January 2012 - Alaska Business Monthly by Alaska Business

Alaskaâ&#x20AC;&#x2122;s 2012 Economic Forecast | Apache Corp. Q&A

January 2012

Junior Achievement impacts 4 million U.S. students in more than 173,000 classrooms Begins on Page 12

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JANUARY 2012 TA B L E O F C O N T E N T S

ABOUT THE COVER

D E PA R T M E N T S

Alaska Business Monthly salutes Junior Achievement this month and the important work the organization does. Special Section begins on page 12. Cover photo from Junior Achievement USA

From the Editor . . . . . . . . . . . . . . 7 Inside Alaska Business . . . . . . . . 8 Market Squares . . . . . . . . . . . . . 73 Right Moves . . . . . . . . . . . . . . . . 74 Alaska This Month . . . . . . . . . . . 82 Events Calendar . . . . . . . . . . . . 85 Alaska Trends . . . . . . . . . . . . . . . 87 Ad Index . . . . . . . . . . . . . . . . . . . 90

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

View from the Top 11 | David Board Stage 2 Studios LLC Compiled by Peg Stomierowski

ARTICLES

Public Relations 34 | PRSA Alaska Plays Vital Role at 35 Provides learning and networking opportunities By Susan Sommer

Economy 56 | Alaska’s 2012 Economic Forecast National insecurity, belt-tightening makes leaders cautious By Gail West

Real Estate 36 | Housing Market Confidence National economic crisis affecting Alaskans By Tracy Barbour

Transportation 66 | Arctic Deep Water Port Long-term asset envisioned By Paula Lowther

Construction 40 | Yukon Equipment, Still Making the Grade Oldest Alaskan-owned heavy equipment dealer By Gail West

22 Regional Focus 22 | Municipality of Anchorage By Tracy Barbour HR Matters 33 | Are You a Boomer? Understanding Gen X and Gen Y is a challenge By Rick Birdsall Legal Speak 45 | Know Alaska’s Insurance Laws Protect your company by being informed By Jeff Waller

Environmental Services 42 | Getting Rid of Hazardous Waste 70 Companies find niche keeping Alaska clean Transportation T i By Vanessa Orr 70 | Commuting Alaska Valley riders see benefit of bus service Oil & Gas By Tracy Kalytiak 46 | Apache Corp. Moves into Alaska in a Big Way Health & Medicine Q & A with General Manager John L. 76 | Alaska’s Primary Care Industry Hendrix Addressing health needs throughout the By Vanessa Orr state By Jody Ellis-Knapp Oil & Gas 50 | Exploration Spurred by Jack-Up Financial Services Rig 78 | Mobilizing Online Banking Escopeta Oil begins drilling in Cook Inlet Delivering the latest technology By Vanessa Orr By Tracy Kalytiak Oil & Gas 54 | Cracking the Code 2012 Q&Q with Cindy Roberts, Author By Debbie Cutler

Small Business 86 | Exit Planning Insights Crucial for you and your business By Sara LaForest and Tony Kubica

www.akbizmag.com • Alaska Business Monthly • January 2012

JANUARY 2012 TA B L E O F C O N T E N T S ARTICLES

SPECIAL SECTION

Junior Achievement Alaska Business Hall of Fame 12 | Preparing the next Generation for the Work Force Educating youth, giving them a future By Flora Teo and Rick Whitbeck 14 | Distinguished Donors 15 | Past Laureates

Junior Achievement Alaska Business Hall of Fame Laureates 16 | Will Anderson President and CEO, Koniag Inc. By Vanessa Orr SIDEBAR 17 | JA Alaska Native Initiative Helps Prepare Alaska Native Youth for Lifelong Success By Vanessa Orr

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ January 2012

FROM THE EDITOR

Reforming the Film Program

Volume 28, Number 1 Published by Alaska Business Publishing Co. Anchorage, Alaska Vern C. McCorkle, Publisher 1991~2009

EDITORIAL STAFF Managing Editor Art Director Art Production Photo Consultant Contributing Photographers

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

BUSINESS STAFF President Vice President Sales & Mktg. Account Mgr. Account Mgr. Traffic Coordinator Accountant

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

501 W. Northern Lights Boulevard, Suite 100 Anchorage, Alaska 99503 (907) 276-4373 Outside Anchorage: 1-800-770-4373 Fax: (907) 279-2900 www.akbizmag.com Editorial e-mail: editor@akbizmag.com Advertising e-mail: materials@akbizmag.com Pacific Northwest Advertising Sales 1-800-770-4373 ALASKA BUSINESS PUBLISHING CO., INC.

ALASKA BUSINESS MONTHLY (ISSN 8756-4092) is published monthly by Alaska Business Publishing Co., Inc., P.O. Box 241288, Anchorage, Alaska 99524; Telephone: (907) 276-4373; Fax: (907) 279-2900, ©2012, Alaska Business Publishing Co. All rights reserved. Subscription Rates: $39.95 a year. Single issues $3.95 each; $4.95 for October. Back issues $5 each. Send subscription orders and address changes to the Circulation Department, Alaska Business Monthly, P.O. Box 241288, Anchorage, AK 99524. Please supply both old and new addresses and allow six weeks for change. Manuscripts: Send query letter or manuscripts to the Editor. Alaska Business Monthly is not responsible for unsolicited materials. Photocopies: Where necessary, permission is granted by the copyright owner for libraries and others registered with Copyright Clearance Center to photocopy any article herein for $1.35 per copy. Send payments to CCC, 27 Congress Street, Salem, MA 01970. Copying done for other than personal or internal reference use without the expressed permission of Alaska Business Monthly is prohibited. Address requests for specific permission to the Editor, Alaska Business Monthly. Online: Alaska Business Monthly is available online from Data Courier and online from Thomson Gale. Microfilm: Alaska Business Monthly is available on microfilm from University Microfilms International, 300 North Zeeb Rd., Ann Arbor, MI 48106.

Changes needed for Alaska business B23 is expected to become active once the State Legislature convenes this month and may actually be one bill that passes before this legislative session is over. There is a sense of urgency by some to hurry up and pass it to prevent the Alaska film production incentive program from expiring next year. While many believe changes are needed to the program and this bill has several, some of these changes don’t help Alaska business. SB23 includes a 10-year, $200 million expansion of film tax credits; program audits every four years (2013, 2017, 2021); three years to spend at least $100,000 instead of two years; six years to use the credit instead of three years; six years to bring a lawsuit instead of one year—to name a few of the changes. There are revisions to qualifying criteria language, i.e., “…the film office may consider [(1)] the effect of the production on (1) both the immediate and long-term prospects for the film industry in Alaska; (2) both the immediate and long-term prospects for the employment of Alaska residents; (3) both the immediate and long-term prospects for the economy of the state; and (4) the public perception of state policy on the utilization and development of the natural resources of the state.” Another change is the addition of a secrecy clause: “Sec. 12.AS44.33.234 is amended by adding a new subsection to read: (c) Information submitted in an application under (a) of this section is confidential and is not subject to inspection or copying under AS 40.25.110 – 40.25.125.” This speaks to the requests for more transparency to the program. There’s language requiring the CPA verifying qualifying expenditures to be licensed in Alaska, and that qualifying expenditures must be made by a production company licensed to do business in Alaska, and the expenditures must be made for work done in Alaska (but not necessarily by Alaskans). There’s a new requirement for end credits to include the film office logo and the words, “Filmed in Alaska with the Support of the State of Alaska and the Film Office, Alaska Department

of Commerce, Community, and Economic Development” or not. The other option is “on each DVD or other media produced for distribution, a short Alaska promo video or advertisement approved by the film office.” There are changes to the amount of the credit; productions in rural areas are increased from 2 percent to 6 percent, base rates for “nonfiction productions produced for television” are reduced from 30 percent to 20 percent. “Rural area” is redefined. A community has to be in Alaska (apparently that wasn’t stipulated before), and if the population is 1,500 or less it’s considered a rural area, or if a community has a population up to 10,000 (an increase from 5,500) if there is no road or rail connection to Anchorage or Fairbanks. There’s the declining rule; whereas qualified expenditures cannot exceed 15 percent of the total production budget between 2013 and 2016, 12 percent between 2016 and 2018, 10 percent after 2018. Is this the ACES concept of the longer they stay, the more they spend, the less they’re rewarded? It doesn’t pencil out as a good business model for more barrels or for more movies. Granted, the Alaska film production incentive program needs changes, but are these really the changes it needs? The Alaska Film Alliance is calling for “reform of the credit/broker incentive system, more support for Alaska-based businesses wishing to work with out of state filmmakers, better incentives for hiring Alaskans, the creation of a work force development program, and using a small portion of the tax credits to build film and media infrastructure in Alaska.” This growing group of Alaska businesses is asking for the creation of an Alaska Film Board to “oversee the state’s involvement in the film industry” and wants “extensive public hearings on this program before moving the bill out of committee” and who can blame them? Ten years and $200 million is a lot of time and money, let’s get it right, let’s get it for Alaska business. – Susan Harrington, Managing Editor

www.akbizmag.com • Alaska Business Monthly • January 2012

INSIDE ALASKA BUSINESS By Nancy Pounds

BLM Receives Safety Award

he Bureau of Land Management Alaska State Office received the Director’s Safety Award. The honor recognizes BLM Alaska officials’ efforts to maintain a safe workplace. All Alaska field offices conducted oneto two-week field safety boot camps throughout the fiscal year required for employees to perform their seasonal work. The State Safety Office also provided time and funding for training, certifying and equipping a new Alaska State Office Collateral Duty Safety Officer to perform wilderness first aid, cardiopulmonary resuscitation and automated external defibrillator training in-house.

SEARHC Garners Grant

he SouthEast Alaska Regional Health Consortium received a five-year, nearly $500,000 grant from the U.S. Department of Health and Human Services. The grant is part of the Community Transformation Grants program, which supports public health efforts to reduce chronic diseases and promote healthier lifestyles. About $103 million in grants were awarded to 61 State and community health groups, including two Alaska agencies, SEARHC and the YukonKuskokwim Health Corp. SEARHC’s grant will support a program promoting healthy, tobaccofree lifestyle choices. Grant funds will be used to hire or contract a full-time grant manager, health educator, evaluator and half-time data manager. The funds will also support a regional health conference about disease prevention.

Anchorage Chosen as Top City for Kids

nchorage was chosen one of America’s Promise Alliance’s 100 Best Communities for Young People. The award marks the fifth time the city has been chosen for the honor. The national program honors communities’ efforts to reduce high school dropout rates and provide services for young people. Anchorage was honored for its programs supporting young Alaskans, including Anchorage’s Promise and America’s Global Youth Service Program. City officials also lauded the Summer Food Service Program, which provided meals for more than 75,000 children statewide. Anchorage received a $2,500 grant as part of the honor. For 2011, more than 300 communities from all 50 states, the District of Columbia and Puerto Rico were nominated for the award.

GCI Caps Rural Internet Project

eneral Communication Inc. was due to begin offering new broadband Internet to some rural households early this year via TERRA-Southwest, a project extending terrestrial broadband service to Bristol Bay and the YukonKuskokwim Delta. Construction of the project was complete in October. In November, existing customers – including schools and health corporations – were moved to the network. United Utilities Inc., a GCI subsidiary, led the TERRA-SW project. “For the first time in history, we will be providing terrestrial broadband to 65 communities in Southwest Alaska, improving access to education, health

care and public safety and creating new economic opportunities for residents and businesses,” said Ron Duncan, GCI president and chief executive. The project was funded by an $88 million loan/grant combination from the U.S. Department of Agriculture’s Rural Utilities Service Broadband Initiatives Program, which was established by the American Recovery and Reinvestment Act. The project included installing 400 miles of fiber optic cable and 13 microwave towers, including four towers installed on remote mountaintops. Officials estimate TERRA-SW will make broadband Internet available for more than 9,000 households and nearly 750 public, nonprofit and private community institutions, including regional health care providers, school districts and Alaska Native organizations.

Crowley Nets State Contract

he Alaska Department of Environmental Conservation awarded a contract to Crowley Maritime Corp. for ongoing administration of Alaska’s Ocean Ranger Program. The contract requires Crowley to recruit, hire, train and organize the logistics of placing Ocean Rangers on board cruise ships each season to act as independent observers and to assure compliance with federal and State environmental health, sanitation and safety requirements. Ocean Rangers are required as part of a law adopted by Alaskans in a 2006 ballot measure. Crowley and ADEC have worked together since 2008 to build the program. Crowley employees implement

www.akbizmag.com • Alaska Business Monthly • January 2012

INSIDE ALASKA BUSINESS the program and develop the Ocean Ranger training, guidebook, manuals and reports. Crowley recruits, deploys and schedules the rangers, supplying them with all necessary communication tools and outfitting needs for onboard reporting, as well as providing travel, information technology and payroll support.

Architect Firm Collects Award

ezek Durst Seiser Architects received the 2011 Society of American Military Engineers Seattle Chapter Design in Excellence Award. The Anchorage firm received the Silver Award on behalf of the U.S. Coast Guard for the Cordova Housing Replacement Project, completed in 2010. The 24unit project required overcoming design challenges, including creating an energy-efficient, cost-effective and environmentally sensitive home to accommodate needs of U.S. Coast Guard families. Bezek Durst Seiser architects designed a facility suited to the lifestyle and environment of Cordova.

Artist Launches Web Site

obert Thompson, an Anchoragebased artist, launched his online gallery at www.theartofAlaska.net. Thompson specializes in aviation art and has completed commissioned work for private collections including five originals on permanent display at F Street Station in downtown Anchorage. The site also features the artwork of John Hume, an artist who specializes in military, aviation, maritime and historical subjects. His clients include aviation museums, private, commercial

and military pilots, Air Force units and aerospace corporations across the United States and the Pacific Rim.

AIDEA Invests in Rig for Cook Inlet

he Alaska Industrial Development and Export Authority completed a deal with Buccaneer Energy Ltd. and Ezion Holdings Ltd. to buy, upgrade and mobilize a jack-up drilling rig for oil and gas exploration in Cook Inlet. AIDEA plans to invest nearly $24 million in the rig. The deal includes a joint ownership agreement. The rig was renamed Endeavor – Spirit of Independence and was dispatched to Keppel FELS Shipyard in Singapore for renovations required for its Alaska work. The rig is due to arrive in Alaska in April and begin drilling in Cook Inlet in May. “The conclusion of this deal is another very positive step forward for Cook Inlet oil and gas resource development,” said Hugh Short, AIDEA board chairman. AIDEA officials believe the investment in the rig will secure long-term energy supplies for Alaskans and provide additional jobs in the economy.

Yukon Equipment Earns Dealer Honors

ukon Equipment Inc. of Anchorage received three awards at the 2011 Oshkosh Dealer Meeting in Appleton, Wis. The Alaska construction equipment dealer garnered three of four awards presented for work in

North America: dealer of the year, top sales dealer and top parts sales dealer. Employees Roy Rank and Roger Morris accepted the awards for the company. Yukon Equipment also provides equipment rental, parts and services.

SBA Honors Alaska Lenders

ells Fargo Bank was chosen Alaska Small Business Administration lender of the year for 2011. The U.S. SBA Alaska District Office presented the award in November at the Alaska Lenders’ Symposium in Anchorage. This award recognizes the SBA lender that achieves the overall highest number of SBA loan approvals to businesses located in Alaska during the federal fiscal year. The bank tallied 27 loan approvals during the fiscal year that ended Sept. 30, 2010, for a total of almost $8.4 million. Alaska Growth Capital BIDCO Inc. was selected as Alaska SBA community lender of the year. The award honors Alaska Growth Capital’s commitment to providing financial assistance to businesses located in Alaska during the federal fiscal year. Alaska Growth Capital, a subsidiary of Arctic Slope Regional Corp., partners with Wells Fargo, Northrim Bank, First National Bank of Alaska and others to provide financing. Alaska Growth Capital tallied 24 loan approvals totaling $17.8 million during the 2010 fiscal year. First National Bank Alaska was chosen Alaska SBA 504 lender of the year. The award honors banks with the highest number of 504-program approved loans. The SBA’s 504 program

www.akbizmag.com • Alaska Business Monthly • January 2012

INSIDE ALASKA BUSINESS provides long-term, fixed-rate; subordinate mortgage financing for acquiring or renovating capital assets including land, buildings and equipment. First National Bank logged nine SBA 504 loans approved during the period for a total of $11.8 million.

Forum and get to know their elected officials personally. Every member who attends the Fly-In can make a difference for Alaskaâ&#x20AC;&#x2122;s business community. The 2012 legislative priorities and positions have been published and are online at www.alaskachamber.com.

Teachers Study Bears at Pilot Program

Corvus Gold Regains 100% Control of LMS and West Pogo Projects

he Alaska Wildlife Conservation Center in Portage coordinated a bear-education pilot program in November for high school teachers. Bear Trust International of Montana developed the Teach the Teachers program, which also featured efforts by the Anchorage School District, University of Alaska and the Alaska Department of Fish & Game. The weekend event included sessions touring the centerâ&#x20AC;&#x2122;s resident bears facilities and small group sessions discussing bear-human interactions and bear biology. Center staffers and State Fish and Game officials led the presentations.

Alaska Chamber Fly-In This Month

he Legislative Fly-In will take place January 25 and 26, in Juneau. The annual Alaska Chamber Fly-In is designed to give members the chance to influence public policy effectively by meeting directly with state legislators and the administration. The Fly-In is a chance for State Chamber members to seek support for the priority positions established at the Legislative Policy

Corvus Gold Inc. announced that its LMS and West Pogo joint venture partner First Star Resources Inc. has not completed their full work commitment and pursuant to the earn-in agreement made Aug. 16, 2010, full and unencumbered ownership of the properties has been returned to Corvus Gold. During First Starâ&#x20AC;&#x2122;s operating periods on the properties, approximately $3.5 million of exploration and development work was completed, which defined an important high-grade feeder structure in the LMS deposit and a high-grade gold vein target on the West Pogo project. Included in the completed work are pending assay results from the 2011 summer exploration drill program at the LMS project.

Time for 2012 PFD & Pick. Click. Give. Itâ&#x20AC;&#x2122;s that time of year again to sign up for the Alaska Permanent Fund Dividend and selected an Alaska organizations participating in the 2012 Pick. Click. Give. charitable contributions program. Donors can select the

organizations or causes they want to support during the permanent fund dividend cycle. More than 400 nonprofit organizations, community foundations and campuses of the University of Alaska were approved for the 2012 program. The nonprofits are dedicated to a wide variety of causes. People can search for organizations they want to support by name, location or type of program. Every Alaskan who files online for the Permanent Fund Dividend has the option to share part or all of their dividend with causes they care about, and 2012 marks the fourth year of the program. Pledge data at the close of the filing period on March 31, 2011, showed 18,726 Alaskans made 27,829 charitable gifts to Alaska nonprofits during the 90-day campaign. The total pledged amount on that date was $1,57 million.

Anchorage Remains on List of Improving Housing Markets

he number of improving housing markets continued to expand for a fourth consecutive month in December, rising from 30 to 41 on the latest National Association of Home Builders/First American Improving Markets Index (IMI). Anchorage is among the 41 on the list. The December list featured 20 new additions, including several major markets. Meanwhile, nine smaller markets dropped off the list, primarily due to softer house prices. Fairbanks is among the nine markets that dropped off the IMI in December due to softening house prices. â?&#x2018;

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ January 2012

VIEW

FROM THE

TOP

Compiled By Peg Stomierowski

David Board

Stage 2 Studios LLC

tage 2 Studios LLC, with offices in Palmer and Denver, is a modest media production studio with an ambitious new video game project. Partner David Board is the creative talent behind the game Lifeless Planet, in which an astronaut discovers an abandoned Russian lab on a distant planet. Board, with a degree in business and graphic design, specializes in interactive flash animation and 3D modeling and animation. He also develops websites with full content management systems, enabling clients to easily edit their websites on their own. Stage 2 helps nonprofits and educators ignite growth. David has served on several community boards including the Big Brothers Big Sisters Mat-Su Leadership Council. KICKSTART: A week after we launched a funding campaign on kickstarter.com in September, major gaming websites promoted Lifeless Planet’s story on their home pages, the project met its goal overnight, and we were fielding major movie and game publisher inquiries. We more than doubled the target goal. TEASING EXPOSURE: The big challenge was publicity. There are hundreds of thousands of games out there, but we were able to capture attention thanks in large part to a dynamic teaser trailer. The response was astounding, with hundreds of emails flooding my inbox the first day! GAMING DRIVERS: Video gaming has grown into a highly competitive $80-billion-a-year industry, eclipsing Hollywood. Mobile and social gaming are driving this trend. (Who hasn’t heard of Angry Birds by now?) However, in this competitive space, it’s not enough to have a good game – you have to cut through the clutter. Stage 2 was able to leverage its experience in marketing and publicity to create almost immediate high-profile exposure. INDIE APPEAL: Crowdfunding websites like Kickstarter make it possible to quickly raise monetary and mind-share investment. And because indie games generally cost far less than the $60 average price tag for big-budget games, they are more accessible to cash-strapped gamers. Overall, we find entertainment media tend to do well despite slow economies. GLOBAL REACH: Adventure games are hugely popular in Europe. I’d say at least half of the Kickstarter contributions came from the UK and Germany. We’ve enjoyed being the little underdog agency based in Palmer, Alaska, doing business with clients across the country. Now we’re humbled to see our customer base expanding internationally.

David Board

INNOVATING: Hollywood and big-game studios cough up the same types of action movies and games every year because it’s safe. But folks can be quite generous when you offer them something truly unique. More than 600 fans donated from $1 to $1,500 to Lifeless Planet. We took a risk on something different, and so far it’s paid off beyond our expectations. ❑

www.akbizmag.com • Alaska Business Monthly • January 2012

special section Junior Achievement Alaska Business Hall of Fame

Preparing the Next Generation for the Work Force Educating youth, giving them a future BY FLORA TEO, JA PRESIDENT RICK WHITBECK, JA CHAIR

Fl Flora T Teo, P President id t

T HE ISSUE Every day, 10 students in Alaska drop out of high school. Last year, 3,900 high school students in Alaska failed to graduate high school. What does this mean for Alaskans? The lost lifetime earnings in Alaska for the class of 2010 dropouts alone total more than $1 billion. Overall, young people who drop out are twice as likely as graduates to be unemployed; three times as likely to live in poverty, eight times as likely to wind up in prison; and twice as likely to become the parent of a child who drops out of high school. How does that affect the economy? Over the course of a student’s lifetime, a high school dropout earns, on average, about $260,000 less than a high school graduate and contributes about $60,000 less in taxes. Conservative estimates show that the nation’s economy would have benefited over time from nearly $335 billion in additional income if the students who dropped out of the Class of 2009 had graduated. The health of a nation is largely influenced by the makeup of the current and future work force. The characteristics of the work force impact productivity, the economy, and global competitiveness. In 2001, approximately 139 mil-

Rickk Whitbeck, Ri Whitb k Ch Chairi

lion individuals were in the U.S. work force. However, the unemployment rate in April 2011 was 9 percent. As the economy recovers, former job positions are being replaced by those that require more technical skills or education. Individuals who were forced to leave the job market are finding it very difficult to reenter the work force because they no longer possess the knowledge and skills employers require. Furthermore, new entrants in to the work force also find themselves unprepared for the demand of entry level jobs that require higher level skills. As a result, employers are struggling to fill open positions. To remain competitive as a nation, the gap between the knowledge and skills needed by employers and the number of available workers who meet these qualifications must be addressed. According to researchers, the skills gap has two primary underlying causes – changing jobs and low levels of education attainment. Jobs today require workers who possess more knowledge and proficiency in 21st century skills, such as teamwork, problem-solving, and technology skills. Furthermore, the level of educational attainment is not keeping up with the number of skilled workers needed. The

www.akbizmag.com • Alaska Business Monthly • January 2012

need for a high school diploma as a minimum is critical as jobs become more complex in a global economy and traditional jobs requiring less education are no longer in demand. According to McKinsey Global Institute, there will be 5.9 million more high school dropouts in 2020 in U.S. than jobs available for workers with that level of education.

JUNIOR ACHIEVEMENT: A REAL-WORLD SOLUTION PROVIDER Through participation in JA programs, students see the relevance of what they are learning in the classroom and its application to the real world, acquire or enhance the skills they need to be successful in the work force or postsecondary institutions, and recognize the value of an education. Such preparation is no longer the ticket to success for young people – it is simply the price of admission. For students to acquire the knowledge and skills to be competitive in the work force, they must be taught how to apply their knowledge to real-world issues or problems. Junior Achievement programs help bridge the gap between what students are learning in the classroom and the application of this knowledge to real world by using curriculum focused on application and the principles of experiential learning. JA reinforces the value of an education and importance of educational attainment. This year, Junior Achievement will reach 9,000 K-12 students in 43 Alaska communities. Contributions raised from local corporations make the program available to teachers and students at no cost. The organization is locally

governed by a board of directors who oversee the mission and vision of the organization. More than 300 Alaskans volunteered in the classroom to help Junior Achievement empower young people to own their economic success. With your help, Junior Achievement can continue to reach even more students this year. This year’s Laureates embody the characteristics of leaders that the next generation can look up to, and inspire them to be successful and achieve their goals. Please join JA and more than 400 business leaders as we congratulate these individuals and celebrate their induction into the Alaska Business Hall of Fame on Thursday, Jan. 26, 2012. We hope to see you there!

ALASKA STATISTICS • Alaska could save as much as $57.2 million in health care costs over the lifetimes of each class of dropouts had they earned their diplomas. • If Alaska’s high schools graduated all of their students ready for college, the state could save as much as $672,000 a year in community college remediation costs and lost earnings. • Alaska’s economy could see a combination of crimerelated savings and additional revenue of about $18.6 million each year if the male high school graduate rate increased by just 5 percent. ❑ President’s Note: Statistics and information used was researched for accuracy. Sources provided upon request.

www.akbizmag.com • Alaska Business Monthly • January 2012

special section Junior Achievement Alaska Business Hall of Fame

BUILDING UP ALASKA’S YOUTH FOR THE FUTURE Distinguished Donors PLATINUM PLUS SPONSORS The Achievement Foundation Alaska Business Monthly Alaska Communications Allstate Foundation AT&T CIRI ConocoPhillips Alaska Inc. Eni Petroleum Company Inc. ExxonMobil Production Company First National Bank Alaska GCI NANA Development Corporation Northern Lights Bingo UpperOne Studios Wal-Mart Wells Fargo PLATINUM SPONSORS Alaska Airlines Alaska Commercial Company Alaska National Insurance Company Alyeska Pipeline Service Company BP Crowley Alaska Inc. Era Aviation Flint Hills Resources Fred Meyer Koch Companies Public Sector LLC Dave Marquez McKinley Capital Management Tom Corkran GOLD SPONSORS 3M Foundation Inc. Alaska Commercial Fishing and Agriculture Bank Calista Corporation ENSTAR Natural Gas Company Harbor Enterprises Inc. Katmailand Inc. KeyBank KPMG LLP Lynden

NANA Management Services Udelhoven Oilfield System Services Inc. Watterson Construction Co. SILVER SPONSORS Alaska Dispatch Publishing LLC Alaska Growth Capital Alaska Railroad Corporation Alaska USA Federal Credit Union Alaska USA Trust Company Anchorage Sand & Gravel Company Inc. Arctic Slope Regional Corporation Associated General Contractors of Alaska Benefit Brokers Calais Company Inc. CH2M Hill Inc. Delta Western Inc. Denali Foods Inc. Donlin Creek Fosler Law Group Gonzalez Marketing LLC Holland America Line Inc. Jim Jansen Katmailand Kodiak Lions Club Koniag Inc. Leonard & Martens Investments Linford of Alaska Mikunda Cottrell Morris Communications Municipality of Anchorage MVFCU North Star Foundation Northrim Bank Odom Corporation The Pebble Partnership Petro Star Inc. Port of Anchorage Shell Oil SKW/Eskimos Southcentral Foundation Tesoro Totem Ocean Trailer Express Inc.

www.akbizmag.com • Alaska Business Monthly • January 2012

special section Junior Achievement Alaska Business Hall of Fame

Past Laureates Don Abel, Jr., 1996

Conrad Frank, 1999

Milt Odom, 1992

Jacob Adams, 2002

Clyde Geraghty, 1999

Pam Oldow, 1990

Bill Allen, 1995

Barnard J. Gottstein, 1989

Tennys Owens, 2005

Bob & Betty Allen, 2001

Robert & Barbara Halcro, 2008

E. Al Parrish, 2006

Eleanor Andrews, 2001

Ernie Hall, 2002

Raymond Petersen, 1988

Robert Atwood, 1988

Lloyd Hames, 1998

Quinn Brothers, 2011

The Bailey Family, 2010

Carl Heflinger, 1999

Elmer Rasmuson, 1987

Bernard M. Behrends, 1987

Michael Heney, 1995

Edward Rasmuson, 2000

Earl H. Beistline, 1998

Willie Hensley, 2009

Frank M. Reed, Sr., 2000

Jim Binkley, 1989

Walter Hickel, Sr., 1988

Robert Reeve, 1987

Bill Bishop, 1994

August Hiebert, 1989

David Rose, 2003

Jim Bowles, 2011

Roy Huhndorf, 1992

Jim Sampson, 2008

Carl Brady, 1990

Robert Jacobsen, 2006

Carl F. Brady Jr., 2004

Jim Jansen, 2009

Alvin O. Bramstedt, Sr., 1991

John Kelsey, 1991

Charles H. Brewster, 1999

Bruce Kennedy, 2007

Brice Family, 2011

Herbert Lang, 1994

W. Brindle, 1993

Marc Langland, 2001

Margie Brown, 2009

Austin Lathrop, 1988

Edith Bullock, 1987

Betsy Lawer, 2007

Jim Campbell, 2006

Pete Leathard, 2003

Larry Carr, 1988

Dale & Carol Ann Lindsey, 1997

Richard Cattanach, 2008

Suzanne (Sue) Linford, 2002

Frank Chapados, 1991

Loren H. Lounsbury, 2002

John B. “Jack” Coghill, 2006

Zachary Loussac, 1989

Jack J. Conway, 1995

Richard Lowell, 2005

William A. Corbus, 1999

Harvey Marlin, 1999

Ron Cosgrave, 2007

Carl Marrs, 2005

D. H. Cuddy, 1993

Vern McCorkle, 2010

Don Donatello, 1995

Harry McDonald, 2011

Ron Duncan, 2007

James A. Messer, 2000

Oscar & Peggy Dyson, 1992

The Miller Family, 2005

Ken Eichner, 1990

Robert Mitchell, 1999

Chuck West, 1991

Andrew Eker, 2009

William G. Moran Sr. &

Noel Wien, 1989

Carl Erickson, 1999

William G. Moran Jr., 2004

Helvi Sandvik, 2006 Grace Berg Schaible, 2004 Leo & Agnes Schlotfeldt, 1993 Orin D Seybert, 2006 Gov. Bill Sheffield, 2003 Merle (Mudhole) Smith, 1993 Charles Snedden, 1989 Sen. Ted Stevens, 2010 William G. Stroecker, 1997 Bill & Lilian Stolt, 1998 A. C. Swalling, 1987 Cliff Taro, 1992 Walter & Vivian Teeland, 1997 Morris Thompson, 2001 William J. Tobin, 2004 Joseph Usibelli, Sr., 1988 Lowell Wakefield, 1990 Leo & Beverly Walsh, 1996 Pat Walsh, 2008

Richard A. Wien, 2003

Arnold G. Espe, 2001

Les Nerland, 1987

Lew Williams, Jr., 1994

Al Fleetwood, 2005

Matthew Nicolai, 2010

William Ransom Wood, 1996

www.akbizmag.com • Alaska Business Monthly • January 2012

special section Junior Achievement Alaska Business Hall of Fame

Junior Achievement Hall of Fame Laureate Will Anderson President and CEO Koniag Inc. BY VANESSA ORR

hen Will Anderson was in first grade, his family moved from Kodiak where he was born, to Whidbey Island in Washington state. But his roots remained deep in Alaska, as did his commitment to his Native village and regional corporations. “Even after we moved, I maintained a close relationship with people in Kodiak, spending every single summer with my grandparents,” explained Anderson, president and chief executive officer of Koniag Inc. “I’ve always considered it my home.” After graduating from Oak Harbor High School in Whidbey, Anderson went on to earn a bachelor’s degree in general studies from Seattle Pacific University, and a second bachelor’s degree in accounting and a master’s

degree at Western Washington University in Bellingham. He paid his way through college working in the cannery at Wards Cove Packing Co. before being offered an accounting position with the company.

GIVING BACK “While working for Wards Cove, I was inspired to serve on the board of Koniag as a way to repay the fact that they’d given me a scholarship for college,” Anderson said. “The first time I ran for the board, I didn’t win; the second time I ran, I was elected, and I served for four years.” After graduating with his master’s degree, Anderson began working for the Boeing Co. in Seattle before taking a job as the vice president of finance

with a Koniag subsidiary, ICRC (Integrated Concepts and Research Corp.) outside Washington, D.C. “I hated Washington – it was too crowded, too hot, too humid, too busy,” Anderson said. “When I got a job offer to serve as a finance manager for my village corporation, I jumped at the opportunity. I drove cross-country with my wife and three children.” After working at Afognak Corp. for six months, Anderson was recruited to serve as the vice president of finance at Koniag Inc. “This was a truly tough decision – I loved working for my village corporation and being in my hometown,” Anderson said. He and his family decided to move to Anchorage, and Anderson served as Koniag’s chief financial officer for six years be-

www.akbizmag.com • Alaska Business Monthly • January 2012

fore being promoted to its president and CEO five years ago. Since Anderson took the position, the corporation has thrived. In 2011, the company’s diversified portfolio of assets grew to more than $160 million, an increase of more than $17 million from the previous year. After-tax earnings were $8.7 million, a 36 percent increase from 2010, and shareholders’ equity increased 5 percent to more than $79 million. Koniag’s family of operating companies generated $141 million in revenues, an increase of 4 percent over 2010. “I think the biggest sign of growth can be seen in the dividend; it’s gone from $1.18 per share when I took over to $10.65 per share this year,” Anderson said. “We’ve had nice steady growth, and revenues have grown accordingly.”

STRONG TEAM, STRONG BOARD Anderson credits the corporation’s success to a number of factors. “We have a very strong team; it’s not just my involvement that makes a difference,” he said. “We have a really strong board, a good management team and a good working environment. People are motivated and happy in their roles. Together, this allows us to achieve great results. “My business philosophy is based on Koniag’s values and is incorporated into every decision that I make: Always do what’s right,” Anderson continued. “There will always be a lot of expectations of you and people will demand success, but at the end of the day, you have to live with yourself. Whatever the circumstances, you have to always do what’s right.” As for being named to the Junior Achievement Hall of Fame, Anderson is characteristically modest. “My first reaction was that there are a lot of other people out there better suited or qualified for this honor,” he said. “But I do think that it is good for young Native people to see Native leaders being honored. “It is important for students – Native students in particular – to have people to look at as an example of the different things they can do with their lives,” he added. “For them to see Native leaders honored is a good thing ❑ for our community.”

JA Alaska Native Initiative Helps Prepare Alaska Native Youth for Lifelong Success A

s the president and CEO of Koniag Inc., Will Anderson understands the importance of reaching out to young people. “Koniag is committed to funding the education of shareholders and our intent is to educate our shareholder base to become leaders of the corporation,” he explained. In just over a decade, the Koniag Education Foundation (KEF), supported by Koniag Inc., has awarded more than $1.8 million in scholarships to shareholders pursuing college degrees, short-term training or career enhancement opportunities. The corporation also supports outside agencies that put an emphasis on education, including Junior Achievement. “I think the job that Junior Achievement does – educating students about the business world in a tangible way – is fantastic,” Anderson explained. “It is important to provide students with information about the various career paths and different opportunities that exist in the world; everyone has individual aptitudes, strengths and interests, and students need to know about the options that are available to them.” To this end, Junior Achievement of Alaska is poised to launch the JA Alaska Native Initiative, a powerful project that provides a vehicle for motivating and preparing Alaska Native youth for lifelong success. The JA Alaska Native Initiative identifies and addresses specific challenges confronting Alaska Native youth and their families, including economic challenges and cultural barriers. “Junior Achievement of Alaska recognizes the complexity of the challenges confronting Alaska Native youth and believes that education, early intervention and a united community effort are prerequisites for providing a vision for Alaska Native children that will allow them to grow into productive, successful adults,” said Flora L. Teo, president, Junior Achievement of Alaska Inc. During the 2010-2011 school year, Junior Achievement partnered with the Kodiak Community Committee, chaired by Luke Fulp, finance director for the Kodiak Island Borough School District, to present programs in Kodiak and seven surrounding villages. “Junior Achievement volunteers flew to these remote villages to present programs emphasizing the importance of staying in school, how to be financially successful and how to become an entrepreneur,” Teo said. “They also helped students to develop many work force readiness skills.” On average, student test scores improved more than 40 percent, and more than 200 students participated in the weeklong program. “Through this partnership, Junior Achievement hopes to help improve the high school dropout rate, encourage students to stay in school, and help them develop the skills they need become work force ready,” Teo said. ■

www.akbizmag.com • Alaska Business Monthly • January 2012

special section Junior Achievement Alaska Business Hall of Fame

Junior Achievement Hall of Fame Laureate Robert Dindinger Chairman and CEO Alaska Travel Adventures

Photo courtesy of Robert Dindinger

BY VANESSA ORR

Center, Robert Dindinger with his new bride, mother-in-law and all of their children in January 2009.

neurship programs with the Chamber of Commerce,” Dindinger said. “I’ve been politically active all of my life and one of my ongoing messages is the need to create jobs and opportunities in the private sector for our children.” Dindinger believes that this is especially important in Alaska where the state is, in large part, a government community. “Between military, State, federal and municipal jobs, a disproportionate part of Alaska’s population

www.akbizmag.com • Alaska Business Monthly • January 2012

works in the government,” Dindinger said. “Small businesses are often overlooked for their contributions to the economy. Alaskans don’t pay for the cost of government here; they don’t pay State sales tax or State income tax. Those costs are borne by businesses exclusively.” To this end, Dindinger has spent years speaking out about entrepreneurship and the struggles and successes that come from running a business. “I

believe in teaching young people how challenging and rewarding it is to run a small business because if they don’t get that message, they may not see the private sector as an alternative for going into public service,” he explained. “Young, creative people can really thrive in the private sector.” According to Flora L. Teo, president, Junior Achievement of Alaska Inc., Dindinger’s willingness to share his experiences with the younger generation was one of the qualities that cemented his nomination. “Bob Dindinger was selected as a laureate this year by a committee of his peers who felt that his pioneering spirit of entrepreneurship, integrity and success makes him an ideal role model for young people in Alaska today,” she said. “He has blazed a path in the travel and tourism industry for the next generation of leaders to follow, and is an outstanding addition to the more than 100 Alaska business leaders previously inducted.” As a way to introduce future businesspeople to the travel industry, Junior Achievement has created the JA Travel and Tourism supplement, designed for high school students taking part in any JA program. The supplement focuses on introducing students to career opportunities in the travel and tourism industry and demonstrating how the industry helps every community in which it operates. During the 2011-2012 school year, Junior Achievement is partnering with Alaska Airlines, Princess Tours and Holland America to present the program to 100 middle and high school students in Anchorage, Juneau, Mat-Su and Fairbanks. The program is an opportunity for Alaskan travel and tourism companies to educate Alaska’s youth about the benefits of travel and tourism and the important role it plays in the Alaska economy. After participating in the supplement, students will understand the effect that the travel and tourism industry has on local, national and global economies and communities, and be able to analyze how the travel and tourism industry can influence a person’s quality of life through employment opportunities and the personal ❑ benefits of travel.

JA Supplement Introduces Students to Travel and Tourism Careers

fter running a business for more than three decades, Robert Dindinger knows what works. And he’s been willing to share his knowledge with Junior Achievement classes over the years, as well as with other organizations. “It’s always been really important to me to talk to young people about being in business, whether that’s through entrepreneurship presentations to Junior Achievement or working in entrepreneurship programs with the Chamber of Commerce,” Dindinger said. “I’ve been politically active all of my life and one of my ongoing messages is the need to create jobs and opportunities in the private sector for our children.” Dindinger believes that this is especially important in Alaska where the state is, in large part, a government community. “Between military, State, federal and municipal jobs, a disproportionate part of Alaska’s population works in the government,” Dindinger said. “Small businesses are often overlooked for their contributions to the economy. Alaskans don’t pay for the cost of government here; they don’t pay State sales tax or State income tax. Those costs are borne by businesses exclusively.” To this end, Dindinger has spent years speaking out about entrepreneurship and the struggles and successes that come from running a business. “I believe in teaching young people how challenging and rewarding it is to run a small business because if they don’t get that message, they may not see the private sector as an alternative for going into public service,” he explained. “Young, creative people can really thrive in the private sector.” According to Flora L. Teo, president, Junior Achievement of Alaska Inc., Dindinger’s willingness to share his experiences with the younger generation was one of the qualities that cemented his nomination. “Bob Dindinger was selected as a laureate this year by a committee of his peers who felt that his pioneering spirit of entrepreneurship, integrity and success makes him an ideal role model for young people in Alaska today,” she said. “He has blazed a path in the travel and tourism industry for the next generation of leaders to follow, and is an outstanding addition to the more than 100 Alaska business leaders previously inducted.” As a way to introduce future businesspeople to the travel industry, Junior Achievement has created the JA Travel and Tourism supplement, designed for high school students taking part in any JA program. The supplement focuses on introducing students to career opportunities in the travel and tourism industry and demonstrating how the industry helps every community in which it operates. During the 2011-2012 school year, Junior Achievement is partnering with Alaska Airlines, Princess Tours and Holland America to present the program to 100 middle and high school students in Anchorage, Juneau, Mat-Su and Fairbanks. The program is an opportunity for Alaskan travel and tourism companies to educate Alaska’s youth about the benefits of travel and tourism and the important role it plays in the Alaska economy. After participating in the supplement, students will understand the effect that the travel and tourism industry has on local, national and global economies and communities, and be able to analyze how the travel and tourism industry can influence a person’s quality of life through employment opportunities and the personal benefits of travel. ■

www.akbizmag.com • Alaska Business Monthly • January 2012

special section Junior Achievement Alaska Business Hall of Fame

Junior Achievement Hall of Fame Laureate Green Family, David Green Master Furriers BY TRACY KALYTIAK ourth Avenue in Anchorage once was wild and colorful, a rowdy strip where the bars were open 24 hours a day. “It was a crazy place,” remembered longtime Anchorage resident Margy Johnson, a former Cordova mayor who does community outreach for Providence Cancer Center. “But there was always order around David Green Master Furriers. Perry was always out there sweeping the walks, doing what needed to be done.” That thoughtful consideration for others in his community is just one of the many qualities that prompted Junior Achievement of Alaska to name Perry Green – patriarch of the family that has operated David Green Master Furrier since 1922 – his wife of 55 years, Gloria, and the rest of the Green family, as laureates in the organization’s Alaska Business Hall of Fame. Also vital is their commitment to Alaska and its young people. The Junior Achievement Alaska Business Hall of Fame is an all-star list of people who succeeded in building Alaska’s economy. “These people are really there to be role models, examples young people can look up to,” said Flora Teo, president and chief executive officer of Junior Achievement. “The Green family is a perfect example of self-starters in Alaska who built themselves a fantastic business. It’s important for kids to be able to hear stories like these. It empowers them.” The Green family includes Perry Green’s nephew, David Green, and David’s wife, Shani, who now serve at the helm of David Green Master Furrier,

Photo courtesy of the Green family

Jerry Green and his brother, Perry Green, about 20 years ago inside the family’s store, David Green Master Furrier.

as well as Perry’s five children: Laurie Young, Deborah Grashin, Alan Green, Jay Green and Beth Balkany. Deborah and Alan still work for the David Green Master Furrier, which currently operates three stores in Anchorage (including a factory), David Green Group at Ted Stevens Anchorage International Airport and a store in Ketchikan. Grashin is instrumental in the internal working accounting systems of the David Green business and has been involved in the business for more than 30 years, while Perry’s brother, Jerry Green, has been his guide and mentor and, Perry said, a “silent Angel in the business, with wisdom and kindness as his sterling qualities.” Perry Green’s friends and associates

say he is a model for young people of how to live a life steeped in civic responsibility and social justice. If there’s a philanthropic endeavor under way, it’s likely 75-year-old Green is in the thick of it. “There’s a goodness and a kindness and a gentleness of spirit,” Johnson said of Perry Green. “It’s always been his passion to make Alaska as good as it could possibly be. If new people meet Perry, they see him as a grandfatherly type person, but he’s nobody’s fool. And Gloria is the epitome of grace – kind, considerate, always has thank-you notes in the mail. When someone is sick, she’s the first one there with the chicken soup.” Perry Green has contributed to

www.akbizmag.com • Alaska Business Monthly • January 2012

Junior Achievement of Alaska, served on more than 50 boards and commissions for the state and has aided a host of other organizations. “I think it’s a sense that I owe something to the community that was good to me,” Green said of his motivation for helping young people, Anchorage, his synagogue and the state of Alaska, among other organizations. “I want to give someone else a leg up. With that in mind, I want to be a contributor and not a sideline person.” Green has visited more than 250 villages in the state, many of them several times, during his fur-buying trips. He began learning the fur trade as a child, picking up nails in the family’s store at age 7, wrapping packages, carrying things, sweeping, making deliveries, sewing and cutting, and working on his own as a fur buyer at Anchorage Fur Trading Co. Perry worked outside the family business as well. “When I was a boy, I didn’t just go to school and go out and play,” Perry said. “I delivered newspapers, picked cherries in Wenatchee (Wash.), picked green beans when I was 8 years old; I drove a delivery truck and delivered groceries in my high school years. I worked as a teletype operator in the Army. I always had a job, always had a responsibility to earn my own money.” Now, Perry Green’s nephew, David Green, presides over the family business, but Perry says he is nowhere near retired. “I’ll go to a trade show now and then, go to a board meeting, come in and see the stock, give my opinion, eyeball it, give my view as to the economics, pension, profit-sharing, things like that,” Perry said. “I still advise them on skin pricing, when inventories get low, when’s a good time to buy, sell. I’m actively very much in the business.” Perry says he and others in the Green family strongly believe in tithing – the practice of giving 10 percent of their income to charity. “The Bible says 10 percent but if you can, do 20,” he said. “It’s always been my credo. Sometimes tithing takes the form of helping people, giving to people in need. Riches do not make you happy – to work, to create ❑ is happiness.”

Helping Youngsters Help Themselves K

ids in school have to do so much. Every day, they take in lessons for math and reading and writing and science, as well as develop self-discipline and navigate the intricacies of making friends. It’s not always possible to squeeze in all the information kids need in order to see just how far education can take them professionally, how to conduct themselves properly in the workplace or how to manage their money. Junior Achievement of Alaska aims to help children learn all these things. Between May and August, the organization forged a partnership with Boys & Girls Clubs in Anchorage, Eagle River and Wasilla and taught club members in grades K-12 about financial literacy, work force readiness and entrepreneurship. “Volunteers are business professionals who were able to talk to students about everything from possible future careers, the importance of building credit, credit versus debit, how to build your own business and the importance of ethics,” said Flora Teo, president and chief executive officer for Junior Achievement of Alaska. “It’s beneficial for the kids to hear from someone who works for the telephone company, a banker, lawyer, someone who’s been through JA and found a job here. It was a great experience, something we look forward to doing again. It was a first for Alaska.” Usually JA conducts its programs in classrooms. This cooperative venture with Boys & Girls Clubs, however, took JA out of its usual setting. The volunteers and clubhouse staff divided Boys & Girls Clubs members into different age groups: K-third grades, fourth-sixth grades, seventh-ninth grades and grades 10-12. The small groups went to separate parts of the clubhouses for their sessions, which took place once a week for five weeks. Approximately 125 children participated in the program, Teo said. First-graders learned about needs and wants, viewing pictures of things and being asked to describe what was a “need” and what was a “want.” “Shelter is a ‘need’, toys and games and candy are ‘wants,’” Teo said. “Students get to vote on what they think.” To learn the concept of taxes, second-graders pretended they were working in a doughnut factory that caught fire. This lesson taught them that tax money comes from everyone in the community and is the way firefighters, teachers and police officers are paid for their work. Middle-school children played a board game focused on economic success, careers, and the likelihood that more education will translate into greater lifetime earnings. “The longer a player stays in school, the more points they get,” Teo said. “Students get an opportunity to see the trajectory of an education.” Older students learned about basic budgeting. “We gave them a random job with a salary that’s current,” Teo said. “We gave them a recommended household budget – how much do they spend on housing, groceries.” JA started in Alaska in 1973. Last year, 6,900 students in 43 communities across the state, from Barrow to Southeast, participated in the program, which aims to bring the real world of business into the classroom using volunteers as the vehicle. “That’s our mission, to educate and inspire students to participate in the global economy,” Teo said. ■

www.akbizmag.com • Alaska Business Monthly • January 2012

REGIONAL FOCUS

By Tracy Barbour

Municipality of Anchorage A good place to work, live and play

Downtown Anchorage aerial view looking toward Cook Inlet.

he Municipality of Anchorage is one of Alaska’s most prominent and populous urban areas. Nowhere else in the state contains such a substantial population concentrated in one place – and within easy reach of the Alaska wilderness. Anchorage residents and visitors can enjoy all the amenities of a modern metro area, including shopping, museums, performing arts and other attractions. At the same time, they have convenient access to thousands of acres of park lands, outdoor recreation, abundant wildlife and beautiful surroundings. “If you combine our wonderful facilities set in this natural setting that makes for a quality of life that’s hard to match anywhere,” says Mayor Dan Sullivan.

STABLE ECONOMY A major factor in the city’s quality of life is its stable economy, which Sullivan views with optimism and realism. He

says a “tale of two economies” is at work in Anchorage. The internal economy is in good position. The city has seen home values decline only about 1 percent, compared to a much higher decrease for the rest of the nation. Anchorage is starting to see a steady recovery from the economic downturn, maintaining a growth curve of 1.5 percent a year. Tourism is rebounding. The University Medical or U-Med district is also doing well. This growing part of Anchorage – which contains the University of Alaska Anchorage, Alaska Pacific University, Providence Alaska Medical Center and Alaska Native Medical Center – is home to about 10 percent of the city’s jobs. The Native corporations are all also doing well, as they capitalize on opportunities within and outside state. “The good thing is all that money comes back to Alaska,” Sullivan says. “Overall the Anchorage economy is in pretty darn good shape.” Bill Popp, president and CEO of the

Anchorage Economic Development Corporation paints a positive picture of the city’s economy as a whole. According to Popp, the local economy has strengthened. “The economy has returned to modest, steady growth,” he says. “It has returned to the pattern that went on 21 years before the recession.” Key employment sectors for Anchorage are government, health/education services, trade, business/professional services, leisure/hospitality and transportation. As of August 2011, Anchorage had gained about 1,300 jobs, Popp says, more than a 1.25 percent increase over the first eight months of last year. Unemployment was down to 5.8 in August – despite having a larger work force. The city’s labor pool is about 155,000, which is up nearly 4,000. At the same time, Anchorage’s unemployed part of the labor force is down about 9,000. “We’re seeing a lot of growth that is not in retail or lowerend services sectors,” Popp says.

www.akbizmag.com • Alaska Business Monthly • January 2012

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Excellence Key The company was also nominated for the Anchorage Chamber of Commerce’s 2011 Gold Pan Award (Business Excellence) and received Accounting Today’s 2009 Top 100 Best Accounting Firms to Work For (Best Companies Group) and the Better Business Bureau’s 2009 Business of the Year Torch Award (Innovative Business Practices). Mikunda, Cottrell & Co. has been serving Alaskans since 1977. In 2012, the firm will mark its 35th year in business – quite a milestone for an entity that originated as a small CPA practice. Today, Mikunda, Cottrell & Co. is a diversified accounting firm with extensive expertise in audit, tax, Sarbanes Oxley/internal control, business valuation, litigation support, financial planning, settlement trusts and wealth management. The company has more than 90 employees and serves businesses with operations in Alaska, throughout the United States and abroad.

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ith several recent performance awards and an upcoming 35th anniversary, Mikunda, Cottrell & Co. Inc. has a great deal to celebrate. The company – Alaska’s largest locally owned accounting and consulting firm – has garnered the Alaska State Chamber of Commerce 2011 Bill Bivin Small Business of the Year Award. The honor is bestowed on businesses that epitomize integrity, leadership and organization. More specifically, it recognizes companies that demonstrate substantial community involvement, a sterling business reputation and extensive leadership in their field. Jim Hasle, president of Mikunda, Cottrell & Co., says winning the award speaks volumes about his company. “It says we’re doing a lot of things right, and we’re providing value to our client base,” he said. “We’re also doing things right in the community; we’re acting as a good corporate citizen.”

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“Our model is such that whether you’re a small, closely held company or a multi-national conglomerate, we can serve your needs,” Hasle said. “We’re able to do that in a real value-driven way, so our clients are not paying Wall Street prices.” Hiring Right Providing value is a key focus of Mikunda, Cottrell & Co. The firm accomplishes this by paying attention to the hiring process and vetting the right people. Hasle explains, “You can’t just hire a resume or high GPA; you have to also make sure the intangibles fit into what you’re trying to do as a firm.” Mikunda, Cottrell & Co. employs people who not only fit its corporate culture, but also who are seeking a career – not just a job. That translates into more longevity and higher value for its clients. Hasle said, “We have a very motivated and talented staff that is dedicated to serving our clientele.” Hasle credits the success of the business to its skilled employees and ability to adjust to the changing needs of the marketplace. For example, the firm has adapted for Sarbanes-Oxley īĜĤğ ĜğıĠĭįĤĮĠĨĠĩį

compliance and expanded its offerings to satisfy a broad range of needs in Alaska and elsewhere. As a member of the McGladrey Alliance, Mikunda, Cottrell & Co. is associated with the nation’s fifth-largest accounting and consulting organization and provides seamless client service domestically and throughout the world. “Many businesses have subsidiaries throughout the United States, and we’ve developed a high level of expertise to serve those different needs.”

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While the retail industry is treading water this year, much of the employment growth derived from the business and professional service sector, including occupations such as architects and engineers, which gained about 300 jobs. However, Popp says there’s no single reason why the business and professional services area is growing. Maybe it’s because of increase in oil and gas and mining,” he says. “We also see substantial dollars on the street from the state (for highway projects). We’re seeing an interesting trend of some firms picking up a fair amount of business outside of Alaska and internationally.” Anchorage also experienced growth in the financial services industry, which saw an increase of about 100 jobs. The leisure and hospitality segment showed even more expansion, with the addition of 400 jobs. But the most dramatic gain was in the health care sector, where 750 jobs were added. Oil and gas was flat, but that’s not necessarily a bad thing, Popp says. However, government employment is down about 300 federal and 100 state jobs. “We didn’t expect it to be a significant factor this year, with the cutting of the budgets,” he says. Department of Labor Economist Neal Fried points out that Anchorage holds a unique position as the headquarters for many of Alaska’s key industries, including oil and gas, mining, health care, transportation and financial services. Anchorage benefits from activity taking place everywhere else in Alaska. If you want to know what’s going to happen with Anchorage, what will happen in the state will have a big influence, he says. “What’s good for Alaska is good for Anchorage,” he adds.

BOUNDARIES Geographically, the Municipality of Anchorage occupies a strip of coastal lowland and extends up the lower alpine slopes of the Chugach Mountains. To the south sits Turnagain Arm, a fjord boasting some of the highest tides in the world. Knik Arm lies to the west and north while the Chugach Mountains form a boundary to the east. According to the U.S. Census Bureau, the municipality has a total area of about 1,960 square miles, of which 1,697.2 square miles are land and 263.9 square miles are water. The Anchorage

Municipality extends 80 miles, from Portage to the south and Eklutna to the north. It comprises Girdwood, Eagle River and Chugiak, as well as other smaller communities. Historically, Anchorage originated in 1914 as the site of a railroad construction port for the Alaska Railroad. A tent city soon developed at Ship Creek Landing – the railroad’s headquarters – and the community continued to grow. Anchorage was incorporated on November 23, 1920. In January 1964, it became a city and borough. In 1975, the city and borough consolidated, forming the unified government officially known as the Municipality of Anchorage.

DEMOGRAPHICS As of the 2010 U.S. Census, Anchorage had 291,826 residents, almost half of the statewide population of 710,231, and 12.1 percent more than in 2000. Anchorage has become more ethnically diverse over the years, which has led to a lot of positive trends, according to Popp. “It’s made for a more vibrant community.” Ethnic diversity is a particularly interesting aspect of Anchorage’s demographics, according to Fried. “I think it surprises a lot of people,” he says. “Even though Anchorage has grown fairly moderately, its diversity has grown much more dramatically. In 1980, 16 percent of our population was nonwhite. Now it’s about onethird nonwhite.”

RACIAL BREAKDOWN Based on the 2010 Census, nonwhites comprised 34 percent of the city’s population, compared to 28 percent in 2000 and 21 percent in 1990. When you look at the racial breakdown, Fried adds, the numbers are even more dramatic. Eight percent of Anchorage’s residents were identified as Alaska Native or American Indian, 8 percent as Asian, 8 percent as Hispanic, 5 percent as Black, 2 percent as Pacific Islander and 3 percent as “Other” in 2010. “You might not notice the diversity so much when you go to work,” Fried says. “But when you look at our school district, that’s where you really realize it.” Students in the Anchorage School

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District speak 87 different languages at home. After English, the five most commonly-spoken languages are Spanish, Hmong, Samoan, Filipino and Yup’ik. Anchorage’s nonwhite population category – excluding African Americans – is growing much faster than the white category. The increase in the city’s ethnic racial diversity from 2000 to 2010 was 144 percent for Pacific Islander or Native Hawaiian, 63 percent for Asian, 49 percent for Hispanic or Latino, 22 percent for American Indian and Alaska Native, 7 percent Black/ African American and 2 percent for White. The multi-race category (for individuals with two or more races) increased 52 percent.

AGE, EARNING AND EDUCATION Anchorage residents are younger than the nation’s population as a whole. The median age is 32.9 for Anchorage, compared to 37.2 for the nation. “Alaska has a large military population that tends to be quite young,” Fried says. “We’re a frontier state, and frontier states tend to be younger.” Even though the Anchorage population is a relatively young one, the senior population is one of the city’s fastestgrowing age groups. In terms of earnings, Anchorage residents have historically generated relatively high incomes. Average hourly wages in Anchorage are about $12 for maid and housekeepers, $20 for medical technicians, $37 for nurses and $42 for civil engineers. Some of the highest median household incomes are earned by residents living in the Hillside-Turnagain Arm (up to $140,000) and Eagle River (up to $110,000) census tracts. The median household income for Anchorage as a whole is about $74,000. Fried points out Anchorage residents’ incomes aren’t that much higher than the national average, especially once the cost of living is taken into account. “We don’t have the big income advantage that we did in the old days,” he says. Regarding education and homeownership, Anchorage residents are a relatively well-educated group. More than 30 percent of individuals 25 and older in Anchorage have at least a four-year degree. And more than 60 percent of Anchorage residents are homeowners.

WORK, LIVE AND PLAY Anchorage is a relatively young city with a fairly modern infrastructure, including newer schools, an extensive transportation system, and access to public services, parks, trails and other amenities. Anchorage has its challenges, Sullivan says. But it’s a great place to work, live and play. He says: “There are job opportunities here. Crime is on the decline. We’re a safer, cleaner and stronger city.” To Popp, Anchorage is a unique place offering something for everyone. “Anchorage is one of the only metropolitan areas where you can go to work, see a Broadway show and fish for world-class King Salmon all within a five-minute walk from downtown Anchorage.” According to the AEDC’s Anchorage Economic Profile, Anchorage also offers several business and industrial parks: The Anchorage Business Park, with 15 acres; the Airport Business Park, with 4.4 acres; and Birchwood Industrial Park, with 155 acres. In addition, the city has approximately 11,000 acres of municipal parkland, 220 parks, 80 playgrounds, 250 miles of trails and greenbelts with 135 miles paved trails, 110 athletic fields, 11 recreational facilities and five pools. There are several museums in Anchorage, including the largest museum in Alaska. Local amenities also include a zoo, botanical gardens, golf courses, movie theaters, ski hills, hundreds of restaurants and thousands of accommodations in bed and breakfasts and hotel rooms.

TRANSPORTATION INFRASTRUCTURE Because of its geographic location and isolation, transportation is a major component of the economy of Anchorage – and of the state. As Alaska’s transportation hub, Anchorage serves as the headquarters for the Alaska Railroad, the trans-Alaska oil pipeline and international air travel. It takes far more effort to move goods to Alaska, and multiple modes of transportation are typically required. Anchorage’s transportation infrastructure (airport, port and other transportation components) serves as a vital channel for a significant amount of goods flowing into Alaska.

The Ted Stevens Anchorage International Airport (ANC) is part of the Alaska International Airports System, which also includes the Fairbanks International Airport. ANC is strategically located 9.5 hours from 90 percent of the industrial world. This unique location enables Asia-to-North America cargo carriers to significantly increase cargo volume and revenue by refueling in Anchorage. Also, federal law offers flexibility to exchange cargo between carriers through cargo transfer rules unique to Alaska and Hawaii. ANC is located about three miles southwest of downtown Anchorage and comprises approximately 4,680 acres. The airport is a hub to Alaska Airlines, and is served by a number of national and international airlines offering direct and connecting flights to all points of the globe, as well as seasonal or charter flights. According to the AEDC’s most recent Anchorage Economic Profile, the airport has 600 wide body landings per week, 522,000 annual flight operations and five million passengers annually. It is No. 2 in the Western Hemisphere for landed weight of cargo aircraft and No. 5 in the world for cargo throughput. Other airports in Anchorage include Lake Hood Seaplane Base, located adjacent to the Ted Stevens International Airport, and Merrill Field. With more than 75 years of service, Merrill Field was the city’s first Airport. Today, it is a commercial service airport, offering taxis and charters. The Port of Anchorage is another critical piece of the transportation system of Anchorage and the entire state of Alaska. It serves 80 percent of Alaska’s population and 90 percent of the consumer goods of Alaska. In terms of economic impact, the Port generates more than $750 million each year. More than four million tons of materials move across its docks each year, which equates to nearly five tons of goods for every person in Alaska. Anchorage is served twice weekly by two major carriers that originate in Tacoma, Totem Ocean Trailer Express and Horizon Lines. The Alaska Railroad is an independent corporation owned by the State of Alaska and managed by a sevenmember board of directors appointed

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by the governor. It is mandated to be self-sustaining, responsible for all financial and legal obligations. The Alaska Railroad system doesn’t connect to the Lower 48 States via an overland route; it connects using rail-barges traveling between Whittier and the Port of Seattle. The railroad has more than 650 miles of track, 1,380 freight cars, 45 passenger cars and 640 employees. Anchorage is home to the largest single work site for the operations of TAPS, the Trans-Alaska Pipeline System run by Alyeska Pipeline Service Co. The 800-mile-long pipeline is one of the world’s largest pipeline systems. Starting in Prudhoe Bay on Alaska’s North Slope, the pipeline stretches through rugged and beautiful terrain to Valdez, the northernmost ice-free port in North America. Since pipeline startup in 1977, Alyeska – TAPS’ operator – has successfully transported more than 16 billion barrels of oil. In the area of public transportation, People Mover serves as the main bus system for Anchorage and Eagle River. It encompasses a network of 55 buses that travel on 14 scheduled routes. In addition, People Mover provides hourly service to the Ted Stevens Anchorage International Airport. Individuals can also travel by motor coach into Anchorage using Grayline, which offers scheduled bus service to several areas in Alaska as well as the Yukon Territory in Canada. Coaches can also be flagged on roads between stops. Other motor coach and shuttle options include Seward Busline and Two Dogs Trucking and Transportation. Ground transportation in Anchorage is facilitated by the Glenn, Seward and George Parks highways. The Glenn Highway runs 328 miles from Anchorage to the Alaska Highway at Tok Junction. The Seward Highway extends 127 miles from Seward to Anchorage. The Parks Highway stretches about 350 miles from Anchorage to Fairbanks.

POLICE AND FIRE DEPARTMENTS The Anchorage Police Department has approximately 516 employees (362 sworn and 154 non-sworn). The Anchorage Police Department is the largest police department in Alaska, serving a population of roughly 300,000 in a service area encompassing 159 square

miles. There are several specialized units including Canine, Special Weapons and Tactics, Homicide Response Team, Hostage Negotiations Team, Bomb Team, School Resource Officer, Crisis Intervention Team, Identification Section, Data System Section, Records Section, Traffic and Crime Prevention Unit. APD’s Homicide Response Team has been nationally recognized for its techniques and solvability rate. According to the police department’s 2010 Uniform Crime Report, the total number of crime reports decreased from 12,804 in 2009 to 12,646 in 2010. Property crimes decreased from 2009 to 2010, while “person” crime increased. However, certain categories within person crimes decreased, including murder and non-negligent manslaughter and forcible rape. There was an increase in the number of aggravated assault crimes reported. The Anchorage Fire Department has about 390 fire fighters that staff more than 10 fire stations. There are seven Basic Life Support, five Advanced Life Support engine companies, four truck companies, three aerials, a heavy rescue company, and four tankers that serve as front line suppression and Emergency Medical Service (EMS) response units. Seven Mobile Intensive Care Units and Fire and EMS Battalion Chiefs complete the 24-hour unit staffing.

HEALTH CARE FACILITIES Anchorage is served by several general hospitals, including Providence Alaska Medical Center, Alaska Regional Hospital and Alaska Native Medical Center (ANMC). It also has a V.A. Medical Center and various smaller clinics and health care facilities. Providence Alaska Medical Center is the state’s largest hospital and largest private sector employer. The 371-bed Providence Alaska Medical Center located in Anchorage, offers an array of high-quality services including: adult critical care, behavioral health services, a children’s hospital, a comprehensive cancer program, LifeMed Alaska Air Ambulance and orthopedic services. Alaska Regional Hospital offers a wide range of health services, including free prostate cancer screenings, health education seminars, community health fairs, support groups for cancer and

stroke survivors, and free immunization clinics for area schoolchildren. Alaska Regional has more than 1,000 employees and a medical staff of over 450 independent practitioners. Alaska Native Medical Center is an acute, specialty, primary and behavioral healthcare provider that delivers comprehensive medical services to Alaska Native and American Indian people living within the state. ANMC provides a full range of medical specialties and services with more than 250 board-certified physicians, 700 nurses, 150 hospital beds and the 56-room (108 bed) Quyana House.

EDUCATION SYSTEM Anchorage has an extensive K-12 education system and three universities. The Anchorage School District (ASD), one of the 100 largest school districts in the country, has 49,000-plus students in attendance. ASD services the whole municipality including Anchorage, Eagle River, Chugiak and Girdwood and collectively manages about 90 different schools within the district. University of Alaska Anchorage (UAA) is the state’s largest post-secondary institution. UAA is comprised of six teaching units at the Anchorage campus: Education, Health and Social Welfare, Arts and Sciences, Business and Public Policy, Community and Technical College and the School of Engineering. The university offers career pathway programs featuring 37 associates, 56 bachelor and 36 master’s degrees, as well as 29 vocational and professional certificates. UAA is fully accredited by the Northwest Commission on Colleges and Universities. Alaska Pacific University (APU) is an accredited university and belongs to the Eco League, a consortium of five small liberal arts institutions that share similar missions and value systems based on environmental responsibility, social change, and educating students to build a sustainable future. APU now offers more than 10 undergraduate majors and five graduate programs, as well as an early honors program to help high school seniors get a head start on their college education. Wayland Baptist University in Anchorage was established in 1985 with 12 students and has seen consistent growth.

www.akbizmag.com • Alaska Business Monthly • January 2012

Wayland designs programs around the needs of men and women serving in the United States armed services and offers baccalaureate and master degree programs within the fields of business, teaching and Christian ministry.

MEDIA & TELECOM Anchorage has seven television stations, two local cable providers, several radio stations and one college station covering the local market. The city has one daily newspaper and a few weekly and monthly papers and periodicals, most have an online presence, along with some Internet-only news sites. The telecommunications sector in Anchorage is fairly small – but it’s incredibly dynamic and constantly changing, according to Fried. “Ever since deregulation, it’s been exploding,” he says. “You have a lot more players.” Major telecommunication players include Alaska Communications, AT&T Alascom, General Communication Inc. (GCI) and Matanuska Telephone Association (MTA) providing an assortment of high-speed wireless, mobile broadband, Internet, local, long-distance and advanced data solutions. Some provide cable television. Most either already offer or soon will offer some form of 4G service. These companies have continued to invest million of dollars in the Anchorage market to increase speed, capabilities and market share. Last year, wireless giant Verizon announced its intent to enter the Alaska cell phone market, but has yet to do so. The AEDC and Alaska’s telecommunications companies are waiting to see just what impact Verizon will have. “That’s going to make for some interesting times,” says Popp. “It will take what is already a competitive market and make it even more competitive.” The heightened competition should translate into lower prices for wireless customers, he adds.

REAL ESTATE Anchorage’s real estate market is essentially holding steady, thanks to the city’s strong economy. “We’ve been saying it’s stable now for the past four years,” says Realtor Niel Thomas, executive vice president of Coldwell Banker Best

Properties Direct, who’s been selling and analyzing real estate since 1983. The number of building permits was up for the first eight months of 2011, compared to the same period in 2010. Year-to-date permits through August 2011 totaled $317.9 million; previous year’s total for the same time period was $241 million. Building permits for 2011 were up in the commercial sector, driven by new office and apartment buildings as well as remodeling projects; residential permits were not. The number of permits to construct new single-family homes, duplexes and condo units was down to 212 permits issued through August 2011, down 40 from in 2010. Thomas attributes the current decrease in residential and duplex permits, in part, to the tightening lending standards. “In particular, it affects people who might be candidates for moving up to a larger home,” he says. The stricter loan underwriting requirements are making it more difficult for Anchorage residents to purchase a house. Home loan interest rates are at record lows now, but many people don’t have the required down payment, income and cash in reserves to qualify for a loan. “It’s cheap to borrow money, but if you don’t have the cash savings, you can’t make the purchase,” Thomas says. Home values in Anchorage have leveled off, with the average sales price for typical family homes sold through the Alaska Multiple Listing Service ranging among $187,665 for a two-bedroom to $287,146 for a three-bedroom, and $368,148 for a four-bedroom. At the end of August 2011 there were 1,167 homes for sale. “For the last five years, in the summer, we’ve had about 1,100 homes for sale,” Thomas says. “Between 1,000 and 1,500 homes for sale in the summer is normal.”

ANCHORAGE TOURISM Tourism is one of the key industries driving Anchorage’s economy and is a diverse market, according to Julie Saupe, president and chief executive officer of the Anchorage Convention and Visitors Bureau (ACVB). Many people think of tourism in terms of the folks you see on the street between May and September, but the market is much

broader. “Of course that’s an important part of our tourism market, but we work to make sure our hotels and restaurants are busy year round,” Saupe says. Anchorage’s tourism industry also revolves around conventions and business travelers, as well as the international market. Saupe says the international area has a great deal of potential and has shown significant growth. “The weak dollar certainly helps,” Saupe says. “We’ve got some nice international air travel into coming into Anchorage. And the rest of the world has more disposable income and their ability to travel is getting better.” Anchorage had a positive tourism season last year, especially during the summer. “It really was a good season in quantity as well as quality. The folks were spending money and doing things,” Saupe says. The city’s tourism market started strong at the beginning of 2011 and the trend continued through the second and third quarters. Saupe says Smith Travel Research indicates hotel occupancy, year-to-date through August, was up about 3 percent and the rate hotels were able to charge was up about 4 percent. “It shows travelers are willing to come back and spend a little money.” The ACVB is feeling positive about the 2012 tourism season and expects to see advanced bookings, stable hotel rates and a 5 percent increase in the bed tax. Alaska is a high-interest destination offering an experience visitors won’t find anywhere else, Saupe says. “Even with the current unknowns in the national economy, everybody is feeling really optimistic about 2012.” Nearly a million people travel to Anchorage each year, representing a broad assortment of visitors. Tourists come during summer as well as winter for various reasons, including hunting, fishing and sightseeing. Many are simply drawn by the allure of Alaska. “The wildlife and the wilderness experience that they can have with all the comforts of an urban setting is a huge draw,” Saupe says. “That’s what we sell to the tour operators.” Anchorage has a wide variety of amenities to cater to the needs of convention delegates and other visitors, according to Saupe, who says she’s noticed interesting trends taking place

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with the Anchorage tourism industry, including younger visitors. The average age used to be 65-plus, but now mid-50s seems to be the average. “I think Alaska is becoming more accessible to the greater population,” she says. “It used to be people thought they had to take three weeks and take a motor home up the Alaska Highway. Now with the growth in the cruise lines and air travel, we get the multigenerational travelers.” The number of independent travelers is growing as well, including cruise ship passengers who come ashore to spend time and money in the city. These travelers represent a smaller slice of the tourism pie, but they’re important to the local economy, Saupe says.

ECONOMIC DEVELOPMENT Energy development is a top priority for Anchorage, according to Sullivan. “For 40 years we had the cheapest natural gas in the nation,” he says. “Now we have the most expensive.” Anchorage has been very proactive at advocating for legislation for creating gas storage in Cook Inlet. Encouraging oil and gas drilling in the Cook Inlet has also been an important issue. That goal became a reality when a new mobile offshore rig recently began drilling in the inlet. “They say there’s lots of gas in Cook Inlet, it’s a matter of getting out and finding it,” Sullivan says. While there are no major projects on the horizon for Anchorage, there are several large projects currently under way. The Anchorage airport, for instance, recently completed a remodel of the South Terminal and is working on upgrading its airfield to accommodate super jumbo aircraft like the Airbus A380 and Boeing 747-8. “It will make it even more efficient for air cargo planes to come in.” Popp says. “It will also provide additional opportunities for growth.” Anchorage is also moving forward with its multi-million-dollar upgrade and expansion project at the port. “The expansion project has had some challenges, but now it’s moving again,” Sullivan says. “It’s the most critical piece (of transportation) for us to get completed.” The multi-phase project will double the port’s size and transform it into a

world-class intermodal facility. The larger facility will provide increased seismic protection, additional acreage for commercial use, the ability to accommodate larger vessels, two new barge berths and secure road access for military deployments. The improvements will allow the port to better serve its existing clients and keep pace with future trends in the shipping industry.

HIGHWAY AND BRIDGE PROJECTS In addition to making extensive investments in the port and airport,

Anchorage also has planned a number of highway improvement and development projects. A prime example is the Highway to Highway project to link the Seward Highway and Glenn Highway, creating Anchorage’s first freeway through the city. “We’ll keep moving forward on connecting Anchorage better and making sure traffic keeps flowing,” Sullivan says. Anchorage is also making headway on the Knik Arm Bridge project. The decision on the environmental impact statement has come back, and now the

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Anchorage is seeing good, steady growth – despite the recession, and overall has dodged most of its major effects. project will be able to move forward. The bridge represents an important link because it will provide another route out of Anchorage into the Mat-Su Borough and cut down on the commute time to Wasilla or Palmer. The project, which should take about seven years to complete, will also open up land for the development of housing and industry in Mat-Su. Another development for Anchorage is the transfer of Kulis Air National Guard Base back to the State of Alaska. The transfer, completed last fall, involves 130 acres Kulis leased on the south side of the Ted Stevens Anchorage International Airport. The land, along with 46 buildings and facilities, is being made available for lease or purchase. Future projects for the municipality include plans to develop the Ship Creek area into a retail and tourism hub. And in Eagle River, there’s an effort by Eklutna Village Corp. to develop one of its parcels into an industrial park.

STEADY GROWTH Anchorage is seeing good, steady growth – despite the recession, and overall has dodged most of its major effects. However, the city has seen lower international trade numbers at the airport. But much of the recession’s affect on Anchorage has been by association, rather than by a direct impact, Popp says. For instance, Anchorage residents are still being impacted by diminished retirement fund investments, as well as the tougher lending practices. Still, Popp says, Anchorage has seen good levels of growth that could be absorbed in a logical way. It’s helped the city grow in ways that’s made it a more positive environment for businesses, families and children. “The future is looking pretty bright for Anchorage over the next few years,” Popp says. “We see good steady growth in all our ❑ major indicators that we track.”

www.akbizmag.com • Alaska Business Monthly • January 2012

H R M AT T E R S

By Rick Birdsall

Are You a Boomer? Understanding Gen X and Gen Y is a challenge

R-E-S-P-E-C-T Any respect you initially had was flushed when the interloper ignored the sign and parked in your place. This happens daily in the workplace when baby boomers encounter Gen Y employees without a clue the boomer’s rules are not understood. The boomer manager, desiring to get the new employee started on the right path, gives well-intentioned criticism for trivial offenses that might otherwise be tolerated with others. The manager expects his position gives him “banked” respect. The newbie, not having “banked” much respect, is expected to do what he or she is told without questioning authority. Interestingly, the younger Gen Xers, and even more so with the Gen Yers,

already arrived on the job with a tank full of respect. The newbie fails to recognize his harsher and disparate treatment is associated with his manager’s lack of familiarity. He or she then looks to extrinsic factors. Am I being treated this way because of my race, age, sex or some other unlawful reason? A discrimination complaint can follow with the accompanying conflict and tension in the workplace.

hile running late for work the last thing a person needs is an interloper in his designated parking spot. You know – the parking spot with the huge Magoo sign that says, “Unauthorized Vehicles will be Towed.” Thankfully, you note the vehicle has an occupant. A brief honk should bring a quick solution. Nothing happens. You lean on the horn and give a hand gesture to MOVE. The driver’s window slides down and you receive a euro hand gesture signaling “whatsa your problem.” You approach the vehicle. Is it someone who can’t read English or is Mr. Magoo alive and well living in Alaska? You see an early 20-something male and ask him to move. He replies, “You need to show respect.”

POST-BOOMER RESPOND TO A DIFFERENT MANAGEMENT APPROACH As noted in an article published in USA Today by Stephanie Armour, based on the research of Bruce Tulgan of “Rainmaker Thinking” and Jordan Kaplan at Long Island University, “Gen Y’s believe in their own worth. Generation Y is much less likely to respond to the traditional command-and-control type of management still popular in much of today’s work force. They’ve grown up questioning their parents, and now they are questioning their employers. They don’t know how to shut up, which is great, but that is aggravating to the 55-year-old baby boomer who says, ‘Do it and do it now.’” Younger workers arrive with initial respect in their personal bank and feel free to spend it. This is a consideration often unfamiliar to a baby boomer. Conversely, younger employees need to understand that, while they are entitled to respect, boomer managers expect some of it to be earned. This takes time. Oh, and by the way, if you don’t ❑ know Magoo, ask a boomer.

Rick Birdsall

About the Author Richard Birdsall, B.A., J.D., brings with him 22 years of trial experience representing the California Department of Transportation and its engineers, three years in the legal field of environmental remediation, nine years of criminal investigation experience, and two years conducting investigations for the Alaska State Commission for Human Rights. Now a senior consultant for The Growth Company, Birdsall uses his broad experience conducting training in legal compliance, investigation, risk assessment, team building, mediation and alternative dispute resolution. He is particularly adept ferreting out troublesome HR problems and then finding creative ways to solve them. For more information on The Growth Company Inc.’s training and HR on-call services to companies needing help, please visit www. thegrowthcompany.com.

www.akbizmag.com • Alaska Business Monthly • January 2012

PUBLIC RELATIONS

PRSA Alaska Plays Vital Role at 35 Provides learning and networking opportunities BY SUSAN SOMMER

The charter given from the Public Relations Society of America when the Alaska Chapter was formally recognized.

ublic relations can make or break a project, a public figure or a company. Think controversial blueprint, politicians or introduction of a neighborhood liquor store. While PR is clearly only a piece of the whole enterprise pie, its role is often undervalued and its practitioners relegated to supporting cast. The Public Relations Society of America exists to help PR professionals overcome these obstacles as well as foster standards, learning opportunities and networking among its members. Alaska’s chapter of PRSA celebrates its 35th year in 2012 and forges ahead as the state’s premier organization for the industry.

ALASKA CHAPTER, NATIONAL REACH PRSA Alaska, based in Anchorage, has about 130 members statewide and offers monthly networking luncheons, professional development seminars, webinars, a job bank, education opportunities, a mentorship program, awards recognition and accreditation preparation. Monthly subchapter luncheons are also held in Fairbanks. Members work

in numerous industries and include 14 accredited in public relations and seven PRSA fellows. The Alaska chapter was founded by Anchorage-based Bruce Pozzi, who is still an active member. The group was certified in 1977. “We give quality council and advice. You don’t have to go to the bigger city,” Pozzi says. “We’ve grown up, we’ve become professional. We’re damn good!” PRSA Alaska members call Pozzi the “George Washington” of the chapter; he was first and second year president, the first Alaskan to earn the APR (Accredited in Public Relations) credential and became a national PRSA fellow in 1993. The state is no longer a communications desert since the introduction of email and the Internet, and its PR professionals have played a significant part in national public relations circles. Three PRSA Alaska members have served on the organization’s national board of directors and seven local communicators have been inducted into its College of Fellows. To be inducted a person must dem-

onstrate a footprint on the profession through accomplishment, community service and leadership.

LUNCHING AND LEARNING Committees within the local chapter include those focused on advocacy, accreditation, awards, education, fundraising, membership, mentorship, programs, publicity and statewide unity. The monthly luncheons, though, are what everyone really looks forward to. And no wonder, with guest speakers such as Ann Wylie, owner of Wylie Communications Inc., who shared her knowledge of how important writing is to good public relations. Jim Lukaszewski was another recent featured speaker at a local chapter luncheon. As a national leader in crisis communication strategy and strategic counseling, Lukaszewski shared his expertise and insight with Anchorage and Fairbanks members at a half-day seminar focused on how to be a company’s trusted strategic adviser. Longtime PRSA Alaska member Vivian Hamilton, who is accredited in

www.akbizmag.com • Alaska Business Monthly • January 2012

public relations, is a national fellow and works as communications manager for the Alaska Mental Health Trust Authority, says the best placement within an organization for the PR professional is directly reporting to the CEO. “Public relations is responsible for the reputation of the entire entity,” she says, making a case for having direct access to executive management for its global view of the business. PRSA makes it easy for college students to take advantage of the group’s offerings, too. The University of Alaska Anchorage is home to a chapter of the Public Relations Student Society of America and works closely with the journalism department to foster relevant skills for Alaska’s work force. Volunteering within the organization is another way to learn about the PR world. President of the Alaska chapter for 2012, Kirsten Schultz says, “Through volunteering I’ve connected with members from a variety of different industries across the state. We all bring different experiences and abilities to the chapter. It’s through those relationships I’ve learned the most about our profession.”

BUILDING TRUST The PRSA Code of Ethics governs members’ professional activities and is also meant to be a model of good behavior for anyone working in the PR field. Ethical practices and interaction with clients and the public should adhere to values such as advocacy, honesty, loyalty, professional development and objectivity. The Code advises professionals to “protect and advance the free flow of accurate and truthful information; foster informed decision-making through open communication; protect confidential and private information; promote healthy and fair competition among professionals; avoid conflicts of interest; and work to strengthen the public’s trust in the profession.” Should PRSA members encounter an ethical matter they need more in-depth guidance on, they’re invited to talk with the organization’s Board of Ethics and Professional Standards. “We work to educate the community about PRSA’s Code of Ethics and the role public relations professionals serve

as strategic advisors,” says 2011 Alaska chapter president Emily Ford. “Most importantly, PRSA Alaska makes connections. What I have valued the most about my PRSA Alaska experience is the opportunity to make connections with communicators from across the state, to learn from my peers and to have other public relations professionals to lean on for professional guidance.” Ford says if she had to describe the Society in just three words, they would be “valuable, dynamic, informative.”

WHAT’S NEXT FOR PRSA ALASKA? With an always uncertain economy, fewer employers are paying professional membership fees for their staff. Many PRSA Alaska members end up paying for the monthly luncheons out of their own pockets. In response, PRSA Alaska tries hard to provide excellent value to members by hosting more nationally recognized speakers of high caliber at discounted rates, as well as informative webinars and other educational offerings. Carla Beam has been a PRSA Alaska member for more than 30 years. This PR expert, now vice president for University Relations and president of the University of Alaska Foundation, shares her vision of how crucial the role of the state’s PR force is to public policy issues: “We have a strong university system to help us research and formulate the kind of approach and dialogue that just might be a model for other parts of the country and world. This requires us to be as much visionaries and leaders as we are skilled public relations technicians.” What about those communicators just entering the PR industry? asks Kirsten Schultz, “Whenever young professionals seek perspective on the job market here, the first thing I advise is joining PRSA’s Alaska Chapter.” The professional development opportunities, she says, are available nowhere else in the state, and the relationships they form will connect them to a statewide network of professionals willing to mentor and advise them throughout their careers. “It’s an unparalleled resource for all professionals, no matter their ❑ level of experience.”

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www.akbizmag.com • Alaska Business Monthly • January 2012

REAL ESTATE

Housing Market Confidence National economic crisis affecting Alaskans BY TRACY BARBOUR

Photos courtesy of Spinell Homes

Spinell Homes project located downtown at 12th Avenue and L Street.

hile Alaska is somewhat isolated from the rest of the country, the national economic crisis is having a psychological and real impact on the state’s housing market. Since the advent of the recession in 2007, Alaska has been virtually insulated from many of the financial woes that hit the Lower 48. The nation’s economic crisis was marked by reckless lending practices leading to bank failures, high unemployment and rising prices for food, oil and other commodities. Many markets around the country

are struck by record home foreclosures, plummeting housing prices and tightened underwriting requirements for mortgage loans. In contrast, Alaska’s diversified economy has remained overall stable during the economic downturn with relatively few foreclosures, a healthy housing market and a statewide unemployment rate that is uncharacteristically lower than that of the nation’s. But industry experts say the uncertainty of the national economy is eroding the confidence of many Alaskans and impacting the state’s housing

market in various ways. Home construction is down, while remodeling and refinancing activities are up. Overall consumer behavior and expectations are changing to subtly affect Alaska’s housing market.

CHANGES IN CONSUMER CONFIDENCE AND BEHAVIOR Consumer confidence – or the lack thereof – is like an invisible cloud hanging over the Alaska housing market. Many people are more hesitant to buy and build new homes. Chuck Spinelli, president of Spinell

www.akbizmag.com • Alaska Business Monthly • January 2012

Homes Inc., attributes the shift in Alaskans’ attitude to the national economic crisis. “It’s gotten people so afraid to make a commitment to buy a house,” Spinelli says. “They’re afraid to go in and get a loan because they’ve heard all this bad news.” Tara Telzlaff, a senior vice president at Northrim Bank, has also noticed a difference in people’s perspective. The Alaska housing market hasn’t seen the massive depreciation in value like some places in the Lower 48. Interest rates are extremely low, so affordability is not the issue, she says. Consumers are treading very carefully and conservatively before making home purchases. “From my perspective, buyers are taking their time to make decisions,” Telzlaff says. “They’re shopping around for builders. They think the market is stressed because of what’s happened in the Lower 48.” Consumers aren’t the only ones who have changed their behavior. So has Northrim, which specializes in providing residential construction loans, mostly to home builders. The bank has modified its approach to

handling some of its foreclosed construction projects. In the past several years, when the bank has taken projects back from builders, it has done so in a way that minimizes damage to the market, according to Telzlaff. “We helped the market to keep some contractors in work,” she says. “We used builders who were reputable and we paid those liens. When we put those houses on the market, we didn’t just ‘short sale’ them. We held onto those properties.” Telzlaff, who was responsible for liquidating some of the foreclosures, said it took longer to sell the properties at a fair price, but it was worth the extra effort. “We could have hurt the industry, but we didn’t do that,” she says. “We’re committed to this market.” The bank was able to avoid shortselling the foreclosed properties because of its strong capital position and sense of responsibility, according to Northrim Credit Officer Steve Hartung. “That’s one advantage of dealing with a community bank that cares about the market,” he said. Realtor Niel Thomas, ABR, CCIM,

“People want factual information, and what they end up hearing (about Alaska’ housing market) is comforting.” –Niel Thomas, Realtor CRS, has also noticed a subtle transformation in clients’ expectations. He’s increasingly being called upon to provide factual market-related information, particularly from people relocating to the state. “We have a lot of engineers and technical people, who are numbers-oriented, prove-it kind of folks,” Thomas says. “People want factual information, and what they end up hearing (about Alaska’ housing market) is comforting.” Although Alaska has a stable housing market, it doesn’t surprise Thomas that

www.akbizmag.com • Alaska Business Monthly • January 2012

some homebuyers are feeling insecure. However, what drives people’s decision to move is based on life changes – like the desire for more space, the need for less space or a job transfer. However, those kinds of issues have little to do with what’s happening at a national level. “The phrase that ‘All real estate is local’ is certainly true here,” Thomas says.

TIGHTER REGULATIONS AND LENDING STANDARDS The national financial crisis has resulted in game-changing consumer protection regulations. Underwriting standards have grown more stringent on mortgages, credit cards, and student, auto and payday loans. With the new mortgage underwriting criteria, borrowers must have better credit, jumbo loans are harder to come by, and 5-percent-down loans are virtually gone. The tougher regulations have brought about sweeping changes on everything from the way lenders have to pay their loan officers to how they must disclose mortgage loans. The stricter standards are all designed to protect the public from the types of subprime loans that were made in the 2000s. However, some of the changes are onerous, says Roger Alrich, the owner of Residential Mortgage LLC, which has about 20 percent of the market share in Alaska. For example, the one-page document formerly known as a good faith estimate is now a four-page form, and the penalties for making errors on it can cost lenders thousands of dollars, according to Alrich. To meet this administrative change, the company modified its data system and provides additional training for its 50 to 60 loan officers. The expanded good faith estimate form has added considerable time and cost to processing loans. “We’ve added a fulltime person who goes back to check all of the numbers,” Alrich says. “We’re very careful.” While new laws are intended to safeguard consumers, they’re also making it considerably harder for them to qualify for mortgage loans. There are tighter requirements in terms of the down payment, debt-to-income ratio and cash reserves. Perhaps the most positive effect of the national financial crisis has been

lower interest rates, Alrich says. Interest rates are at historic lows. Residential Mortgage, for example, has Federal Housing Administration (FHA) loans at 3.75 percent. “Here in Alaska, there’s never been a better time to buy a house,” Alrich says. “Prices have not gone up significantly in the last three or four years. It’s a great opportunity for buyers.” There’s also never been a more opportune time to refinance an existing home loan. With interest rates at such low levels, the Alaska refinance market is very strong, according to Hartung of Northrim Bank. Back in October, borrowers could get a 15-year mortgage at 3.25 percent interest, he says.

NEW CONSTRUCTION DOWN Despite the attractive lower interest rates, the home construction market is down. In Anchorage, only about 200 building permits were issued in 2011, which is considerably lower than the 550 permits that were pulled in 2006. The addition of 200 new units is far below what it would take to replace aging inventory, but the number reflects a stable market, according to Thomas. “We’ve had a stable market for about four years now,” he says. Anchorage has a longstanding shortage of buildable land, but there are some new homes going up in several subdivisions around Anchorage. About a half a dozen houses are being built off Sand Lake Road and Tulian Park Loop. These areas feature mid-range homes – priced from $450,000 to $500,000 – with triple garages. Much of the Anchorage Municipality’s home construction is concentrated in Eagle River, where about a dozen new homes were being built in October. Another eight homes were being erected in Mountain View by Cook Inlet Housing Authority. The homes are affordably priced at around $225,000. “There’s an effort to tear down aging housing (mainly fourplexes) and build owner-occupied units,” Thomas says. At Spinell Homes – Alaska’s largest home builder – business has decreased with the national downturn. In the past, Spinell Homes has built as many as 150 homes a year. The company expects to close out 2011 with about 80 houses completed, which is about the same vol-

The national financial crisis has resulted in game-changing consumer protection regulations. ume as last year. “I think it will be pretty much the same for 2012,” Spinelli says. Spinell Homes builds houses primarily in Anchorage, Eagle River and the Mat-Su Valley. Much of the company’s reduction in business has been in Mat-Su. In terms of building trends, Spinell Homes is constructing more houses priced under $400,000. The company is also building smaller units on smaller lots, including condos, row houses and single-family homes. The average size of Spinell Homes’ projects runs about 1,800 square feet. Spinelli says consumers are paying more attention to their budget and are buying “less house” than they can afford. “Everybody who’s purchasing wants to spend less and make a safe move,” he says. “The people who are buying houses today are conservative people who don’t want to lose their house.” Spinell Homes offers a number of incentives to cater to value-driven consumers. The company has always offered options that allow buyers to customize house plans to their needs. More recently, it’s added an incentive to pay up to $4,000 worth of the buyer’s closing costs. At Northrim Bank, business has also been a bit slower. “We are down about 10 percent year over year,” Hartung says in an October interview. “I think we were looking for a little better year than this.” However, Telzlaff adds: “We’re not down because we’re not lending. We’re down because builders’ business is down.” Likewise, Residential Mortgage has seen a decline in business in 2011. In 2007, the company closed $719 million in home loans, Alrich says. In 2010, loan volume rose to $761 million. “This year, we’re back down to the $720 million range,” he says.

www.akbizmag.com • Alaska Business Monthly • January 2012

INCREASE IN REMODELING PROJECTS The home construction market may be down, but remodeling activities are up. Business is brisk at Alaska Remodeling. The full-service remodeling company – which also runs a new construction company called Glacier Homes – is doing more bathrooms and additions. Owner Levi Smith says master suites and garages are popular projects for homeowners who want more space – without the hassle and expense of buying a bigger home. “More people are approaching us for additions than new construction,” Smith says. “People are more hesitant to pull the trigger on bigger projects, so they’re choosing to repair and renovate.” Alaska Remodeling completes up to four additions a year, along with about 60 other remodeling jobs. Smith says he’s noticed that people are being more meticulous about hiring a remodeling contractor. “Between 2003 and 2007, folks were more relaxed about choosing contractors,” he says. “One in 10 customers would ask to see our license, insurance and bond. Now every customer asks to see them.”

THE EXISTING HOME MARKET Alaska’s existing home market is holding steady. Sales prices have hardly changed over the last four years, according to Thomas. In 1997, the average sales price in Anchorage was in the mid to low $160,000. But between then and about four years ago, the sales price more than doubled at $327,000. “It’s a reflection of the stability of jobs and the population,” Thomas says. “Our real estate values have always been tied to that, and our job situation has been stable in that regard.” Condo sales continue to be pretty vigorous, with a slight increase in prices. If there’s any soft spot in the market, it’s upper-end homes priced beyond $750,000. But the fact that big, expensive homes are the weakest part of the market doesn’t necessarily reflect buyer sentiment, Thomas says. It can also be an indication of lender conservativeness. In the past, it was easier for homeowners to move up to a larger house. But now with the stricter underwriting criteria, fewer people can afford to upgrade to their dream home. “We’re in

a different lending climate,” Thomas says. “Tightened lending standards have impacted the higher end of the housing market.” In terms of availability, Anchorage had about 1,030 homes on the market in October – nearly five months worth of inventory. For price ranges up to $500,000, there was about fiveand-a-half months of inventory. That’s considered to be a balanced market, according to Thomas. In contrast, there were 39 homes priced from $750,000 to $1 million – representing a year’s supply. Anchorage properties are spending fewer days on the market. In the last six months, homes took about 64 days to sell, compared to 70 days to sell over the past 13 months. Thomas expects to see a fairly busy fall market. That’s the time people often create a quick sale to avoid holding property over the winter. For 2012, he is optimistic Alaska’s housing market will continue to remain healthy. “As long as the job market and population trends stay as stable as they are, I think we can anticipate more of ❑ the same,” he says.

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www.akbizmag.com • Alaska Business Monthly • January 2012

CONSTRUCTION

Yukon Equipment, Still Making the Grade Oldest Alaskan-owned heavy equipment dealer BY GAIL WEST

ukon Equipment Inc. had a pretty good year in 2011, according to Roy Rank, general manager, “but the industry is in an uncertain mode right now.” The nation continues to face one of its biggest recessions and the world’s economy is in turmoil. Alaska, although it hasn’t felt the recession as heavily as other states, hasn’t been completely immune. Most of the state’s economic sectors have been relatively flat, “but in the heavy equipment industry, we’re all cautiously optimistic that the economy will climb back up,” Rank added. “Everyone who has done well to this point is positioned to do well in the future, and Yukon is those ranks.” With several projects in the pending stages – mines in the permitting process, Susitna hydro project moving forward, the Knik Arm Bridge, the gas line and bullet line under discussion, and the governor trying the get the oil industry back on track – Rank said there are several mega projects that could be ahead for the industry. “There’s no other state with so much work in front of them,” he said. “If we only get one or two of those big projects, we’ll do well.” Helping Yukon stay at the forefront of the heavy equipment sales and rental business is its new owner, Calista Corp. Calista is one of the 13 Alaska Native regional corporations and one with its roots in the Yukon-Kuskokwim Delta. According to its website, “Calista’s success is built upon solid partnerships and the formation of strategic teaming relationships.” Certainly, one of those partnerships is the one with Yukon Equipment which Calista purchased in the fall of 2010.

“We’re a subsidiary of Calista now,” said Morry Hollowell, Yukon’s president, “but we continue to manage and operate the company as we have for the past 66 years. With Calista behind us, we’re now a more highly capitalized company – they’ve added their financial strength to Yukon.” Besides the relatively new ownership of the company is the addition of Rank as general manager. “I just came on as general manager June 1,” he said.

ADDING EXPERIENCE Rank first began working as a salesman for Yukon in 1993 when he moved to Alaska from San Diego. He brought with him years of experience in the heavy equipment sales and rental industry. Two years after joining Yukon, he went a bit further north to Fairbanks and opened the company’s store there. Eventually, Rank became a part owner of the company, then sold his portion of Yukon to pursue other opportunities with Alaska Construction Equipment Inc. and Northstar Trucking. Now, however, he’s returned to his Alaska roots with Yukon and said his mission is to “continue to look for new revenue opportunities and to grow all sectors of our business.” Both Yukon’s headquarters in Anchorage and its branch in Fairbanks contain full-service dealerships – sales, rentals, parts and service. Hollowell said it’s relatively common for a Yukon Equipment mechanic to fly into a Bush community to help get a machine back up and running. “If customers buy equipment from us, they expect to turn around and make money from that equipment. They can only do that if they can rely

on the equipment and on the dealer to keep it running,” he said. Rank listed some of the brands Yukon represents in Alaska. “Our primary brand is Case construction and agricultural equipment. Case loaders, backhoes, excavators, skid-steer loaders, bulldozers, articulated dump trucks, quad tracks and so on,” he said. “We have PowerScreen screening and crushing plants, Stone and Wacker compaction equipment, Elgin street sweepers, Vactor vacuum trucks, Labrie and Lodal refuse trucks, Oshkosh snow blowers and plows, M-B runway brooms, etc. We carry about 30 different product lines.” “We’re also a dealer for Trail King Industries, with trailers to haul the equipment,” said Hollowell. “We’re really a multi-line dealer, but Case is our primary product line.” Rank went on to say that Yukon rents, as well as sells, equipment. There are many companies that may not have enough work lined up so they’d rather rent, Rank said, and Yukon can accommodate them. “We’re breaking into the rental market more and more,” he said. “The markets are changing, so we’re shifting more to rentals right now. My crystal ball isn’t any different from anyone else’s, but business has definitely flattened out. It’s a time to be cautious.” A bright spot on the horizon, Rank said, is the work the State of Alaska has just advertised, including a $40 million upgrade to the Seward Highway. “We’ve had quite a bit of private, commercial work,” he added, “but most of that work has been completed. Fortunately, though, we have a joint base here that needs improvements and upgrades. There’s also

www.akbizmag.com • Alaska Business Monthly • January 2012

Photo courtesy of Yukon Equipment Inc.

Roy R R Rank, k generall manager ffor Y Yukon k E Equipment i t IInc., said id Y Yukon k represents t C Case loaders, backhoes, excavators and other Case equipment in Alaska.

the Port of Anchorage expansion. In addition to construction companies across the state, Yukon counts State and city governments among its customers. According to Hollowell, the State of Alaska, the Municipality of Anchorage and the City of Fairbanks, as well as other communities, purchase Elgin street sweepers, Vactor vacuum trucks, Oshkosh snow blowers and M-B runway brooms for the airports. “In fact,” Rank said, “we’ve just delivered a bunch of Oshkosh snowblowers around the state. Last year, Yukon received the 2011 ‘Dealer of the Year’ award for the Oshkosh Corp. We were number 1 in North America for sales of their products – primarily their airport products.”

A SOLID FOUNDATION Yukon Equipment is the oldest Alaskan-owned heavy equipment dealer in the state, supplying equipment to projects around Alaska for more than 60 years, according to its website. In reality, Yukon has been in operation for more than 100 years, but under its former – as well as its current – name. In 1900, 18-year-old Carl Lomen set out from Minnesota to stake his claim in the Nome gold rush. Not willing to let his son wander into the wilderness on his own, Lomen’s father joined him. Two years later, the rest of the family moved to Nome and Lomen’s father opened a legal office there. The brothers bought a photographic studio then opened a drug store.

The Lomen family also was known for their reindeer herd. To help get reindeer meat to market, the Lomens founded Arctic Transport Co. in 1923. Another business the Lomens founded, Lomen Commercial Co., was the seed that eventually sprouted into Lomen Equipment Co. in 1945 and two years later became Yukon Equipment. “Stan Tatom was the first president,” Hollowell said, “and Lomen Commercial kept a percentage of ownership in the new company. I came on board in 1980 as an equipment salesman,” he said, “I worked my way up through the ranks, and became president in 1985. I continue to serve as president.” Today, Yukon Equipment’s sales average $25 million to $30 million a year, according to Hollowell, and the company has about 35 employees between the Anchorage and Fairbanks locations. “When I reflect on the company,” Hollowell said, “there’s a wonderful history. Several of the employees have been here more than 20 years. Part of what keeps them here is that sense of pride - being part of a great, old Alaska company. “It’s satisfying, too, that we’re dealing with second-generation customers,” he said. “That says something about the quality of our products and our service.” “There’s a competitive market and an aggressive bunch of companies out there,” Rank added, “and that speaks well for Alaska. That makes us all work ❑ a little harder.”

www.akbizmag.com • Alaska Business Monthly • January 2012

ENVIRONMENTAL SERVICES

Getting Rid of Hazardous Waste

Photos courtesy of Emerald Alaska Inc.

A before shot of an abandoned drum site Emerald Alaska Inc. cleaned up.

Companies find niche keeping Alaska clean BY VANESSA ORR

isposing of waste – particularly hazardous waste – has always been a challenge in the 49th state. Not only does the state lack disposal sites, but much of the waste is located in remote rural areas that create an even bigger issue when it comes to identification, remediation and removal of toxic material. This, is in addition to the fact that in the past many Alaskans did not understand the importance of removing this waste, or the dangers that could result from leaving it in place. As education and enforcement

activities have increased, so has the need for companies specializing in this field. “Alaska is probably about seven to 10 years behind the times; up here, regulations are just beginning to catch up to those in the Lower 48,” said Shaun Tucker, technical service representative and outside sales manager for Emerald Alaska Inc. “A big part of our business is educating our customers; a lot of people aren’t aware of what is, or is not, hazardous waste. And we’re definitely starting to see more enforcement, with smaller businesses

getting their first unannounced visits from the EPA and facing potentially heavy fines.” “While regulations and enforcement do play a big part, in my opinion, the facilities and government in Alaska are already very responsible about managing waste,” said Mike Holzschuh, North America territory manager, Waste Management Sustainability Services. “Alaska is a very fragile place, and it’s important to protect its wildlife and fishing; over the years, I’d say there’s been a 100 percent turnaround in how hazardous waste is managed.”

www.akbizmag.com • Alaska Business Monthly • January 2012

TYPES OF HAZARDOUS WASTE According to Holzschuh, the two primary waste streams hazardous waste collection companies in Alaska deal with are classified under TSCA (Toxic Substances Control Act) codes, which include PCBs (polychlorinated biphenyls), and RCRA (Resource Conservation Recovery Act) codes. â&#x20AC;&#x153;We have a huge client base that includes waste products from the military, the State and federal governments, the private sector and oil companies, among others,â&#x20AC;? he explained. â&#x20AC;&#x153;Approximately 60 percent of the waste we collect is nonhazardous; 40 percent is classified as hazardous.â&#x20AC;? Waste Management Sustainability Services handles remediation, transportation and disposal of waste, including logistics and project management. â&#x20AC;&#x153;We do everything from cradle to grave. From the customer site in Alaska to our landfill in Oregon, we do it all,â&#x20AC;? Holzschuh said. Waste is transported over the road in Alaska and Washington, and in Washington, it is transferred onto the Union Pacific Railroad or onto private carriers, where it is taken to the companyâ&#x20AC;&#x2122;s Arlington, Ore., site. Waste Management does have a landfill in Juneau, though it is primarily for construction and demolition waste. All municipal solid waste is taken to its Oregon facility. â&#x20AC;&#x153;Because there are no real manufacturing plants in Alaska, we donâ&#x20AC;&#x2122;t see the weird or exotic chemicals, plastics or styrenes that you see in the Lower 48 from companies that manufacture consumer products,â&#x20AC;? said Tucker of the waste streams handled by Emerald Alaska Inc. â&#x20AC;&#x153;We mainly see paint waste, a lot of benzene-contaminated materials, diesel-contaminated materials, and water-based drilling muds and acids from drilling companies. â&#x20AC;&#x153;We deal with anything from a five-gallon pail to a semi-truck load of waste,â&#x20AC;? he added. â&#x20AC;&#x153;There are no customers too big or too small.â&#x20AC;? According to Tucker, hazardous waste is a core part of Emeraldâ&#x20AC;&#x2122;s business. â&#x20AC;&#x153;The company got its start managing nonregulated materials such as contaminated wastewater and used oil,â&#x20AC;? he said. Emerald has contracts throughout the state and also has the

State of Alaska spill response contract. Emerald recently opened an office in Prudhoe Bay/Deadhorse to serve clients in that area. â&#x20AC;&#x153;We identify, package and transport hazardous waste, and handle all of the logistics, shipping and disposal,â&#x20AC;? Tucker said. â&#x20AC;&#x153;Emerald has multiple contracts within the state with federal, State and local municipalities, and we currently operate the Household Hazardous Waste program for the Municipality of Anchorage. The most common wastes we see there are paints, varnishes, paint thinners, other solvents, batteries, motor oil and antifreeze.â&#x20AC;?

WASTE LOGISTICS Emerald Alaska also deals with military sites, and currently holds the Defense Reutilization and Marketing Service (DRMO) contract, and has contracts with major oil companies. â&#x20AC;&#x153;During one project we did at a military site, we removed 17,000 tons of PCB-contaminated soil,â&#x20AC;? Tucker said. â&#x20AC;&#x153;The soil was moved using 22 90-ton railcar gondolas, 75 20-foot intermodal containers, and a bulk barge, which required 100 trucks running around the clock for four days straight. The waste was then moved south to Seattle, where it was put into railcars and moved to a thirdparty disposal facility. That project was finished in a week.â&#x20AC;? Another large-scale project Emerald managed was for a major oil company at Swanson River, dealing with a site left from the 1950s. â&#x20AC;&#x153;Back then, oil-based drilling waste was left in an open pit, which at the time was best management practices,â&#x20AC;? Tucker said. â&#x20AC;&#x153;We extracted the waste out of the pit, dewatered it, solidified it on-site, packaged the material and transported to a third-party disposal facility; it came to roughly 11,000 tons of material.â&#x20AC;? While itâ&#x20AC;&#x2122;s difficult enough to remove hazardous waste from an area close to transportation hubs, logistics are even tougher in Bush Alaska. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;ve been to 37 remote locations from the end of the Aleutians to Barrow and Bethel; we will go from the very top of the state to Southeast to Saint Lawrence Islands to the Yukon Territory,â&#x20AC;? Tucker said. â&#x20AC;&#x153;The word â&#x20AC;&#x2DC;noâ&#x20AC;&#x2122; is not really in our vocabulary.â&#x20AC;? Depending on the site and the type

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ January 2012

Emerald Alaska Inc. pumping out oil, asphalt and tar drums.

of waste to be removed, logistics can include almost every type of transportation. “We’ve worked at abandoned mine sites where we’ve needed to helicopter materials to a staging area where they were barged to Seattle and then transported by train,” said Tucker. “The only modes we haven’t used are carrier pigeon or dogsled. “Actually, I have seen drums come in by dogsled,” he laughed. “It was the middle of winter in the Interior, and some orphan drums came in on a dogsled to a place where they could be flown out.”

NEW USES FOR OLD WASTE As times have changed, so have the ways in which waste is processed. In some cases, what was once unusable waste can now be recycled for other uses. At Emerald’s processing facility in Anchorage, for example, nonregulated and nonhazardous used oils and fuels are recycled through mechanical and chemical means and turned into industrial burner fuel for resale. “We also took more than 900 drums of tar and asphalt and processed the material on-site for beneficial reuse,” Tucker said. “It was used to pave the runway at Nome Airport, and the drums themselves were crushed and the metal recycled in Seattle. Emerald

Alaska is always looking for the best management practice and the most cost-effective recycle-reuse for generated wastes.” Through Waste Management’s Organic Recovery Unit (ORU), a thermal desorption unit located in its Oregon facility, oil is distilled from petroleumcontaminated materials. Using intense levels of heat, organic material, water and solids are driven from soil or other media without allowing the heat source to come into direct contact with the waste. “The ORU operates like a large distillation vessel,” explained Gary Fisher, district manager, Chemical Waste Management of the Northwest. “We can process about seven tons of contaminated soil per hour, or three tons of sludge, which has a much higher moisture content.” The final distilled product is then sold back into fuel-type markets. Waste Management’s ORU is indirect-fired, which means flames never come into contact with the hazardous material. Organic Recovery Units can also be direct-fired, though this type of unit is more often used when dealing with nonhazardous materials. The benefits of ORU technology are many, including lower remediation expenditures, a smaller carbon footprint, reduced liability and regulatory compliance for

companies that take advantage of this technology. ORU is also more cost-effective and uses less energy than incineration while producing cleaner output. Unlike bioremediation, which takes a minimum of 12 months to 14 months to remove contaminants from soil, ORU technology is much faster and also creates recoverable oil. In the future, it may even leave a smaller environmental footprint than it already does. “Bio-treatment is more passive; you are not inputting or using fossil fuels,” said Fisher. “And while the ORU currently runs off of propane, our long-term goal is to use landfill gas from Columbia Ridge to heat it.” The company is currently in the middle of an engineering feasibility study to determine if this technology will work. As technologies change and Alaskans become more informed about the dangers of hazardous waste, companies who work in this industry will continue to help keep Alaska’s environment pristine. “The industry is changing and Alaska’s old mentality of being a ‘me’ state is changing,” Tucker said. “Alaskans are taking a proactive approach to finding solutions that are more environmentally friendly. They want to do the right thing to protect the environment and not leave a mess for someone else to clean up.” ❑

www.akbizmag.com • Alaska Business Monthly • January 2012

LEGAL SPEAK

By Jeff Waller

Know Alaska’s Insurance Laws Protect your company by being informed

“Y

our company has the right to an attorney of its choice.” This is not something you would expect to hear from an insurance company when a business has been sued, but there are common situations were this exact situation arises.

CLAIMS ACCEPTANCE For example, your business has been sued for negligence and an intentional act (like defamation or intentional infliction of emotional distress), so you send the complaint to your insurer because you have a commercial general liability (CGL) insurance policy. Assuming there is a duty to defend your business, the response from the insurance company may include either a statement that the insurance is accepting the claim “without reservation” or that the insurance “reserves its rights.” If the insurance company accepts the claim “without reservation,” then the insurance company selects the lawyer who will represent the insured business. In this situation, the insurance company and the business have the same interests – stated another way; the insurance company is not going to deny coverage based upon any policy or coverage defense (i.e., the policy covers only negligent acts, not intentional acts). If the insurance company “reserves its rights,” that means the insurance company may assert it does not have to pay any of the claim or may only pay a portion of the claim (leaving the rest to be paid by your business) based upon a policy or coverage defense. In this situation, there is a conflict of interests between the insurance

Jeff Waller

company and your business. As more information about the claim or lawsuit is obtained, the insurance may discover facts showing that coverage under the liability policy is excluded for various reasons.

CHI COUNSEL Because of this conflict of interests – your business wanting the insurance to cover the claim if any amount has to be paid and the insurance company believing that the claim may not be covered completely or at all – the insurance company has to provide the business with what is called “CHI Counsel” in Alaska. The term “CHI” comes from the name of the insurance company (CHI of Alaska) in the case where this issue was first decided by the Alaska Supreme Court. The court correctly recognized that one attorney cannot represent the conflicting interests of both the insurance company and the insured business in certain situations. In such a scenario, your business is entitled to choose its own independent

attorney and the insurance company has to pay his or her fees. That attorney then defends your business against the claims in the lawsuit. However, the attorney still has to work with the insurance company (every insurance policy typically contains a clause that the insured must cooperate in the defense of a claim) while at the same time working to protect your business’ interests in the matter. Most states have a similar statute or rule of law addressing this issue. However, there are out-of-state insurance companies selling policies in Alaska that may not appreciate the full scope of what is required under Alaska law when such a conflict arises. Additionally, there are times when an insurance company will not be 100 percent clear on whether it is “reserving its rights” or accepting the claim “without reservation.” If a business has doubts whether its insurance company is reserving its rights regarding a claim or lawsuit, and whether the business has the right to CHI Counsel, it is worth a quick call to an attorney. No business wants to accidentally end up without the protection of liability insurance coverage and being faced with the costs of defending a lawsuit and paying all or most of the damages from a claim.

About the Author Jeff Waller is a senior associate attorney at Homes Weddle & Barcott P.C. in Anchorage. His practice includes litigation, construction law, employment law, insurance defense and real estate matters. Prior to becoming an attorney, Waller owned and operated several businesses.

www.akbizmag.com • Alaska Business Monthly • January 2012

OIL & GAS

Photos courtesy of Apache Corp.

Apache contractors deploying offshore nodes in Cook Inlet to record seismic data. John L. Hendrix General Manager Apache Alaska

Apache Corp. Moves into Alaska in a Big Way Q & A with General Manager John L. Hendrix BY VANESSA ORR

ounded in 1954, Apache Corp., which is headquartered in Houston, Texas, has more than 4,500 employees worldwide. More than half of its production is from fields in North America with significant operations in Egypt, the United Kingdom sector of the North Sea, Australia and Argentina. Now considered one of the world’s top independent oil and gas exploration and production companies, at year-end 2010, Apache claimed $43 billion in total assets. That same

year, as part of a new global exploration program, the company began acquiring acreage in Alaska, including more than 300,000 acres of oil and gas leases in Cook Inlet from the Alaska Mental Health Land Trust and through private acquisition. In June 2011, the company obtained another 500,000 acres through the State oil and gas lease sale. The company now holds 800,000 acres in the Cook Inlet region, where it began a 3D seismic study in September.

John L. Hendrix, general manager for Apache in Alaska, is responsible for running operations on the Last Frontier. At the time this article was written, he was setting up Apache’s newest office in Alaska. ABM: How’s the move going? Hendrix: Great! We’re in temporary offices now, but on the first of the year, we’ll be moving into Peterson Tower. We have three employees, but are growing, and we currently employ over

www.akbizmag.com • Alaska Business Monthly • January 2012

200 contractors on our seismic project in Cook Inlet. ABM: It’s interesting that Apache is focused on Cook Inlet, particularly at a time when other companies are pulling out of the area because of declining oil and gas production. Do you know something that others don’t? Hendrix: We’re excited about being in Cook Inlet. It’s a proven oil basin that for years has been forgotten when it comes to oil. Oil was discovered on the Kenai Peninsula near Swanson River in 1957, and it was in its heyday in the 1960s. Then Prudhoe Bay was discovered, and all the focus moved up there. The big money went north. I grew up in Homer and went to work in Prudhoe Bay in 1980, working there through fall of 1999. Even today, the resources in Cook Inlet are mostly ignored. For example, when people today talk about oil projects or issues, they talk about the trans-Alaska oil pipeline, Prudhoe Bay and the North Slope. They aren’t talking about Cook Inlet.

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ABM: Yet Apache has chosen to invest there. Hendrix: Apache is the largest leaseholder in Cook Inlet with 800,000plus acres. We looked at the historical oil play and decided to get an acreage position. We decide on how to invest using the following criteria. First, is there a chance of developing hydrocarbons in Cook Inlet? We believe that there is significant potential there. Second, can those hydrocarbons be developed economically? We know that we have the right team and the right technology to develop anything, anywhere. Third, is the state and political climate good? It is; in fact, hats off to the state and its politicians and the people of Alaska who have shown that they want us to come into Cook Inlet and develop the resource. ABM: Did State tax incentives help in your decision? Hendrix: I would say that state tax incentives helped increase the scope and scale of our operation. ABM: Let’s talk about that operation. Right now, you’ve got www.akbizmag.com • Alaska Business Monthly • January 2012

seismic testing going on in Cook Inlet. Hendrix: After acquiring the acreage in Cook Inlet, our next step was to determine what was under those 800,000 acres. We looked at wireless nodal technology, which some people call â&#x20AC;&#x2DC;seismic gone geek.â&#x20AC;&#x2122; We currently have 200-plus people in the Inlet working on this project, which includes seven helicopters and 12 seismic rigs drilling 35-foot holes to transmit sound waves, which our nodal technology will receive at the surface. ABM: How does nodal technology work? Hendrix: There are land nodes, which are smallâ&#x20AC;&#x201D;about the size of coffee cans, and offshore nodes, which can weigh up to 65 pounds. The nodes are plugged in, and the listening sensors and GPS are charged. Nodes are lifted to their sites, which are spaced between 165 and 200 feet apart. We use a conventional explosive source and/or vibrators at a depth of about 35 feet for onshore operations, and air guns in offshore operations to generate a pulse. The sound travels through the ground or water,

and the formation reflects back a signal that is recorded by sensors. Once seismic data have been recorded, we pick the nodes up, download the data and recharge them to use again. Weâ&#x20AC;&#x2122;ve contracted with SA Exploration Services (SAE) to deploy this technology, which was developed by Fairfield. One of the many positive aspects of this technology is wireless crews can deploy the nodes easily. The crews do not have to create traditional seismic lines or cut down trees. Weâ&#x20AC;&#x2122;re using wireless technology instead of traditional cable technology. This makes it environmentally friendly, and easier, particularly in populated areas. When someone doesnâ&#x20AC;&#x2122;t want you to place a node on their property, with wireless nodes you can put a node in one location, then jump over the property that you canâ&#x20AC;&#x2122;t use, and put a node on the next property. You donâ&#x20AC;&#x2122;t have to run five miles of cable to communicate between nodes. ABM: Where in the Inlet are you deploying this technology? Hendrix: Weâ&#x20AC;&#x2122;re currently shooting seis-

mic from Beluga south to Trading Bay. Weâ&#x20AC;&#x2122;re looking deep, too. A lot of people in the past went shallow, but with us, nothing will be left unturned. Weâ&#x20AC;&#x2122;re shooting seismic to approximately 18,000 feet deep, and when we drill, we plan to drill to bedrock to make sure that we donâ&#x20AC;&#x2122;t bypass any oil or gas. ABM: What types of information are you receiving? Hendrix: We ran a test line in the West Forelands in late March and early April to prove up the nodal technology and that was very successful. In additional to using the wireless nodes, we also ran a traditional cable seismic line to truthtest the nodal data. Actual field data from this fallâ&#x20AC;&#x2122;s program began coming in on Nov. 11 and weâ&#x20AC;&#x2122;ve been gathering seismic data since then. The data we have now covers 12 square miles, and the project is ongoing. This is the largest 3D seismic survey ever undertaken in Cook Inlet; we will be in the field for the next three years, with the goal of getting 400 square miles done each year for a total of 1,200 square miles over the life of the project.

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ January 2012

ABM: What do you plan to do with this data? Hendrix: We’re looking for hydrocarbons—oil and gas. As we continue to shoot seismic and gather data, we’ll begin to understand the subsurface geology and see where the geological traps are. Where we see a sizable number of traps or opportunities, we’ll look at undertaking exploratory drilling and developing the area to minimize the footprint in the most economical way. The goal is to shoot a lot of seismic to get good quality data to develop a quality portfolio. Our geoscientists are now mapping from the data we’ve received. ABM: What’s the timeline for drilling? Hendrix: We hope to find something attractive to drill soon and drill several wells by the end of 2012. I do want to stress that we plan to develop this area responsibly and efficiently; our goal is to be a great partner to the people, businesses and governments here in Alaska. ABM: What type of investment are you making in Cook Inlet?

Hendrix: In seismic testing alone, we’ve spent about $30 million so far this year. In the next few years, we’ll probably spend $200 million, just on acquiring data. That doesn’t include any investment if we start exploratory drilling. ABM: In a place full of companies that explore for oil and gas, what do you think sets Apache apart from its competitors? Hendrix: First, Apache is a can-do company. We really believe that our people are our biggest asset—they walk the talk. Apache empowers its employees—everyone from the field up to the CEO. And each region is empowered to make its own decisions. Everyone is encouraged to look for innovative ways to unlock potential or to access new resources. We’re strong because of our corporate spirit and our management—all of our managers are working managers, and all of our teams have the desire to succeed. Some people call it a fire in the belly. We’re hungry. As for working in Alaska, I believe

Where we see a sizable number of traps or opportunities, we’ll look at undertaking exploratory drilling and developing the area to minimize the footprint in the most economical way. that we’re also right-sized for the state at this time. We’re a good-sized independent that has the technology portfolio and financial portfolio to work in Cook Inlet. Our goal is to be a very responsible partner in Cook Inlet for the state of Alaska long-term. We are a proven company with a proven track record of delivery; we’re also a rateof-return-driven company. We believe that we don’t get anywhere by sitting on our assets. ABM: Next steps in Cook Inlet? Hendrix: From December 15 to January 15, due to darkness, seismic crews will be taking a break. Then we’ll resume seismic testing on a year-round basis. We’ll continue to assess the data and come up with drilling prospects. ❑

www.akbizmag.com • Alaska Business Monthly • January 2012

OIL & GAS

Exploration Spurred by Jack-up Rig Photos courtesy of Escopeta Oil & Gas

The Escopeta Oil Co. LLC rig in the Cook Inlet Basin.

Escopeta Oil begins drilling in Cook Inlet BY VANESSA ORR

or almost two decades, Escopeta Oil & Gas has had a presence in Alaska. But it wasn’t until Sept. 2, 2011, that the company was able to begin drilling its first well in the state; and getting to that milestone wasn’t easy. Difficulties in the transport of a Spartan 151 jack-up rig—and issues with the U.S. Department of Homeland Security—delayed drilling at the company’s Kitchen Lights Unit No. 1 by more than three months. And a whopping $15 million fine for the transportation of that rig may also color the discovery of what the company says could be the largest discovery of natural gas in Cook Inlet for a quarter of a century.

JACK-UP RIG’S DIFFICULT JOURNEY Transporting the huge rig from the Gulf of Mexico was a challenge. The 150foot independent leg/cantilever unit needed to be transported from Texas to Alaska in time for the 2011 drilling season, or Escopeta risked losing the Kitchen Lights Unit and most of its leases. In addition to the expense of ferrying the mobile drilling unit, which is designed to work especially well in shallow offshore areas such as Cook Inlet, regulations cited in the 1920 Jones Act forbid the transport of goods between U.S. ports by a foreign-flagged vessel. According to Danny S. Davis, owner of Escopeta Oil & Gas and a working in-

terest owner in the Kitchen Lights Unit, though the company tried to find a U.S. flagged heavy-haul vessel to transport the jack-up rig in 2006 and again in 2011, it was unsuccessful. The company had been granted an open-ended Jones Act waiver from Homeland Security in 2006, which would not have expired until June 7, after the jack-up rig was offloaded in Alaska had it remained on schedule. However, Escopeta was asked to apply for a new waiver, which was turned down in late May, after the jack-up rig was already en route. “The Obama administration treated us rough on this; we had the Jones Act Waiver provided by the Bush admin-

www.akbizmag.com • Alaska Business Monthly • January 2012

istration, which we thought was in effect,” Davis said. “We had to unload the rig in Vancouver and spend two months there, which put us behind for the drilling season. And then we were fined $15 million for breaking the Jones Act, which we never broke.” According to Davis, Homeland Security threatened to confiscate the rig and the boat on which it was traveling, the M.V. Kang Sheng Kou, which had brought it around the tip of South America. The rig was detoured to the coast of British Columbia. “We had to turn around and drop the rig off in Vancouver and have work done there by Canadians that was originally going to be done in Kenai,” he said. “Canadians got the jobs and the money; Alaskans didn’t.” On July 20, the rig finally left the Vancouver area, towed by three U.S.flagged Foss Maritime Co. tugs. On Oct. 13, U.S. Customs and Border Protection, which is part of the U.S. Department of Homeland Security, levied a $15 million fine against Escopeta for violating the Jones Act by transporting the jack-up rig using a foreign-flagged vessel.

Danny S D S. D Davis, i owner, E Escopeta t Oil & G Gas. Working Interest Owner, Kitchen Lights Unit

According to Davis, the law firm representing Escopeta, Blank Rome, will be mitigating the fine. “I personally don’t feel that we owe a

dime,” Davis said. “This administration is anti-jobs and anti-oil. They should have given us an award and brought us to dinner at the White House; not tried

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www.akbizmag.com • Alaska Business Monthly • January 2012

to punish us. Homeland Security was terrible to us, fining us for creating jobs in the U.S. It just doesn’t make sense.” Escopeta has found an ally in the Alaska congressional delegation, and also hopes to enlist the help of other senators from outside the state. “Alaska’s senators and representative are really fantastic—the people of the state have no idea how lucky they are to have those three working for them,” Davis said. According to a press release from the office of U.S. Sen. Lisa Murkowski, she, Sen. Mark Begich and Rep. Don Young worked with the head of the U.S. Department of Homeland Security to challenge objections to Escopeta’s use of a foreignowned vessel to deliver the specialized jack-up drilling rig to Cook Inlet. The delegation believed a Jones Act waiver was warranted because no U.S.-flagged vessel was capable of transporting a rig of that size in time to allow exploration by the summer of 2011.

ESCOPETA CLAIMS MAJOR FIND Despite the battle with Homeland Security, Escopeta proceeded to install

the jack-up rig in Cook Inlet, making it the first jack-up rig located in the Inlet for more than a decade. Designed and constructed by Baker Marine Corp. in 1981 and completely refurbished and upgraded in 2006, the rig can operate in a minimum of 12 feet of water and a maximum of 150 feet or water, and can drill to a depth of 25,000 feet. In early November, the company announced a major gas find. In a prepared statement provided by Escopeta Vice President Bruce Webb, the company said they believe there are 3.5 trillion cubic feet (tcf) of gas to be found in the larger Kitchen Lights Unit from two separate geologic formations. This find has encouraged the company to explore an accelerated natural gas scenario that could bring gas to Cook Inlet as early as 2013. In order to comply with regulations to finish drilling for the 2011 season by Nov. 15, Escopeta stopped drilling at 8,800 feet. “We discovered about 500 feet of net pay in the Beluga formation, and while we haven’t been able to drill into the

upper Tyonek yet, we believe, based on subsurface geology logs and the seismic we did, that there is 400 to 500 feet of pay there,” Davis said. In late April or early May this year, the company plans to drill 16,500 feet into the Jurassic formation, which will include drilling through the Tyonek, Sunfish and Hemlock formations. “In the early days, people were paying attention to oil and not gas,” Davis said, adding he believes there are also approximately 350,000 million barrels of oil to be found at Kitchen Lights. “Everyone is skeptical now, but the fact is, the Beluga is one of the biggest producing fields out there. “The Kitchen Lights Unit is interesting that it contains two separate geologic features,” he said. “One is the Kitchen Lights anticline, which is where we drilled, and then there is the Kitchen Lights thrust fault trap, which is west of the anticline and has never been drilled before. I believe there are 3 to 4 tcfs of gas there and about 800 million barrels of oil. We’ll drill there next year if there’s time.” After Escopeta’s announcement of

www.akbizmag.com • Alaska Business Monthly • January 2012

the find, some state officials were more cautious, saying the claim couldn’t be substantiated either way. “Even when Escopeta turns their logs over to us, which we will diligently review, we can’t make any comments positive or negative about these findings as this information is confidential at the request of the operator,” said Bill Barron, director of the Alaska Division or Oil and Gas. “This is an exploration well, so we can’t discuss what we think or find. That said, the comments I made earlier relative to the complexities of the resource established in Cook Inlet still ring true; a lot of work needs to be done to prove any reserve base, big or small.” Escopeta’s success in installing the rig—and the fact it may receive up to $25 million in reimbursements from the state for being the first to drill a well in Cook Inlet using this equipment—has encouraged others to follow suit. By May, a second jack-up rig is expected to arrive in Cook Inlet—one partially owned by the state. The Alaska Industrial Development and Export Authority (AIDEA) finalized an agreement in November to invest $27 million to purchase the Adriatic XI jack-up rig with partners Buccaneer Energy, out of Australia, and Ezion Holdings Ltd. of Singapore. The rig, which will be named Endeavor-Spirit of Independence was moved from Malaysia and is currently in Singapore being modified for Alaska waters. “The state is bringing its own rig to Cook Inlet, which means we’ll be competing with the state,” Davis said, noting that to date, Escopeta has had a very positive relationship with state agencies, especially the Department of Natural Resources. The state will not remain in the jackup rig business, however, as AIDEA’s investment will be repaid under terms of the contract within five years. A subsidiary of Buccaneer and Ezion Holdings called Kenai Offshore Ventures will own the rig, which will be operated by Archer Drilling. As more companies consider revisiting the Cook Inlet region in their search for oil and natural gas, more jack-up rigs may soon be making their way north to begin work on the Last Frontier. ❑

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www.akbizmag.com • Alaska Business Monthly • January 2012

OIL & GAS

Q&A with Cindy Roberts, Author BY DEBBIE CUTLER

possible for the next generation to enjoy the many benefits from living here that we have. And, I wanted to understand the language of the proposed 2007 Alaska Gasline Inducement Act known as AGIA. Cracking the CODE Expanded in 2012.

ur former publisher, the late Vern McCorkle, inserted a detachable booklet in our January 2008 edition called “CRACKING THE CODE – A Citizen’s Guide to the Alaska Natural Gas Pipeline Discussion and the Alaska Gasline Inducement Act (AGIA)” by Cindy Roberts. The second edition is available online at www.akbizmag.com, and is titled “CRACKING THE CODE 2012 – A Citizen’s Guide to the Alaska Natural Gas Pipeline Discussion.” Beyond the interesting reading, it encourages active study so we can all learn more about the gas pipeline’s role in our future. ABM: Cindy, what prompted you to write the CODE in 2008? Roberts: Like many Alaskans, I believe that the Alaska natural gas pipeline project is a golden opportunity to revitalize and strengthen Alaska’s economy for many years to come, and make it

ABM: Why? Roberts: I was concerned when British Petroleum announced its plan to purchase Arco Alaska in 1999. I was close to the Backbone group and watched carefully as the Federal Trade Commission filed suit to prevent the merger. If the sale had gone through, BP would have acquired monopoly control of more than 70 percent of the North Slope oil fields and the Trans-Alaska Pipeline System (TAPS). BP is a fine company, but it shares the British tradition of monopoly enterprises, such as the East India Co., the Hudson Bay Co., etc. America’s tradition is built on competition. ABM: 13,000 copies of the 2008 CODE went into circulation (and the January issue sold out). Why did you do a 2012 edition? Roberts: The easy answer – I ran out of copies and was getting requests. The real answer – The gas pipeline issues have moved back to the top of the Alaska agenda.

Cindy Roberts

The Legislature and governor awarded the AGIA license to TransCanada in December, 2008. Now three years later, the economics of that decision have changed dramatically due to shale gas development in the Lower 48 and western Canada. The cost of transportation to the west Alberta border may be more than the market price. Alaskans need to understand the issue. ABM: Which gas line option do you support, and why? Roberts: I strongly support the AllAlaska pipeline endorsed by 62 percent of Alaska voters in 2002. While Alaska is part of the USA, we have always had a stronger market for our resources in Asia. Think about fish, timber, coal, wood pulp, and liquefied natural gas. Alaska has exported Cook Inlet LNG to Japan for more than 40 years. ABM: How do the mathematics work behind the pipeline projects Alaska is currently researching? Which is the most viable option in your opinion?

www.akbizmag.com • Alaska Business Monthly • January 2012

Roberts: The math is simple. In 2006, there was a national gas shortage and spot market U.S. prices skyrocketed. AGIA happened. The U.S. and Canada markets reflect supply and demand, and today, Alberta and U.S. short-term prices are less than $4 per thousand cubic feet (Mcf). The $41 billion pipeline may have a tariff that costs more than the market price. Think about why BP and ConocoPhillips dropped Denali – The Alaska Pipeline Project last spring. It was also headed to Alberta and beyond to the Mid-America market. Asia buys energy based on barrels of oil equivalency (BOE) and signs 20-year contracts. The Japan Customs-cleared Crude price, or “Asian Cocktail,” is expected to exceed $18 per million British thermal unit in the near future. Japan, Korea, and China are following us closely. Hawaii is also hoping Alaska will enter the gas market and help meet its energy needs. The math also impacts the ASAP (Alaska Stand Alone Pipeline) option. Under AGIA, ASAP has a smaller throughput with a higher unit cost. It could supply Anchorage or Nikiski, but it would be limited in supplying a sizeable export contract and revenue to the State. Governor Sean Parnell announced on October 27 that the proposed crossCanada line is stalled and we should pursue a large diameter pipeline to Alaska tidewater and export liquefied natural gas (LNG) to Asia. (Under AGIA, that means Valdez.)

get solid answers. In 1979, I worked with my husband and long-term Hickel aide, Malcolm, on the startup of Commonwealth North. I was then tapped to help with the start-up of the Alaska Minerals & Energy Resource Education Fund (AMEREF), the Alaska World Trade Center, and the Alaska Science & Tech Foundation. In State government, I was Special Assistant and immediate staff to both Commissioners of the Department of Natural Resources and the Department of Commerce, Community & Economic Development. My last assignment was to represent DCCED at the Denali Commission. I also served as the public works director in Wasilla for a year. All of those assignments have given me a wonderful network of friends and professionals who were helpful in clarifying my many questions.

ABM: Who are you working with to produce this booklet? Roberts: I have tapped the expertise (and the patience) of 30 or more Alaskans to refine the nearly 200 terms in the 2012 CODE.

ABM: Anything else you’d like to add? Roberts: Yes. Thank you ABM for your interest and support of this effort to help Alaskans understand this critical issue. Alaska’s economy and our future will be determined in the next six months by the decisions and leadership exhibited by the Legislature and the governor. That will require all of us as Alaska citizens to be familiar with the issue and its vocabulary so that we can ask tough questions. We need to support those who are making an economic gas pipeline a reality, and make informed decisions for this year’s Alaska elections. ❑

ABM: Hearing about the issues can’t be enough to write a glossary. There has to be more to this story. What energized you for this project? Roberts: My “back-story” covers a range of Alaska issues. I learned enough forestry and landform analysis at the University of California, Berkeley, to ask good questions and

ABM: Who is underwriting the 2012 CODE? Roberts: A list of the 2012 edition contributors is in both the printed and cyber formats. The group includes contractors and unions, educational institutions, individuals, entrepreneurs and businesses. They all know Alaska needs to grip the issue and make some tough decisions. ABM: What is your distribution? And how does one get a copy? Roberts: The CODE is online at ABM’s website. I have printed copies. So do the contributors. The single copy price is $10 plus mailing.

Since 2007, everyone in Alaska has been asked to understand “gaslinespeak” for AGIA and for the future economy of Alaska. The 2012 CODE is a renewed effort to help us all ask good questions and get clear answers. Cracking the CODE 2012 is greatly expanded (100 pages versus 32 pages) and includes more maps and updated information. Here is a sampling of some terms. Btu British Thermal Unit A standard energy measurement equal to the amount of heat required to raise the temperature of one pound of water one degree (58.5˚ to 59.5˚) Fahrenheit under standard conditions of pressure. Midstream Industry activities that occur between exploration and production (upstream) and refining and marketing (downstream). The term is most often applied to pipeline and marine transportation. Netback The price of natural gas and of crude oil established by subtracting midstream transportation and processing costs from the sales price at the final market. To order a print copy, contact Cindy Roberts at cindy.roberts@gci.net. Or scan the QR code below into your phone for a direct online link to the new addition of “CRACKING THE CODE 2012.”

www.akbizmag.com • Alaska Business Monthly • January 2012

ECONOMY

Alaska’s 2012 Economic Forecast National insecurity, belt-tightening makes leaders cautious BY GAIL WEST

hat will the Alaska economy look like in 2012? According to a number of business and government leaders, it will look relatively flat with the potential for a few bright spots. If, however, the State moves ahead with one or more of the big projects currently on the horizon, such as the Susitna-Watana Hydroelectric Project, the entire prospect for the economy could begin a decided upsweep and encourage both businesses and residents. Alaska Business Monthly asked a number of business sector leaders for their take on the economy in 2012, here’s what they had to say.

www.akbizmag.com • Alaska Business Monthly • January 2012

Joy Journeay, the association’s executive director, said the largest potential threat to air carriers statewide is the bypass mail issue. Margie M i B Brown President and CEO Cook Inlet Region Inc.

ALASKA NATIVE CORPORATIONS Steven Hatter Deputy Commissioner for Aviation Alaska Department of Transportation & Public Facilities

AIRPORTS Steven Hatter, deputy commissioner for Aviation in the Alaska Department of Transportation & Public Facilities, said two big national issues face Alaska’s airports: bypass mail and essential air service. Both programs are currently facing serious challenges to long-term federal support. “In this position, I’ve seen how critical a lifeline aviation is to Alaska,” he said. “It’s a $3.5 billion industry, and 10 percent of the jobs statewide are aviation related. As for our international airports, Ted Stevens in Anchorage is number five in the world for cargo throughput.” Alaska needs to be prepared to see fewer federal dollars coming in – through the U.S. Department of Transportation and Federal Aviation Administration. Hatter said nothing is firm yet, but it’s a strong possibility given the nation’s debt crisis. “We need to spend what we do get as wisely as we can,” he added. He went on to say his office is focused on making certain the State is not deferring maintenance to the point an airport would need new infrastructure before it really needs it. In the FY 2012 aviation plan funded by the FAA, the State has netted “about what we averaged over the last three years – at $205 million for capital improvements throughout the state,” Hatter said. •••

JJoy Journeay J Executive Director Alaska Air Carriers Association

AIR CARRIERS The Alaska Air Carriers Association echoed Hatter’s concerns about bypass mail and essential air service. Joy Journeay, the association’s executive director, said the largest potential threat to air carriers statewide is the bypass mail issue. The U.S. Postal Service is the primary beneficiary, she said, “due to the reduced cost in handling parcel post that is directly inducted by the carrier and directly delivered to the customer.” In 2009, Journeay said, the aviation community saw a significant drop in tourism and recreational activities, but cargo and basic passenger travel statistics were slightly less affected by the economy. “Passenger service is a little more stable because aviation transport is the only means of access to 82 percent of Alaska’s communities,” she said. Journeay added that her organization is working diligently with all of Alaska’s delegation and the governor on parcel post, essential air service and safety issues. •••

Margie Brown, president and CEO for Cook Inlet Region Inc., said there are some common issues facing all the Native corporations. One of those is the role of government in encouraging private development of natural resources. “We’d like to have a consistent timeline for permitting and know what hurdles will have to be overcome to move a project forward,” she said. Another major issue facing most corporations is the continuing challenge to the SBA 8(a) program. Although CIRI isn’t heavily dependent on this program, several other corporations are. One of the biggest issues facing the state is the declining oil flow through the pipeline. “At CIRI, we’re watching the state’s economic conditions carefully. We need a strong and robust economy for our current investments and for our shareholders,” she said. “We know that smaller companies have been doing exploration, but we need the majors to stay and to work on their assets. Brown added that a significant part of her job, and that of all her counterparts, is to be concerned about the longterm. “The calamity of the financial markets showed me we aren’t immune in Alaska. It’s critical that we diversify our portfolios.” To illustrate, Brown pointed to NANA’s acquisition of an oil services company that works in the Gulf of Mexico. “We’re making investments outside of Alaska,” she said. “It’s one way to diversify and protect ourselves against risk. It also shows that private capital goes where private capital is wanted. It’s worrisome that we have private capital dollars leak out of Alaska.” •••

www.akbizmag.com • Alaska Business Monthly • January 2012

JJohn h M MacKinnon Ki Executive Director Associated General Contractors of Alaska Doug Longacre Senior Vice President First National Bank Alaska

BANKING & FINANCIAL SERVICES Alaska banker Doug Longacre, a senior vice president at First National Bank Alaska, said he expects to see the economy stay pretty flat unless one of the big projects comes through. “I think banks are a good barometer of the economy, and it’s been fairly flat. A lot of people have been taking a ‘waitand-see attitude,’” he added. “We do have an extraordinary interest-rate environment, one the nation and world hasn’t dealt with before,” Longacre said. “First National had a good year in 2011, but we’re concerned going forward because there is so much relying on the petroleum industry in Alaska. We have a unique economy here, and we need to pay attention to what the drivers are.” One of the biggest issues facing banks today, he said, are the regulations coming from the federal government. “We’re still trying to be profitable for our shareholders,” he said, “but it’s costly to comply with all the regulations handed down.” With fewer federal dollars coming into the state, Longacre encouraged Alaskans to be concerned about the decline of oil flowing through the pipeline. “Where would we be able to replace the revenues oil brings? Alaskans do have control of the issue through our Legislature, and we do have to find new sources of oil.” •••

Larry M L McCallister C lli t Director for Programs and Project Management U.S. Army Corps of Engineers Alaska District

CONSTRUCTION Associated General Contractors of Alaska’s Executive Director John MacKinnon said 2011 was a good year for the construction industry. 2012, he says, will have its ups in some sectors and downs in others, but will likely average out to be a relatively flat year. “Point Thompson, starting next fall, should mean $300 million in access pads and other facilities,” he said. “On the other side of the market, we’re probably going to see across-the-board cuts in federal spending. In Alaska, we have a State administration and Legislature that are pro economy. We’ll all have to tighten our belts on the federal side, so we need to take our own initiative as a State and do what we need to do here.” MacKinnon said he gets his optimism from the go-ahead attitude of the elected leaders, whether it is the next phase of investment in Susitna hydro or a gas line to tidewater for instate use and export. “We need that kind of mega thinking,” he said. “I also believe the State should be looking long-range at three major power lines – one to the Seward Peninsula, one from Healy southwest to Bethel, and one from Cook Inlet down the Alaska Peninsula.” “Those,” he added, “would require rudimentary roads to construct and maintain, and eliminate two of the biggest impediments to development in this state – energy and transportation.” As for upcoming trends, MacKinnon said he is concerned about federal spending but is optimistic about the mining industry and private investment projects. •••

CORPS OF ENGINEERS Federal government cutbacks are facing the U.S. Army Corps of Engineers and Alaska is no exception. Larry McCallister, the Alaska Corps’ director for Programs and Project Management, said FY 2011 saw about $550 million worth of projects around the state – including military, civil and environmental cleanup projects. In 2012, McCallister said the Corps is looking at about a $460 million program. At the end of November, McCallister said the Corps was still planning on a robust year in FY 2013. “But we’ve been told that a good portion of the 2013 program across the U.S. will be cut. Right now we’re planning on awarding $370 million in projects for military construction but there isn’t an approved Army budget yet. We suspect Alaska may only get $200 million to $250 million.” Of the money the Corps spends in Alaska, McCallister said about 60 percent goes to military projects and about 40 percent to civil and environmental projects. Though the federal budget is still up in the air, “we still have probably $100 million on environmental work and $50 million to $80 million in work for other agencies. “The military construction program is in a big flux right now, but we expect to see the environmental program grow a little bit,” he said. As far as a long-term outlook for the Corps of Engineers, McCallister takes a philosophical approach: “Congress comes, Congress goes. Priorities change.” •••

www.akbizmag.com • Alaska Business Monthly • January 2012

Kuparuk

THANK YOU FOR 30 YEARS In December of 1981, ConocoPhillips began producing the first barrels of oil from Kuparuk, then North America’s second largest field. More than 2 billion barrels later, Kuparuk is still productive, thanks to advancements in technology and the efforts of our experienced employees and contractors. On this anniversary we recognize all of the individuals and companies who have supported Kuparuk over the past 30 years. So what about the next 30? Recovering the North Slope’s remaining reserves will require the state and industry working together. We’re ready.

HERE’S TO MORE ANNIVERSARIES TO COME.

Bruce Lamoureux Senior Chief Executive Providence Health + Services Alaska

Dan Robinson Chief of Research and Analysis Alaska Department of Labor & Workforce Development

EMPLOYMENT The employment situation is looking better here than in most other places, said Dan Robinson, chief of Research and Analysis for the State’s Department of Labor. “We’re one of a small number of states with a very small job-loss record for last year,” he added. Jobs have been steadily growing by small increments since 2009, Robinson said, “and it looks like 2012 will probably follow the same pattern. Preliminary numbers for 2011, through September, showed a growth of 3,600 jobs, a little less than 1 percent. By industry, health care continues to be a source of growth – it’s roughly up 900 jobs from 2010. Government has been down a little and retail trade hasn’t grown much in the last few years. Oil and gas is up a little, probably closer to flat, and hospitality is up a little.” It’s still early to say much about future trends in the job market, he said. “Things that matter are oil revenue and federal spending. Both are enormously important to Alaska; they’re the two biggest drivers.” November unemployment for Alaska stood at 7.6 percent, at the same time as the national figure stood at 9.1 percent. Washington state’s unemployment was at 9.1 percent; California’s at 12 percent; and Oregon’s at 9.6 percent, Robinson said. “Normally, our figure is 1 or 2 percent above the nation’s, but in 2008, the U.S. rate went higher than Alaska’s and has stayed there,” he added. “Our resource-based economy has made a big difference for us.”•••

HEALTH CARE Glenn Reed President Pacific Seafood Processors Association

FISHERIES “In Alaska’s fisheries we have the benefit of two certification bodies – State and federal, so the health of the resource is good and well managed,” said Glenn Reed, president of the Pacific Seafood Processors Association. Alaska’s salmon fishery was mixed in 2011, but overall it was a good year, he says. There was a “dramatic reduction” in red crab fisheries in 2011, and 2012 looks uncertain at this point, Reed said. “The red crab fishery may not open in 2012, or there may be a reduction in harvest,” he said. “We won’t know for several months. The opilio crab fishery saw an increase in 2011, but, again, we don’t know next year’s limits. The Bering Sea Pollock fishery will trend down for allowable catch – it looks like a 12 to 14 percent reduction. As for Pollock in the Gulf of Alaska, the trend will be up. The trend for cod will be up in both the Bering Sea and the Gulf. Other groundfish species are generally trending about flat or a little up.” A significant issue facing the fisheries’ industry is the National Ocean Policy initiative coming out of Washington, D.C., Reed noted. It would centralize fisheries’ management in D.C. “We’ve been actively opposing this effort,” he said. We must ensure that we don’t end up with folks in D.C. making decisions on fisheries around the country. The regional folks know their fisheries better.” •••

Predictions for the health care industry in 2012, as Bruce Lamoureux, senior chief executive of Providence Health and Services Alaska saw them, call for more challenges. “The precipitating factors are the economics of health care and the continued escalation of costs,” he said. “Many employers and individual consumers choose to drop coverage because of the expense. That leads to patients delaying care or not seeking it at all until they face an emergency.” “Health care jobs will continue to grow. We know the number of Medicare-aged people in Alaska is expected to triple in the next 20 years. That, alone, means more health care will be needed,” Lamoureux said. Things to watch for in 2012, he added, are what, if anything, materializes from the Affordable Care Act. “A second issue is that each passing day, we have a society approaching a breaking point for lack of affordability.” The third issue Lamoureux says he is watching is incentives and penalties applied to health care deliverance. The Centers for Medicare and Medicaid are preparing to launch value-based purchasing, he said, and hospitals that do not perform at a defined threshold are going to see reduction in their Medicare reimbursement. “Overall, I’d say the lack of affordability is unacceptable and outrageous, and if we don’t take care of this ourselves, we’ll suffer the consequence of ignoring the problem. It’s not just physicians who are part of the problem, or hospitals. It’s not just patients, it’s not just employers – we all have a stake in it.” •••

www.akbizmag.com • Alaska Business Monthly • January 2012

St Steve Borell B ll Former Executive Director Alaska Miners Association

MINING Steve Borell, former executive director of the Alaska Miners Association – he resigned in December – said he sees continued, steady growth for the mining industry. “The driving force right now is the high price for metals,” he added. There are seven major mines in

Alaska, and they will continue to try to improve their productivity and lower their costs. “I don’t know of any expansions planned by the majors,” he said. “As for coal, about 9 percent of the state has coal under it – more coal than the rest of the country put together,” Borell said. “I expect Chuitna will get its supplemental environmental impact statement this year, and Wishbone Hill is waiting to determine final feasibility and get its permit renewals. It looks promising.” Borell said he sees a trend of continuing exploration as long as metal prices stay high and global markets are steady. A major concern, he said, is the future of the nation. “We are seeing the Environmental Protection Agency literally out of control. At the top of the agency now, they have people who have radical agendas and affect all aspects of mining, oil and gas, timber, farming – across the board” Mining in Alaska, however, has a bright future, Borell said. Alaska is effectively unexplored. “We’ve hardly touched the coal and industrial minerals here.” •••

Kara Moriarty Executive Director Alaska Oil and Gas Association

OIL & GAS The Alaska Oil and Gas Association’s new executive director, Kara Moriarty, said the same issue that faced oil companies last year will face them this year. “Changing the Alaska tax structure,” she said. “We have the highest production taxes in the nation, so the investment climate is not conducive to the kind of capital spending required to get more oil into the pipeline.” “Cook Inlet is definitely in changing times,” she said. “Chevron is selling

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projects whether big or small.

assets and leaving the inlet, and we are optimistic that the new owners, Hilcorp, will find success in Cook Inlet. We’re seeing several new faces in the inlet and hoping for more production.” As for the three majors on the North Slope, Moriarty said Exxon is trying to develop Point Thomson. “They’re about a year behind because of federal permitting issues,” she added. BP is focused on its infrastructure upkeep and hoping for an environment favorable to develop heavy, viscous oil. “Unfortunately, the biggest trend we see in Alaska is the continuing decline of oil in the pipeline. Over the last three years, production has declined more than 20 percent. There’s been no immediate budget impact to the State because of high oil prices,” Moriarty said, “but until we see a change in the culture here, we’re not going to see the types of development that can stem that decline.” ANWR also needs to move into the development stages, Moriarty said, and if there’s a significant find offshore in 2012, “that’s another generation of oil production. It means jobs and money for Alaska.” •••

economy,” Stephens said. “Our economy is showing some slight growth, so commercial real estate is following that trend.” Growth in Alaska, he added, is significant considering all the bad news in the Lower 48, “and we’re impacted somewhat by national companies that are holding back a bit on business. There is a spec office building under construction on Gamble between Northern Lights Boulevard and Fireweed Lane.” Plus, Stephens says, JL Properties will break ground this spring on a new class A office building. These two create 103,000 square feet of new office space. The vacancy rate in new buildings is very low right now. There are three new office buildings – 188 West Northern Lights, the JL Tower at 36th Avenue and C Street and Centerpoint West – those last two building have only one floor available each. 188 WNL has about four or five available floors. “Obviously, any major construction projects – a gas line or if Shell is successful in the Chukchi Sea – will mean additional growth. With the market as tight as it already is, I think it will put additional pressure on space and raise prices,” Stephens said. •••

Chris Ch i St Stephens h Associate Broker and Partner Bond, Stephens, & Johnson Inc.

Helen H l JJarratt President Alaska Association of Realtors

right on the cusp of stabilizing,” she said. “Foreclosures in Alaska are less than 2 percent and we’re number two in the country for the lowest number of foreclosures. When we had the crash in the 1980s, we had about 5,000 homes in foreclosures in the Anchorage-Eagle River area. This time, however, our lenders held a tighter rein on their lending so we don’t have the standing inventory. What we had is pretty well gone now, so we’re beginning to see more housing starts.” Jarratt added that there are very few homes going up because of stricter lending regulations. “Right now, there’s a proposal in Congress that calls for conventional loans requiring a minimum of 20 percent down payment and no more than 28 percent of your income going to your housing loan payment.” Another obstacle to homebuyers now is consumer confidence, Jarratt said. “We don’t know where we’re going. We don’t know what changes Congress will make. We don’t know if any of the big projects in Alaska will materialize. There’s such a lot of uncertainty. However, interest rates are at historic lows – we haven’t seen such low interest rates since the 1950s. “ •••

REAL ESTATE (COMMERCIAL)

REAL ESTATE (RESIDENTIAL)

Anand A dV Vadapalli d lli President and CEO Alaska Communications

There will be a slight uptick in commercial real estate in 2012, according to Chris Stephens, an associate broker and partner in Bond, Stephens & Johnson Inc. “Real estate is a somewhat lagging indicator, but generally goes with the

Helen Jarratt, president of the Alaska Association of Realtors, said she expects 2012 to be a stable year, unless something happens with a gas line or oil exploration. “We’re in a buyers’ market now,

The economic prognosis for the telecommunications industry is continued stability over the next six to 12 months, said Anand Vadapalli, president and

TELECOMMUNICATIONS

www.akbizmag.com • Alaska Business Monthly • January 2012

CEO of Alaska Communications. “We see a continued increase in the amount of data consumed by homes and businesses in our state, from video applications to gaming, to email and other business data-intensive applications,” Vadapalli said. “This will be a continued trend over the next several years. The other main trend is the increasing use of mobile devices – as customers expect to be able to access their data and content anywhere and at any time.” Verizon Wireless has indicated it may be entering the Alaska market and the FCC recently approved an order making changes to the Universal Service Fund, a regulatory program that has been in place for decades. Both will affect the telecommunications industry in the state. “Over the long-term, however, we see the industry in Alaska adjusting to these two developments, in particular, our investment strategy given the FCC order,” Vadapalli said. Overall, Vadapalli said Alaska Communications sees opportunities ahead with a growing market as customers consume more data. •••

Owen G O Graham Executive Director Alaska Forest Association

TIMBER Owen Graham, executive director of the Alaska Forest Association, said the Interior timber industry had a good year in 2011 and is growing slowly. He added that there are a few small mills on the Kenai Peninsula and around Anchorage, but they’re struggling for timber. “The State has a lot of timber, but

the mills are having trouble gaining access to it,” he said. In Southeast, he added, they logged from available timber. “The biggest thing is timber supply. The (U.S.) Forest and Park services own 94 percent of the land in Southeast and haven’t put much of it up for timber sales. The mills are all starved out. We’re working with the State to encourage the federal government to speed up the NEPA (National Environmental Policy Act) process to keep the wood coming,” he said. “The government says the NEPA process takes three years, but they’ve been averaging probably seven years.” The market forecast is good, Graham added, but the mills’ access to timber is a production problem. “This year, we’re anticipating about a 20 percent reduction in operations due to a lack of available timber and a slight reduction in log exports to China. “The brightest spot on the horizon, though,” Graham said, “is the State’s task force on timber. We all hope it will make a difference. The industry has become so small that it’s hard to get attention from the feds.” •••

First Things First At Fort Knox, our top priorities are simple. Our people. Our community. Our environment. We invest in our people, so they are trained to do the best job possible. We support our community with charitable donations, volunteer hours and local purchases. We adhere to the toughest standards to protect water and air quality. These are our priorities. Because at Fort Knox, it’s about putting first things first. Fairbanks Gold Mining Inc. A Kinross company

www.akbizmag.com • Alaska Business Monthly • January 2012

kinross.com

“We were up in air arrivals, both domestically and internationally, and that’s a good indicator that we have a good increase in independent travel.”

Ron Peck President and CEO Alaska Travel Industry Association

TOURISM When the final numbers are calculated for 2011 – in January or February – Ron Peck, the president and CEO for the Alaska Travel Industry Association, said he believed the industry numbers would show a slight increase. “We were up in air arrivals, both domestically and internationally, and that’s a good indicator that we have a good increase in independent travel.” For 2012, though, Peck said he thought highway travel will be down – “a function of the price of fuel,” he said. “I’ve noted, anecdotally, that we’re seeing a decline in 25- to 30-foot gas RVs. The higher end coaches, those folks with more discretionary income, still came. The drop in numbers affects small businesses on the highway.” Cruise numbers, he figured, would be basically flat for last year and this year. “There may be a slight reduction – maybe 1 or 2 percent in 2012. “But the good news is we anticipate new cruises from Holland America and Princess.” International travel was up with an increase in flights by Japan, Korean and

www.akbizmag.com • Alaska Business Monthly • January 2012

Condor airlines. “Korean Airlines had a 90 percent load factor,” he said. “If the world economy stabilizes, there’s a good opportunity for growth from Pacific Rim countries because of the weakening of the dollar. If our economy holds steady, we’ll also see a growth in the cruise industry. “We’re rebounding slowly from the doldrums of ´09,” Peck said, “and a strong, consistent marketing effort in other states and countries will help us continue to draw visitors.” •••

TRANSPORTATION Jeff Ottesen, director of Development for the Alaska DOT&PF, said FY 2011 was the high-water mark for federal highway dollars in Alaska at $580 million. Beyond that, however, Ottesen said, funding is uncertain. “Right now, we have seven weeks’ worth of our $450 million allocation. Where we go from there is the million dollar question. Without some new form of revenue for the federal highway trust fund, the whole system has to be cut by about one-third. That’s a drop back to $300 million. We have projects that will take seven to 10 years to deliver, and we have funding for seven weeks.” Most of the money the State puts into the highway system comes in the form of matching grants. “We’re pretty fortunate,” Ottesen said. “Every $1 of State money brings $5 of federal funding. Other states aren’t having such good luck getting match money from their Legislatures. Ottesen added that if the nation gets a new jobs bill on top of the restored 2012 funding level, Alaska could see about $600 million in highway funding. “It’s pretty hard to plan right now,” Ottesen said. “Washington is signaling that we should spend most of our money on repairing and maintaining what we have rather than building something new. However, we’re still building from scratch. We’re just in a totally different ❑ stage of life.” www.akbizmag.com • Alaska Business Monthly • January 2012

TRANSPORTATION

Arctic Deep Water Port Long-term asset envisioned BY PAULA LOWTHER

here has been discussion about the viability of an Arctic deep water port in the United States, but those talks took a serious turn when Senator Lisa Murkowski joined Secretary of State Hillary Clinton in Nuuk, Greenland for a meeting of the Arctic

Council last May. The Arctic Council, a high-level intergovernmental forum that addresses the issues facing Arctic countries, is made up of foreign affairs ministers and leaders from the U.S., Canada, Russia, Norway, Iceland, Finland, Sweden and Denmark.

INCREASED MARINE TRAFFIC Shrinking sea ice in the Arctic has contributed to increased marine traffic, raising concerns over whether northern nations are prepared to respond to Arctic emergencies such as search and rescue and environmental spill response.

www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ January 2012

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During the Arctic Council’s bi-annual ministers’ meeting, an international treaty was signed by all Arctic Council nations that would require coordination of emergency response efforts in the event of a plane crash, cruise ship sinking or other major disaster. This legally binding treaty puts significant responsibility on each country to fulfill its obligations under the agreement. Days after the Arctic Council treaty was signed, the U.S. Army Corps of Engineers partnered with the Alaska Department of Transportation and Public Facilities to host the Arctic Deep-Draft Ports Planning Charrette in Anchorage. The purpose of this planning session was to bring together representatives from state and federal agencies and organizations to begin the process of joint planning for potential U.S. ports in the Arctic regions of Alaska. Involved agencies included the Alaska Department of Natural Resources Division of Coastal and Ocean Management, Alaska Industrial Development and Export Authority, Denali Commission, Northern Waters Task Force, NORAD, U.S. Arctic Research Commission, Arctic Council, Institute of the North, Marine Exchange of Alaska, Committee of the Arctic Maritime Transportation System, and the U.S. Navy.

MAINTAINING SOVEREIGNTY Alaskan leaders have long recognized the need for Arctic port development on a national and state level. Senator Mark Begich introduced seven pieces of legislation in 2009 known as the Inuvikput Package that urged lawmakers to take the necessary steps in maintaining sovereignty in light of increased Arctic traffic and activity while expanding and diversifying Alaska’s economy. Also in 2009, Murkowski introduced legislation that would require the U.S. to undertake a detailed study of the feasibility of establishing a deep water sea port in the Arctic. While the Arctic Deep Water Sea Port Act of 2009 did not become law, Murkowski has continued to lead the national conversation about the strategic importance of the Arctic to the U.S. In a press release dated May 16, 2011, Murkowski states, “It is an exciting and unprecedented time in the Arctic. We know that the environmental changes

occurring in the region are happening at a dramatic rate, but the political response has been much slower.” In 2010, Representative Don Young followed up Murkowski’s proposed legislation by introducing the bill H.R. 4576: Arctic Deep Water Sea Port Act of 2010. It also failed to gain traction in Congress. Since the U.S. purchased Alaska in 1887, it has sought to protect its interests in the Arctic. President George W. Bush signed the National Security Presidential Directive (NSPD)-66 on Arctic Region Policy in January 2009, stating goals as: “Meet national security and homeland security needs relevant to the Arctic region; Protect the Arctic environment and conserve its biological resources; Ensure that natural resource management and economic development in the region are environmentally sustainable; Strengthen institutions for cooperation among the eight Arctic nations; Involve the Arctic’s indigenous communities in decisions that affect them; and, Enhance scientific monitoring and research into local, regional and global environmental issues.”

LONG-TERM ASSET The only state in the Arctic region, Alaska bears a lot of the responsibility for meeting this mandate. At the USACE/DOT &PF intense planning session last May, Young acknowledged there has been significant interest in the Arctic by the U.S. as well as other Arctic nations. “The U.S. is an Arctic nation because of Alaska, and Alaska will provide the gateway to our nation’s future,” Young said. “We have the opportunity now to address the prospects of industry years down the road and how we can use changing Arctic conditions to our advantage. Now is the time to be investing in our infrastructure and laying the groundwork. “ Beyond national security and resource development on the national scale, Alaska stands to benefit greatly from the construction of one or more deep water ports along Alaska’s coastline. This major infrastructure asset would provide a direct shipping point for resources developed in western and northern regions and could support future oil and gas development in the Arctic. Mark Luiken, commissioner of

DOT&PF stated in a press release, “A deep draft port would be a long-term national asset. It is vital to project U.S. presence, to open up opportunities for economic growth, aid in mineral research and development, and to support continued scientific studies.” The State of Alaska has defined the purpose for the future port as: “To promote economic development, employment, job training and education in the state of Alaska, including areas of rural Alaska was historically high rates of unemployment, through the development and construction of an Arctic port that will attract new industry, expand international trade opportunities, and broaden and diversify the economic base in Alaska in a safe, reasonable and efficient manner.”

PRIVATE INDUSTRY The planning charrette underscored that while generating national interest is vital to securing federal funding for any deep water port in the Arctic, economic development of resources and private industry will most likely be the driving force behind progress. Recently, Sitnasuak Native Corp. of Nome signed a contract with Vitus Marine LLC to deliver 1.5 million gallons of petroleum products to Nome via marine tanker to replace the fuel that was not able to be delivered to the town due to early winter storms. This contract marks the first time fuel has been scheduled for delivery to a western Alaska community during the winter months, according to Sitnasuak officials. Although the double-hulled ice-classed Russian tanker is certified to travel through four feet of ice, the use of the Coast Guard icebreaker Healy may be needed to ensure the delivery makes it to Nome, the company stated. The Nome fuel crisis demonstrated the need for additional infrastructure in Arctic regions of Alaska. Clearly a deep water port could not have ensured fuel delivery for Nome, but increased infrastructure in the area would entice larger vessels to bring goods and services to the northwestern communities of Alaska. Infrastructure identified in the intense planning session last May that is needed to make the Arctic deep water port economically viable include an airport, helicopter facility, marine

www.akbizmag.com • Alaska Business Monthly • January 2012

support services, billeting, warehousing, stores, potable water, sewage facilities, fuel and public services such as hospitals and schools.

both stated that while an Arctic port is not vital to their operations at this time, they would definitely use the port if it where available.

NATIONAL UTILIZATION

SITE SELECTION

The U.S. Coast Guard and National Oceanic and Atmospheric Administration are the two federal agencies that would benefit most from a deep water port in the Arctic. Currently, the most northern base for the USCG is located on Kodiak Island, 940 air miles across land from Point Barrow, according the charrette report, and the ability to respond quickly to emergencies in the Arctic is greatly reduced because of the distance vessels must travel from other ports. NOAA estimates it spends one third of its time transiting to ports with services, fuel, food and supplies. The NOAA survey ship Fairweather has a 22-day endurance while at sea, however it takes the vessel four days to travel from Dutch Harbor to Barrow. A deep water port with the proper amenities could extend the time vessels could spend on productive tasks, according to NOAA. The USCG and NOAA have

Potential Arctic port sites were discussed at the May 2011 planning session held in Anchorage. While resource development and private industry will ultimately drive the location and development of an Arctic port, the criteria of a site location for purposes of discussion included national security, environmental, economic development, infrastructure, life safety, sustainability, land ownership, spill response and socioeconomics. Possible port sites under discussion included Nome, Kivalina, Kotzebue, Port Clarence, Cape Darby, Cape Blossom, Red Dog, St. Michael, Prudhoe Bay, Chukchi Sea, Beaufort Sea and Bering Straits. Planners said it is doubtful one port will fit every need and multiple port solutions may need to be evaluated. How a deep water Arctic port project will be funded is unclear. The federal government appreciates the roll it must

play in protecting the country’s interest in the Arctic in regard to national security and sovereignty; however, the fragile state of the federal economy puts into question whether that will be enough to push the project forward. Nearly $1 million in state funding from the 2012 fiscal budget has been identified by Governor Sean Parnell to begin the process of underwriting the studies necessary to identify the feasibility for Arctic port development, but even that is about a third of the cost necessary to complete the three-year study that will determine the best location for the nation’s only deep water Arctic port. Findings of the planning charrette indicated Arctic deep water port development is a 20-plus year process and stressed that some issues need to be addressed now such as how the U.S. will fulfill its obligation to the Arctic Council Search and Rescue treaty. Spill response was also listed as a concern as traffic continues to increase in the region; however, short-term solutions such as mooring buoys and lightering may be necessary until the full port ❑ project can be built.

www.akbizmag.com • Alaska Business Monthly • January 2012

TRANSPORTATION

Commuting Alaska Photo courtesy of Valley Mover

An estimated 40 percent of the work force in Mat-Su commutes to Anchorage jobs. Many people use the Valley Mover.

Valley riders see benefit of bus service BY TRACY KALYTIAK

very workday morning at 5:50, Rick Allen awakes in his Palmer home, takes care of his Jack Russell terrier and then grabs a $1 cup of fresh-roasted java during his 7 mile drive to a Trunk Road park-and-ride lot. Allen, director of Alaska’s Office of Public Advocacy, leaves his SUV and boards a 39-passenger Valley Mover bus at 7:20 a.m. for his commute to Anchorage. “I plug my headphones into my iPad and listen to music, bang out emails,”

Allen said. “The time just zooms by.” People throughout the state participate in the commuting ritual, with slight variations: some people can walk to work, while others must get there by air, ferry, bus, passenger van, car, motorcycle or bike. Alaskans who drive to work take less time to get there than the national average of 25.2 minutes, with the exception of Mat-Su commuters, who take an average of 33.6 minutes to get to work.

NEARLY HALF OF VALLEY WORKERS COMMUTE An estimated 40 percent of the work force in Mat-Su commutes to Anchorage jobs. Many of those commuters, like Allen, are headed to Anchorage for their workday and the actual travel time is generally longer than the census indicates for the 40-mile trip. The need for commuting options is critical in Mat-Su, which has a population

www.akbizmag.com • Alaska Business Monthly • January 2012

of nearly 90,000 people and is the fastestgrowing region in Alaska. Between the 2000 and 2010 census counts, Mat-Su’s population grew 42 percent. Sixty-seven percent of Alaskans drive to work alone in their car, truck or van, according to statistics published in March 2011 by the Alaska Department of Labor. That number is higher in Mat-Su, where 70.1 percent of the commuters drive to work alone in a car, truck or van, and only 0.5 percent use public transportation.

LONG-TERM IDEAS Over the years, officials and planners have concocted a variety of ideas aimed at sugaring the pill of that tedious, sometimes hazardous Valleyto-Anchorage commute. They’ve discussed and dismissed and rediscussed various prospects: offering light rail from Anchorage to Mat-Su, erecting a $4 billion dollar bridge connecting Point MacKenzie to Anchorage, running a 195-foot-long, 60-foot-wide twin-hulled steel-and-aluminum icebreaking Navy prototype ferry back and forth across Knik Arm. Light rail, so far, is still just an idea. The bridge remains controversial and unbuilt. The ferry exists but landings for it do not, and the Mat-Su Borough in November had not yet decided whether it would keep the dry-docked $78-million Susitna vessel, sell it, or sell it and lease it back to use for ferry service. The borough was expected to take title to the vessel this month. It has been in Ketchikan, in the process of being certified with the Coast Guard and undergoing repairs to a ramp that lowers to let vehicles on and off the ferry. Massive-scale projects like the Knik bridge and light rail could take years, even decades, to solidify into real-world entities, said Mokie Tew, who created Valley Mover commuter bus service in February 2010. Even when projects like these are finally realized, Tew said, it’s uncertain how much they will relieve the burden of commuting for the bulk of the people who live in the borough but have to get to work in Anchorage. The ferry, for instance, is anticipated to carry 20 vehicles and about 134 people. It’s also uncertain whether there www.akbizmag.com • Alaska Business Monthly • January 2012

are sufficient numbers of customers to cover costs associated with the ferry or the bridge.

SHORT-TERM SOLUTIONS

Photo by Jim Coe

“What do we do for those years and how do we pay for those projects?” Tew said. “Right now we have a way to get to Anchorage economically, improve people’s quality of life, safely, in a way that doesn’t involve a white-knuckle drive. It’s right now, today. You can go right now and get on the bus.” When Tew and his wife, Roberta, first launched the not-for-profit organization, their rehabilitated People Mover buses drove routes within Mat-Su, with one bus making the daily journey to and from Anchorage. “I’d been doing business in the Valley for about 10 years and saw there were a lot of good people there working very hard but always broke,” said Tew, who works as a mechanic in addition to operating Valley Mover. “This is about working people who can’t quite get there (economically) because transportation is a huge expense.” Tew wanted to help people get

around throughout the Valley – with routes going everywhere between Willow and the Butte – but within three months decided he couldn’t afford to keep the buses going with that plan. “I realized that although I couldn’t get enough people involved in the Valley itself, I did notice there were a lot of people getting on the bus to go to Anchorage,” Tew said. “I could keep this Anchorage route and it could be the seed to make the rest of this go.” Valley Mover employs seven people, including bus drivers, mechanics, bus washers and administrative staff. Tew has received an $8,000 grant from the Mat-Su Health Foundation for Valley Mover, as well as a $340,000 federal Small Business Administration grant and a $15,000 grant from the borough. Tew now serves on a recently formed committee that aims to talk once a month about transportation needs in the Valley. Representatives from the Mat-Su Borough, Chickaloon Village and Mat-Su Community Transit (MASCOT) are participating in that effort. MASCOT is a nonprofit that

provides public transportation primarily within the borough. Chickaloon Village operates Chickaloon Area Transit System, which connects to MASCOT and Valley Mover transit systems. Another system, Alaska Share-A-Van, is a commuter option for Mat-Su residents needing a ride to and from Anchorage. It is a regional vanpool program established in December 2009 between Anchorage Share-A-Ride and the MatSu Borough. “I’m ecstatic about it,” Tew said of the committee. “The borough is realizing transportation is a community thing.”

INCREASING RIDERSHIP Three hundred people a month commuted from Wasilla to Anchorage via Valley Mover in its early days. Now, Valley Mover gives 300 rides a day. The buses make 10 trips a day, Monday through Friday, Tew said. An unlimited monthly pass costs $120 a month; a one-way ride costs $7 and a round-trip will set you back $10. “A month of commuting with my SUV was $500 just in gas,” Rick Allen said. “That gives perspective on the amount of money you could be saving. It has a real impact on the bottom line for a lot of people.” Allen and Tew both believe there’s a stigma associated with using public transportation in the Valley. Only 1.4 percent of Alaskans used public transportation between 2005-2009, according to Alaska Department of Labor statistics published in March 2011. Nationally, approximately 5 percent of the population uses public transportation. “A lot of people believe they still have to drive a car back and forth,” Tew said. “When I first talked about doing this, people didn’t think Valley Mover would work here. Everyone was laughing at me.” Allen has used light rail in Houston, Texas, and during his travels in other parts of the country. He knows about the ambitious and costly efforts to launch a ferry and construct a bridge across Knik Arm. “In 20-30 years, maybe that will be where we go, but right now I feel like the bus folks are really taking care of business,” Allen said. “This bus? That’s ❑ what’s happening now.”

Rick Allen Allen, director of the Alaska Office of P Public blic Ad Advocacy, ocac prepares to board a Valley Mover commuter bus that will take him from Anchorage to a park-and-ride lot near Wasilla. www.akbizmag.com • Alaska Business Monthly • January 2012

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www.akbizmag.com â&#x20AC;˘ Alaska Business Monthly â&#x20AC;˘ January 2012

RIGHT MOVES Compiled by Nancy Pounds SOUTHEAST ALASKA REGIONAL HEALTH CONSORTIUM

Dr. Robert Gannon joined the Alicia Roberts Medical Center in Klawock. He recently spent 15 years working at the Salt Lake Veterans Affairs Hospital. He also spent the past five years working in the emergency room at Mountain West Medical Center in Tooele, Utah. Steven Forde was hired as a physician assistant at the Klawock center. He specializes in internal medicine. He has 17 years experience in internal medicine, geriatric care and acute care in a hospital setting at Highlands Regional Medical Center in Sebring, Fla. Joyce Moore was promoted to services administrator at the Alicia Roberts Medical Center. Moore previously served as deputy clinic services administrator. She has worked for the center for 14 years, serving in several roles, including health information coder and deputy clinic administrator.

D.C. He replaces longtime director John Katz. Barbara Propes was appointed deputy chief of staff for Lt. Gov. Mead Treadwell. Michelle Toohey, who previously served in the role, was promoted to chief of staff. Propes served as executive director of the Alaska World Affairs Council in Anchorage, and as president and chief executive of the World Affairs Councils of America in Washington, D.C. Ree Sailors was chosen deputy commissioner for family, community and integrated services with the State Department of Health and Social Services. She most recently served as program director for the National Governor’s Association Center for Best Practices.

Forde

Moore

STATE GOVERNMENT

David Stone was chosen deputy commissioner for the State Department of Labor and Workforce Development. He previously served as assistant commissioner. Greg Cashen was chosen assistant commissioner. Cashen most recently worked as executive director of the Alaska Workforce Investment Board. Jeff Selvey was appointed to serve as executive director of the board. Selvey had worked as the board’s career and technical education coordinator. Gov. Sean Parnell appointed Kip Knudson as director of State and federal relations based in Washington,

PEDRO BAY CORP.

Phil Fechtmeyer was hired as controller at Pedro Bay Corp. He recently worked as finance controller for Alutiiq, a division of Afognak Native Corp. Fechtmeyer has more than 25 years of accounting experience. Ray Atwood was chosen business manager for Pedro Bay’s subsidiary, Clear Stream LLC. Atwood previously worked for Chugach Alaska Corp.

ALASKA ENERGY AUTHORITY

Wayne Dyok was hired as lead project manager for the Alaska Energy Authority’s Susitna-Watana Hydroelectric Project. The project, in the early planning stage, will be located about halfway between Anchorage and Fairbanks and create a 700-foot dam with a power-generation capacity of 600 megawatts. Dyok has 35 years of experience designing and planning U.S. and international hydroelectric projects.

ASSOCIATED GENERAL CONTRACTORS OF ALASKA

Gannon

Native women and children. Lund, originally from Wrangell, is one of the founders of the Southeast Alaska Regional Health Consortium. She has served as its president since 1997.

The Associated General Contractors of Alaska elected officers for 2012: Tony Johansen, vice president, Great Northwest in Fairbanks, president; John Eng, Cornerstone Construction, Anchorage, vice president; Kevin Welker, Kiewit Building Group, Anchorage, secretary; Brian Horschel, ACME Fence Co., Anchorage, treasurer; Meg Nordale, Ghemm Co., Fairbanks, contractor-atlarge; and Terri Gunter, Senco Alaska, Anchorage, associate member.

SEARHC PRESIDENT HONORED BY GOVERNOR

Gov. Sean Parnell presented Tlingit elder Ethel Lund with the Shirley Demientieff Award at the Alaska Federation of Natives convention in October. The award honors Alaskans who serve Alaska

Fechtmeyer

FAIRBANKS NORTH STAR BOROUGH SCHOOL DISTRICT

Karen Gaborik was appointed interim assistant superintendent for secondary education with the Fairbanks North Star Borough School District. Gaborik most recently served as Lathrop High School principal, a post she has held since 2006. Dave Dershin, assistant principal, will serve as interim administrative principal. He has worked as assistant principal for curriculum and instruction since 2007.

BETTER BUSINESS BUREAU

Adam Harkness was appointed Alaska public relations manager for the Better Business Bureau serving Alaska, Oregon and Western Washington. Harkness has worked for Alaska television and radio stations.

WORK TEGEATHM ER WE TO GET THE JOB DONE

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www.akbizmag.com • Alaska Business Monthly • January 2012

RIGHT MOVES

Sponsored by Northern Air Cargo

ALASKA MINERS ASSOCIATION

Fred Parady was chosen as the new executive director for the Alaska Miners Association. He replaces longtime executive director Steve Borell, who retired. Parady most recently served as chief operating officer for the North Slope School District. His career also includes more than 25 years working in Wyoming’s mining industry.

INSTITUTE

OF THE

NORTH

The Institute of the North added Tom Barrett, Peter Scott and Peter Taylor to its board of directors. Barrett is president of Alyeska Pipeline Service Co. Scott is communications manager for Shell Oil Co. Taylor, who will serve in an ex officio position, is consul of Canada in Anchorage. Current board members are Jack Hickel, Randy Hagenstein, Leif Selkregg and Michael Sfraga. The board has a new executive committee featuring Ira Perman, chairman; Drue Pearce, vice chairwoman; Greta Schuerch, secretary; Duane Heyman, treasurer and emeritus members John Hendrickson, Max Hodel, Gail Phillips and Steve Shropshire.

DAVIS WRIGHT TREMAINE LLP

Michael Jungreis joined Davis Wright Tremaine LLP in Anchorage as a partner. Jungreis has 30 years of experience representing Alaska mining, oil and gas industries. Lisa Doehl was hired as of counsel. Both Jungreis and Doehl previously worked at Hartig Rhodes Hoge & Lekisch PC. Doehl has worked 19 years as a natural resources attorney.

FIRST NATIONAL BANK

Three First National Bank employees were appointed to lead new divisions as senior vice presidents. Cheri Gillian was promoted to director of corporate communications and external affairs. She first joined the bank in 1980 as the bank’s first full-time graphic designer. John Hoyt was chosen deposit, consumer credit and card services director. He has more than 27 years of Alaska banking experience. Ryan Strong was appointed mortgage-lending director. He first worked at the bank from 1995 to 2005 as management associate, loan officer and branch manager.

D hl Doehl

Michelle Felix was promoted to marketing officer at Denali Alaskan Federal Credit Union in Anchorage. She previously served in the credit union’s internal audit department and in branch operations in Fairbanks.

Felix

TETRA TECH

Patty McGrath was hired as a National Environmental Policy Act program manager for Tetra Tech. McGrath has 15 years of experience coordinating regulatory work for mining operations with Environmental Protection Agency Region 10.

FEDERAL GOVERNMENT

Gillian

Hoyt

Strong

JOINT BASE ELMENDORF-RICHARDSON

Lt. Gen. Stephen Hoog was appointed commander of Alaskan Command, 11th Air Force, Alaskan North American Aerospace Defense Command Region and Joint Task Force Alaska. He serves at Joint Base Elmendorf-Richardson. Hoog previously served as commander of 9th Air Force, Shaw Air Force Base in South Carolina. Lt. Col David Piffarerio received Lockheed-Martin’s first Raptor F-22 1,000-hour patch. Piffarerio is commander of the 302nd Fighter Squadron at JBER. Staff Sgt. Sammy Jeffery was hired as the Anchorage-based Air Force Reserve recruiter.

KEYBANK

Jungreis

DENALI ALASKAN FEDERAL CREDIT UNION

Chris Yelverton was promoted to area retail leader at KeyBank in Anchorage. Yelverton will continue to lead the Key@Work Program for Alaska. Yelverton joined KeyBank in 1998 as a client-relations representative and has held several positions in the retail division.

Kurt Sorenson received the Department of the Interior Environmental Achievement Award for Sustainability Hero award. Sorenson worked at the Bureau of Land Management-Alaska Glennallen field office. He was the only facility maintenance staffer at the office, yet worked hard to recycle, including saving items until he was able to make the 200-mile trip to a recycling center.

DOYON NAMES QUINTAVELL AS NEW COO

Doyon Ltd. announced that Roberta “Bobbi” Quintavell will serve as the corporation’s new chief operating officer (COO). The position was previously held by Aaron Schutt, who was named Doyon’s president and CEO effective Oct. 1, 2011.

U.S. SEN. LISA MURKOWSKI’S OFFICE

Andrea Gusty was hired as communications director for Alaska for Sen. Lisa Murkowski’s office in Anchorage. Gusty recently served six years as an evening news anchor and lead investigative reporter for CBS 11 News in Anchorage. ❑

YOU CAN ALWAYS COUNT ON OUR TEAMWORK FOR FAST, RELIABLE, SHIPPING SERVICE.

NAC is a proud sponsor of the 2012 Iditarod and 2011 champion John Baker. www.akbizmag.com • Alaska Business Monthly • January 2012

HEALTH & MEDICINE

Alaska’s Primary Care Industry Addressing health needs throughout the state BY JODY ELLIS-KNAPP

rimary care access is a hot topic not only in Alaska but also around the country. Because Alaska’s small population is spread across a wide and sometimes inaccessible range of space, providing care and accessibility to care can be even more of a challenge here. Various entities around the state work to bring providers and patients together, from remote villages to within the city limits. One of the biggest proponents of primary care in Alaska is the Alaska Primary Care Association. Started in 1995, its goal is to ensure the availability of health care to people throughout the state, making medical underservice a thing of the past. Today, the association includes 25 organizations employing almost 1,000 people, operating in more than 140 sites across Alaska via Community Health Center programs. Shelley Hughes, the government affairs director of Alaska Primary Care Association, says their focus is serving more patients for less. “APCA provides vital services and technical assistance to support members in offering quality, cost-effective care,” she says. “We also assist communities in accessing grant and foundation funds, providing support and technical assistance as they grow.” In regard to Alaska’s location possibly making access more difficult, Hughes says, “Recruitment of providers is more challenging in Alaska, mainly due to the remoteness and weather, as well as professional isolation.” Challenges continue in making sure there is a high enough ratio of providers in Bush locations, as the distance to other facilities can be daunting. “We do have the advantage of a small state population,” she says. “So

if we put our heads together and are willing to collaborate, we can make headway on issues such as improving immunization rates, managing diabetes and keeping people out of the emergency room for routine care.”

MEDICAL RESIDENCY PROGRAM The issue of finding primary care physicians has been partially resolved by a program at Providence Health & Services Alaska, the Alaska Family Medicine Residency program. This program provides residents the opportunity to practice in Anchorage, as well as stints in rural areas. The program is the brainchild of Dr. Harold Johnston, who has been an integral part of the creation and continued growth of the program. “I was born and raised in Anchorage, and when I returned here after finishing my training, I started working at the Anchorage Neighborhood Health Center,” he says. “I began to realize Anchorage needed a residency program, and helped form a small committee to start exploring the possibility. We worked on the planning for about five years. As the program got to the point of being ready to take off, we needed a director and I was interested in the position. I applied for it and I’ve been here ever since.” The Alaska Family Medicine Residency program had its first residents arrive in 1997. Today the program has graduated more than 100 doctors. The three-year program accepts 12 residents each year. Providence’s Family Medicine Clinic, opened in 1996, is where the program is based. Approximately one-third of the clinic’s patients are Medicare patients, one-third Medicaid, and one-quarter are uninsured and pay on a sliding scale. “We serve about

10,000 patients who would otherwise not get care,” Johnston says. The Family Medicine Clinic’s ability to provide care for the underinsured is only part of the positive results generated by the residency program, he added. “Of the 100 plus doctors we’ve graduated, 80 percent have chosen to stay in Alaska,” he says. “There are only about 330 family physicians in the entire state. Without our program, there would be even less. We have really helped to stabilize and improve access to health care in Anchorage and rural areas.”

REDUCING COSTS Marilyn Kasmar is the executive director of the Alaska Primary Care Association. Born and raised in Anchorage, she earned a bachelor’s degree in nursing from Seattle University in 1981, returning to Anchorage and obtaining her MBA from Alaska Pacific University in 1993. She was working as the operations director for the Anchorage Neighborhood Health Center when the association was founded. “I’d been in the same position for five years,” she says “I was ready for new challenges. In July of 1996, I took the job as the APCA’s first, and at that time only, staff person.” Kasmar says access to primary care helps reduce health care costs overall, providing substantial savings of public funds, and resulting in a healthier and more productive population. “The expansion of primary care has been shown to have a significant impact on the health of individuals and communities,” she says. “Health reform, critical work force shortages, increasing health care costs, a growing number of employers and workers who cannot

www.akbizmag.com • Alaska Business Monthly • January 2012

GROWING THE HEALTH CENTER PROGRAM Changes the association has helped implement include being a key advocate for the Frontier Health Initiative, which was funded in 2001. APCA worked with a delegation in Washington, D.C., to help grow Alaskaâ&#x20AC;&#x2122;s health center program. â&#x20AC;&#x153;The outcome of this advocacy was that the initiative was funded under the Community Health Center program and has resulted in a large expansion of the program in Alaska,â&#x20AC;? Kasmar says. APCA has also done considerable work in growing infrastructure, business planning and advocacy to those communities working to build sustainable clinic facilities in rural Alaska, as well as assisting in providing health information technology. APCAâ&#x20AC;&#x2122;s goals include continued emphasis on a patient-centered medical home model.

â&#x20AC;&#x153;We believe this is a time proven model that achieves the triple aim of improving the health of the population; enhancing the patient experience of care, including quality, access and reliability; and reducing, or at least controlling, the per capita cost of care.â&#x20AC;? Kasmar says, â&#x20AC;&#x153;We are also supporting activities that will improve the availability of the primary care work force and are heavily involved in health information technology work and development.â&#x20AC;? There have been major improvements to Primary Care access over the years, such as increased Community Health Center sites, making care available to a much wider range of residents. â&#x20AC;&#x153;We now have 25 CHC organizations operation 142 CHC sites,â&#x20AC;? Shelley Hughes says. â&#x20AC;&#x153;Back in the 1970s, we had one site. Weâ&#x20AC;&#x2122;ve come a long way.â&#x20AC;? Kasmar says with the current climate in Congress, the future of health reform is uncertain. â&#x20AC;&#x153;It is safe to say there is a much greater awareness on the part of policymakers and the general public about the current system, how it works,

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Photo courtesy of Providence Health & Services Alaska

afford health care coverage, and the ever-mounting numbers of Alaska seniors on Medicare who cannot access a provider are just a few of the significant challenges facing our members.â&#x20AC;?

Dr. Harold Johnston has been an integral part of the creation and continued growth of the Alaska Family Medicine Residency program.

why and how much it costs, and why it is not sustainable,â&#x20AC;? she says. â&#x20AC;&#x153;The need for reform is clear. How we get there â?&#x2018; remains to be seen.â&#x20AC;?

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FINANCIAL SERVICES

Delivering the latest technology BY TRACY KALYTIAK

ne of the first things Jennifer Delgado and her husband, Mark, did after moving to Alaska from Texas was open an account with Alaska USA Federal Credit Union. “We used checks a lot back then,” Jennifer Delgado said of their early days in the state. “We’d have to call the bank, order checks. Now, we use debit cards and get online. Everything gets paid right away. You don’t have to wait for checks to clear. You just fill out information, click a button and it’s done.” The Delgados have stayed with Alaska USA through the births of two children, a move from Anchorage to Palmer, and the transition of the credit union and a growing number of other Alaska financial institutions from paperbased and automated-teller banking to online and mobile financial transactions. Jennifer uses a smartphone but hasn’t yet explored what Alaska USA provides for it via mobile banking; her husband, however, has used the credit union’s mobile banking service. “Mark seems to be more in tune with all that,” she said. “He uses it to check the balance. That’s more than I would do; we usually just do everything online to keep track of where our money goes, where it’s spent, what’s been paid.” Alaska USA, Wells Fargo and KeyBank are among the Alaska financial institutions that offer online and mobile banking options to members and customers.

ULTRA BANKING Dan McCue, senior vice president of corporate administration for the $4.4 billion credit union, says Alaska USA’s

UltraBranch service is a free account management tool that can be accessed online, by phone or mobile, or through self-service terminals in branches. With UltraBranch, members can transfer funds, make loan payments, pay bills, open new account types and view eStatements. “Since the introduction of Alaska USA mobile services, including apps for iPhone and Android, members have increasingly used their cell phones and mobile devices to access their accounts on the go,” McCue said. “UltraBranch also is available in a Business Edition that makes payroll processing and wire transfers efficient for small and medium- sized businesses.” Alaska USA’s free mobile apps also make it possible for the credit union’s members to research rates, find locations of branches and ATMs and pull up cleared-check images. Twenty percent of the 425,000-member credit union’s log-ins originate from mobile devices, according to Alaska USA statistics.

SECURITY LAYERS Keeping members’ information secure is of topmost importance, McCue said. “Alaska USA has numerous security tools in place to protect members’ personal and financial information,” McCue said. “This includes multiple layers of security and trained experts who actively monitor data systems. Alaska USA also routinely tests security systems and installs state-of-the art enhancements.” Since consumer awareness and education are important keys to preventing fraud, McCue said, Alaska

Steve Campanella, district retail leader for KeyBank in Alaska.

USA has resources on its website, www.alaskausa.org, that provide steps members can take to protect against becoming a victim, including monitoring account activity online using UltraBranch and mobile, and safeguarding personal information like account numbers, passwords and personal identification numbers. In addition, receiving eStatements and eNotices offered by Alaska USA can keep personal information out of the hands of identity thieves who look for it in the trash or mailboxes. Security is also paramount for KeyBank, which first began offering mobile banking in 2009. The bank offers the same level of authentication in its mobile web and mobile banking applications as it does with its online banking services. “KeyBank never stores any data on any mobile device,” said Steve

www.akbizmag.com • Alaska Business Monthly • January 2012

Campanella, district retail leader for KeyBank in Alaska. “Clients taking advantage of texting, their names and account numbers never appear in the messages. Mobile applications, for those clients who have smartphones, help them navigate through the (KeyBank) site with the same level of encryption.”

BUILDING CLIENT RELATIONSHIPS KeyBank refined its mobile and online offerings after reaching out to clients for feedback via “relationship reviews.” Clients are currently able to review their balances, view recent transactions, arrange for transfers and monitor bill payments. In the future, it might even be possible for clients to make deposits using the bank’s mobile application. One of the popular features, Campanella said, is notification for clients when a large transaction goes through their account, or balance notification if funds in an account fall below a certain predetermined amount. “They can react accordingly,” he said. “That offers peace of mind to our clients. If something out of the ordinary or something they don’t recall happened, clients can receive, very quickly, account information on their account.” Transactions involving notifications might include direct payroll deposits, any large expenditure at a retail store or bill payments that go through. “KeyBank continues to be a relationship bank,” Campanella said. “What’s critical to us is that we offer a breadth of delivery channel options that best meet our clients’ needs. We try to take information we receive and adapt accordingly.”

GROWING MOBILE SERVICES Whether utilizing text message banking, mobile Web, or mobile applications, KeyBank’s client activity via mobile devices is on the rise. For example, the number of KeyBank clients who have accessed their account information via the bank’s mobile Web option increased 233 percent, year over year, as of Oct. 31. “This large increase can be directly correlated to the smart phone market share and that clients now have the capabilities to view their account information on their respective devices,” Campanella said. “In addition to the www.akbizmag.com • Alaska Business Monthly • January 2012

increase in viewing of account information, Key clients are also very active moving money (up 270 percent YOY) on their mobile devices, whether they are paying bills or transferring money amongst their KeyBank accounts.” As of September 2011, the iPhone was the most popular mobile device accessing both Key’s online and mobile services. “On average, 30 percent of mobile device traffic is coming from the iPhone,” KeyBank statistics stated. “Android-based operating systems continue to gain share and all properties continue to see a decline in BlackBerry traffic. In the tablet space, the iPad is by far the most popular device accessing KeyBank sites.” KeyBank plans to expand the bank’s future mobile banking procedures to attract more use. The bank’s Integrated Channel management strategy promotes convenience and support across all of the bank’s so-called client touchpoints. “Clients can expect to see an increase in investment of mobile services by KeyBank, both from a marketing perspective and from a client solution perspective,” Campanella stated. “Key recognizes that the various touchpoints with our clients expands beyond the bank’s traditional channels, and Key will look to leverage new media, including social media, to accelerate product development and marketing.”

MOBILIZING TECHNOLOGY While technology in mobile and online banking accelerates at an almost intimidating rate, customers by and large are keeping pace. “I think that once you make the leap from in-person banking to online banking, the world opens up and people become enamored of the convenience new things present,” Anne S. Foster, regional public affairs director for KeyBank, said. Wells Fargo & Co., a nationwide, diversified, community-based financial services company with $1.3 trillion in assets, operates 63 locations in Alaska. In 2007, Wells Fargo launched its mobile banking service. Brian Pearce, senior vice president and head of Wells Fargo’s retail mobile channel, said the bank began its

foray into mobile banking by launching a mobile website and then adding text banking. Now, text banking is the mobile option of choice, especially for customers who do not use a smartphone. “We’re seeing amazing engagement in text banking,” Pearce said, adding that the typical text-banking customer exchanges 25 texts per month. In 2009, the bank launched free applications for iPhone, BlackBerry and Palm, and then introduced its app for Android. Overall, Wells Fargo now has 19.7 million customers who use its 16-yearold online site, www.wf.com, and 6.7 million people use Wells Fargo’s mobile-banking services. “It’s growing tremendously fast,” Pearce said. “There’s been a great uptick in terms of transfers. People using mobile want to use transfers. These are folks who are managing their money very carefully.” Text banking through Wells Fargo is secure because customers view accounts by nicknames they set, rather than by account numbers, and no detailed personal information is sent. Website transactions and Wells Fargo apps are secure, because the bank doesn’t store a customer’s user name or password, 128-bit encryption layered security masks sensitive information and sessions end when the customer closes the browser or app. The bank’s online security guarantee covers website, text and mobile-app transactions. If a phone is lost or stolen, a Wells Fargo customer may call a tollfree number, 24 hours a day, seven days a week, to deactivate his or her account. One of the things Wells Fargo focuses on is “launch, listen and learn,” Pearce said, starting out with basic services and then surveying customers to find out what their needs were. “People are on the go, active, busy, looking for a way to stay on top of their finances,” Pearce said. “They want to know if that check cleared, did they get paid, did their direct deposit come in. Then (we asked), what are the top tasks customers want to do on the go, what else makes sense to do on a mobile phone?” With wf.com and Wells Fargo apps, customers can pay bills, transfer

money and locate the nearest Wells Fargo ATM using a cell phone’s global positioning system. The bank didn’t simply aim to offer a shrunken version of its online banking. It wanted to precisely tailor banking services to the phones customers used. The kinds of things Wells Fargo explored were things that take advantage of the power of the phone, including a phone’s GPS service, Pearce said. “You’ve got to mobilize, not miniaturize,” he said. “You need to start by listening to your customers, what makes sense to make available in the mobile channel, how can you help (mobile phones) offer a really robust experience and functionality.”

FIGURING OUT WHAT PEOPLE WANT Through an ethnography study, Wells Fargo enlists the help of customers willing to share the routines of their day, which allows the bank to get a more in-depth, lab-like perspective on how people use their mobile phones. The bank also uses social media like Twitter in its “Voice of the Customer” program to gather suggestions and ideas from customers. “A cell phone often is the last thing people interact with at night and the first thing they interact with in the morning,” Pearce said. Wells Fargo recently took the top spot on the Keynote Mobile Banking Scorecard for its mobile Web banking and text banking and its BlackBerry application. Wells Fargo also earned first place in ease of use, privacy and security, and quality and availability, in an evaluation of its mobile web, text and applications. Keynote Competitive Research issued the scorecard, a first-of-its-kind benchmarking study designed to help banks identify strengths and opportunities in acquiring and serving mobile banking customers. “There’s something new happening almost every week: new tablets, new phones are out, Android has become a major player in the operating system environment,” Pearce said. “What are our customers doing? What do they need? We just continue to keep an eye on these things, how customers are using the channel. It’s an exciting time to be in this mobile banking space.” ❑

www.akbizmag.com • Alaska Business Monthly • January 2012

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ALASKA THIS MONTH Compiled By Nancy Pounds

DINING ••• Open Table

OH, YUM ... GREAT EATS! A

nchorage’s dining scene has converged with technology to produce a convenient system for diners. Alaskans can check for a preferred dining opening online rather than calling all over town to find an available spot during peak hours. A nationwide online reservation system, www.opentable.com, now features 15 Anchorage restaurants plus Alyeska Resort and the Pump House in Fairbanks. Participating eateries include Simon & Seafort’s Saloon & Grill, Marx Bros. Café, the Crow’s Nest and Southside Bistro, among others. Restaurants purchase software from OpenTable, choosing the online and computer-based system over a paper reservation book. The website also features local reviews and information about participating restaurants. Jens’ Restaurant joined OpenTable in February 2010, said Annelise Hansen, who owns and operates the Midtown Anchorage restaurant with husband, Jens Hansen. “The reservation and table management is easier on a computer than with the old reservation book,” she said. “The phone rings less often. It is easy to use and very reliable.” Diners benefit from OpenTable’s online reservation system with the ability to make reservations any time via the computer or phone via the OpenTable app, she said. OpenTable asks its diners to rate the restaurant after the visit, sometimes a blessing or bummer for the restaurant, Hansen noted. Reviews cycle out of the system after four months, she said. “We are lucky right now to have the best rating in Anchorage, but you never know what will happen next month,” she said. •••

www.akbizmag.com • Alaska Business Monthly • January 2012

ALASKA THIS MONTH

TRAVEL ••• Winterlake Lodge

interlake Lodge, north of Anchorage on the Iditarod Trail, is a retreat for winter lovers who treasure outdoor adventures and culinary treats. Carl and Kirsten Dixon have owned the lodge for 15 years. Kirsten Dixon, who attended the Cordon Bleu culinary school in Paris, is a chef and cookbook author. In winter, she opts for “slow, lingering cuisine.” “Our kitchen certainly has a personality of seasons,” Dixon said. “We do more hearty cuisine (in the winter).” She listed top menu items: braised meat, root vegetables, soups and baked goods. The lodge is the Finger Lake checkpoint on the Iditarod trail and is often booked months in advance with Iditarod fans. The week before the Iditarod also brings a flurry of activity, she said. Iditarod Trail Invitational racers bike, ski or trot into the lakeside checkpoint. Also, Iditarod checkers and veterinarians arrive to prepare for the arrival of dozens of mushers and teams. Winterlake Lodge guests mingle with mushers who are beginning their 1,049-mile push north. “I feed all the mushers,” Dixon said. “Our guests like to come into the kitchen as mushers sit around the table and eat.” Winterlake offers a four-day dog-mushing school option for the winter season, which runs Jan. 15-April 15. The Dixons maintain about 20 sled dogs, and the classes begin with small dog teams on the frozen, expansive lake. Other winter activities available include snowmachining, cross-country skiing and snowshoeing. Wintertime guests include out-of-state visitors and Alaskans, sometimes sharing the state’s treasures with business clients, Dixon said. The Dixons operate other remote facilities in summer. Kirsten Dixon says she relishes the joys of an Alaska summer, and appreciates the white-hued views in winter. A smaller kitchen crew flows with camaraderie and joy of working together, she said. “It’s a nice complement to summer,” Dixon said. “I love the pace of winter versus the frenetic pace of summer.” For more information, visit www.withinthewild.com. •••

www.akbizmag.com • Alaska Business Monthly • January 2012

ALASKA THIS MONTH Compiled By Nancy Pounds

Perseverance Theatre Perseverance Theater Producing Director Ruth Kostic (left) and Artistic Director Art Rotch.

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uneau’s Perseverance Theatre is bringing two productions to Anchorage for the first time this winter. “The Blue Bear” is set for Feb. 10-18, and “A Raisin in the Sun” runs April 13-22 at the Alaska Center for the Performing Arts. Tickets are on sale this month and sure to sell out. Perseverance officials have considered Anchorage performances for several years in order to expand its audience base, said Ruth Kostik, producing director. The theater company leaders also envision producing performances in other Alaska towns on the road system, Kostik said. Artistic director Art Rotch said the company has saturated the Juneau market and must find new audiences to continue to grow. Rotch modeled the multiple-city plan after similar programs, including the Arizona Theatre Co. in Tucson and Phoenix. Rotch’s Arizona Theatre contact served as the last director of the now-disbanded Alaska Repertory Theatre, and he noted similarities between Anchorage and Juneau. Distance is the major difference, Rotch recalled his friend saying. “In Alaska we have a lot of things in common,” Rotch said. “In programming theater to operate (in different Alaska towns), we can learn a lot about Alaska.” The Juneau troupe has been carefully charting its first-ever Anchorage season. “We partnered with the Anchorage Concert Association,” Kostik said. “We’ve gotten a great response from that.” Planning includes plotting logistical challenges of transporting sets to Anchorage, she said. For “The Blue Bear’s” set will be built in Anchorage. “A Raisin in the Sun” will close in Juneau on April 1 then sets will be loaded onto a shipping container to arrive in time for the mid-April shows in Anchorage, she said. “The big thing for us is that our stage in Juneau is a different size and shape than the Sydney Laurence (in Anchorage),” Kostik said. Perseverance officials are also making theater-industry connections in Anchorage to enlist help in the new endeavor, she said. Alaskan Lynn Schooler wrote “The Blue Bear,” which depicts his quest to photograph a rare glacier bear and commemorate his friendship with Japanese wildlife photographer Michio Hoshino. Hoshino was killed by a grizzly bear. “The Blue Bear” premiered in Juneau last January, and the original cast will reprise their roles in Anchorage. Visit www.perseverancetheatre.org for tickets and much more information. •••

www.akbizmag.com • Alaska Business Monthly • January 2012

Courtesy of Richard Schmitz

ENTERTAINMENT •••

EVENTS CALENDAR ANCHORAGE 7 Silent Film: Safety Last Presented by the Anchorage Symphony; a publicity stunt goes wrong and a store clerk climbs the face of a department store, facing hilarious obstacles at every turn. Alaska Center for the Performing Arts, 8 p.m., free. www.anchoragesymphony.org 7 Family Skate Season Kickoff Free fun for all; strap on your skates and join this annual skate series. Free hot chocolate, music and games will help usher in this Anchorage tradition. Westchester Lagoon, 1 p.m. to 3 p.m. www.muni.org/departments/parks 12-21 Beauty and the Beast Disney’s Beauty and the Beast, the smash hit Broadway musical is coming to Anchorage. Held at the Alaska Center for the Performing Arts, times vary. alaskapac.centertix.net 13-14 Native Theatre Festival Enjoy a day filled with storytelling, dancing and theatre from Alaska, Hawaii and other cultures at the Alaska Native Heritage Center, and save the date for next month’s Indigenous World Film Festival at the Center on Feb. 3-4. www.alaskanative.net 14 Rage City Roller Girls Season 3 Champion Dirty Polli’s take on the visiting Juneau Rollegirls at the Dena’ina Center, 7 p.m. to 10 p.m., doors open at 6 p.m. www.ragecityrollergirls.org 18 Alaska Fighting Championship 88 Alaska Fighting Championships is Alaska’s premier mixed martial arts event. Sullivan Arena, 7:30 p.m. www.facebook.com/alaskafighting 19-29 Anchorage Folk Festival Hundreds of acts drawn from Alaska and around the world for the best free music event in Alaska. All concerts and workshops are free and open to the public. Times and locations vary with events. www.anchoragefolkfestival.org 20-21 Great Alaska Beer and Barley Wine Festival The 17th annual showcase of suds features more than 200 beers and barley wines from 50 regional brewers. Egan Center, times vary. auroraproductions.net/beer-barley.html 28-29 Alaska Kennel Club Dog Show Held at the Egan Center, times vary. alaskakennelclub.org

6 Closet Artists Invitational Show Open to new and emerging artists, $5 fee per entry limited to five entries which have not been shown at the Co-Op Arts Gallery before. Entry deadline 4 p.m., Jan. 4. Contact: 907-452-2787. 7-28 Explore Alaska Film & Lecture Series This exciting series features recreation films & local guest speakers who share their first-hand accounts of Alaskan adventures. Morris Thompson Cultural and Visitors Center, Saturdays at 2:30, free. www.morristhompsoncenter.org 21 Frank Solivan and the Dirty Kitchen Hot Bluegrass Come and enjoy the music presented by Acoustic Adventures and suitable for all ages. Alaska Centennial Center for the Arts, 8 p.m. Contact: 907-488-0556.

GIRDWOOD 4 Snow Film Series at the Sitzmark Snow Film Series kicks off the New Year in full snow machine power mode with a double feature of Sledneck’s XIV and Hybrid Color Film’s Red Sunday. Get Snow Film Series tickets can be purchased online at www.alyeskaresort. com. Movies start at 7 p.m. and are open to all ages. Minors must be accompanied by a legal guardian. 18 Telluride Mountainfilm on Tour The evening features short films hand-selected from the famous Telluride Mountainfilm Festival, currently in its 34th year. Part of the Snow Film Series at the Sitzmark. Save the date for ski industry icon Warren Miller’s “Like There’s No Tomorrow” to show Feb. 1. 14-22 NSAA Safety Week Get a safety education. Annual event highlighting resort safety education efforts while increasing slope safety. www.alyeskaresort.com 29 Merryvale Winery Seven Glaciers restaurant presents a wine dinner featuring Merryvale Vineyards. Dinner includes a chef’s tasting menu to compliment the featured wines, 7 p.m. to 11 p.m., reservations: 907-754-2237.

JUNEAU 26 The Capitol Steps These are the only people in Washington who attempt to be funnier than the politicians, providing great political satire for us all. Centennial Hall, 7:30 p.m. www.jahc.org.

SEWARD

28-29 Out of this World The Anchorage Symphony Orchestra collaborates with Emmy nominated astronomer/visual artist Dr. Jose Francisco Salgado from the Adler Planetarium in Chicago to present his awe-inspiring video accompaniment to “The Planets.” Alaska Center for the Performing Arts, Saturday, 8 p.m.; Sunday, 4 p.m. www.anchoragesymphony.org

20-22 Polar Bear Jump Festival The first Seward Polar Bear Jump was held in 1986 when costumed people jumped into Resurrection Bay. Many festival activities benefit local nonprofits as well as helping Children with Cancer. Opens with auction Friday night. polarbearseward@yahoo.com

FAIRBANKS

TALKEETNA

1-31 Cultural Events Saturday Film Festivals Experience Alaska Native art, music, stories and dance. Enjoy free, 7-28 world-class exhibits of Interior Alaska’s people, landscapes and Lunafest Film Festival, Jan. 7; Backcountry Film Festival, Jan. 14; Oceans seasons. Morris Thompson Cultural and Visitors Center, daily, free. Film Festival, Jan. 28. Sheldon Community Arts Hangar, 7 p.m. ❑ www.talkeetnachamber.org www.morristhompsoncenter.org www.akbizmag.com • Alaska Business Monthly • January 2012 85

SMALL BUSINESS

Exit Planning Insights Crucial for you and your business BY SARA LAFOREST AND TONY KUBICA

ow much time do you spend thinking about exit planning? If you’re like many small business owners we meet – not much. That’s okay as long as you don’t care about supporting yourself and your family when you retire or leave the business, and if you are not attached to what happens to the business, your employees and your customers after you leave. But in truth, the business people we meet do care. They care a lot – they just haven’t done much about it yet. Unfortunately, many business owners we encounter believe their business will just dissolve when they exit, and don’t believe, or understand that their business could have value for sale. In developing your exit plan it is necessary to understand the two key reasons businesses have value and the three types of exits. Your business can have value to grow the acquirer’s business by adding or enhancing services or product lines and by removing you as a competitor. Types of exits are involuntary (meaning your business stops growing and you go out of business), unexpected (due to death, illness or disability), and voluntary (retirement or proactive selling opportunity).

Regardless of whether the exit event is planned or not, at some point there will be a transition. So we ask again, how much time have you spent thinking about and formulating an exit plan that considers not only the planned exit options, but also the unplanned exit possibilities? To start thinking about it, we suggest you start with one key question: Can your business continue if you could no longer run it tomorrow? If the answer is yes – absolutely, then you are well prepared for a sale or for a biological event. If your answer is no because the business relies either solely or primarily on you for sales and key operational activities, you are not a very attractive acquisition target. And should a biological event occur, sustaining the business will be a serious challenge. Clearly, we recommend you have an exit plan regardless of where you are in your business life cycle. You now may appreciate why you need to work on your business to prepare it to achieve your personal objectives when you leave, and an added benefit, as you continue to work on your business, it will gain in value.

PLANNING IS CRITICAL

ASK YOURSELF QUESTIONS

Exit planning (including a buy-sell-transfer agreement) is critical for you earlier than later because an exit plan better prepares you (the business owner) for the inevitable transition of your business – whether it’s expected (intended), unexpected or the result of undesirable circumstances that can and do arise. Most business owners we talk to understand the voluntary exit, even if they are not currently planning for it. And they also understand – or perhaps a better word is fear – an involuntary exit. What is less discussed, but a looming reality like the proverbial albatross around your neck, is the unexpected exit. An unexpected exit may be triggered by a biological event, what we have coined “The Biology of Exit Planning,” including death, illness, disability, even becoming too old to effectively run the business. Due to the sensitivity of the topic, many people simply avoid discussing the unexpected, and then are left to deal with the muddle of unknowns amid the highly emotional and sometimes financial losses of an owner.

If you are still not completely convinced of the need for an exit plan, then we ask you to do the following exercise to determine how wellpositioned you are for leaving the company, either on your terms or by elements outside your control. Set aside some time and answer the following questions:

1. Where do you see yourself in 3 to 5 years? Retired, still working with the company, or sold your company and started a new company or working for another company? 2. When do you plan to retire? Be specific. If you say, “I will never retire,” remember the reality of biological events and the planning for the current company (versus others you may wish to be involved in the future). 3. What is the income you will need when you retire to maintain your current (or an acceptable) lifestyle? Working with your accountant or financial advisor, determine current expenses, expenses upon retirement, current assets (i.e., savings, investments, whole life insurance, property, other), what

other income streams are available to you upon retirement (i.e., Social Security, spouse pension, pension you may have from a previous employer, other), and how much is needed from your business to support your retirement? (We call this Filling in the Gap.) 4. What do you expect from the company to support your retirement? (This could be from a sale, from an ongoing financial payment – possibly as part of a buy-out.) How much money per year? Be specific. And for how many years? 5. What needs to happen with the company to support your retirement objective? This is a key question if there is an expectation that the business will provide funds to you after you retire, and it begins the thoughtful and planned process for exiting the business. It is the exit plan, and it is based on your expectations and what will be required for the business to support your post-business goals. While formulating an exit plan will require some “frontloading” in time, the payoff for your efforts will allow you to control and better manage the exit; help you maximize company value; minimize tax implications; establish multiple exit options, which mitigate unknowns and negative unexpected circumstances; better enable you to achieve business and personal goals; reduce stress and anxiety with prior planning and defined expectations; and insure business continuity. And this means if you manage a profitable business, have an excellent reputation and are unique or somewhat unique in your value – the buying price includes goodwill. To help you best position yourself and your family for your exit and to position your business to get what you want from it – worth, legacy or both – we strongly encourage your exit planning strategies begin with answering ❑ these key questions. About the Authors Sara LaForest and Tony Kubica are founding partners of Kubica LaForest Consulting LLC. They are management consultants, executive coaches and business improvement specialists serving clients nationwide. They specialize in leadership strategy, organizational development, and transition management and performance improvement. Find them at www.kubicalaforestconsulting.com.

www.akbizmag.com • Alaska Business Monthly • January 2012

ALASKA TRENDS By Paul Davidson Alaska Trends, an outline of significant statewide statistics, is provided by the University of Alaska Center for Economic Development.

Interest Rates The long decline

nterest rates are set by financial markets and influenced by the sale of United States Treasury securities and vice versa. Treasury bonds do not pay interest, rather they sell at less than their face value and pay in full on their maturity date. Subtracting the difference between the amount the Treasury bond is sold for and its face value gives the discount (interest) rate. U.S. Treasury bonds, due to their security, gauge interest rates by setting the interest rate floor of financial markets. The sale of U.S. Treasury securities and other federal open market practices are guided by the 12 members of the Federal Open Market Committee, which meets eight times a year in Washington, D.C. Treasury bonds are only, initially, sold at the New York Federal Reserve Bank. The graph is based on closing market bids obtained at the New York Federal Reserve Bank at 3:30 p.m. Eastern Standard Time each business day and illustrates the decline in the yield of Treasury bonds over the past 20 years. In 2011 the average yearly Treasury bond yield reached 3.019

percent, the lowest of the last 20 years; 41 percent lower than the 20 year average of 5.188 percent. Low interest rates allow funding of investments with lower yields, and theoretically boost economic growth by increasing the ❑ amount of business that gets funding.

Chart Data Source: U.S. Treasury

ALASKA TRENDS HAS BEEN BROUGHT TO YOU THIS MONTH COURTESY OF AMERICAN MARINE/PENCO

www.akbizmag.com • Alaska Business Monthly • January 2012

ALASKA TRENDS

Indicator

Units

GENERAL Personal Income – Alaska Personal Income – United States Consumer Prices – Anchorage Consumer Prices – United States Bankruptcies Alaska Total Anchorage Total Fairbanks Total EMPLOYMENT Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast Sectoral Distribution – Alaska Total Nonfarm Goods Producing Services Providing Mining and Logging Mining Oil & Gas Construction Manufacturing Seafood Processing Trade/Transportation/Utilities Wholesale Trade Retail Trade Food & Beverage Stores General Merchandise Stores Trans/Warehouse/Utilities Air Transportation Truck Transportation Information Telecommunications Financial Activities Professional & Business Services Educational & Health Services Health Care Leisure & Hospitality Accommodation Food Services & Drinking Places Other Services Government Federal Government State Government State Education Local Government Local Education Tribal Government Labor Force Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast

Period

Latest Report Period

Previous Report Period (revised)

Year Ago Period

Year Over Year Change

US $ US $ 1982-1984 = 100 1982-1984 = 100

2nd Q11 2nd Q11 1st H11 1st H11

32,862 12,975,924 200.28 223.60

32,433 12,828,663 195.46 218.58

31,153 12,462,673 194.834 217.535

5.49% 4.12% 2.79% 2.79%

Number Filed Number Filed Number Filed

September September September

78 56 14

74 59 11

114 87 17

-31.58% -35.63% -17.65%

Thousands Thousands Thousands Thousands Thousands

September September September September September

344.34 185.26 45.02 39.91 37.62

348.08 185.18 45.25 42.13 38.96

344.28 185.54 44.77 40.15 37.38

0.02% -0.15% 0.57% -0.60% 0.63%

Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands Thousands

September September September September September September September September September September September September September September September September September September September September September September September September September September September September September September September September September September

342.9 49.6 293.3 17.1 16.5 13.7 18.6 13.9 8.0 67.1 6.4 37.0 6.3 10.4 23.7 6.1 3.7 6.6 4.5 14.8 28.1 42.3 32.0 36.8 7.2 22.4 11.1 85.3 17.2 26.7 8.5 41.4 23.7 4.0

352.3 58.5 293.8 17.2 16.7 13.6 19.0 22.3 15.0 69.6 6.7 37.8 6.5 10.4 25.1 6.4 3.9 6.6 4.5 15.0 28.6 42.9 31.9 40.8 8.3 23.8 11.1 79.2 17.5 24.3 5.7 37.4 19.2 3.8

339.2 49.7 289.5 16.3 16.0 13.3 19.0 14.4 10.7 65.0 6.4 35.8 6.3 10.0 22.8 5.8 3.3 6.4 4.2 15.0 27.4 41.7 30.1 35.2 9.4 20.8 11.8 87.0 17.6 26.8 8.4 42.6 24.4 4.0

1.09% -0.20% 1.31% 4.91% 3.13% 3.01% -2.11% -3.47% -25.23% 3.23% 0.00% 3.35% 0.00% 4.00% 3.95% 5.17% 12.12% 3.12% 7.14% -1.33% 2.55% 1.44% 6.31% 4.55% -23.40% 7.69% -5.93% -1.95% -2.27% -0.37% 1.19% -2.82% -2.87% 0.00%

Thousands Thousands Thousands Thousands Thousands

September September September September September

369.00 197.73 47.79 42.36 40.61

372.89 197.45 48.10 44.60 41.94

363.12 195.15 46.80 41.58 40.41

1.62% 1.32% 2.10% 1.86% 0.49%

www.akbizmag.com • Alaska Business Monthly • January 2012

ALASKA TRENDS

Indicator

Units

Unemployment Rate Alaska Anchorage & Mat-Su Fairbanks Southeast Gulf Coast United States

Period

Latest Report Period

Previous Report Period (revised)

Year Ago Period

Year Over Year Change

Percent Percent Percent Percent Percent Percent

September September September September September September

6.7 6.2 5.8 5.8 7.4 8.8

6.7 6.2 5.9 5.5 7.1 9.1

7.2 6.9 6.2 11.6 7.8 9.2

-6.94% -10.14% -6.45% -50.00% -5.13% -4.35%

Millions of Barrels Billions of Cubic Ft. $ per Barrel

September September September

17.54 8.60 113.76

16.31 8.28 106.95

18.41 9.78 75.27

-4.72% -12.09% 51.14%

Active Rigs Active Rigs $ Per Troy Oz. $ Per Troy Oz. Per Pound

September September September September September

7 1978 1,776.25 38.15 1.04

6 1957 1,757.65 40.30 1.11

6 1655 1,271.22 20.55 1.08

16.67% 19.52% 39.73% 85.67% -3.47%

REAL ESTATE Anchorage Building Permit Valuations Total Residential Commercial Deeds of Trust Recorded Anchorage – Recording District

Millions of $ Millions of $ Millions of $

September September September

45.60 8.76 36.84

23.63 12.98 10.65

25.53 16.37 9.16

78.58% -46.49% 301.97%

Total Deeds

September

999

883

1,023

-2.35%

VISITOR INDUSTRY Total Air Passenger Traffic – Anchorage Total Air Passenger Traffic – Fairbanks

Thousands Thousands

September September

435.91 83.53

614.91 110.75

421.23 116.55

3.48% -28.33%

ALASKA PERMANENT FUND Equity Assets Net Income Net Income – Year to Date Marketable Debt Securities Real Estate Investments Preferred and Common Stock

Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $

September September September September September September September

36,971.70 37,537.60 56.3 (1,989.0) (114.2) 21.5 (1,719.0)

38,889.70 39,504.90 125.1 (1,325.8) 3.5 15.9 (1,397.7)

36,340.60 36,700.40 255.5 $1,852.7 60.2 16.6 1,629.4

1.74% 2.28% -77.96% -207.36% -289.70% 29.52% -205.50%

BANKING (excludes interstate branches) Total Bank Assets – Alaska Cash & Balances Due Securities Net Loans and Leases Other Real Estate Owned Total Liabilities Total Bank Deposits – Alaska Noninterest-bearing deposits Interest-bearing deposits

Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $ Millions of $

3rd Q11 3rd Q11 3rd Q11 3rd Q11 3rd Q11 3rd Q11 3rd Q11 3rd Q11 3rd Q11

2,105.62 49.64 156.23 1,097.05 7.05 1,847.06 1,800.05 543.72 1,256.33

2,050.03 51.85 158.58 1,098.51 6.21 1,796.24 1,756.69 643.96 1,114.74

2,068.99 37.35 131.40 1,110.96 15.76 1,823.80 1,785.53 479.89 1,305.64

1.77% 32.91% 18.90% -1.25% -55.26% 1.28% 0.81% 13.30% -3.78%

FOREIGN TRADE Value of the Dollar In Japanese Yen In Canadian Dollars In British Pounds In European Monetary Unit In Chinese Yuan

Yen Canadian $ Pounds Euro Yuan

September September September September September

76.84 1.00 0.63 0.72 6.39

77.07 0.98 0.61 0.70 6.40

84.48 1.02 0.63 0.73 6.69

-9.05% -2.16% 0.33% -0.74% -4.51%

PETROLEUM/MINING Crude Oil Production – Alaska Natural Gas Field Production – Alaska ANS West Cost Average Spot Price Hughes Rig Count Alaska United States Gold Prices Silver Prices Zinc Prices

Data compiled by University of Alaska Center for Economic Development.

www.akbizmag.com • Alaska Business Monthly • January 2012

ADVERTISING INDEX Alaska Air Cargo. . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Construction Machinery Industrial LLC. . . . . . . . . . . . 2

NCB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Alaska Housing Finance Corporation . . . . . . . . . . . . . 3

Cruz Construction Inc. . . . . . . . . . . . . . . . . . . . . . . . 51

North Wind Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Alaska Miners Association -- Fairbanks . . . . . . . . . . 73

Design Alaska. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Northern Air Cargo . . . . . . . . . . . . . . . . . . . . . . . 74, 75

Alaska Photo Booth . . . . . . . . . . . . . . . . . . . . . . . . . 73

Dowland-Bach Corp.. . . . . . . . . . . . . . . . . . . . . . . . . 47

Northrim Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Alaska Rubber & Supply. . . . . . . . . . . . . . . . . . . . . . 13

Dynamic Properties – Matthew Fink. . . . . . . . . . . . . 35

Northwest Ironworkers Employers Association. . . . . 64

Engineered Fire & Safety . . . . . . . . . . . . . . . . . . . . . 48

Pacific Alaska Forwarders . . . . . . . . . . . . . . . . . . . . 41

ERA Helicopters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Pacific Pile & Marine . . . . . . . . . . . . . . . . . . . . 8, 9, 10

First National Bank Alaska . . . . . . . . . . . . . . . . . . . . . 5

Paramount Supply . . . . . . . . . . . . . . . . . . . . . . . . . . 73

GCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Parker, Smith & Feek . . . . . . . . . . . . . . . . . . . . . . . . 27

Great Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Pen Air . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Green Star Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Personnel Plus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

Judy Patrick Photography . . . . . . . . . . . . . . . . . . . . . 53

Rosie’s Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Junior Achievement of Alaska, Inc.. . . . . . . . . . . . . . . 6

Ryan Air . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Alaska USA Federal Credit Union. . . . . . . . . . . . . . . 81 American Marine/PENCO. . . . . . . . . . . . . . . . . . . . . 87 Amerigas Propane . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Anchorage Opera . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Arctic Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Arctic Office Products (Machines) . . . . . . . . . . . . . . 65 Avante Medical Center . . . . . . . . . . . . . . . . . . . . . . . 77 Azimuth Adventure Photography . . . . . . . . . . . . . . . 32

Kendall Ford Wasilla . . . . . . . . . . . . . . . . . . . . . . . . . 52

Stellar Designs Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . 73

Bell Tech . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Kinross Fort Knox . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

The Growth Company. . . . . . . . . . . . . . . . . . . . . . . . 47

Carlile Transportation Systems . . . . . . . . . . . . . . . . . 67

Lynden Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Tobacco Prevention Control . . . . . . . . . . . . . . . . . . . 25

Chris Arend Photography . . . . . . . . . . . . . . . . . . . . . 90

Mikunda Cottrell & Co. Inc. . . . . . . . . . . . . . . . . . . . . 23

Washington Crane & Hoist . . . . . . . . . . . . . . . . . . . . 37

Cloud49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Millenum Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Waste Management . . . . . . . . . . . . . . . . . . . . . . . . . 71

Conoco Philips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

MT Housing Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Wells Fargo. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

www.akbizmag.com • Alaska Business Monthly • January 2012

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