comment ensure a fair and thorough environmental review process.”

Craig Cole, Spokesperson for Gateway Pacific Terminal Project

The results of those studies will be presented in the draft EIS. Randal Perry, project manager for the Northwest Field Office of the Corps, said the draft EIS tentatively is scheduled to be completed in the first quarter of 2014. “That’s a very optimistic date,” Perry said.

If the public feels it hasn’t had enough opportunity to weigh in on the process, it will get another shot sometime next year. Once the draft EIS is released to the public for review, the public comment period will reconvene for at least 45 days, with at least one public meeting.

Comments on the draft EIS will be considered while composing the final EIS, which will be used to help make permit decisions.

Despite permit decisions still a

WHATCOMBUSINESSALLIANCE.COM | 57

COAL TERMINAL SCOPING investment in Whatcom County. whelming among the crowd of over nents from Wyoming and Montana According to SSA, the project 2,000 attending the scoping meetto Spokane. would create more than 4,400 local ing in Bellingham, and the crowd The meetings in Ferndale, drawjobs during construction and more in Spokane. Organizers of the ing about 1,500, and in Seattle than 1,250 direct and indirect jobs sessions said that the local Sierra conversely featured the strongest on an ongoing basis. voice of advocacy Also, a recentlytoward the project. published report Several prominent found that the terWhatcom officials minal would become traveled to Seattle one of the highest and spoke at the property taxpayers in scoping meeting, the county —second including: Mayor behind the British Gary Jenson of Petroleum (BP) Ferndale, Mayor Refinery at Cherry Scott Korthuis of Point.

Lynden, Leroy Opponents of the Rohde from the project contend that International the impacts to the Longshore and environment from Warehousemen’s The crowd swelled under an overhang at the outset of the scoping meeting increased rail trafUnion Local 7, held in Bellingham, where protestors dominated the session. fic, diesel emissions, President/CEO of the coal dust, and vessel Bellingham/Whatcom traffic all outweigh the economic Club helped saturate the turnout in Chamber of Commerce & Industry benefits.

Bellingham and Ferndale; busloads and Blaine city councilman Ken That viewpoint surfaced overof project opponents carried oppoOplinger, and Hugh Foulke representing the Ferndale School Board.

During late November a group calling itself the Northwest Jobs Alliance delivered 10,000 petition signatures to the Whatcom County Courthouse.

Consensus strongly suggests that this project, if completed, would be a proverbial a game-changer. For some, it represents more local rail traffic, increased local and even global pollution, and possible fallout on property values. For others, it means putting thousands in the local labor force back to work and strengthening Washington’s trade economy.

On the outskirts of the debate businesses anxiously watch the process unfold, wondering if this is the same environmental review they’ll have to face if they intend to expand or locate in Whatcom County.

Regardless of their passion, all sides of the debate will have to be patient, as a final vote on permits most likely will occur no sooner than 2014.

58 | BUSINESSPULSE.COM

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Business Person of the Year Awards coming March 20 Nominations welcome until Jan. 15

By Business Pulse Staff

W

ho left an indelible imprint on the business and economic landscape in Whatcom County during 2012?

And, who has done that over a lifetime career as a Whatcom business leader?

You can nominate someone now. Continuing a tradition of 27 years, the Whatcom Business Alliance and Business Pulse Magazine will stage the annual Whatcom Business Person of the Year awards dinner March 20, 2013 at Lakeway Inn & Conference Center in Bellingham.

We welcome your nominees by

60 | BUSINESSPULSE.COM

January 15 in four categories for awards: • Business Person of the Year • Lifetime Achievement • Small Business of the Year • Startup Business of the Year Send your nominations for the first three categories to Shannon@ WhatcomBusinessAlliance.com.

Suggestions for Startup go to Apply@nwirc.com, where NW Innovation Resource Center is managing the nominations. Please include brief information about the nominee and your name and contact information.

Table reservations for the event are available now at 360.746.0410.

This is the longest-standing award in Northwest Washington,

begun in 1987 for recognition of excellent business achievement.

Criteria for the nominations: • Business Person of the Year—Any leader in Whatcom County from a business or organization, either private sector or nonprofit, who represents business success and community impact.

• Lifetime Achievement Award—Any person representing long-time contributions to business success and community prosperity in Whatcom.

• Small Business of the Year—Any successful business with fewer than 100 employees.

• Start-Up of the Year—Must have opened for business on or after January 1, 2010.

2012 Awards Lifetime Achievement – Frank Imhof, 34-year president of IMCO General Construction.

Business Person of the Year – Jeff Kochman, president of the Barkley Company.

Small Business – Chuckanut Bay Foods, a boutique wholesale cheesecake bakery in Ferndale.

Startup Business – Infusion Solutions in Bellingham, an in-home provider of infused medications.

Please socialize with us on Facebook at both the Business Pulse Magazine page and the Whatcom Business Alliance page.

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ENTREPRENEUR/START-UP TIPS Laura Bostrom | Accelerator Program Manager, NW Innovation Resource Center The NW Innovation Resource Center provides services so entrepreneurs can create economic opportunities and jobs through innovation. A nonprofit organization based in Whatcom County, the NWIRC accelerates early-stage startup companies and their rate of success through mentorship, resources, and accountability.

Crowd Funding: Kickstarter paves—and often pays—the way on line

S

cott Baumann captured the magic moment on video. The children squealed with delight over the invention. From her bike, Baumann’s daughter called to her mom, who was watching from the driveway, “Mommy, look what dad made me. I went all over the whole neighborhood!”

for the money received. The funding amounts are small, often under $50. (The company featured in my column of Fall 2012, Wild Squirrel Nut Butter, completed a successful crowd-funding project last spring.)

Chalktrail set a goal of $37,000

if you love buying items before anyone else, look at Crowdhut. com. Crowdhut sells products that originated on those crowd-funding websites.

Many entrepreneurs who work with the NW Innovation Resource Center discuss pursuing a crowd-funding campaign.

We recommend that entrepreneurs definitely explore Kickstarter and the other crowd-funding options.

But remember that using a crowd-funding site provides no funding shortcut.

His daughter had comCreating and running a pleted a bicycle ride (trainsuccessful crowd-funding ing wheels still attached) campaign requires detailed with half of a hula hoop work—and it definitely attached to the back frame helps to have a huge perof the bike. The hula hoop sonal network of social half had a large piece media friends to carry of chalk connected to it, the message through the enabling her to leave an Internet. artistic trail of chalk on the Though crowd-funding road showing her path. websites list many projects Baumann, the chief in the arts, opportunities inventor behind Procreate abound for businesses to Children on bicycles leave a colorful Chalktrail pattern.

Brands in Ferndale, used promote and fund new Photo courtesy of Procreate Brands that moment as part of products. Rewards to a video to promote the donators vary by the type finished product that he named to pay for the initial manufacturof project and the size of the Chalktrail. The video became a key ing run of the product. Baumann financial contribution. element to a crowd-funding camwas successful and raised $37,711 Entrepreneurs should note that paign he created on the website in 30 days.

Kickstarter takes 5 percent of Kickstarter.com.

Several websites offer crowd the money pledged on successful Crowd funding is just what it funding. Check out Kickstarter, projects, and payment processsuggests—asking a lot of people to Indiegogo, or Fundable to see ing costs another 3 percent on fund a project, rather than a single a dizzying selection of projects average. Fundraisers only receive source or a few. Fund requesters from across the country. And money if the project achieves its offer something of value in return 62 | BUSINESSPULSE.COM

financial goal. Since Kickstarter launched in 2009, individuals have pledged more than $350 million through the site to fund new projects. In the Whatcom County area more than 40 projects have been successful, raising more than $300,000.

The Kickstarter website states that 44 percent of its projects reach their funding goals.

However, this does not include the projects that never get accepted onto the site. Kickstarter does not publish those numbers. The site lists several categories of projects that it will not even consider, including health and beauty, baby, pet products, and several others.

A successful campaign requires a strategy to promote your campaign. Many people reach out to their Facebook friends and other extended social networks.

Baumann said that anyone pursuing crowd funding will benefit from a strong social backbone to

lean on while promoting a campaign.

A compelling video that tells the story of the product also is necessary. Look at other successful campaigns to get an idea of what works in the crowd-funding

In the Whatcom County area more than 40 projects have been successful, raising more than $300,000. Chalktrail from Procreate Brands exceeded goal of $37k environment. In the Chalktrail video Baumann shows kids and adults demonstrating the product; he details how the product was developed, and he shows the original prototype in use.

The Kickstarter platform

allowed Baumann to introduce the Chalktrail to a huge, targeted audience. Bloggers picked up the story of Chalktrail, and Internet promotion helped the campaign exceed its financial goal.

Through online coverage resulting from the Kickstarter campaign, Chalktrail entered into a worldwide manufacturing and distribution agreement with Fat Brain Toy Company. Fat Brain gave Chalktrail a Toy of the Year award for 2012.

To achieve success in this format, entrepreneurs must have a compelling product, a well-done video production, and a plan to market the Kickstarter campaign.

Baumann said he was impressed at the quality of the projects he has seen on Kickstarter.

“It’s such a crowded space, you can’t be ordinary. You have to be extraordinary,” he said. “You have to find a way for your product to stand out.”

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H.R. PROTOCOL Bob Pritchett | President/CEO, Logos Bible Software Bob Pritchett co-founded Logos Research Systems, Inc. (now renamed for its niche-market product, Bible software) in 1992, and the business perennially has made fastest-growing companies lists regionally and nationally.

He is on the executive committee of the Whatcom Business Alliance board of directors.

The greatest job on earth – Entrepreneur

E

ntrepreneurs are the under-appreciated heroes of civilization. Virtually every advance in art or science has either been in the service of business, or has reached us through the work of an entrepreneur.

Entrepreneurs publish and promote the artists. Entrepreneurs make the results of accidental discoveries available to everyone. Entrepreneurs seek out new and better solutions.

In pursuit of profit, entrepreneurs have given us the steam engine, the electric light, and onehour dry cleaning. The march of progress has been to the beat of the business drum. Entrepreneurs are the drummers.

Being an entrepreneur is the greatest job on earth.

Small Business Is Hard Work The greatest job on earth is a very hard job. The people who are starting and running businesses are, quite literally, running the world.

And that takes a lot out of you.

The world is not run by the United Nations. The world is not run by the president of the United States. The world is run by the people who run the businesses that milk the cows, build the widgets, drive the trucks, and sell the goods.

Wal-Mart, General Motors, and the rest of the Fortune 500 do a lot of the heavy lifting. But small businesses have a harder job.

Big businesses are huge machines. They are well docu64 | BUSINESSPULSE.COM

mented, well staffed, and they know what to do and how to do it…for the most part, the people running them understand how the machines work and have the resources to keep them going.

Small businesses, and the entrepreneurs and business owners who run them, are building new business machines. Small businesses are: • Growing faster. Revenues, employees, etc.…at a breakneck pace.

• Innovating more. Large businesses…do not have to invent their business model and processes on the fly.

• Taking bigger risks. Small businesses are financed with credit cards, personal guarantees, and loans from family and friends.

Starting a small business is not just a risky career step; it is a risky life step.

When my business was just starting up, I knew a guy who was participating in a multilevel marketing business. Every time I ran into him he wanted to “talk business,” which to him meant parroting phrases from motivational tapes.

“There is nothing better than to wake up in the morning, look into the mirror, and say, ‘Hi, boss!’” he said.

“What are you talking about…?

When I look into the mirror I ask, ‘Are we going to meet payroll?’” I replied.

Okay, not really. I said, “You’re right.”

The Purpose of This Book … is to share some of what I

have learned with you, my fellow entrepreneur, business leader, and hero of civilization.

This book is not intended to be inspirational. It is intended to be useful. It is not full of business platitudes or step-by-step howto advice. If you want to be told that if you dream it, you can do it, get another book. If you want to know how to write a business plan, don’t look here. I do not have 13 Incontrovertible Laws of Excellence.

You are the one who has to come up with the new ideas.

Entrepreneurs clothe and feed and entertain and supply the world, creating the wealth and the jobs. You are the one who provides the place where people can work and grow to their greatest potential.

In these pages you will find tips.., warnings..,and encouragement to make the tough calls.

It is great to be the boss. There are some nice perks to being an entrepreneur. But it is often a hard, lonely, and frightening responsibility.

You are the one who has to come up with the new ideas.

Entrepreneurs clothe and feed and entertain and supply the world, creating the wealth and the jobs. You are the one who provides the place where people can work and grow to their greatest potential.

You have the greatest job on earth….

[Reprinted by permission from: Fire Someone Today, Bob Pritchett (2006), Thomas Nelson Inc., Nashville, Tennessee. All rights reserved.”]

12for’12 W

e sat down at length with Hart Hodges. Hope you can sometime. He’s enlightening, insightful, thoughtful, and thought-provoking. His breadth of experience and knowledge about Whatcom County business provided immeasurable insight in pulling us through this 2012 retrospective, after contributing mightily to the 13-for-’13 lead articles.

A 2012 Retrospective: Headlines and Dreadlines PORT LEADERSHIP VACUUM ‘FIXED’ – Rob Fix (l.), new executive director of the agency that is our top story of 2012, the Port of Bellingham, appears at the waterfront with Port management team members Mike Stoner, the director of environmental programs, and Lydia Bennett, the director of economic development.

Photo by Marie Duckworth, Port of Bellingham

Example: Hodges’ observation, “The loss of Sears and Semiahmoo illustrate the changing landscape in Whatcom County…” led to our concept of Dreadlines.

We made a decision that, except for the lead-off foursome – The Port of Bellingham, PeaceHealth St. Joseph Health Center, and the combo with the sound of a tire going flat (s-s-Sears-Semiahmoo) – we would not attempt to place comparative value on a dozen happenings or themes that struck a strong chord within the Whatcom County business world.

Some major headlines/dreadlines didn’t make it because, though newsy, their full impact is yet to come – Costco moving, and the cargo terminal (see p. 54 for an update on the scoping process).

After the initial foursome that best served our theme, Deadlines and Dreadlines, the listings all had various impacts and although numbered they appear in random quantifiable and sequential order.

To get to the convenience of 12 things for ’12, we, by the (of course) dozens, sorted through publications and stories and conducted many interviews with business leaders who were in the thick of it all.

Hodges played referee, of sorts. Like Santa, he looked at our list, checked it twice, helped point out who was, well, you know.

To add some much-needed positivity and color we also brought you thematic photo images that we’ve called New Skyline – some of the economy-bolstering new buildings that grace our area’s horizons. Each has exceptionally noteworthy impact, ranging from storing ice to performing arts to serving conventions and inventions.

Our own internal story of morphing in 2012 to a quarterly, support publication stands as our biggest headline within our walls and work family (see item No. 6).

Oh, and a piece of most excellent news to end with: Drs. Murphy and Hodges have agreed to lend their considerable prowess to our lineup as guest columnists/analysts in 2013.

–Mike McKenzie, managing editor

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2012 BUSINESS IN REVIEW

ROB FIX LOOKS AHEAD The Port Commission selected Rob Fix as the new executive director of the Port of Bellingham. The Commission had presented three others from among nine finalists. Fix had stated publicly early in his interim tenure that he was not interested.

Commissioner Mike Macauley wrote in a blog that Fix was one of the nine finalists, but all six names of non-candidates were withheld to protect their privacy. Fix added insight during an interview in his office a few days later.

Business Pulse Magazine: You were a sudden, somewhat surprising selection – how’d that happen?

Rob Fix: At first I had said I wasn’t interested. But after having some successes and enjoying the work I thought I could do well, and midsummer I let the commissioners know that. I have an incredible relationship with Bellingham Mayor Kelli Linville and Whatcom County Executive Jack Louws, and felt we could use that to the Port’s advantage.

BPM: How will you handle special interests re: business and environment?

RF: We exist to promote economic activity. We’re the designated county agency for that. It means creating industry, business, and jobs. Yet we want good balance.

The waterfront has been carefully designed with lots of parks. We never want all parks at the expense of jobs.

BPM: What’s foremost on your plate for 2013?

RF: To execute and keep everybody informed on all the current issues we’re dealing with. The two biggest, with all strategic planning in place, are the continued Bellingham International Airport expansion, and the waterfront development project.

BPM: You have challenges with airport development, right?

RF: Yes. Concerns about noise and its impact on homes and businesses, for one.

We have no control over take-offs and landings. We do control where Port dollars go. Continued expansion is in motion, including private and Port parking. And we may attract a hotel to the area.

BPM: How fast will the waterfront development move along?

RF: At least six months. We’ll have a series of public hearings to get input.

Meanwhile, the Whatcom Waterway clean-up is under way, dealing with mercury, algae, contamination of the soil, etc. Final determination on the use of the land will dictate the clean-up process.

BPM: What’s the vision for the land use?

RF: Find a developer of mixed-use properties. Find individual tenants. Create industrial activity compatible with our community. We envision a combination of retail, office space, and residential for the area adjacent to the shipping terminal.

BPM: The land swap with the city that you led the way on as interim director appeared to be a good sign.

RF: That shows that governments can get along, as long as we can compromise.

The exchange put parks land in the City’s hands at Cornwall Beach, and industrial lands in the Port’s hands where the marine commerce is. Our goal is to cooperate with anybody and everybody.

BPM: How’s the Port’s bottom line?

RF: In great shape—$20 million in operating revenues, and $40 million in capital expenditures. We collected $6.7 million in tax revenues the last two years, and expect the same in 2013. Most government taxes keep going up; we’ve kept ours flat.

BPM: What’s the goal as a business?

RF: To better utilize our existing assets, to create more jobs and more commercial activity. We operate conservatively and efficiently with our 98 employees. But we can always continue to improve.

BPM: Dealing with numbers is in your wheelhouse.

RF (smiling): This—public relations—is my biggest weakness. I’m a finance guy. I’m not used to sitting here with reporters.

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1. PORT OF BELLINGHAM: A TWO-HEADED ‘12 The 2012 ride across the Port of Bellingham’s behavioral waters was as tumultuous as the fickle winds and tides of its neighboring Bellingham Bay. The Port easily led the entire accumulation of 2012 stories that struck the largest and boldest in both categories – Headlines and Dreadlines.

A total recapitulation would rival Britannica for volume, and Tolstoy for length, for drama, and for titleappropriateness (War and Peace).

Looking back: The Port Commission stirred a firestorm of controversy in a dragged-out process that resulted in executive director Charlie Sheldon resigning last April 2. Then, shortly after sitting three replacement finalists before public scrutiny, and then after offering the job to one, and then after having him suddenly withdraw his application, and then after stating that the hire would wait until 2013, the commissioners did an about-face and named—wait, what?--Rob Fix on Nov. 9.

Perfect last name. In many positive, thriving ways the Port can press forward aggressively, i.e., Bellingham International Airport expansion. But other areas, such as unifying an oft-divided public and local governments, cry out for a good Fix. The Commission itself came under fire. Strong citizen groups pushed a ballot initiative into the November election with an objective of expanding the commission from three to five. It failed Big, better news: purchase of Bellwether’s Bayview Center Building; a land swap with the City of Bellingham for property ready for commercial development; possible tenants interested in waterfront property (Latitude Restaurants Bellingham, Inc., with plans to open in the space formerly occupied by the familiar Bayside Café that closed after 20 years).

The airport added Denver, Las

NewSkyline2012: Jansen Art Center

Funded by the Jansen Foundation, this $2 million renovation of a former Lynden City Hall built in 1928 opened 20,000-square feet in which artists can create, teach, share, and engage the community in appreciation of the arts. The center includes two dance studios; a painting studio; rooms for writers, weavers, jewelers, and potters; a small performance hall; practice rooms for music students, and a piano lounge. Designed by Zervas Group Architects and built by Exxel Pacific, the project received the top 2012 award from the Northwest Washington Chapter of the American Institute of Architects. Photo courtesy of The Jansen Art Center

Vegas, Palm Springs, and a triple dose of Hawaii to schedules, and, entering the next phase of its $38.5 million expansion, clearly was one of the top business success stories of 2012. We detailed that story in our Fall 2012 issue.

Other Dreadlines: A couple died and 12 boats were destroyed in a fire in Squalicum Harbor. More controversy arose over the razing of the historic, 93-foot-tall Georgia Pacific former tissue mill. And similar issues fester over the old Granary structure, too, that advocacy groups want to save on land that otherwise is ripe for industrial or real estate development.

2. PeaceHealth St. Joseph Medical Center: Positive Growth The largest employer in Whatcom County (2,700 and counting, with nearly $200 million in payroll) continued a stunning growth spurt. No wonder, then, that

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2012 BUSINESS IN REVIEW

NewSkyline2012: Lummi Gateway Center

The grand opening unveiled this first-of-its-kind, 10,000-square-foot, business incubator on Rural Avenue in Ferndale at the I-5/Slater Road exit. The $4 million micro-enterprise provides investment into small businesses and training opportunities to support existing and start-up tribal entrepreneurs. No other exists in U.S. tribal communities. As a Lummi Ventures Partnership with Lummi Nation, Northwest Indian College, and Northwest Area Foundation, it also received funding from the Northwest Area Foundation, Economic Development Administration, Washington Department of Commerce, Lummi Nation, a Rural Business Enterprise Grant, and the Bill and Melinda Gates and Paul G. Allen Family foundations. The center shares property with the Lummi Commercial Co.’s 260 Tobacco and Fine Spirits, and includes The Seafood Market, Lummi Gateway Café, Arts & Crafts Gift Market (about 70 artists’ works), Heritage Center, Totem/Canoe Carving Shed viewing area, and the Lummi Nation Service Organization and small-business start-up office. Photo courtesy of the Lummi Nation

U.S. News & World Report named it to the Best Regional Hospitals list that evaluates hospitals outside of major metropolitan areas.

Major expansion headlinegrabbers included the opening of PeaceHealth North Cascade Cardiology in Sedro-Woolley, the Peace Island Medical Center in Friday Harbor on San Juan Island, and the state-of-the-art Cancer Center in Bellingham.

PHSJ also neared completion of an alliance with United General Hospital in Sedro-Woolley to lease and operate as PeaceHealth United General Medical Center, effective July 1 this year.The Hospital District retained ownership of facilities.

3. AND 4. DEMISE of SEARS, SEMIAHMOO: The ESS-ence of Dreadlines: News on Oct. 29 of Sears closing sent shock waves through the community. (Some months down the road, a mega-sporting goods brand, Sports Authority, will remodel and fill the space, also big news.)

Semiahmoo’s fate held little surprise when, on Oct. 31, word went out that it would close Dec. 1.

Shock value runs high because the hotel was the largest economic 68 | BUSINESSPULSE.COM

driver for the Blaine community: a 25-year-presence, more than 200 jobs, a million-dollar chunk of the budget for a town of about 4,750.

The hotel paid about $1 million a year in taxes and utility usage.

With that gone, the tax burden likely would spread to all remaining property owners.

The reason for no surprise is that the hotel had been in financial turmoil repeatedly over the last 20 years. The Upper Skagit Indian Tribe still is majority owner, but still tied partially to the original developer-owner, David Syre of Trillium Corp. A Seattle Times report cited a “complicated financial condition” that fatally wounded the sprawling hotel that has 200 rooms and a boatload of meeting space.

Semiahmoo hotel officials stated that the 224 laid-off employees would receive a month’s salary and continued benefits through Dec. 31.

Sears’s 92 employees received severance pay and could apply for positions at other Sears locations (the nearest is Burlington) or with Kmart, a Sears Holdings Company property. Bellingham’s was one of 11 stores that Sears, Roebuck & Co. sold last April to the investment trust, General Growth Properties,

that owns Bellis Fair—also developed by Syre/Trillium.

Adding to the surprise of announcement on Oct. 29 about Sears’ scheduled closing in late January was that employees had been told a week earlier, and an official was quoted saying that the management group knew seven months ahead in March. It’s a modern miracle in this age of instant and omnipresent communications that news didn’t leak.

4 1/2. And sold….

Birch Bay Square off I-5 at Lynden/Custer Road exit sold for $8 million to a Canadian group, North American 6666 Investments, LLC. The property has struggled constantly for survival; it consists of16 acres off of Birch Bay-Custer Road, with Bob’s Burgers and Brew, The Woods Coffee, and The Market at Birch Bay as attractions.

5. FIRE AT BP REFINERY Last Feb. 17 the Friday midafternoon skies lit up and filled with large streams of smoke when a fire erupted at the BP Refinery at Cherry Point. This rocked the local economy early in the year when the refinery had to cut back severely on

its processing of Alaska crude oil.

Regulators idled a large portion of the refinery for about three months. The fire and shutdown reportedly contributed to a spike in gasoline prices at the local pumps to the highest prices since 2008.

The good news from the Environmental Protection Agency was that nobody was trapped in the fire, only one treat-and-release, non-burn injury), no oil or polluted run-off in nearby water sources, no air-pollutant threats, and the fire and materials used to fight it remained contained in the refinery.

BP Cherry Point, which opened 42 years ago, employed 848 at the time of the fire. Suppliers relied on replacement oil to provide the primary source of transportation fuel in this region – mostly automobile, and aviation (about 80 percent of Sea/Tac International jet fuel).

6. KEEPING UP WITH ‘INITIAL’ CHANGES: NWEC, CEV, WBA A significant shift on the community economic development scene took place throughout the year, as one major player in that arena shut down, one made a transition to new environs and role, and one start-up sprang onto the scene.

The Center for Economic Vitality closed.

The Northwest Economic Council underwent a reformatting move and blended into the Council of Governments in an advisory capacity. Earlier in the year, NWEC yielded its state-designated status of Associate Development Organization (ADO) to the Port of Bellingham.

And the Whatcom Business Alliance started last April. With a sterling 20-person board of directors from across virtually every industry private sector, by year’s end the organization was approaching 150 members. With a stated mission of fostering business success and community prosperity, the WBA accepts no public funding and operates non-partisan on issues.

Business Pulse Magazine, itself undergoing transition from monthly to four-times-a-year publishing and reverting to its original name when founded 36 years ago, is the WBA’s official publication.

7. LIQUOR FLOWING When state stores for sales of alcoholic beverages closed in June, as directed by the ballot mandate that passed in Washington during the November, 2011 elections, spirits immediately filled shelves at virtually every large grocery source, plus numerous small privatized, spe-

cialty stores.

Locally, the largest new enterprise came from California – BevMo. A widespread liquorstore chain, it revealed plans to open seven stores in Washington, including one in Bellingham this February.

8. THE ELECTIONS FALLOUT Washington made national headlines when voters passed laws last November to legalize marijuana for recreational use, joining Colorado, and same-sex marriages. The marijuana issue, in our compilations, interviews, and research, stood second only to health care for raising the most questions in the local business world.

What about testing and screening? What about privacy laws in hiring? What about the replacement of coffee breaks? Questions of all types and shapes.

Locally, a proposal to expand the Port’s Board of Commissioners to five members, instead of three, failed. Otherwise, the elections brought very little in the way of change – local, state, and national – in terms of business. Except….

8 ½. THE TIRESOME CLIFF REPORTING An endless stream of reportage

NewSkyline2012: Regal Barkley Village Stadium 16

For the first late-morning showing Dec. 10 when Regal Cinemas opened its new 16-screen megaplex, movie fans (in photo) lined up more than two hours early in falling rain. Special showings the first three days raised about $100,000 for local charities. Hundreds attended the midnight showing of “The Hobbit” on Dec. 13, and the first full slate of current-running films the next day. Across from the theater The Woods Coffee opened its 14th location (which, in a twist of construction fate, opened before No. 13 on Lakeway Drive that is scheduled to open this spring). Regal closed its Sunset Square and Sehome theaters, but continues to operate at Bellis Fair Mall. Read all details about this colorful addition to Barkley Village in the Fall 2012 digital edition on www.BusinessPulse.com. Business Pulse Staff photo

WHATCOMBUSINESSALLIANCE.COM | 69

THE HART OF OUR 12-FOR-’12 – Hart Hodges (r.) and his partner, Michael Ryan, operate Waycross Investment Management Company in Bellingham. Hodges helped us cull the most memorable business-impact stories of 2012. A long-time professor of economics, he also is director of the Center for Economic and Business Research at Western Washington U. Waycross manages investment portfolios and wealth management services for individuals, not-for-profit organizations, and for-profit corporations as a fee-based, state registered investment adviser. Staff Photo

about the (say it out loud) Fiscal Cliff. And the endless debate over….

9. HEALTH CARE REFORM: REALITY A BIG MYSTERY You could call it the Health Care Scare. Tremors continue to ripple up and down and throughout the business world everywhere over the unknown ramifications of the Affordable Care Act. It merited a whopper of a story in this issue of our magazine, because the topic kept cropping up in our visits with business owners and workers: questions about insurance costs and availability, about tax implications, about ominous penalties and fees, and impact on hiring, downgrading employees to part-time, and freezing expansion..

Several accounting and insurance companies with specialties regarding health-care procedures have created public workshops on the subject. The Whatcom Business Alliance is holding such a session on February 13 (see story on p. 48). And local colleges already have created curriculum courses for studying the new laws that begin to create effects this year, take effect next year, and continue to unfold 70 | BUSINESSPULSE.COM

through 2018.

10. NEW COUNTY LEADERSHIP Coming off the 2011 local elections, both Whatcom County and the City of Bellingham installed new leadership – County Executive Jack Louws and Mayor Kelli Linville were sworn in last January. They have engaged strongly in several matters affecting the private business sector – namely, a reconveyance of Lake Whatcom watershed timberland by the County, and a land swap with the Port by the City as two examples. An immediately noticeable, positive change: the two new leaders meet for breakfast once nearly every week to discuss matters of mutual import between the two largest population segments in the region. In an interview on p.

66 new Port Commissioner Rob Fix said his relationship with Linville and Louws enhances economic progress.

11. ALCOA INTALCO WORKS: POWER PLAY #1 Power to the smelter people. A deal closed on a memorable, infamous date, Dec. 7, for Alcoa’s huge Intalco Works aluminum plant in

NW Whatcom County.

A 10-year contract through September of 2022 with Bonneville Power Association (BPA) in Portland, Ore., threw the ‘On’ switch to ongoing and future electrical power for the smelter. How big a deal was this? Well, 300 megawatts, for one thing. And the state governor was there for the announcement.

In a broader picture: Intalco was employing 648 at the time of the contract signing, according to a news release, furnishing $118 million in personal income and $5 million in local taxes. One of Alcoa’s two presences in Washington (the other is Wenatchee Works in Malaga), Intalco is a 47-year fixture in Whatcom County. The deal, officials stated, provided lower power rates in the short term, and stability for long-term rate management.

12. POWER PLAY #2: PGE PAYS $80M FOR FERNDALE GAS PLANT Tenaska Washington Partners, L.P. sold Puget Sound Energy (PSE) a 270-megawatt, natural gas-fired power plant near Ferndale to help the state’s oldest and largest utility meet long-term electricity needs – hopefully at lower cost rates.

The transaction, according to public records revealed by the Whatcom County Treasurer, Steve Oliver (information that PSE and Tenaska would not release), involved almost $80 million. A report in the Bellingham Herald quoted Oliver on a $400,000 windfall for the county in real estate excise tax – a designated portion of a total $1.4 million excise tax resulting from the sale.

The power plant directly next to the Phillips 66 oil refinery was built in 1944. It becomes one of four operated in the county by PSE, along with Bellingham, Ferndale, and Sumas. The potential is to purchase natural-gas power that can supply about 200,000 homes with cleaner, more efficient, and less costly means.

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WHATCOMBUSINESSALLIANCE.COM | 71

THE 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 continues to receive national attention. Myers holds a Master’s degree from the University of Washington.

Environmentalism gets sacked by emotions in political football

I

magine a business facing two choices about how to achieve a particular goal. It could compare the options and find out which cost less, or it could simply pick the one that was more emotionally satisfying, regardless of cost. The second approach would almost certainly lead to lost money and wasted resources.

Yet that is exactly how officials make many of our environmental policies in Washington state.

Instead of finding how to get the most bang for the environmentalprotection buck, politicians choose policies based on how they feel.

Making decisions based on emotional whim is not good for the environment. It wastes scarce resources on policies that fail to improve wildlife habitat, preserve clean water, or provide other environmental benefits.

Contrast that approach with two simple business principles – (a.) applying methods that businesses use every day to (b.) serve their customers. These two principles demonstrate why the free-market is more successful than politics at helping the environment.

Prioritize People and businesses manage 72 | BUSINESSPULSE.COM

scarce resources every day. We prioritize our actions, focusing on those things listed in order of importance.

If we have 100 things to do, we don’t do the easiest 95 and call it all good. Businesses choose the most important actions first, even if they are the most difficult.

“Washington state wastes huge amounts on solar energy to reduce tiny amounts of carbon dioxide.”

Politics is the opposite. The easiest projects get done first, even when they appear less meaningful.

The hardest projects get put off. Not only does this avoid political problems, but it yields political benefit by allowing politicians to claim progress, even if that progress turns out to be ephemeral.

The environment pays the cost for this lack of discipline. Important problems remain left to fester while symbolic projects are moved to the front of the line. In a political system, what gets prioritized highest is the politics—not environmental benefit.

In a free market, what gets prioritized highest is the outcome. If an energy savings target is not met, there are costs to be paid. Those costs cannot be avoided or whitewashed. Prioritization is a must in a

free market. It is a matter of success or failure – literally life or death – for a business enterprise.

Do More with Less If there is one principle environmentalists should embrace it is the notion that we should do more with less. With a political approach, however, we rarely take that route.

As example: Consider the carbon footprint.

When examining ways to reduce carbon emissions we should look for methods that successfully reduce carbon for the least cost. The lower the cost, the more benefit we can provide for any given budget.

With politics, however, we frequently choose the most expensive approach. In California a government permit to emit one ton of carbon dioxide costs about $12.

Companies won’t pay more because it would be cheaper to use other approaches to reduce emissions.

In Washington state, however, we waste huge amounts on solar energy to reduce tiny amounts of carbon dioxide. At the new Coyote Ridge Corrections Center in Connell in Eastern Washington, solar panels cost about $880,000 to install.

Over their life the panels will cost about $1,000 for every ton of CO2 avoided.

That’s more than 80 times the cost of a permit in California! Many politicians in Washington state rightly oppose a cap-and-trade system like that in California, but think

nothing of spending 80 times more to subsidize solar energy.

Wasting money also wastes opportunities to help the environment, and can only be called antienvironment.

The free market is the best system ever designed to reward those who find ways to do more with less, and to achieve a desired outcome by using the fewest resources.

A free market punishes those who ignore important challenges, and provides the discipline necessary to face those challenges and succeed.

Politics, on the other hand, avoids difficult choices. It prioritizes the symbolic, not the successful.

Solar panels, ahhh. Feel-good environmentalism. A million-dollar feeling, for a $12 result.

Until we learn to harness the benefits of the free market, Washington’s politicians will continue to spend huge amounts of resources while producing only small environmental benefits.

GIVE. ADVOCATE. VOLUNTEER.

United Way of Whatcom County unitedwaywhatcom.org like us on Facebook!

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MINIMUM WAGE 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.

Minimum wage hike bad news for businesses, workers I

f there is one thing small businesses and the unemployed in our State don’t need right now, it is another increase in the cost of providing jobs.

But that is exactly what is in store for 2013. On January 1, the state’s minimum wage increased to $9.19 an hour. The 15-cent increase comes on the heels of last year’s 37-cent increase—more than 5 percent in less than two years.

This would appear to be good news, wouldn’t it, workers earning more pay?

What this means is that the state of Washington will continue to burden job-creators with the highest minimum wage in the nation.

While seemingly generous to low-income workers, our high state minimum wage prevents many people from being hired. A high minimum wage guarantees a pay rate once hired, but it makes it harder to get a job in the first place. So the unemployed suffer most.

The economics is simple.

When costs become too high for employers, they have to stop hiring or let workers go.

With an unemployment rate hovering around 8.2 percent, well above the national rate of 7.9, 74 | BUSINESSPULSE.COM

the last thing our state needs is to present employers with another obstacle to hiring. The timing is bad, but the increase is automatic.

One inherent problem with Washington’s regular annual increases in the minimum wage is that they are based on the costly Puget Sound-area Consumer Price Index (CPI). The CPI is essentially a snapshot of what it costs

The state of Washington will continue to burden job-creators with the highest minimum wage in the nation. for consumer goods and services.

Not surprisingly, the CPI for the Seattle region is higher than, say, in the Tri-Cities, Aberdeen, or Whatcom County. In fact, the Puget Sound-area CPI is the highest in the state.

Pegging the minimum wage to the state’s largest metro-area CPI puts the state’s labor policy on autopilot. This is not a good thing. First, it doesn’t take economic reality into consideration; when unemployment is above the national average it makes no sense to blindly increase the cost of keeping people employed and

creating new jobs.

Second, if the CPI falls, as it did in 2010, the minimum wage does not decrease correspondingly—it just doesn’t increase.

Finally, tying the statewide minimum wage to the Puget Sound CPI unfairly forces employers in the eastern and rural parts of Washington to match the labor costs of the most expensive region of the state.

In case you think a high minimum wage is needed to support a family, 85 percent of workers earning minimum wage are either (a.) living with a parent or relative, (b.) part of a two-income couple, or (c.) single and have no children.

According to the U.S. Department of Labor, only 3 percent of workers over age 25 earn the minimum wage. So teens and young workers, not adults, comprise by far the biggest sector of minimum wage earners.

Numerous studies conclude that increasing the cost of creating jobs (by a mandated minimum wage) has the predictable effect of reducing the number of jobs created, thus leaving more workers unemployed.

Nobel-winning economist Milton Friedman observed, “The real tragedy of minimum wage laws is that they are supported by

well-meaning groups who want to reduce poverty. But the people who are hurt most by higher minimums are the most poverty stricken.”

The increase in the minimum wage is bad news for the unemployed, young and inexperienced workers in Washington. It is also bad news for small business owners and consumers struggling in a down economy.

Governor-elect Jay Inslee promised to support policies that will encourage job growth, spur the economy, and generate revenue so tax hikes aren’t needed to solve our state’s budget woes. He should realize the automatic high minimum wage makes reaching his policy goals harder, not easier.

After a decade in practice, putting minimum wage policy on autopilot is clearly causing more harm than good.

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ANALYSIS: NATURAL RESOURCES Don C. Brunell | President, AWB Don Brunell is the president of the Association of Washington Business, the state’s oldest and largest business association with more than 7,800 members representing 700,000 employees as both the state’s chamber of commerce and the manufacturing and technology association. About 90 percent of members employ fewer than 100 people.

More than half employ fewer than 10. For more about AWB, visit www.awb.org.

Hitting the ‘rich’ on donations holds unintended fallout for the needy W ith all the class warfare these days, “rich” has become a fourletter word. To hear some tell it, high-income earners are greedy misers who don’t pay their “fair share.”

Well, not quite.

When it comes to taxes, the IRS reports that, in 2009, (the latest year figures are available) the top 1 percent earned 17 percent of all income and paid 37 percent of federal income taxes.

As for contributing to charity, Americans are a generous people. According to the Urban Institute’s Center on Nonprofits and Philanthropy, private donors contributed $202 billion to charities in 2010. The Chronicle of Philanthropy reports that last year the top 10 wealthy individuals donated $8.3 billion, the top 10 U.S. foundations gave $8.1 billion, and the top 10 corporate foundations donated $8.7 billion.

Microsoft co-founder Paul Allen donated $372.6 million in 2011, including a $295 million gift to his Paul G. Allen Family Foundation and $70 million to the Allen Institute for Brain Science.

Like Allen, many wealthy people and companies form their own foundations. The Bill & Melinda Gates Foundation has a $37 billion endowment that funds their global charity efforts. In 2010, Gates and business magnate Warren Buffett announced that 40 of America’s richest people — 76 | BUSINESSPULSE.COM

including themselves — had agreed to sign a “Giving Pledge” to donate at least half their wealth to charity, which works out to an estimated $115 billion.

Washington companies that gave generously last year include Microsoft ($105 million), Intel ($90.6 million), Starbucks ($30.5 million) and PACCAR ($5.85 million).

Donations targeted (for) more tax revenue…. changes target ‘the rich,’ (but) the greatest impact would fall on the poor.

As impressive as those numbers are, charitable giving is not just about the big guys, it’s also about the local folks and small employers who consistently and quietly give back to their communities.

For example, Ed Schweitzer, who started his engineering company in his garage in 1982, now runs a multimillion dollar engineering laboratory that employs 1,700 people in Pullman. A partial list of the Schweitzer family largess includes $2.4 million to build and upgrade the city’s aquatic center, $1.7 million for the Girl Scouts, and $1 million to the Palouse Discovery Science Center.

In western Washington, The Fulcrum Foundation depends on local donors and patrons to provide low-income families with tuition assistance so their kids can

attend Catholic schools. In every community, fundraising drives solicit local business owners for donations for the Salvation Army, United Way and families of fallen police officers.

In Olympia, The Rants Group, a property management company owned by father and son Ron and Pat Rants, has led drives over the years to support the local Boys & Girls Clubs. In Grays Harbor, the Quigg family, owners of Quigg Bros., Inc., led the fundraising to build a new YMCA. Ironically, these very donations are now being targeted by the federal government. In search of more tax revenue, President Obama is proposing to reduce the federal income tax deduction wealthy people get for their charitable gifts from 35 percent to 28 percent.

Since many small business owners file their taxes as individuals, they’re defined as “wealthy.”

Some proposals sparked a firestorm of protests from charity managers who argue that limiting tax deductions for charitable donations would undercut support at a time when the need is greater than ever. While the changes target “the rich,” the greatest impact would fall on the poor.

At its core, the notion of severely limiting charitable tax deductions presumes that the federal government will do a better job helping community groups and causes than the local people who live there.

Do we really think that’s true?

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SCENE ON THE STREET

SCENE ON THE STREET GOAT CART AT BELLINGHAM FARMER’S MARKET

This unique sculpture of a goat pulling a cart, seen on the street corner of Railroad and East Maple in Bellingham, signifies the agricultural roots of the city’s Farmers Market.

The indoor-outdoor market begins operating on a year-round basis this month for the first time as its 20th anniversary draws nigh. Beginning Jan. 19, the Market plans to open on the third Saturday of January, February and March, 2013.

The Bellingham Farmers Market Association (BFMA) operates the market that opened downtown on June 19, 1993 with nearly 50 vendors featuring mostly fresh, farm-grown products. The next year the Saturday market expanded its season to April-October.

Another expansion took place a few years ago when the BFMA accepted a request a midweek outdoor market in Fairhaven that became known as Village Green on Wednesday afternoons. The association now comprises 150 vendor-members who generate approximately $1 million in annual sales operating out of 109 available spaces on Saturdays.

The goat cart stands as a symbolic sentry.

JOEL TOWNSAN FOLLOW-UP In Fall, 2012 we introduced you to Joel Townsan, with Flip-Out Screwdrivers LLC and its first product, The Tantrum. We plan to follow Joel with the wireless tool that turns 168 ways at the head from 17 different angles. Here, in his own words, is what he’s been up to.

Since the last time I interviewed with Business Pulse Magazine, I’ve focused on getting product samples produced of the newly-redesigned Tantrum Screwdriver.

The new version is definitely more rugged than the previous versions and was designed with the professional user in mind. So far, it’s been no easy task, but we’re making progress.

I recently teamed up with the CNC department at Bellingham Technical College (computer numerical control machining). Together, we’re working on producing some of the parts for the tool. This time around we’re using metal for some of the housing parts of the tool.

I’m working with several other companies who are producing various parts for the product, as well. I think the theme thus far has been overcoming challenges. It turns out some the parts that we were planning on CNC machining were too complex, so we’re going the injection-molding route instead. That creates a whole new set of design challenges— not to mention it’s incredibly time-consuming and expensive.

I’ve been busy working seven nights a week trying to support this project and working on Flip-Out during the day, so it’s been super busy. There are so many things that can go wrong or turn out completely different than expected. I’m just dealing with the challenges every day, and trying to navigate this ship the best I can.

I want to make sure this product is completely solid before we release it to the world. We only get one shot at this, so it has to be perfect. I’m pretty excited with how far we’ve come with this product. I think 2013 is going to be a good year for us.

Business Pulse will rejoin Joel for an update in the Spring, 2013 issue.

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ADVERTISER INDEX ALCOA Intalco . . . . . . . . . . . . . . . . . . . . . . . . . 9 Allstate Insurance . . . . . . . . . . . . . . . . . . . . 33 Anderson Paper . . . . . . . . . . . . . . . . . . . . . . 57 Archer Halliday . . . . . . . . . . . . . . . . . . . . . . . 41 Barkley Company . . . . . . . . . . . . . . . . . . . . . 84 Bellingham Athletic Club . . . . . . . . . . . . . . 73 Bellingham Golf and Country Club . . . . . 53 Bellingham Technical College . . . . . . . . . . 49 Best Western Lakeway Inn . . . . . . . . . . . . . 42 Big Fresh Media . . . . . . . . . . . . . . . . . . . . . . . 5 Business Person of the Year . . . . . . . . . . . 82 Corion Landscape Management . . . . . . . . 15 DataLink West . . . . . . . . . . . . . . . . . . . . . . . . 56 Dian Padys Photography . . . . . . . . . . . . . . 17 Exact Scientific . . . . . . . . . . . . . . . . . . . . . . . 58 First Federal Savings . . . . . . . . . . . . . . . . . . 59 Fitness Gear . . . . . . . . . . . . . . . . . . . . . . . . . 31 Gateway Executive Suites . . . . . . . . . . . . . 34 Hardware Sales Office Furntiure . . . . . . . . 73 Hotel Bellwether . . . . . . . . . . . . . . . . . . . . . . 7 Innotech . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Innovations . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Larson Gross . . . . . . . . . . . . . . . . . . . . . . . . . 21 Laserpoint Awards . . . . . . . . . . . . . . . . . . . . 75 Metcalf Hodges . . . . . . . . . . . . . . . . . . . . . . 23 Mills Electric . . . . . . . . . . . . . . . . . . . . . . . . . 35 Morgan Stanley Smith Barney . . . . . . . . . 47 Multop Financial . . . . . . . . . . . . . . . . . . . . . 67 NW Propane . . . . . . . . . . . . . . . . . . . . . . . . . 79 Oltman Insurance . . . . . . . . . . . . . . . . . . . . 55 Peace Health St. Joseph Medical Center . 45 Pott’s Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Print & Copy Factory . . . . . . . . . . . . . . . . . . 29 Roger Jobs . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 St Francis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 St Paul’s Academy . . . . . . . . . . . . . . . . . . . . 27 Saturna Capital . . . . . . . . . . . . . . . . . . . . . . . . 2 Scotty Browns . . . . . . . . . . . . . . . . . . . . . . . 75 Second Time Around Computers . . . . . . . 61 Silver Reef Casino Hotel & Spa . . . . . . . . . 83 Skagit State Bank . . . . . . . . . . . . . . . . . . . . . 77 TD Curran . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Technology Alliance Group(TAG) . . . . . . . . 30 Transgroup Worldwide . . . . . . . . . . . . . . . . 71 United Way of Whatcom . . . . . . . . . . . . . . 73 The Unity Group . . . . . . . . . . . . . . . . . . . . . . 70 US Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Varner Sytsma Herndon . . . . . . . . . . . . . . . 13 Video Simple . . . . . . . . . . . . . . . . . . . . . . . . . 71 WECU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Whatcom Business Alliance . . . . . . . . 41, 46 Whidbey Island Bank . . . . . . . . . . . . . . . . . . . 3 Whirlwind Services . . . . . . . . . . . . . . . . . . . 61

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We’re open for business _ your business.

The brilliant new iPhone 5 and iPad are uniquely engineered to integrate all of your mobile devices, with free downloads of thousands of apps for your business.

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Better yet, we are an Authorized Verizon dealer.

Whether it is one or thirty iPhones or iPads, we’re there to handle your for new devices coupled with worry-free warranties and priority service. Older devices are welcome with our trade-in and trade-up service. The Learning Center at TD Curran is always available for one-on-one training. Take advantage of www.tdcurran.com/iphone-in-business

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2013 SON BUSINESS PER OF THE YEAR

March 20, 2013 Awards Dinner

Best Western Lakeway Inn & Conference Center, Bellingham

We invite you and your organization to play a key role in this event as we pay tribute to the job creation, risk taking, entrepreneurship and philanthropy that has enhanced the economic and civic vitality of our communities. As a table sponsor, you will enjoy the following benefits:

TABLE SPONSOR BENEFITS • A reserved table of eight with your company’s name and logo displayed on it • Special recognition as a table sponsor at the banquet • Preferred seating

DON’T MISS OUT More than 400 business leaders attend these high-profile events. Order as many tables as you like, but do it fast because they will sell out.

For more information on Tickets or Table Sponsorships call:

360.746.0418

M A G A Z I N E

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