Business Pulse Magazine: Spring 2013

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27th Whatcom Business Person of the Year on March 20

MAGAZINE

Nick Kaiser

A Lifetime

of business success Spring 2013

Larry & Debbie Stap of Twin Brook Creamery

Experts say: ways the State your tax dollars

Do family farms have a future? What you need to know about

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The Secret To Success Is Not So Much Talent As It Is Determination. Congratulations to each and every one of the businesses in Whatcom County who had the gumption and perseverance to make these lists. Well done.


TABLE OF CONTENTS

FAMILY MATTERS

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That theme dominates this issue. With Mother’s and Father’s Days approaching you’ll find 15 family-run businesses profiled or highlighted in our story lineup, including some among our 27th annual Business Person of the Year 2013 finalists. The awards finalists offer something for every taste: Succulent salmon, chicken feed, or local wine, recycled metal, pistol training tools, and dogs—such as the Bullmastiff litter at start-up finalist Rover Stay Over seen here with Cannon (l.), Ransom (c.) and Memrie Scheffer—and half a dozen more.

Photo courtesy of Rover Stay Over

Shuttle Systems

Made by Mothers

Marijuana Law

Boeing space division bioscientists, including Gary Graham of Bellingham, conducted studies in the 1960s combatting the effects of zero gravity on the bodies of astronauts. Graham applied some of those principles to products that have morphed into top training tools used by physical therapy clinics worldwide, hundreds of professional athletes, athletic trainers, and strength coaches. Graham’s entrepreneurial endeavors stretch to the moon and back.

Shelly Allen entered business as a new mother and developed a unique productsourcing model for Bellingham Baby Company. She sources not only locally, but products made by other entrepreneurial moms make up almost the entire shop inventory of all-things-baby. Every day at Shelly’s store is Mother’s Day.

Opinions vary from legal and state experts and local business leaders about the application of the new marijuana law in the workplace. What actually has changed in the workplace with this law (what did Shakespeare say, “Much ado….?”), and what do you need to know about it?

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TABLE OF CONTENTS

Guest Columnists

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Job creation and the Fed lead off a smorgasbord of business resource topics: Fall in love with business execution (p. 66)…Java talk (p. 78)…check in with Washington Policy Center and Assn. of Washington Businesses hot buttons (p. 82-85)…speak the language of Lean (p. 86), and enjoy a book excerpt. (p. 94).

Cover Story: Dairy Industry

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June is National Dairy Month, and we take a comprehensive look at history-rich dairy farming in Whatcom County with a 5-part package. The generational family farms stand out with different approaches to survival, including the VanDyk’s Holsteins, retailing Edaleen Dairy, bottled-up Twin Brook Creamery, and organic Edelweiss Dairy. The VanDyks: (l. to r.) Landon, Hale, Bud, Rocklyn, Susan, and Kohl.

Lighthouse Mission

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Led by Ron Buchinski, the Lighthouse Mission continues a heritage begun 90 years ago. Through expanded services and shelter space Lighthouse Mission serves a record numbers of guests, providing the county’s only walk-in homeless crisis shelter. But it’s not all about free handouts. Guests must make a pact.

Second Time Around Computers

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Providing an opportunity for your electronics to have another life, Second Time Around Computers recycles electronic goods, sells retail, and offers repair services and network solutions. See how they find value in cast-off items.

M A G A Z I N E The Publication of The Whatcom Business Alliance Managing Editor: Mike McKenzie Graphic Designer: Jason Rinne Subscriptions: Janel Ernster Administration: Danielle Larson Feature Writers: Gerald Baron Dave Brumbaugh John D’Onofrio Sherri Huleatt Cheryl Stritzel McCarthy Mike McKenzie Linda Partlow Kaity Teer

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Special Contributors: Big Fresh Media Laura Bostrom Randall Benson Paul Guppy Richard Davis Hart Hodges Tony Larson Dennis Murphy Todd Myers Bob Pritchett Erin Shannon Roger Stark Debbie VanderVeen

Cover Photo: Duclos Studios II Photography: Gerald Baron Ryan Duclos Sherri Huleatt Kaity Teer Mike McKenzie Photos courtesy of: Bellingham Cold Storage Edaleen Dairy Shuttle Systems Business Person of the Year nominees

For editorial comments and suggestions, please write articles@businesspulse.com Business Pulse Magazine is the publication of the Whatcom Business Alliance. It is published at 2423 E. Bakerview Rd., Bellingham, WA 98226. (360) 671-3933. Fax (360) 671-3934. The yearly subscription rate is $20 in the USA, $48 in Canada. For a free digital subscription, go to businesspulse. com or whatcombusinessalliance.com. Entire contents copyrighted © 2012 – Business Pulse Magazine. All rights reserved. POSTMASTER: Send address changes to Business Pulse Magazine, 2423 E Bakerview Rd., Bellingham, WA 98226.


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Dave Adams, President Emergency Reporting

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

Janelle Bruland, President / CEO Management Services NW

Kevin DeVries CEO Exxel Pacific, Inc.

Greg Ebe President / CEO Ebe Farms

Andy Enfield Vice President Enfield Farms

Brian Gentry, Manager Community & Business Services Puget Sound Energy

John Huntley President / CEO Mills Electric, Inc.

Sandy Keathley Previous Owner K & K Industries

Paul Kenner Executive VP SSK Insurance

Becky Raney Owner/COO Print & Copy Factory

Jon Sitkin Partner Chmelik Sitkin & Davis P.S.

Doug Thomas President / CEO Bellingham Cold Storage

Kathy Varner CEO VSH, Certified Public Accountants

Karen Winger Senior VP, Commercial Banking Wells Fargo Bank

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

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LEADING OFF Tony Larson | President, Whatcom Business Alliance The Whatcom Business Alliance is a member organization made up of businesses of every size and shape, from every industry. The WBA enhances the quality of life throughout Whatcom County by promoting a healthy business climate that preserves and creates good jobs.

Honoring the economic engine of our community W

e have a lot of outstanding content for you in this month’s magazine. An allencompassing report that reveals how difficult survival is within the dairy industry, accompanied by stories of some outstanding dairy farms and their unique business models. A profile of a company in Glacier with a link from 1960s space exploration to its exercise equipment products. Columnists speak to current issues like Medicaid and carbon emissions, lean operations and the economic recovery that isn’t.

tions from our nominating committee and the public. We receive 100s of nominations that we narrow down to finalists in three categories.

However, for the past 27 years this has been known as our Whatcom County Business Person of the Year edition. That’s because we have a process Frank Imhof, CEO of IMCO General Construction, every year that culminates with was the 2012 recipient of the Whatcom Business a special night for the business Lifetime Achievement Award. community to honor its own. We recognize and honor business The Start-up Business of the Year people and companies for their sucfinalists consist of companies crecessful efforts in creating jobs and ated within the last three years that enhancing the economic and civic have operated successfully and have vitality of our community. great prospects for the future. Over the course of the past few The Small Business of the Year months, we’ve collected nomina10 | BUSINESSPULSE.COM

finalists have operated successfully for many years and must have fewer than 100 employees. Companies like these represent the backbone of our economy. They are typically not only respected in our community, but they also are leaders in their industries. The Business Person of the Year is an open category intended to recognize leaders from private or nonprofit organizations who deserve recognition for building their business, creating jobs, and taking leadership roles in making our community a better place to live and work. The size of their company doesn’t impact their eligibility to be recognized in this category. You’ll enjoy a profile of each of the finalists for these awards. All the finalists will be recognized, and we’ll reveal the winner in each category at the event on March 20. In addition, we will crown the winner of the Whatcom County Lifetime Business Achievement Award. This annual award goes to a person who has made significant contributions to our community over a long period of time. This year that is Nick Kaiser, Chairman of Saturna Capital in Bellingham; he’s our Personally Speaking feature in this issue as well, starting on page 12. If you were to read the names on the Lifetime Business Achievement Perpetual Trophy, it would read


as a Who’s Who in Whatcom County business history. Many of the companies they built continue with positive impact in the county today. Companies like Morse Steel, Lynden Transport, Haskell Corporation, Yeager’s, Allsop Inc., Wilder Construction, Brown and Cole Foods, Peoples Bank, Bellingham Cold Storage, what is now Cascade Radio, Unity Group Insurance, Haggen Foods, Hardware Sales, Walton Beverage, Diehl Ford, Jacaranda Corporation, Exxel Pacific, Hempler’s Meats, Westford Funeral Home and Imhoff Construction to name a few. This special evening of recognition has been called the Oscars of Whatcom County Business. It is a special night with a special purpose. As an attendee of every one of the 26 previous events, I’m always encouraged by the fraternity of business owners and leaders who come together because they understand the value of recognizing business people. Few outside this fraternity understand the risks, efforts, sacrifices, and costs required to successfully start, operate, and grow a successful business. Few understand the weight of responsibility business leaders feel for their employees. The sleep they lose when things aren’t going so well, or when they have to make tough decisions that impact their employees. Many of the business owners I speak to feel as though fewer and fewer elected officials and people in the general public understand the valuable role successful businesses play in creating community prosperity. Many don’t seem to understand that without business success, our community cannot thrive. The businesses and business people we honor bring us the products and services we need and desire. They help make us more efficient and effective and provide products and services that make our lives easier. When businesses are successful, they provide jobs that allow people

to support their families, other businesses and charitable organizations in the community. They and their employees pay a significant

The businesses in our community drive our economy and our quality of life. They raise the tide, and a rising tide raises all boats. The business leaders in our community deserve to be recognized, honored, and thanked. portion of the taxes that allow our government to operate and provide the services it does. They take leadership roles on boards and commissions. They get involved in nonprofit fund raisers and provide

funding and volunteers for organizations that serve the less fortunate among us. The businesses in our community drive our economy and our quality of life. It is because of them that we have what we have. They raise the tide, and a rising tide raises all boats. The business leaders in our community deserve to be recognized, honored, and thanked. That is why the Whatcom Business Alliance and Business Pulse Magazine happily invite you to join us on the evening of March 20, at the Best Western Lakeway Inn and Conference Center in Bellingham. It will be a night of networking, fun, and celebration of business in Whatcom County. You can order a table of 8 or individual tickets online at WhatcomBusinessAlliance.com or call 746-0410. I hope to see you there. Enjoy the Magazine!

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TITLE

Personally Speaking ... with

Nick Kaiser

2013

Lifetime Achievement Award Recipient

Interview and photos by Mike McKenzie

T

he year 1946 was a big one for Nicholas F. Kaiser, though he could not know that at the time. Dr. Robert Kaiser, his father, opened his ophthalmology practice in a Bellingham building across Holly Street from Nick Kaiser’s present office at Saturna Capital. Later that year, Nick was born, the first of four sons born in Bellingham after a sister who was born in Panama. Kaiser has adhered to his Bellingham roots, and he’s built one of the most prominent mutual fund advisor/manager firms in the nation, primarily on assets of Islamic investment funds. A stroll into the lobby of Saturna Capital reveals shelves lined with 35 awards for excellence in that niche. You also immediately step into a nautical world – photos, paintings, and model boats, including a sports craft that Kaiser built called The Markell, named for his late first wife. And a sea and diving Orca scene that he papered on a wall himself in the conference room. His life’s trail has wound widely and afar—a Yale and University of Chicago 12 | BUSINESSPULSE.COM

Credit


graduate in finance, a soldier turned computer analysis whiz, a pilot with commercial rating, an ocean sailor, an entrepreneurial international financier, community benefactor, family man, and global traveler. Starting right here….

Father set the stage During World War II, my father was an Army doctor serving in Panama. In the fall of 1945, he moved his family here from Philadelphia. He opened for business on January 2, 1946, with hours of 8-to-5. At a quarter to eight that first morning, already there were 15 people in line. His new practice was an instant success. My younger brother Fred stepped in when my father retired in 1983, practicing at the Northwest Eye Clinic.

A return to roots A Bellinghamster, born and raised, I went to Shawnigan Lake School, 40 miles away on Vancouver Island. My class of 1963 is about to celebrate our 50th reunion. Then I attended Yale to study economics and politics. After my Canadian schooling, I expected to stay in the U.S permanently. After obtaining my MBA at the University of Chicago in 1968, I volunteered for the Army.

World of computers Fortunately, I was assigned to Ft. Benjamin Harrison in Indianapolis as a computer systems analyst. Our unit made up the MOS tests (military occupational specialty) from a database of questions, and then scored the exams. We had a fine group of officers, who played considerable golf. We all reported to a general in Washington, D.C., and when he visited, our colonel would say, “Kaiser, come brief the general.”

ing firm, which was asked by an investor if they could develop computer programs to beat the market. The consultants said no. When I finished my service, the investor—Sam Moxley—asked me to go into business with him. We were early stock market students doing computerized research. He owned a pharmaceutical retailing chain, which used a computer to control inventory for 60 stores. In 1974 we bought control of Unified Management Corporation, a small Indianapolis investment advisory firm with two mutual funds.

Mutual funds paid dividends Unified did well, growing to over 60 employees when we sold it to Mutual of New York in 1986. My first wife, Markell, had joined me at the firm where we continued its growth until retiring in 1989. I had met Markell when she was at Vassar. When we started

Saturna Capital after moving to Bellingham, she continued working with me until she passed away suddenly in 2006.

The family tree Brooks is oldest, and she’s a professor of environmental economics in Denmark. Max was next, our only son, and a thirdgeneration Yale graduate. He, as you know, started Hand Crank Films in Bellingham. (Max Kaiser’s video production company is a nominee for 2013 Whatcom Small Business of the Year. See page 48.) Jane and Sarah are twins. Sarah (Brand) has an event-planning firm in the same building where her grandfather began his medical practice. Jane (Carten) is president and CEO of Saturna Capital, where she has taken over general management, all of our technology, and marketing. Jane’s the only one of our five children who went to

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Moonlighting lit the path On the side I did some moonlighting at an academic consult-

WHATCOMBUSINESSALLIANCE.COM | 13


NICK KAISER France. We added her two sons living in New York to the family.

Private school tradition Becoming a benefactor of St. Paul’s Academy in Bellingham stems from my parents sending me away to Shawnigan Lake School, north of Victoria. As is common in the eastern U.S., most of my siblings also went away to school. And as we became parents, our children did, too – Toronto, Tacoma, New Hampshire, Vermont.

St. Paul’s Academy spotlight AWARD-WINNING MANAGERS – Three of the senior officers at Saturna Capital—(l. to r.) CFO Jim Gibson, Nick Kaiser, and VP/Director Phelps McIlvaine who manages the Bond Portfolio— visit beneath the plethora of awards that the company’s mutual funds have earned.

college here - her undergraduate degree in computer science and business, and her MBA, are from Western Washington University. Our youngest, Emily, lives in the Maine woods. She went to

high school and college in New England, her husband is from Pennsylvania, and they represent the alternative generation. I remarried in 2010 to Deborah, an arts enthusiast from Boston and

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When I was growing up here I was active at St. Paul’s Episcopal Church. The academy started as a pre-school program of the church in 1972. Expanding into elementary grades, in 2000 it purchased its own building on Northwest Avenue. Still growing, a new Upper School building plus a separate preschool building have been added recently. More than 360 day students now attend. Shawnigan Lake School also remains important to me, and I currently serve on the governing board. It has 450 residential students, the majority from Canada.

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At age 13 I became an Eagle Scout, and I’m still involved by serving on the Mt. Baker Foundation. The Mt. Baker Council of the Boy Scouts of America covers from Snohomish County north, serving 7,500 youth in hundreds of Cub packs, Scout troops, and Venturing crews.

The Islamic niche While in Indianapolis, two Muslim businessmen, Dr. M. Yaqub Mirza and Dr. Bassam Osman, asked if we could manage an Islamic mutual fund. Intrigued, we took on the assignment, and after a couple of years to get formed and through the regulations, started Amana Mutual Funds Trust


operations in 1986. After we sold Unified, we retired to Bellingham. We started Saturna Capital here in 1989 and soon began managing Amana. Ever since, our strongest focus has been on Islamic investments; it’s our niche, and we give most of our attention to that.

(The other listing came from Puget Sound Business Journal’s 100 Fastest-Growing in Washington.)

Why Malaysia? Many consider Malaysia the center of Islamic finance. Ethnically, it’s a balanced country

Amana Funds and awards We’re very proud of the three Amana funds. The Growth Fund has grown to $2.2 billion in assets, and the Income Fund to $1.3 billion— the two largest of their kind in the world—and more than three-quarters of our total assets managed. They’ve received much recognition with awards, and they’re the main reason Saturna Capital made two fastest-growing privately-held company lists last year. We were on Inc. Magazine’s for the fourth straight year because of our threeyear sales growth of about 160 percent.

“We write our documents in plain English…(and) make Saturna Capital’s core values very visible.” –Malay, Chinese, and Indian. A British-based democracy, they get along together. It’s not like in the Gulf, heavily bound by traditions, or fractiously divided like India. We bought a small investment firm in Malaysia in 2010, now with eight employees. We’re bring-

ing out a new fund this year specifically for the Malaysian market.

Business is an open book The mutual fund business is open and transparent. We publish fund values daily, and provide numerous reports – all of them right on our website. The funds have over 100,000 investor accounts. We try to write our documents in plain English, again to help investors understand what we do and how we operate. The Internet has been a big part of growing our business, helping our investor education efforts while keeping costs as low as possible. We make Saturna Capital’s core values very visible. In the lobby. On the website. In our marketing materials. Our board devised these as a way to guide a growing business by understanding our history and incorporating basic practices.

WHATCOMBUSINESSALLIANCE.COM | 15


NICK KAISER

KAISER ACHIEVEMENTS St. Paul’s Academy in Bellingham expanded in recent years into its Upper School. Saturna Capital undertook what it called “our most ambitious philanthropic campaign” and led the initiative to fund the project with a pledge exceeding $2.5 million. That spurred $1 million in private donations, and laid the cornerstone for obtaining the necessary $6 million in bank financing to complete the school. This stands the largest, but far from the only support to educational endeavors by our Lifetime Achievement Award recipient, Nick Kaiser, the founder, director, and chairman of the board at Saturna Capital. His achievements in business, that of building one of the world’s most successful investment asset management and advisory companies, reflect one of Whatcom County’s most successful private, family enterprises ever. The entryway to the downtown Bellingham headquarters displays about three dozen industry awards. One is the Community Investment Award from the Mutual Fund Education Alliance honoring the industry’s “top corporate citizen.” The St. Paul’s fund-raiser lay at the heart of the selection. Coming from a family deeply invested in private and university education, proud father of five college graduates, Kaiser volunteers at St. Paul’s Academy, sits on the board of his high school—Shawnigan Lake School (B.C.) and of the Mt. Baker

Foundation, and funds the Kaiser Professorship of International Business at Western Washington University. On the business side, Kaiser remains very involved as trustee, president, and equity portfolio manager, and has been a repeat nominee of the prestigious Morningstar, Inc. Domestic Stock Manager of the Year. Returning about 25 years ago, he since has watched Saturna Capital continually have its industry’s spotlight shining on his hometown Bellingham. It has earned multiple peer recognition in Lipper Awards for 3-, 5-, and 10-year performance; fastest-growing privately-owned company acknowledgement by Inc. Magazine four times, and awards for its corporate communications. Before starting Saturna Capital on a foundation of Islamic mutual funds, Kaiser had purchased another investment and brokerage firm, Unified Management Corp. in Indianapolis, and built it before selling to Mutual of New York. A Yale degree in economics and MBA in international economics and finance plus almost 40 years’ experience, he is widely-sought among industry organizations. They include: Service with the Investment Company Institute (past governor), CFA Institute (past chapter president), Financial Planning Association (past chapter president), and No-Load Mutual Fund Association (past national president).

On Saturna’s uniqueness We’re totally integrated. We do as much as possible in-house. It gives us a lot of power. In our investment analysis, we use our expertise via our own software. We have programmers in Chicago, Denver and Bellingham. Our integrated systems enable us to manage our business well, at a relatively low cost to the advantage of our investors. As an example, many advisor groups farm a lot of their promotional work to marketing firms. But among our 73 employees, we have own publishing, advertising and marketing staff.

Community issues and activism In 2005 when I was nominated for one of your magazine’s Business Person of the Year awards I sat at a table of friends. As I looked around, I was pleased that the room was filled 16 | BUSINESSPULSE.COM


with many community business people. Bellingham isn’t known as being favorable to business, but the turnout helped me become a stronger supporter of local government candidates who would deal with issues like cost of municipal services and taxes. (Nick Kaiser won the Whatcom Business Person of the Year award in 2005.)

In leisure time We spend many holidays in Canada, with a home on Saturna Island. We ski, plus fish and boat in our local seas. As an international portfolio manager, I travel with Deborah considerably. Last year we visited England, Malta, Italy, Greece, and of course, Malaysia. Jane’s running Saturna Capital now with a great team. We are expanding our portfolio manager group, but I still lead the stock picking … I’m not tired yet.

from the business school. We have endowed a chair there. (The endowment provides the Kaiser Professorship in International Business.)

What would make it better? Washington isn’t the best state for business. Even British Columbia has much lower property taxes. In our community we need more understanding about how

business creates jobs, and jobs create incomes, and incomes support families and build the community. Improving business productivity, not higher business taxes, is what raises the standard of living for everyone. Bellingham does have dynamic businesses – we need to nurture them, and reverse the trend of the last decade where a smaller percentage of the population actually works for a living.

Saturna Island is special We’ve had a home there since 1999. Most of the Island is becoming a new national park. As a boy I visited, fishing with my father. If you look north from Orcas or Lummi Island, you see Saturna Island, and you can almost see our house there.

Doing business locally Ours is a global business, obviously. Almost all of our revenue comes from outside of Bellingham. But it’s home. We have an office in Reno for our trust company, and it’s an attractive, low-tax, state.

But…. But I was born here, this is home. We recruit good people to Bellingham because of what it’s like as a place to live. And I have so many things going on here – family, St. Paul’s Academy, Boy Scouts, and our involvement at Western (Washington University). We provide scholarships, academic visitors, and get interns

WHATCOMBUSINESSALLIANCE.COM | 17


Preserving Legacy

Whatcom dairy farmers search for stability Article and Photos by Gerald Baron

L

osing the family farm is a tragedy on multiple levels. More than just losing a job, a business, or a career. Familyowned farms have a legacy to uphold and pass

on to future generations—a legacy created by parents, and grandparents, and even great-grandparents who worked incredibly hard. They created a way of life, even more than a livelihood. Now, especially within this region’s once-thriving dairy landscape, that family farming way of life in Whatcom County finds itself increasingly threatened. For Bud and Susan Van Dyk, like most

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Whatcom family dairy farmers, preserving the family legacy for the next generation is a powerful mission and continual struggle. Bud, 61, holding his 5-year-old granddaughter, Rocklyn, on his lap during a wide-ranging, personal interview with the family, said, “It was my life dream to continue the family farm, but now, is it a curse or a blessing? I don’t want to be the one to drop the ball.” For the Van Dyks, working the family farm definitely has been more blessing, evidenced by their two sons, Landon, 30, and Kohl,

23, choosing to join the farming operation. But the Van Dyks wonder if that tradition can continue. “With my kids,” Bud asked,, “the burden is on them. But, am I passing on something good or bad?” The “bad” is the instability that surviving dairy farmers hereabouts have (source: http://whatcom.wsu.edu/ag/cfa/docs/CFA_Chapter_4.pdf) experienced in the past few years, and the conin his teenage years he knew of tinued uncertainty of the viability 25 to 30 farms on that road. Just of sustaining family-owned dairy three remain. Washington State farms. The decline of the Whatcom University reports that in 1959 just family-farm community is nothunder 1,200 dairy farms operated ing new. in Whatcom County, but by 2007 The Van Dyk’s farm is fewer than 200 existed. Since 2007, on Van Dyk Road off the the decline has accelerated. Hannegan, a few miles south of Lynden. Bud said when he started working on the farm

WHATCOMBUSINESSALLIANCE.COM | 19


THE DAIRY INDUSTRY

GEN-3 & 4 – Bud Van Dyk and Susan Van Dyk (at left) wonder if the Holstein farm his grandfather started will continue past the fourth generation represented by their son, Landon (on the right) and his brother, Kohl?

The reaction by non-farmers might be, “So what? There aren’t many buggy-whip makers around anymore either.” That would overlook the significant impact of farming, dairy farming in particular, on the quality of life and economic vitality of the county. According to Whatcom County Farm Friends, local dairy farmers produce about $200 million in what the industry terms farm gate income. But, as long-time dairy farmer and farm leader Sherman Polinder pointed out, much of that income gets spent locally with an estimated multiplier of five times the farm gate value. That translates into a lot of jobs in feed companies, repair shops, truck and car dealerships, retails stores, and the like. Bellingham and the more urban areas of Whatcom County also enjoy the scenic and environmental benefits of farming. But increasingly, farmland is threatened by urban sprawl. WSU reports that in 1950 Whatcom County farmers worked 210,000 acres. Today, farm acreage totals less than half of that. A correlating increase in farmland value holds a mixed blessing for farmers: They can provide for retirement, but to start or expand a farm has become prohibitively expensive. 20 | BUSINESSPULSE.COM

Economic pressures on local dairy farmers particularly have intensified during the last few years. Polinder, one of three local dairy farmers to sit on the Darigold co-op board of directors, said that in the last three out of five years many dairy farmers have lost equity. That is, their operations have not

“It was my life dream to continue the family farm, but now, is it a curse or a blessing? I don’t want to be the one to drop the ball.” Bud Van Dyk, Whatcom generational dairy farmer

been profitable and they used up the value of their cattle and equipment to keep going. That, clearly, is unsustainable. The reasons are quite simple: high cost of production, and low prices for milk. Both Polinder and Bud Van Dyk quickly point to one very significant factor: federal subsidies for corn grown to produce ethanol. What was intended to help move

the nation to greener fuel and less dependence on foreign oil turned devastating for farmers. Corn provides the basis for cattle feed, and farmers selling corn for fuel raised the prices for feed. Polinder, in an interview for this report, said that this trend took 40 percent of the corn crop out of the food chain— a shift particularly hard on West Coast farmers because of the transportation costs from the main corngrowing regions in the Midwest. Aside from ethanol subsidies, farmers also point to the mercantile exchange. The Chicago Mercantile Exchange (MCE) trades both milk and corn, therefore speculators determine the price of both to some degree. Then there is the matter of overproduction. Milk and dairy product prices are based partially on supply and demand in a global market. Milk prices are low in part because, as Polinder said, lots of people want to milk cows. More than that, while the number of farms has decreased dramatically, the production by each farm has increased even more dramatically. For two reasons: more cows, and much better cows. When Bud Van Dyk’s grandfather, Peter A. Van Dyk Sr. first started farming on the Van Dyk road back in the early 1900s, he had just a few cows. When his son, Peter Jr., took over the farm shortly after World War II, he milked 20 to 30 cows—a big farm for that time. Those cows produced about 12,000 pounds of milk annually. Now the Van Dyks milk more than 700 cows, and each cow produces double the amount of milk. The same farm that produced 300,000 pounds of milk a year 50 years ago now produces 17 million pounds. While the Van Dyk’s farm in 2013 is a little larger than the average Washington dairy of 528 cows, it is far smaller than some of the mega-dairies in the county with more than 2,000 cows. Dairy Farmers of Washington reports on the Washington Dairy Products


Commission website that while 17 percent of the farms in Washington have more than 500 cows, they produce a whopping 77 percent of the state’s total milk production in the state. The 460 dairy farms in the state, which ranks No. 10 in the nation in milk production, produce 5.5 billion pounds of milk a year. The incredible Susan Van Dyk: ‘Genomic numbers have become very important.’ increase in productivity is one major reason for Strategies for Survival over-supply and resulting low Farmers still toughing it out in prices. Bud Van Dyk said that if the this environment are nothing if not industry had put as much effort and resilient. The commitment to the money into marketing its healthy family heritage, the land, and the product instead of producing everlifestyle remains stronger than ever. more productive cows, today’s story But, how to survive? And here is might be different. where the story gets really interest-

ing, because there is no one way. A variety of survival strategies are being played out in Whatcom County, and some hope for change in the politics of farm support. Politics is one big driver of farm economics. The decision of the George W. Bush and Barack Obama administrations to push corn for ethanol is one example. And farm income has been supported by farm subsidies for many years. Federal subsidies create a difficult choice for farmers because they notably have been self-reliant and disdainful of anything smacking of a handout. But in today’s global market every country subsidizes farmers in

WHATCOMBUSINESSALLIANCE.COM | 21


THE DAIRY INDUSTRY many ways. Polinder pointed to the proposed Dairy Security Act as a bright hope for the future—if it can get passed. Part of a massive Farm

Bill, still stalled in the House of Representatives heading into March, the Dairy Security Act (DSA) could offer local farmers some security

EDELWEISS TEAMS WITH ORGANIC VALLEY IN NICHE MARKET APPROACH Going organic is another strategy some Whatcom County dairy farmers adopted to find the elusive higher price and greater stability. Hans and Colleen Wolfisberg operate one of three farms in Whatcom County that produce certified organic milk. However, they are among 1,800-plus farmers across 35 states and three Canadian provinces producing their milk for the Wisconsin-based co-op Organic Valley. The Wolfisberg’s Edelweiss Dairy sits just southeast of Lynden and nestled against the Nooksack river, home to a herd of 160 Jersey cows. The Wolfisbergs started the farm in 1996 after Hans moved from his native Switzerland. Farming here is very different, he said, as in Switzerland the government controls all aspects of farming through subsidies. And the Swiss subsidies primarily relate to environmental benefits, rather than producing products. “You’re paid to keep the ground bare, or plant a hedge along a creek, or plant fruit trees,” Wolfisberg explained. The move to certified organic dairy was relatively easy for the Wolfisberg family because it fit with their own values about food and animal husbandry. Their cows graze during the summer months instead of staying in the barns year-round, and their calf-raising Hans Wolfisberg operation is distinctly different from the igloo-type calf enclosures found on most dairies. Edelweiss sells milk exclusively to Organic Valley, self-proclaimed as the fast-growing organic milk producer and marketer in the U.S. Headquartered in Wisconsin and celebrating its 25th anniversary throughout March, Organic Valley reported its 2012 sales at $860 million, estimating it sells about 60 percent of the market share of organic milk nationwide. While the price differential between organic milk and non-organic milk varies, currently it is about 50 percent. But similar to the producer-handler situation, the cost of production is considerably higher. The transition from a traditional to an organic dairy farm runs high because the farm has to be fully organic for one year before selling any milk. Edelweiss Dairy has capitalized on the relationship with Organic Valley, which provides a strong support structure of agronomists, animal husbandry experts and veterinarians. Wolfisberg said he believes organic can work for other farmers, even though Fresh Breeze near Lynden and Eldridge Farms near Everson are the only others in Whatcom County. “It takes a different management style,” Wolfisberg said, “like grazing for example.”

22 | BUSINESSPULSE.COM

and stability. “It’s a voluntary program,” Polinder said. “Dairy farmers have to sign up for a five-year period, and in that period if margins (the difference between cost of production and milk prices) get too low, the farmers agree to cut back production.” That reduction will lower supply and thereby increase prices, restoring the margins. To incentivize farmers into signing up for this program the legislation provides for a form of profitability insurance. “If margins get below $4, then the insurance kicks in,” Polinder said. Plus, farmers can opt to buy additional insurance so that payments begin when margins dip below $6 at a cost of 15 cents per hundred weight. Van Dyk supports this program even though he finds the idea distasteful that the government supports farmers in a less than free-market way. “But it’s not free enterprise anyway,” he said. As Landon Van Dyk, the fourth generation Van Dyk farmer, said, “It’s not like we’re making widgets.” His brother Kohl said, “It’s a fresh product, we can’t stockpile it.” And the time and investment needed to increase production is substantial. Polinder is strongly supportive of the Dairy Security Act and considers it part of his Christian perspective. If farmers continue to produce despite their agreement to cut production, their excess production will go into a food bank to feed the needy. “We think this has a Christian quality to it,” Polinder said, “It will help stabilize our industry, but if we insist on overproducing then the money goes to help those at the poverty level.” The Van Dyks and many others look beyond the government to help secure their future. Landon and Kohl Van Dyk purchased 40 acres that used to be part of their greatgreat-uncle Ralph’s farm on Noon Road. Added to 20 acres in produc-


tion on the home farm, they grow calf, technicians can predict what 60 acres of raspberries. traits it will pass on to its offspring, How has it worked? Landon and including production, health traits, Kohl laughed, demonstrating some type traits, etc. “The highest-priced pain. The rainy weather combined animals at auction today are those with young plants contributed to severe challenges in their first two years of harvest. The Van Dyks, like other farmers with high-production registered herds, have sold cows and heifers from their exceptional stock of Holsteins. The Van Dyk farm commanded upwards of $15,000-$20,000 for its high-production, registered Holstein cow or heifer. Susan Van Dyk said that too is changing because of genom- Sherm Polinder, seen here with his grandson Kyle, says ic testing. Farmers in the past, politics will sway the future of dairy farming. she said, would evaluate a cow or heifer by the producing history with extremely high genomic numof their parents and several other bers,” Susan said. factors. Previously the top-selling ani“Genomic numbers have become mals were the best-looking animals very important,” Susan said. By with good production records and taking a sample of hair from a a deep pedigree, but the demand

for those animals has decreased as registered breeders have chased the high genomic numbers. Because this technology is so new, some of the parents of animals that sell for a lot of money have not had a chance to prove themselves. This change adds more uncertainty to an alreadyuncertain industry. While Bud Van Dyk serves as president of the Washington State Holstein Association, the Van Dyk Holstein’s Farm no longer features only the signature black-and-white milk cows. Brown, moon-faced Jerseys have joined the herd, 130 of them. For the Van Dyks this diversification came about because of the higher-component content of Jersey milk and the breed’s exceptional conversion of feed-to-milk ratio. Seeking to squeeze every bit of margin, the Van Dyks also set up

WHATCOMBUSINESSALLIANCE.COM | 23


THE DAIRY INDUSTRY

HOLSTEIN HAVEN – The Van Dyk dairy farm in Everson features these milk cows, plus Jerseys among 1,600 head that eat from the farm’s feed mill and produce electric power with their waste.

their own small feed mill where they grind whole corn and barley into cow feed. But, investing in a biomass digester was an even bigger step. A digester converts the considerable waste produced by the nearly 1,600 cattle on the Van Dyk farm into electricity. In the Van Dyks’ case, all that manure produces 400 kilowatts of continuous electricity, which sells to Puget Sound Energy. These cows produce more than milk; they’re producing enough power for up to 400 homes. The digester, designed and built by DariTech in Lynden, was a $2 million investment, partially funded by government grants. The technology is paying off for the Van Dyks, not just from electricity sales, but also in eliminating other costs such as the use of the bacteria-free solids for their herd’s bedding material. Ferndale-based Andgar Corporation is a national leader in planning, constructing, and operating dairy digesters. Gary Van Loo, Andgar’s chief executive officer, said that in the past 10 years Andgar completed 12 digesters, including three in Whatcom County. They recently completed the largest digester in the U.S. in Jerome, Idaho. 24 | BUSINESSPULSE.COM

The total electric output of these 12 digesters is 15.4 megawatts— enough to power about 15,000 homes. The by-product of producing the electricity is the solid material left from the manure, rich in nitrogen and phosphorous. This removes the material from the waste stream and helps convert it into a useful and sellable by-

Jerseys, genomes, and digesters all add to the survivalist strategy of Van Dyk dairy farmers. product. The Van Dyks’ diversification strategies are numerous, and potentially include the beef market. According to Debbie Vander Veen at Veen Huizen Farms, a Jersey cattle and crop farm on East Pole Road, the long-term drought in the Midwest has shifted herds toward the greener Northwest. Vander Veen said, “As the cattle inventory [in drought-stricken areas] continues to shrink, the beef price will increase with demand. Dairy farmers produce milk, but also produce beef. This shortage of beef

may help offset the loss in cash flow for dairy farmers of Whatcom County.” While the Van Dyks have integrated multiple and broad strategies around milk, beef, breeds, technology, and even raspberries, some local dairy farmers have taken a singularly-focused approach aimed at increasing their margins with targeted marketing and branding strategies. (See related stories about Twin Brook Creamery, Edaleen Dairy and organic Edelweiss Dairy.) Either way, retaining the legacy of the family-farming way of life within the dairy industry continues as a difficult mission in Whatcom County. Landon Van Dyk didn’t intend to return to help run the family farm. He graduated with a degree in engineering from Seattle Pacific University. He worked as a civil and electrical engineer after graduating, but soon found himself arranging his work schedule so he could spend more and more time on the farm. With the raspberry operation gearing up, Landon said he felt it was time to make the jump. For younger brother Kohl, farming was all he ever wanted. “I couldn’t see myself doing anything else,” he said., His 4-year-old son, Hale, climbed up onto his dad’s lap during the interview, raising the obvious question: Can the farm be passed on to yet another generation? If the farmers have anything to say about it, the answer is a definite yes. Susan Van Dyk said, “Farmers are eternal optimists.” And husband Bud echoed, “We keep saying, ‘It’s got to get better.’” Gerald Baron was raised among dairy cows in rural Whatcom County. A regular contributor of articles and photography, he’s a former owner/publisher of Business Pulse.


WHATCOMBUSINESSALLIANCE.COM | 25


Twin Brook Creamery Bottled up in building consumer brand By Gerald Baron

26 | BUSINESSPULSE.COM

T

win Brook Creamery, located on Double Ditch Road near Lynden, is a fifth-generation family dairy farm, and has become well-known around the state for its milk sold in glass bottles. Larry Stap, whose great-grandfather started the farm, said the transition from a traditional Darigold co-op producer to a “producer-handler� came as a result of trying to make the farm work for the next generation.


“Our daughter Michelle and her husband, Mark Tolsma, came to us in 2006 and asked if they could join the farm,” Stap said in a conversation about family-farm dairies in Whatcom County. “Did we want to get bigger and bigger, or try something else?” They opted to try something else–sell their milk directly. The bold move was a steep, expensive, and dangerous learning curve. The family has succeeded to the point of becoming a finalist for our magazine’s Whatcom Small Business of the Year 2012 Award. Going into milk processing, distribution, shipping, sales, and marketing proved to be a much bigger

challenge than the Staps first anticipated. The workforce grew from just them and a couple of extra hands to a dozen workers in addition to family. ”It’s a good thing we didn’t know what we didn’t know,” Stap said with a laugh. He said he has come to appreciate Darigold a lot more. “Farmers have no idea what goes on when the truck leaves the farm,” Stap said. Despite the learning curve, Stap said they did four things that

turned out to be providential and effective.

1. The glass bottle It was a hit with the consumers because of its difference and its nostalgic appeal, but even more so to the retailers. “Consumers pay a deposit and they have to bring the bottle back to the store to get the deposit back. Retailers like it because it brings the customer back,” Stap said.

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CREAMERY CLAN – The Stap and Tolsma families that operate Twin Brook Creamery, from left: Makenna, Larry Stap, Levi, Debbie Stap, Jacob, Samatha (front), Michelle and Mark Tolsma. Photo by Ryan Duclos

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TWIN BROOK CEAMERY of the cream settling at the top and it helped move the product.

3. Lowtemperature pasteurization Stap was clear that their reasons for choosing low vs. high temperature were economic. “It required less expensive equipment,” he said. But, he said, the new health-conscious consumer shows a strong preference for lowtemperature pasteurization because it produces less change in the milk and leaves a more pure taste, closest to what the cow produces.

4. The cows Twin Brook Creamery milks a herd of 175 Jerseys, all A POPULAR TASTE – Debbie Stap of Twin Brook Creamery pours one of the dairy’s top purchases, its chocolate milk, with names and regisat a recent tasting for a Haggen open house in Ferndale. tered certification, that Her grandson Jacob observes; he could become the 6th produce higher milk generation involved in the farm. Photo by Mike McKenzie components like butterfat. “One hundred 2. Not to homogenize pounds of milk from a Holstein their milk produces 10 pounds of cheese,” Stap said. “But a hundred pounds Homogenization mixes the of Jersey milk produces 15 pounds heavier cream with the milk, of cheese.” That also translated changing the nature of the milk into a taste difference that the to some degree. But for health Twin Brook Creamery customers reasons, and possibly nostalgic prefer. Their cows remain outside reasons, consumers like the idea

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in fields from mid-March through mid-October. Despite these fortuitous advantages, getting the milk sales off the ground was far from easy. The first Seattle retailer came to the creamery’s owners and said that their product had made the entire dairy case more profitable in the retailer’s six stores. Word spread quickly, and soon retailers from around the region were asking for Twin Brook products. The Staps enjoy a personalservice side to their marketing. They appear frequently throughout the year at grocery events, such as the Ferndale Haggen ‘Grand Reopening’ recently, pouring samples. Twin Brook Creamery’s products include milk whole, non-fat, and 1- and 2-percent, heavy whipping cream, half-and-half, and a special-formula chocolate milk, plus an in-house recipe, seasonal October-to-New Year’s egg nog that routinely sells out before the holidays end. When they hold sample tastings some people sip pure cream (“that’s what I use on my oatmeal and cereal,” Stap said), but the chocolate milk goes non-stop. “The key to our chocolate milk is the quality of ingredients, mixed first, then we put it through our low-temp pasteurization that retains better taste. Retailers tell us that when we sample, their sales of our products goes up about 20 percent.” Retailers charge considerably more for Twin Brook Creamery milk, resulting in higher margins for the retailer. The price difference from the farm is substantially higher— about 50 percent more than commodity milk prices—but Stap was quick to point out that the much higher costs involved in processing, regulations, marketing, and transportation more than make up the extra margins. The consumer pays a refundable $1.95 deposit for the bottles. Returns go back to Twin Brook, helping cut the cost of new bottle


purchasing. And if the users don’t return the bottle, Stap said, “We are getting free advertising in their homes.” Their marketing materials are steeped in family values content tied to producing a top-quality, uncompromised, healthful milk product. “We feel good about providing jobs, having people enjoy what we serve, and keeping the farm going to the fifth generation with our daughter Michelle and son Mike involved,” Stap said.

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He said he read a recent article that said 25 percent of family farms make it to the second generation, just 12 percent to the third, and just 3 percent to the fourth. Pointing to one of the Staps’ 13 grandchildren, 8-yearold Jacob, bouncing a rubber ball off a paddle during the Haggen sampling, Stap said, “Maybe we’ll get to the sixth generation.” Now, after a long facilities expansion process all last year that increased milk production and sales between 20-25 percent, the owners are looking at ways to provide additional dairy products, perhaps cheese, under the increasingly-valuable Twin Brook Creamery brand name. The Stap and Tolsma family farm looks more secure because of its higherrisk business model. Stap said, “We’re finding there is value in the brand.”

WHATCOMBUSINESSALLIANCE.COM | 29


thrives on direct sales, and

three company stores By Dave Brumbaugh

J

ust about every dairy farmer has probably thought about selling milk directly to retail customers rather than to processors. Ed and Aileen Brandsma of Lynden are among the few who went all in. When the couple established Edaleen Dairy in 1975, they began selling some of their milk out of a small store on the farm along the Guide Meridian, about a mile south of a Canadian border crossing. The first years were difficult – the Brandsmas used excess milk at times for irrigating fields. But their small store became a popular stop for Canadians in the late 1980s and early 1990s when high gasoline and dairy prices drove them across the

Edaleen Dairy produces nearly 20 flavors of premium ice cream. 30 | BUSINESSPULSE.COM


border for quick shopping trips. Edaleen Dairy also supplied milk for stores in Blaine and Sumas that received many Canadian shoppers. The surge in sales led Edaleen Dairy on a growth spurt that continues today with 2012 revenue of more than $15 million with three stores, plus a strong wholesale distribution. Its 1,600 Holstein cows produce milk for 315 7-Eleven stores in western Washington and western Oregon, plus many other customers such as the Darigold co-op. Edaleen opened its second store in Sumas two years ago, and another in Lynden last November.

“We used to watch the milk price. Now we watch feed costs.” Mitch Moorlag, co-owner and GM, Edaleen Dairy

The anaerobic digester installed in August at Edaleen Dairy collects manure at the farm and creates enough electricity to power 450 homes.

dairy farms like Edaleen Dairy to a monthly production of 3 million pounds of milk that could be sold in stores. Last year’s fire at the Darigold processing plant in Lynden disabled it enough that it could no longer take surplus milk

from local farms; Edaleen Dairy therefore had to reduce its herd by 400 cows, according to Moorlag. The retail price of milk continually presents a challenge because many supermarkets and big-box stores use milk as a loss leader.

Industry challenges It hasn’t been straight-line growth by any means, according to Mitch Moorlag, Edaleen Dairy’s general manager. Moorlag and his wife Karen, daughter of Ed and Aileen Brandsma, have joined her parents in ownership of the company. “The challenges for dairy farmers are regulatory agencies on land management and (urban encroachment),” Moorlag said. Regarding land management, he added that differences with government agencies arise about how to protect the environment. “Every dairy farmer and agriculture producer is trying their best to be the best steward of our land with the resources they have,” Moorlag said. A highly-contested U.S. Department of Agriculture ruling in 2005 limited producer-handler

WHATCOMBUSINESSALLIANCE.COM | 31


TITLE

Edaleen Dairy not only enters a creative float for the annual Lynden Lighted Christmas Parade but also is the event’s title sponsor.

Edaleen Dairy can’t sell milk at a loss, or low margins, in its own stores and survive, so it emphasizes quality, efficiency, and customer service and loyalty. “The biggest keys to our success are employees who care about our cows and customers, plus local customers who come back every time their refrigerator is empty,” Moorlag said. Last year the biggest business hurdle for Edaleen Dairy wasn’t the price of milk at stores, but the price of producing milk. A drought in the Midwest drove up the price of grain and alfalfa that cows eat – a situation that won’t likely change until this year’s harvest. Also, high fuel prices affect the cost of operating tractors on the farm and delivering milk to distributors. “We used to watch the milk price,” Moorlag said. “Now we watch feed costs.”

Turning manure into money The desire to increase efficiency and reduce costs led Edaleen Dairy to become one of three Whatcom farms to partner with Andgar Corp. of Ferndale in building an anaerobic digester 32 | BUSINESSPULSE.COM

on the farm. Cows produce a significant amount of manure, which typically must be stored in a lagoon until it can be spread over land as fertilizer in an environmentally-responsible manner. However, neighbor complaints

“The challenges for dairy farmers are regulatory agencies on land management and (urban encroachment). Every dairy farmer and agriculture producer is trying their best to be the best steward of our land with the resources they have.” Mitch Moorlag, co-owner and GM, Edaleen Dairy

about the odor, and environmental concerns about the release of greenhouse gas pose problems for dairy farms. An anaerobic digester heats raw manure to 100 degrees, and then bacteria convert acids in the manure to biogas, primarily methane and carbon dioxide. The

methane gas is then collected and burned by an engine to create electricity. Andgar installed the digester at Edaleen Dairy during August last year, the third one in Whatcom County. The electricity sold from the digester to Puget Sound Energy is enough to power 450 homes. The process also creates a byproduct that Edaleen Dairy uses for animal bedding. A $500,000 U.S. Department of Agriculture grant and a $2.1 million USDA loan helped make the project feasible, which Moorlag said will enable Edaleen Dairy “to stay viable for years to come.”

A tasty expansion As Edaleen Dairy’s Guide Meridian store continued to perform well selling its milk and nearly 20 flavors of ice cream, management team discussions began about the feasibility of a second store. When a location became available in Sumas on the street motorists use to cross the border there, Edaleen Dairy took advantage of the opportunity and opened a store there in June 2011. “We’re definitely happy with what we’ve turned that into and the customer base we developed there,” Moorlag said. Meanwhile, many Lynden residents drove several miles to its Guide Meridian store, and for a long time Edaleen had considered opening a store in the city. The company also is a significant supporter of major Lynden events. It donates the ice cream (and Curt Maberry Farms provides the raspberries) for $1 sundaes during the annual Northwest Raspberry Festival every July. Proceeds benefit the Lynden Chamber of Commerce and various youth-oriented ministries. Gary Vis, executive director of the Lynden Chamber of Commerce, said the $1 treat has raised approximately $40,000


over the past 12 years through the donation of 40,000 bowls of ice cream. Edaleen Dairy also is the title sponsor of the Lynden Lighted Christmas Parade, which draws more than 10,000 spectators annually. So, when Eastside Market & Deli in Lynden closed last year, the location seemed perfect for another Edaleen Dairy store. “When that opportunity arose, it just seemed like the right time and right place,” Moorlag said. The downtown Lynden store is different from Edaleen Dairy’s other two stores, both of which offer the company’s milk, ice cream, and other products with their brand, plus dairy products such as cheese from other companies. Since the Eastside Market & Deli offered a general assortment of grocery items as well as a sitdown area for lunch customers, Edaleen Dairy kept those features after significantly remodeling the

Edaleen Dairy’s management team includes, from left: founders and co-owners Ed and Aileen Brandsma, co-owners Karen and Mitch Moorlag (general manager), plant manager Kevin Price and chief financial officer Scott Engels.

building, and also began offering an assortment of ice-cream sundaes. The downtown Lynden store opened Nov. 29, but it may not be the last one for the company. “We

have no specific plans but we’re looking at a few opportunities in Whatcom County,” Moorlag said. “We definitely have made it part of our business plan to grow our retail presence.”

WHATCOMBUSINESSALLIANCE.COM | 33


DAIRY INDUSTRY HISTORY Debbie VanderVeen Debbie and her husband Jason own Veen Huizen Farms, a dairy and crop farm in Everson. She is president of the Whatcom County Farm Bureau and serves on the Whatcom County Agriculture Advisory Committee. Debbie hosts farm tours and promotes agriculture education throughout her community as a fifth generation farming family.

Whatcom History: Dairy Farming 101 D

airy farming has been a major part of the local agriculture industry throughout Whatcom County’s history. As the trees were cleared, dairy cows began populating the County’s stump farms. In 1892 a group of dairymen in the Custer area started the first creamery in Whatcom County. The creamery produced 150 gallons of milk, 100 pounds of butter, and 75 pounds of cheese daily. A gallon of milk sold for nine cents and a pound of butter for 27 cents. Creameries opened in Sumas and Lynden in 1894. A cheese plant opened in Lynden soon thereafter. Dairy farming’s strong foundation traces to the formation of the

34 | BUSINESSPULSE.COM

Whatcom Dairymen Co-operative in 1919. A year later the association bought a creamery in Lynden and built a modern utility plant that evolved into one of the world’s largest dried-milk plants. The association formed the roots of the Darigold cooperative that is the top milk distributor in the Pacific Northwest. Utilizing available data, an organization called Whatcom Farm Friends has tracked the last 60-plus years of the county’s dairy history, providing a better understanding of the value of the dairy industry to our local economy. Dairy represents about 65 percent of the local agriculture economy, and dairies manage the largest percentage of the county’s agricultural land. The trends indicate fewer and larger herds, 25 years of relatively flat pricing, and ever-increasing milk production. Pricing in the dairy industry is based on a cental, or hundredweight (a unit in the U.S. Customary System equal to 100 pounds) of bulk milk. Adjustments for protein content will cause each farm’s price to differ from month to month.

Major trends in the industry: • Between 1950-1960 – Transition from milk cans to bulk milk tanks required a significant capital investment. From mall hand-milked herds and placing milk in cans, some dairies changed to machinemilked herds with bulk milk tanks picked up by tankers and delivered to the local processing plants. About one-third of the herds made the investment. • 1984-1987 – The federal dairy herd buyout went into effect. The federal government facilitated the national dairy industry’s request to use industry-funded assessments to reduce cow numbers that were causing a glut of milk in the market. Whatcom County lost 77 dairy herds to the buyout during this three-year period. • The late 1990s –The number of dairy cows in Whatcom County peaked. Milk price instability and governmental regulations hindered dairy herd start-ups. Pressure for land from crop farmers – primarily blueberry growers – has since reduced the amount of land available to dairies and caused slowly-diminishing cow numbers.


Whatcom Business Alliance

Member News

Fostering Business Success and Community Prosperity

R

ecently, Bellingham Cold Storage (BCS) held an in-house celebration for employee Rene CardonaSagastume. The party cake icing included an image of the American flag. He had become a U.S. citizen. BCS enabled the process with its progressive Workplace Literacy and ESL (English as a Second Language) programs.

Those company initiatives helped earn a coveted industry recognition—the 2013 Premier Employer Award— from the Northwest Food Processors Association’s (NWFPA). “This is very significant,” said Doug Thomas, BCS president and CEO who serves on the board of the Whatcom Business Alliance. “They spent two years vetting us for it with rigorous questions and processes.” The award recognized just 11 companies nominated for innovative employee engagement practices that promote economic opportunities for lower-income employees. To qualify, these companies’ practices must be an integral part of the company’s strategy for sustaining and improving business results. “The award recognizes Bellingham Cold Storage’s many employee practices including their Workplace Literacy program, their long standing dedication to assisting non-native English-speaking workers and their families in their day-to-day cultural challenges,” said Dave Zepponi, president of the NWFPA. “BCS has many practices that engage their workers in the business, encouraging their growth in the company, training

and promoting within as well as collaborating with others in the community.” Thomas said that the programs for alien workers from South American, Eastern bloc countries, and other areas has resulted in 11 workers gaining U.S. citizenship. “We’re committed to education,” Thomas said. It doesn’t stop with the ESL and literacy programs. “We have a training center with our own classrooms where we teach safety with ammonia, safety with forklifts, evacuation drills, CPR (cardiopulmonary respiration), and more.” Recently BCS opened an onsite medical clinic to ensure access to health services for all employees, reducing down-time, improving health, and Rene Cardona-Sagastume decreasing the cost to employees. “This (award) is great for our employees,” Thomas said, “and it feels great to work for a company that aspires to do great things and create a great work environment – not just find something to win and do things to go win it.

S

everal other Whatcom Business Alliance (WBA) members made headlines recently, as well: • John Huntley, owner, president and CEO of Mills Electric, earned Washington Subcontractor of the Year recognition from the Association of General Contractors. The award includes considerations for community philanthropy in

addition to business accomplishments. • The Barkley Company, in shifting its direction toward residential development, moved forward on an estimated $15.6 million project in Barkley Village that will include a four-story building of 112 apartments, two parking facilities, and street-level commercial business space. President/CEO Jeff Kochman, who sits on the WBA executive committee, said he anticipates construction to begin in May and take about a year. • This month Wilson Motors closed a deal to purchase King Nissan. Wilson General Manager Julian Greening announced the purchase in January and said it did not include King Volvo. The company’s division will become Wilson Nissan. Wilson Motors is the top-selling new car dealership in Whatcom County and, Greening said, had its best year in 2012 since 2008. Wilson has 91 employees; King Nissan had 19. • The Port of Seattle awarded a $10.5 million contract to Imco General Construction in Ferndale for cleanup along the waterfront in the South Park area. Beginning in May, Imco will remove contaminated upland soil and river sediment. This news came shortly after a huge internal announcement that Frank and Patti Imhof handed off some leadership of the firm within the family. Frank Imhof, last year’s Lifetime Achievement honoree at the Whatcom Business Person of the Year Awards, relinquished his president’s role to Tyler Kimberley, his son-in-law. Imhof has run the company for 34 years, and he retained roles of CEO and chair of the board of directors. Patti Imhof remained on the advisory board. WHATCOMBUSINESSALLIANCE.COM | 35


Business Person of the Year By the Business Pulse Magazine Staff

O

n Wednesday, March 20, Business Pulse Magazine and the WBA celebrates local business at its 27th annual Whatcom County Business Person of the Year Awards Dinner. The event, co-hosted by takes place at the Best Western Lakeway Inn & Conference Center. This Business Person of the Year awards celebration is the longestrunning business awards event in Whatcom County. The three finalists for Business Person of the Year represent true innovation, leaders both within their industries and their communities: two publishers – one traditional (newspapers, printing) and one specialty (Bible software)—and an entrepreneur who built and sold a cable TV company. This trio from a strong list of nominees consists of men with exceptional business acumen and wide-ranging accomplishments (alphabetically): • Mike Lewis publishes two weekly and two monthly news36 | BUSINESSPULSE.COM

papers and serves as president of multiservice printer Lewis Publishing Company Inc. in Lynden. • Bob Pritchett co-founded and now serves as president and CEO of Logos Bible Software in Bellingham, which has earned numerous awards for rapid growth, best workplace, and numerous other citations. • Bob Warshawer founded Black Rock Cable and culminated its massive growth throughout four counties by selling during 2012. Nick Kaiser, director and chairman of Saturna Capital, will be honored with a Lifetime Achievement Award. (Go to Personally Speaking for his story, page 12) Other category nominees include the rock stars of local start-ups (since 2010) and small business (under 100 employees). VSH Certified Public Accountants and Whidbey Island Bank provide title sponsorships of the awards dinner. Co-sponsors include Chmelik Sitkin & Davis Attorneys at Law, Comcast, Dawson Construction, and Larson Gross CPAs & Consultants.

The 2013 nominees (alphabetically) Start-up Business of the Year • Next Level Training in Ferndale • Rover Stay Over in Lynden • Scratch ‘n Peck in Bellingham Small Business of the Year • Hand Crank Films in Bellingham • Samson Farms & Winery in Everson • Vital Choice Wild Seafood & Organics in Ferndale • Z Recyclers in Lynden Business Person of the Year • Mike Lewis, Lewis Publishing • Bob Pritchett, Logos Bible Software • Bob Warshawer, Black Rock Cable The awards banquet starts at 6 p.m. with a social hour, followed by dinner at 7 p.m., and the awards ceremony at 8 p.m. Tickets cost $55 each, and sponsored tables of eight are available for $600. To order tickets call 360-746-0410. Tickets are also available at www. WhatcomBusinessAllliance.com


STARTUP BUSINESS OF THE YEAR

M

ike Hughes, formerly a college football player and professionally a patent attorney in Ferndale for 10 years, wanted to incorporate competition back into his life. So he became a competitive pistol shooter. As a marksman who became a widelysought shooting trainer, he identified a market gap: Pistol shooters lacked a training tool to improve shooting accuracy without using costly live rounds. He invented a patented training product that would mark the target with laser shots: the Shot Indicating Resetting Trigger laser training pistol (SIRT). Hence, no ammunition is wasted and safety prevails in practice. “I showed the concept to my shooting friends, and it took off from there,” Hughes said. He created NextLevel Training LLC and in 2011 about 1,500 SIRT pistols sold. Last year, the company sold about 4,000, and the new head of marketing, Tom Larson, forecasts at least doubling sales this year. The company now has 20 full-time employees, clearly establishing itself as a $1 million enterprise in sales. It started from scratch. “The first commitment I had to make was funding the company with my life savings,” Hughes said. He also secured loans from family members, employees, and vendors. “NextLevel Training attracted angel investments to fund our continued growth. Whatcom County has a large population of individuals willing to invest in early-stage companies.” The company also produces the SIRT Laser Bolt that displaces an AR-15 rifle bolt and fires a laser down the rifle barrel. But the SIRT pistol, in designs for professionals and for students, accounts for 95 percent of sales. “The automatically-resetting

Mike Hughes

NextLevel Training By Linda Partlow

trigger after each pull conquers a long-standing and frustrating problem with the dry-fire of a firearm,” Hughes said. Further, the pistol and the rifle laser bolt—both incapable of firing a live round—eliminate accidental discharges common among traditional firearms used in training. NextLevel Training provides training routines, free instructional videos, and training methodologies. “We have a reputation for the best customer service in the industry, and we intend to keep it that way,” Hughes said. He never has charged a customer for a warranty repair. Major customers include National Rifle Association instructors, law enforcement agencies, military units, and private gun owners. The SIRT simulates the size, weight, and functional features of the popular Glock 17/22 pistol. NextLevel will introduce a Smith & Wesson M&P (military and police) model this summer. Hughes also has plans for additional SIRT pistol models based on other manufactured firearms. “Our vision is to

improve the SIRT with new features that will revolutionize the firearms training market,” Hughes said. “We are filing new patents.” Hughes is proud of keeping it all at home. Whatcom County, he said, has presented NextLevel with a multitude of diverse resources, including interns from Western Washington University, a diverse pool of manufacturing-skilled labor and front-office professionals, support services from local vendors, and vast wilderness conducive to shooting ranges and practice. NextLevel Training buys materials locally, creates and assembles all products in-house, and creates jobs for many who had been laid off in staff cutbacks elsewhere. “I’m very pleased at how we’re meeting a need,” he said, citing proficiency and safe-gun handling in the firearms markets. “The reward (of entrepreneurship) is in leaving a legacy—creating something that did not exist before, and passing it on to your family, friends, community, and future generations.” WHATCOMBUSINESSALLIANCE.COM | 37


STARTUP BUSINESS OF THE YEAR

Sydney Scheffer and Zoe

Rover Stay Over By Linda Partlow

T

aking care of animals has been a life-long passion for 20-year-old Sydney Scheffer. Together with all of her large family, she has turned her passion into a successful business. In April 2011 the Scheffers founded Rover Stay Over on Hannegan Road in Lynden. By the end of 2012, the dog kennel and grooming company more than doubled its 2011 sales.

Scheffer and her parents, Ken and Charmae Scheffer, and four siblings are no strangers to animal– kenneling services, having raised their own dogs and cats. “We sometimes found it challenging to find just the right place to leave our beloved furry kids…some of the kennels felt more like jail than home,” Syndey Scheffer said. “That’s when our dream of opening a top-notch, family-style kennel began. Rover Stay Over definitely started on a shoestring. We had 38 | BUSINESSPULSE.COM

very limited funds, and we worked hard to not spend money we didn’t have.” The Scheffers homeschooled Sydney, who is president of the corporation and kennel manager, and her sister, Estee, serves as the parttime kennel assistant. The other three children—Memrie, Cannon, and Ransom—continue to homeschool and pitch in with Charmae at the kennel as time allows. Rover Stay Over also employs certified pet groomer and veterinary technician Katie Hall full time and receptionist Fran Timmer part time. “We really want pets and people to feel good and have fun when they come to Rover Stay Over,” Sydney Scheffer said. “That goal is achieved by making sure each and every person and furry kid that walks through our doors are looked after to the best of our ability.” Besides attracting Whatcom County dog owners looking for kennel and grooming services, Rover Stay Over appeals to Canadian travelers on shopping excursions, and owners with pets recovering from either injuries or

illnesses. Today, kenneling services bring in around 80 percent of sales, with grooming bringing in about 20 percent, with some merchandise sales somewhere in the middle. The kennel offers both day care and long-term boarding for dogs, and grooming services for dogs and cats. Rover Stay Over’s manyfaceted uniqueness extends to tours of all areas of the kennel. The operators describe the dog care as home-style. The family spends time playing and snuggling with the animals, which can play in kiddy pools, run through sprinklers, and interact safely mostly in kennels that have no separation panels and overhead doors. The grooming salon offers blueberry facials and feather extensions for fur. Hall is one of the few cat groomers in the county. Rover Stay Over also has equipment for geriatric dogs, and retail pet accessories such as Bling-a-Longs. A favorite feature and resource of the staff’s is social media outlet Facebook. “Our customers love when we share photos of their furry kids on Facebook, and while on vacation they see photos of their pets,” Sydney Scheffer said. She said affordable social media tools have helped grow the business and have kept marketing and advertising expenses low. Surveys conducted in 2011 and 2012 showed 50 percent of Rover Stay Over’s new customers found them based on an even split among location, signage, and referrals. Rover Stay Over has room for additional expansion, and the Scheffers might consider opening another Whatcom County location. They also would like to offer cat boarding, thereby creating a onestop source for families with dogs and cats. “We want to be able to do a great job, not just grow,” Sydney Scheffer said. “It is a 24-hour-aday, 365-days-a-year job, and we need to pace ourselves.”


WHATCOMBUSINESSALLIANCE.COM | 39


STARTUP BUSINESS OF THE YEAR

Scratch and Peck Feeds

Diana Ambauen-Meade

By Linda Partlow

D

iana AmbauenMeade launched her business venture out of her backyard by mixing her first batch of Scratch and Peck chicken feed in a borrowed cement mixer a few years ago. She opened an office and mill in Bellingham’s Irongate Business Park during 2010. Last year the business more than doubled in sales over 2011 and now has seven full-time employees. Scratch and Peck Feeds produces non-GMO (Genetically Modified Organisms) livestock feed for chickens, turkeys, and pigs, with a focus on urban backyard farmers and rural small farms. The products are 100 percent soy-free, and the ingredient grains are sourced directly from organic farmers in 40 | BUSINESSPULSE.COM

the Pacific Northwest. As of July 2012, Scratch and Peck Feeds became the first North American company to have all of its products verified GMO-free by the Non-GMO Project. After researching the need for her product, by talking with farmers and completing feasibility studies, Ambauen-Meade and her husband Dennis Meade and their son, Bryon Meade, decided to take the plunge and open their own mill. “My husband and I committed a sizeable amount of our life savings, and we were lucky to have a couple of trusting family members invest with us as well (about $250,000),” said AmbauenMeade, who, as founder and co-owner, works in all aspects of the business. Dennis, an electrical contractor, focuses on facility maintenance, and Bryon serves as operations manager.

“Along the way, I just met really wonderful, helpful people and got directions, and was hooked up with people who could help me design the mill,” Ambauen-Meade said. “I just kept pushing forward and (the business) grew organically.” Scratch and Peck’s wholesale model sells primarily to farm and feed stores, natural food co-ops, and nurseries. They also sell to small farms that produce eggs and pastured poultry. “And we sell a surprising amount of feed at retail through Amazon.com and through our own Web store,” she said. “Our business operates on the belief that doing what’s right and making a profit are not mutually exclusive goals. We believe in a triple bottom line: people, planet, and profit.” The company incorporates a recycling and reusing program that limits the mill’s weekly waste to that of a four-person household. Paper bags used for feed packaging are made from sustainable tree farms and printed with plant-based, biodegradable ink. The main component for the animal feed is camelina meal, a biofuel source that boosts protein levels. Ambauen-Meade is currently working with farmers in Western Washington on growing more of the seed locally. Scratch and Peck Feeds plans to add two full-time employees and increase sales by 50 percent this year. “We want to be the leader in our niche feed market,” AmbauenMeade said. “We expect to expand further into the western states with our own sales force and through hand-picked distributors.” To budding entrepreneurs, she recommended taking the time to hire good people. “Treat your employees as family with trust, respect and gratitude,” she said. “It will come back in ways you never imagined.”


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March 20, 2013 Awards Dinner

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

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For more information on Tickets or Table Sponsorships call: Co-sponsored by:

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WHATCOMBUSINESSALLIANCE.COM | 41


BUSINESS PERSON OF THE YEAR

Michael Lewis By Dave Brumbaugh

C

ommunity newspapers represent the living history of small towns, chronicling achievements and activities that usually don’t draw the attention of larger media. Michael Lewis has a unique viewpoint on the evolution of community newspapers. His grandfather, Sol Lewis, purchased the Lynden Tribune in 1914. Sol’s son, Julian, and brother, Bill, ran the business for 40-plus years. Since 1991, Michael Lewis has been a third-generation publisher and president of the company. According to a 2010 Bloomberg Businessweek story, just 13 percent of family-owned businesses have successfully passed down to a third generation. And Michael Lewis’s charge has changed drastically since his grandfather, father, and uncle ran things. Now, the Lynden Tribune must determine how to remain viable in today’s Internet-infested marketplace where news is available in so many places and often free. “I had wonderful mentors in my uncle Bill Lewis and my father Julian,” Michael Lewis said. “They taught me the skills and instilled the values in me that have allowed for continued success in the challenging world of community newspaper publishing.” He has grown a publishing company that employs 35 and produces much more than the Lynden Tribune, a weekly staple approaching its 100th year in the family, covering much of north Whatcom 42 | BUSINESSPULSE.COM

County. The company also publishes two other weekly newspapers, the Ferndale Record and Whatcom Extra. Michael Lewis also owns two monthly newspapers, the Foothills Gazette and El Periodico (a Spanishlanguage publication), distributed to about 9,000 homes combined. Plus, his large commercial printing division operates as Lynden Print Company, providing diversification. “I am proud of the reinvestment I have made back into the company, which has allowed us to grow the commercial printing side of the business,” Lewis said. “We have come a long way since the days of the single-color Heidelberg Kord press.” He described how his business offers diversified services that include six-color printing capabilities, personalized digital printing, UV coating, automated direct mail services, and more. However, community newspapers remain at the core of the company. That means not only reporting about the community, but also involvement in efforts to improve it. He cited two examples from the Lynden Tribune: • The Readers Care Fund, which in its seventh year raised

$22,000 for the most recent beneficiary, Project Hope and the Lynden Community Center’s nutritional meals program. • The Sol Lewis Community Service Awards, which for 32 years have recognized the contributions of local men and women. Lewis also is personally involved in the community and the newspaper industry. He served several terms on the initial board of directors that formed the Lynden Boys & Girls Club. He also has served 25 years on levy and bond planning and promotional committees for the Lynden School District; a board director and co-president of the Lynden Chamber of Commerce; a board director and president of the Mount Baker Rotary Club, and a board director and president of the Washington Newspaper Publishers Association. He said all of that is just part of living in Whatcom County. “The strong sense of community values that the residents of Whatcom County hold dear are the foundation and core principles that community newspapers cherish,” Lewis said. “We strive to uphold these values each and every week we publish our newspapers.”


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BUSINESS PERSON OF THE YEAR

Bob Pritchett By Mike McKenzie

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nspired and encouraged within his family filled with business enterprise, Bob Pritchett has been a businessman virtually all his life. At six, he created and sold metal pin-on badges from a curbside table on the street where he grew up in Cherry Hill, N.J. At 10, he acquired bees and made money selling honey. And, he created spread sheets and monthly financial reports. During ninth grade he started a computer software business. “I just assumed,” he said, “I’d always be in business.” He wove this story line recently from a corner office of the historic Flatiron Building in downtown Bellingham, seated above the company he co-founded 21 years ago, Logos Bible Software. He has guided the business to around $40 million in sales, and more than 300 employees, and the company has cornered the market in Bible software publishing with more than 30,000 electronic books. The staff produces prolifically in-house, including the hire of Biblical scholars, and also partners with several other sources. The vast network also makes Logos Bible Software, which has millions of users in 180 countries and 12 languages, a pioneer leader in multilanguage electronic software of any kind. Their niche market even extends to a worldwide, participatory community online, Lifeshare, and a multitude of forums and other support. Complex though Logos may seem, Pritchett, as president and CEO, operates with a four-word 44 | BUSINESSPULSE.COM

employee manual— “Honor God. Love others.” That forms the foundation of a work environment warranting widespread recognition in best places to work listings, which feeds into several fastest-growing company listings. That environment includes 45,000 square feet in the Flatiron, shared only with a coffee shop on street level, and two other downtown buildings referred to as campuses. Also factored into the best-places work surroundings are a full-benefits package, and amenities like a bicycle shop, a gym, a wall of kayaks, and soft drinks and espresso at no cost. Employees walk, pedal, paddle, or work out as they choose. And they work as they choose. Pritchett measures work time by productivity and deadlines. “They decide their days off, their vacation, and manage their work hours,” he said. “They work in small groups, offering more autonomy, responsibility, and ownership of an entire product.” Rules, be hanged. “No nitpicking, no bureaucratic policy. Let leaders influence …” “Bill Gates,” he continued, referring to the Microsoft magnate who hired Pritchett away from college when he was 19 (neither has a degree), “said it best – business is easy, it’s just math.” Pritchett has applied that definition to another compacted formula. “I became interested in getting

people engaged with the Bible. The driver of our business has been to deliver value to something people care about, and provide products and services that they will pay for.” He said that he never intends for the financials of his business to “diminish the components of the spiritual and personal mission” behind his products. The company’s written mission is “to serve the Church.” Logos Bible Software also serves its community, both locally and globally, through numerous charitable outreach channels. And, the business serves its community through job creation. “Our role within our company,” Pritchett said, “is equipping, removing obstacles, encouraging, and inspiring so that we have a workplace where people find purpose and provide for their families.” [Read an excerpt of Bob Pritchett’s book on business principles on page 94.)


WHATCOMBUSINESSALLIANCE.COM | 45


BUSINESS PERSON OF THE YEAR

Bob Warshawer By John D’Onofrio

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he contrast between Bellingham and Nevada’s Black Rock Desert is extreme. The Black Rock Desert is famous as the site of the annual Burning Man Festival, held each summer on the alkali flats of this sunblasted landscape in the northwestern corner of the Great Basin. The Black Rock desert also is the birth place of one of Whatcom County’s most successful companies, Black Rock Cable. Originally a cable TV company, Black Rock was formed by Bob Warshawer in Nevada during the 1980s. Warshawer had worked as a laborer, a fine-furniture maker, and a choker-setter and high-lead rigger for a logging operation in the Trinity Alps of California. But an entrepreneurial streak ran through his veins. He started two businesses in the San Francisco Bay area, well-drilling and software services that eventu46 | BUSINESSPULSE.COM

ally sold to payroll and human resources giant ADP. In 1994 Warshawer moved Black Rock Cable to Bellingham, and in 2002 he made the decision to temporarily abandon the cable TV business to focus on providing fiber bandwidth. The company built an infrastructure that allows any business to connect to high capacity bandwidth. After raising funds to support this new project, Black Rock began the “fibering” of Bellingham in 2003, delivering ultra-high, fiber optic bandwidth to local customers and helping many larger local businesses connect all of their locations together in a giant local area network. Within a year the fiber footprint expanded to all of Whatcom County. Next came Skagit County and by 2006 Black Rock established itself in Snohomish County. “Black Rock worked with Snohomish County and seven local cities,” Warshawer said, “to connect their operations with fiber,

enabling them to save money... while reducing duplication and creating an environment that would foster new and better services to their citizens.” The company grew from two employees to 23. The initial two miles of fiber grew to more than 900 miles. The customer base mushroomed from three to 225 in more than 1,000 locations. Last year Warshawer sold Black Rock to Wave Broadband, a local company trying to expand into the high bandwidth business while maintaining its cable TV business. Warshawer built Black Rock on a philosophy learned from his father. “My dad had two sayings regarding work that are guidelines for me,” he said. “First, all work is honorable. And second, you’re going to be dead, and you’re going to be dead for a really long time, so you had better love whatever you do.” Along the way, Warshawer has given back to the Whatcom County community through his involvement with Brigid Collins House and Bellingham Technical College (BTC), an institution that he is enthusiastic about. “Howie Mills at Mills Electric always told me that not everyone was a knowledge worker with a four-year degree, and a country that forgot that was headed for trouble,” Warshawer said. “I think BTC is a perfect blend of helping people reach their work potential and helping businesses find the employees they need.” So what’s next for Warshawer? “I am working on an ‘X Prize’ type project,” he revealed, “to help lower the cost of education per student while maintaining or raising the quality.” These days he often can be found on his boat, enjoying the sparkling waters of the Salish Sea and “being a bum,” he said with a laugh. “I’m very good at that!”


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SMALL BUSINESS OF THE YEAR Max Kaiser

Hand Crank Films By John D’Onofrio

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ax Kaiser aims to change the world.

His company, Hand Crank Films, produces films for business clients, organizations, and nonprofits—everything from 30-second television ads to half-hour documentary pieces. “Our films are used at fundraising events, websites, and product launches,” he said. Hand Crank started up in 2005 and now boasts seven full-time employees. Last year was a banner year. The Bellingham-based company opened offices in Seattle and Washington, D.C.; won three prestigious Addy awards bestowed by the American Advertising Foundation, and produced a proprietary in-house software to manage projects from start to finish—client acquisition to final invoicing. Kaiser wears multiple hats as chief executive officer, president, and director of Hand Crank Films. 48 | BUSINESSPULSE.COM

His responsibilities include developing marketing and development strategies, providing quality control of film projects, developing software, and directing some of the company’s films. Explaining the success that his business has enjoyed while navigating the economic downturn, Kaiser quotes rapper/record producer Jay-Z: “Stay hungry. Take every job like it was your first – like it was the job you got as an intern and wanted to impress. Make every job like it was your first –and your last.” And Kaiser believes that his company’s emphasis on choosing the right clients and projects has paid off and fueled Hand Crank’s growth. “We never take a job if we don’t think we can make a substantial impact with our film. This works in up-and-down markets pretty much exactly the same.” Kaiser has no shortage of plans for the future. He’s planning to open an office

in Los Angeles devoted to TV commercial production, as well as increasing the staffing in the Seattle office. He projects that Hand Crank Films will surpass the $1 million mark in revenue this year and he envisions “a slow and steady improvement” of 20 percent annual growth after that while “maintaining a 15-20 percent profit margin and very low debt to equity. Dreams? No shortage of those either. He’d like to see one of Hand Crank’s directors win a Clio (the highest award for commercial work). He’d love to land a national ad campaign with a media buy in excess of $1 million. He’d like “to make a short-film series for YouTube (and get paid for it),” And he’d like Hand Crank Films to earn a reputation as the film studio that creates “the simplest and most beautiful and most effective commercial films in the world.” Despite his global ambitions, Kaiser unabashedly displays enthusiasm about doing business in Whatcom County. “There is no place more beautiful and friendly to do business in the world,” he said. “Whatcom offers the perfect springboard community for small businesses like ours to incubate our ideas before going national and international with them.” And Hand Crank Films continues to invest in itself. The company has purchased a RED EPIC camera system, which shoots at resolutions five times that of standard high-definition. Recent Hollywood movies like “The Hobbit” used this system. “This allows our clients to use any still from our work to make blowups as large as billboards,” Kaiser explained. Hand Crank Films is about much more than technology, in Kaiser’s view. “We honestly believe that quality films can, and do, change the world.”


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SMALL BUSINESS OF THE YEAR Rob Dhaliwal

Samson Farms & Winery By Dave Brumbaugh

T

he Dhaliwal family doesn’t shy away from challenges, which makes the Dhaliwals ideal for farming and the problems posed by weather, pricing, and water. Their nontraditional approach to the business of farming has enabled Samson Farms and Samson Estates Winery to thrive. Samson Farms, Inc., based in Everson, annually harvests approximately 2.5 million pounds of raspberries, 1 million pounds of blueberries, and 100,000 pounds of black currants on 450 acres. After six years the family farm launched Samson Estates Winery in 2001, producing traditional and dessert wines from berries grown on the farm. The winery has a 50 | BUSINESSPULSE.COM

tasting room and retail store in Everson. During 2009 it added a professionally-landscaped venue for staging summer weddings and other events of up to 275 people. Sam Dhaliwal started from scratch. He immigrated from the state of Punjab, India, to Vancouver, B.C. in 1973. He purchased his first 10 acres in Abbotsford, B.C. in 1977 and planted raspberries. Land-use issues resulting from the Fraser Valley’s growing population led Dhaliwal to move to Whatcom County, where he planted his first 35 acres of raspberries in 1987. Samson Farms has been adding acreage and employees ever since. Their fruit-processing facility started operations in 2004, giving the company more control over quality and costs. Growth in revenue and production has averaged about 5 percent in recent years.

“Our passion for agriculture and the rural way of life has allowed us to build a business that we hope will one day be passed on to the next generation,” said Rob Dhaliwal, Sam’s son, who is operations manager of Samson Farms and owner/winemaker at Samson Estates Winery. “We strive to produce the highest quality of products that will keep our customers coming back. Being progressive about adopting new technologies and applied research has enabled us to stay competitive in today’s market.” Rob Dhaliwal also wants excellence for other growers, therefore he dedicates time to industry organizations. He is a former president of the Washington Red Raspberry Commission, current vice-chair of the Washington Blueberry Commission, and a committee member for the U.S. Highbush Blueberry Council. At Samson Farms 20 full-time employees, plus 60-70 high school students who work during the summer harvest. “We feel it is a great opportunity for the youth to develop a good work ethic, as well as keep money in our local economy,” Rob Dhaliwal said. Last year the family established the Samson Farms Agricultural Scholarship at Whatcom Community College for students interested in agriculture as a career. “In today’s ever-changing agricultural marketplace, we find education to be a necessity in order to maintain a successful business,” Rob Dhaliwal said. Samson Farms also supports many local nonprofit organizations. From a 10-acre, one-berry start 40 years ago north of the border, to 45 times that spread and three berries spawning wine and weddings, Samson has branded itself indelibly in the Whatcom farming and business landscape.


WHATCOMBUSINESSALLIANCE.COM | 51


SMALL BUSINESS OF THE YEAR

Randy Hartnell

Vital Choice Seafood By John D’Onofrio

R

andy Hartnell believes that we are what we eat. The founder, president, and CEO of Vital Choice Wild Seafood & Organics Inc. in Ferndale has turned a passion for good food into a growing e-commerce empire. Vital Choice offers direct home delivery of premium quality, sustainablyharvested, canned and frozen wild seafood, and other healthful organic foods.

“Many of our products are not widely available in stores, nor available at the level of quality we provide,” Hartnell said. Mostly by Internet and also by telephone, the company serves individual customers and resellers across the United States, and clients as far away as Europe. 52 | BUSINESSPULSE.COM

Hartnell attributed the company’s success to a philosophy based on the Golden Rule. “We offer products that we enjoy ourselves, and strive to treat our customers the way we want to be treated,” he said. Vital Choice has established itself among diverse market segments. “We provide easy access to environmentally-sound products with profound nutritional benefits at a time when our aging population is demanding more of each,” Hartnell said. Hartnell founded the company in 2001 and has grown it to a staff of 25. Along the way they gathered endorsements by numerous renowned medical experts in diet and nutrition, like Dr. Andrew Weil and Dr. Nicholas Perricone, and became a “Hot Pick” on Dr. Oz’s popular health and wellness television program. During the last two years their rapid growth required a larger distribution center (the former Ocean

Kayak facility in Ferndale) and they opened a shipping facility in Richmond, Va. to serve East Coast customers. Last year Natural Home & Garden Magazine (now renamed Mother Earth Living) featured the company in an article entitled, ”14 Sustainable Food Companies You Can Trust.” Hartnell credited his “amazingly dedicated” staff for much of the company’s growth and success, and he believes that the knowledge that they’re helping people achieve better health creates a powerful and positive working environment. “The helper’s high,” he called it. The staff includes a small executive top line of him, his brother, Terry, and COO Dave Hamburg. “The importance of healthy, sustainably-grown foods is becoming ever more apparent, as our nation’s health deteriorates, and resulting health care costs threaten to bankrupt our country,” he said. “As long as we continue to honor our values and remain a reliable solution for those seeking good, high-quality food, we should continue to prosper.” Vital Choice supports local organizations like the Nooksack Salmon Enhancement Association (NSEA), the Whatcom Salmon Learning Center, and Bellingham Traverse, and others, plus some national projects that receive a portion of sales. “I’m a fourth-generation Whatcom County resident and consider it a privilege to live and work here,” he said. “Since starting Vital Choice I have traveled extensively and gained ever-greater appreciation for the natural beauty and way of life we enjoy here in the Pacific Northwest, as well as all the wonderful, committed people who contribute so much to who we are and what we do.”


WHATCOMBUSINESSALLIANCE.COM | 53


SMALL BUSINESS OF THE YEAR

Cris and Dan Thompson

Z Recyclers Inc. By John D’Onofrio

H

ere in Whatcom County we take our recycling seriously. A large number of local businesses have evolved to manage the trend. But it’s not a new idea. Z Recyclers in Lynden has provided recycling services from their facility a block off the Guide Meridian just south of Lynden since 1971. The husband-and-wife team of Dan and Cris Thompson runs the business. Dan serves as president and general manager, while Cris handles the dual roles of secretary/ treasurer. Z Recyclers is a classic family business. Cris’ s father, Art Zawicki, previously had started it as Puget Sound Salvage in 1964, and later called it Z Auto Wrecking. Then the Thompsons re-launched the business as Z Recyclers. The Thompson’s son Ted 54 | BUSINESSPULSE.COM

manages the steel sales, her brother Tim Zawicki runs heavy equipment, and her uncle works in the non-ferrous metals area. Z Recyclers boasts 18 employees and provides a wide variety of services for residential, industrial, and commercial clients locally and beyond its Whatcom borders in Skagit, Snohomish, and King Counties. The company maintains a public recycling center and dropoff center, and also offers scrap metal drop boxes for off-site collection. Their Facebook page states, “We pay for all metals, ferrous and non-ferrous such as tin, iron, sheet metal, stainless steel, copper, brass, lead, aluminum, and aluminum cans. We also bring drop boxes to you for large loads. Our scales are licensed and bonded. We sell new and used steel.” The Thompsons run their business based on a simple philosophy of offering exemplary customer service. Cris Thompson said that the combination of “honest and

fair scales and prices” and treating “every customer with dignity and respect” has been key to their longevity and growth. When the economic doldrums hit in 2008, the Thompsons reemphasized their customer service commitment and took what Cris Thompson called “baby steps” to proceed cautiously while minimizing risk. “The volume of recyclables was down (in 2012) compared to 2011,” she said. “But new steel sales were greater, as that part of business has grown.” According to Cris Thompson, the company successfully completed a set of eco-friendly improvements to their processing buildings and their truck and trailer storage areas. “We put up a coverall building on a full concrete foundation, housing the auto drain rack, which keeps all fluids from any ground contamination,” she explained. “And, we had a large roof built to cover all loaded semi-trailers.” As a priority, Z Recyclers supports the community in which they do business. Over the years they have supported the 4-H Club, Future Farmers of America, Lighthouse Mission, various youth groups and events, and Whatcom County schools. The company has also partnered with ReUse Works, a Bellinghambased nonprofit that promotes reuse of used appliances, and Z Recyclers has donated materials to be used by local artists in sculpture projects. As a family business, Cris Thompson said that they are bullish on the concept of this traditional business model. “We’d like to see more growth for the family businesses in our community in both business and farming.” She said that doing business in Whatcom County is a pleasure. “Having been born and raised here currently with five generations,” she said, “we love the people in our county.”


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GUEST COLUMNIST Dennis R. Murphy | Western Washington University Dr. Murphy is Dean Emeritus of the College of Business & Economics at WWU. He continues to lecture in classrooms he has filled since 1983, including a course known as “Murphy 101” that commands a waiting list of some students from other fields of study. He holds a Ph.D. in economics (Indiana University), and has a vast background in finance (Cascade Financial, Saturna Capital advisory boards, and more). He serves on the Business Pulse editorial advisory board and contributes this column.

A Visit to the Pump House W

hen I was a boy—a phrase intended to convey a time shockingly long ago—we still had iron hand pumps in many places in the Midwest. These pumps would not infrequently lose their “prime,” and prudent folks kept a bucket of water handy to pour down the top of the pump to restore its ability to lift water. The term was used literally. Fast forward to today, and hardly anyone has that experience anymore, and we use the term pump priming figuratively, and often, associating with a justification for government spending to “prime” the pump of economic activity. The belief in the efficacy of such priming is clung to in some quarters with such ardor it puts “gun-clingers” to shame. Well, we have been priming this pump, not with a bucket, but with the largest fire hose the world has known. And to what benefit? Unemployment rose higher, and remains much higher, than primers ever thought possible. Indeed, if not for the discouraged workers leaving the work force, and therefore the unemployment data, improvement in these metrics would be scant. Are people being hired? Of course they are, because in a dynamic economy 56 | BUSINESSPULSE.COM

they always are. But the rate of hiring is insufficient both to absorb new entrants into the labor force and to make much of a dent in current unemployment. Besides the orgy of deficit spending at the federal level, the Federal Open Market Committee (FOMC) has reduced interest rates to lows never seen in our history. The Fed has single-handedly created such a bull market in bonds that both short and long rates are well below any reasonable estimate of equilibrium rates. Furthermore the guidance that the Fed offers suggests we will be in this ruinous situation for an indefinite period. The FOMC recently opined that our current rates must be in place until inflation exceeds 2.5 percent, or until unemployment declines to 6.5 percent. Every move by policy-makers produces winners and losers, and these policies are no different. Possibly the biggest winner is the U.S. Treasury, now able to fund new debt, and to roll over existing debt, at substantially less than equilibrium costs. Banks and other institutions that held stocks of higher-yielding financial instruments also gained as the value of these investments rose, but that is a one-time realized gain. Evidence also appears that speculators in certain assets might also enjoy short-term benefits. Of course the Fed would like to claim that everyone who gets a job is a beneficiary of their poli-

cies, but the evidence to substantiate that claim is insufficient to be persuasive. The list of those who suffer from these policies is too long to cover in its entirety. Every saver is punished by lack of return on the savings, and retirees in this defined-contribution world are quickly finding that the lack of yield is cutting substantially into retirement income. The huge surge in mutual fund purchases, and even junk bonds, results directly from these problems, and the risk profile of people least able to take on additional risk clearly is worsening. Conventional wisdom holds that these extraordinary low rates will stimulate business borrowing and, by extension, increase employment, yet we are not seeing that happen. One possible explanation is that rates have been pushed so far below any notion of an equilibrium return for risk that lenders decline to make loans in the volume necessary. To the extent this is true—and research tends to support this view—the very policies that the Fed is pursuing to assist the economy are, in fact, exacerbating the damage! The Fed continues to prime the pump by adding $85 billion of assets each month, which will increase the Fed balance sheet to about 25 percent of Gross Domestic Product by the end of the year. The pump is over-primed, and now we are just filling up the well.


GUEST COLUMNIST Hart Hodges | Waycross Investment Hard Hodges wears two hats as he traverses the area’s economic scene. He serves as Director of the Center for Economic and Business Research at Western Washington University. In private business he is co-partner at Waycross Investment Managing Company in downtown Bellingham.

I

n the Winter edition in January we began the year with a theme of 13 for ‘13— looking ahead at 13 economic issues that we thought would be interesting to follow over the course of the year.

How, really, do we create more jobs? The questions we are asking include the following: When might we see appreciable inflation? What would you do with the money if you were in charge of the budget for local economic development? What would you do to reduce unemployment or to improve access to good jobs? Many professional and business service jobs appear in larger urban areas; how might we increase the number of similar jobs in Whatcom County? For this column we carefully examine whether or not job creation programs really are effective. We hear elected officials at all levels talk about the importance of creating jobs. The rationale is obvious. After all, GDP (the amount of goods and services we produce in the U.S.) returned to pre-recession levels quickly enough. The labor market, however, still hasn’t recovered. When GDP became healthy again, we were making the same amount of goods and services as in 2007, but with roughly 6 million fewer workers. So it’s reasonable to ask where have all the jobs gone, and what can we do to bring them back? (As an aside, the jobs have not been sent away. The story here is one of productivity – not outsourcing.) We have publicly-funded and grant-supported job creation programs in place all around us. We seldom ask what we’re actually getting for the money we’re spending, or try to determine if the money has been well-spent.

THEORIES ABOUT JOB CREATION • Small businesses create most jobs. • Start-ups create most jobs. • Targeting “clusters” and key sectors creates most jobs. We decided to test the effectiveness of programs that target small businesses, start-ups, specific sectors, and so on. In particular, we checked to see how well you could explain job growth using the various business characteristics that the job creation programs typically highlight.

TESTING THE FACTORS OF JOB GROWTH: • Firm age, size. • Industry sector. • Location (county). • Average wage. When we link job growth to these business characteristics, we reach two important discoveries: First, we can get any result we want by changing how we measure growth, and/or by changing the way we include the different characteristics in the model. For example, if you measure job growth by number of jobs added you get one result, but if you measure job growth as the percentage change or growth rate, you get a different result. Second, none of the models does a good job of explaining job growth. Some find that firm age or other factors are statistically significant, but that doesn’t mean those factors explain much of the job

growth. Conclusion: While the various models can be interesting, sometimes teasing optimism, we discover very, very little explanatory power in the models. And that conclusion is a bit troubling. At a minimum, it makes me wonder about putting public money into job creation programs. Those programs may be a roll of the dice. And I have to ask myself if that money could have generated a better return if it had been used in a different way. There are lots of important things the public sector needs to do, and the amount of money available is limited. We need to make sure we’re spending it wisely. I also wonder about the fact that many academic studies about economic growth show that innovation and technological development can be very disruptive. Economic growth does not go hand-in-hand with job growth. Some of the things that move an economy forward create jobs in one area, but destroys jobs in other areas. We have to remember that job creation is an understandable goal, but economic growth is the larger goal—and that makes the story more complicated.

Let us know what questions you’d like to see in the “13 in ‘13” List. Or if you’d like to weigh in on this issue of job growth, send your comments to Hart.Hodges@wwu.edu (or call 360.650.3909).

WHATCOMBUSINESSALLIANCE.COM | 57


TITLE

Parker Graham

Gary Graham

From ‘60s outer space to modern day equipment ...

It’s all working out for Shuttle Systems Article and photos by Mike McKenzie

I

n 1965, the US Air Force worked clandestinely on the launching of a Space Station, a top-secret project known as the MOL (pronounced ‘mole’ and standing for Manned Orbiting Lab).

Today, the aerospace research conducted on the MOL and on Apollo astronauts of the 1960s-‘70s share a common bond with a small company based in the tiny town of Glacier, near the snowy peak of Mt. Baker. Daily, thousands of people around the world use exercise equipment created by that local company, Shuttle Systems. Athletes on every level perform certain exercises, or protocols, on 58 | BUSINESSPULSE.COM

a device called the Shuttle MVP. One star-power professional basketball player will appear soon in a national ad campaign for a well-known sports drink using the MVP. The core of the MVP and other Shuttle Systems products arcs back to the MOL space travel studies nearly half a century ago. Back then Gary Graham from Bellingham—inventor and founder of Shuttle Systems—and a team of other bioscientists at Boeing in Seattle had studied the effects of zero gravity on an astronaut’s cardiovascular system during extended exposure in outer space. The government scrapped the MOL project. “That all went into top-secret files,” Graham said. “At Boeing we worked on wild projects.

“We wrote the future.” He recently recollected the blueprint of that historical future, and his as an entrepreneur. And he revealed a passion for building community through meaningful work and meaningful impact of the results. Shuttle Systems equipment finds a global market among injury rehab clinics, the world of sports, and exercise facilities—about 7,000 units. “It feels good knowing that maybe 25,000 times a day, probably even more, people are using our product to help improve their lives,” Graham said. During a day of conversation in Glacier, Graham walked a visitor through the manufacturing and assembly center of Shuttle Systems. Which, by the by, has nothing to do with space shuttles.


And everything to do with space shuttles. Graham, a mechanical engineer out of the University of Washington, had continued his involvement in Boeing’s aerospace projects for NASA. When six American astronauts rode a NASA Lunar Roving Vehicle across the moon’s surface on Apollo 15, 16, and 17, circa 1971’72, they rode the vehicle that Graham envisioned while on Boeing’s Lunar Rover proposal team. He also participated in designing the crew compartment configuration on Boeing’s proposed Apollo Lunar Module moon-landing craft (Boeing didn’t get the contract). These days, the same bioscience engineering applications that Graham’s team used on a very specific conundrum of space travel— the effects of zero gravity—lie at the heart of his inventions. Now flash forward a couple of decades. Seated on the front porch of his house in Glacier—the former train station—pondering a way to help his son Kurt’s high school track team increase their endurance, Graham had a flashback. His wife, Heather, described the scene: “He sat there with two steel pipes, some rubber bands, and a sheet of plywood with wheels. Just sat there like ‘The Thinker’ for about two hours. Then he suddenly went to work….” He recalled an instrument that his Boeing group had created on the down-low in 1965, the Cardiovascular Conditioner (CC). Its cousin came about at Graham’s whim as he patterned the CC concepts. He eventually put together the prototype that became the horizontal, bench-styled CMC Shuttle 2000-1 (CMC as in

CMC Shuttle 2000-1

Cardio-muscular Conditioner). Earthbound, of course. Leaping from such technical moonspeak as orthostatic tolerance to exercise talk of dorsification and plyometrics, the sum of the parts is this: Shuttle Systems makes workout and rehab equipment, par excellence. Five basic products, which can be customized for specific applications, get designed, created in parts, and assembled up on Mt. Baker Highway, then sold wholesale and distributed from a nondescript large garage in Bellingham. Graham, his wife Heather, and his brother Parker oversee this compact operation of 12 employees. “We make our equipment here with materials purchased here in the United States,” Graham said. “We found cost-effective ways to produce our products.” They redesigned the CMC 20001, called it the Shuttle Recovery, and released it at a lower price point. This product utilizes wood

AEROSPACE APPLICATIONS -- A project team at Boeing in 1965 worked on this crew compartment configuration for a proposed top-secret space station that never lifted off. But bioscientific theories from the MOL (Man Orbiting Lab) have resurfaced through participant Gary Graham at the core of equipment like this Shuttle CMC 2000-1 he invented at Shuttle Systems in Glacier. Photos courtesy of Shuttle Systems

in a way that is as sturdy as the metal they had used over the years, thus lowering costs of production. A variation of the original product that provides more resistance, the Shuttle MVP, caters to athletes of every ability level. More than 60 professional teams in the NFL, NBA, and Major League Baseball use it, in addition to numerous individual specialists, plus some colleges and high schools. Shuttle Systems also offers a portable baby brother, the Shuttle MiniPress, and a Shuttle Balance platform. Primarily, the original concept addressed needs of physical therapy. Heather Graham holds particular interest in applications for the field of her studies at Simon Fraser University in Burnaby, B.C.—geriatrics. Specific customizing takes place for requested adaptations, such as providing a flat-padded covering on the Shuttle Recovery that chiropractors can use to make adjustments and then have patients WHATCOMBUSINESSALLIANCE.COM | 59


SHUTTLE SYSTEMS exercise on the same apparatus, or vice versa. Parker Graham stokes sales. Or, as Gary put it, “He drives the commerce end of the business (and) gets us a better market share as a boutique company.” Parker, too, leans to innovative entrepreneurship. [Side Story I. In 1989 he opened drive-through espresso stands, the Café Go-Go, in Bellingham, Lynden, and downtown Seattle. “To my knowledge,” Parker Graham said, “those were the first of their kind in the U.S. There were none in Whatcom County. Some coffee shops had drive-by windows, but nobody had standalone drive-throughs.” He hit upon the idea because he found himself, upon stopping into a coffee shop, returning to a parking ticket on his windshield.]

Graham said. “It’s exciting. We’re getting good data out of it.” Besides having good anecdotal and research results in such areas as back, shoulder, and knee surgery rehab, the Grahams have heard from medical kidney spe-

Once a week Gary Graham visits the home-office site in Glacier, where his grandparents owned a somewhat legendary restaurant and general store, and where larger-than-life stories abound from his past. [Side Story II: Before he cobbled together the crude prototype of Shuttle 2000, he had taken over Graham’s Restaurant. Movie stars hung out there, like Loretta Young and Clark Gable in “Call of the Wild” and Robert De Niro in “The Deer Hunter” when those films were shot on Mt. Baker. Go to www. BusinessPulse.com and read a Web Exclusive about this restaurant that staged helicopter picnics on the peak, events such as “Naked Night” (don’t ask) and “Gourmet Dog Dinner,” featured oddball menu items (The Oinker, Yellow Submarine), and a regular named Theodore who ate wine glasses… “It was a mixture of Walt Disney, Hugh Hefner, and Dick Balch,” Graham said, “to see what we’d get.”]

Now, his world is the Shuttle warehouse, coordinating an army of sales reps, preparing demonstrations, and marketing at expos. STAYING UPRIGHT -- Heather Graham demonstrates a yoga stance Parker Graham spoke on the Shuttle Balance in the Shuttle Systems warehouse in of the research-andHe also maintains a Bellingham. The company is designing a model that two persons development strategy house across the street can use at the same time, as requested from a renowned physical of “listening to the cuswhere his grandparents therapist, Robert Donatelli. tomer…The experts who once lived. Until last year use it clinically and in that provided the site sports training help us improve the cialists indicating positive effects for the manufacturing of Shuttle products.” from a patient exercising on a Systems in a cramped, windowA pro football team recently Shuttle MiniPress while adminisless downstairs and garage. The placed a Shuttle Balance in its tering dialysis. operation moved a block down training room for experimentaNext up: putting two balancMt. Baker Highway into a site tion. Shuttle equipment also rides ers together. Robert Donatelli, a that is a source of pride. “It is a aboard a pair of semi-trailer trucks renowned physical therapist, is recycled building that was going that transverse the U.S. with workdeveloping protocol for 6-foot to be destroyed by the Department out gear for professional golfers. long Balance so two athletes of Transportation, and all the sec“This year we have the MVP can work on it at once. Shuttle tions of our add-ons are recycled, in a pre-draft training camp in Systems also has a research-andtoo.” Atlanta for college football playdevelopment person on staff. At the old family homestead ers preparing for the draft,” Parker Graham has assigned refurbish60 | BUSINESSPULSE.COM


ing. Partly, the house will provide time-share, remote office space for cabin and condominium owners visiting Glacier/Mt. Baker. “These visitors can come up for a week and run a satellite office when they’re not skiing or hiking,” he said. But mainly, feeding another of his many passions, he wants the space to become a place for people of all ages to set up arts and crafts projects and do what he did as a kid – shoot for the moon. “It would be a place with all the tools, materials, and instruction,” Graham said. “ Our society, our communities, need to provide kids opportunities like I had,” he said, During his years at Bellingham High School, Graham was a perennial winner in auto and aircraft design contests. One sponsored by Fisher Body, a division of General Motors at the time, led to scholarship funds at UW, which led to Boeing. The Fisher Body Craftsman’s Guild awarded him first place in the region and state his first three years, and then his last year he won the first Senior Grand National Award.. The original hand-drawn designs, placed neatly in a timeline scrapbook, show a sleek design that became the 1956 Buick Centurion Motorama “car of the future.” And then in 1959 Chevrolet’s production cars implemented the tail-end treatment from Graham’s design. His propensity for design traces to early childhood. He told of his father, Ralph, having a fascination for aircraft from elementary school age after watching a Boeing B-1 biplane land on Lummi Island around 1920. Ralph Graham later helped build the first P-38 Lightning for Lockheed during World War II. After the war Gary’s parents opened the Hobby Hive, Bellingham’s first hobby store. At 14 he built an 18-inch model yacht and won a contest at the Seattle Boat Show. Then he

won some state contests making model airplanes and wound up at the international competition in Detroit, where he saw a sign about the Fisher contest. All this flowed into another ‘aha’ moment. Ill, and at home from school one day at age 17 Graham saw a Collier’s magazine with a cover depicting an outer-space design by Werner von Braun, the scientist behind the Apollo missions that put astro-

nauts on the moon. “When I saw that,” Graham said, “I thought, ‘I want to do that. I want to build space stations.” After his career at Boeing fulfilled his dream, Graham retired from there and wrote on his resume: “I intend to be on the leading edge of the next national goal—a rational society dedicated to improving our cities and environment.” He has arrived.

Congratulations to those being recognized at the Business Person of the Year event. Thanks for improving the economic and civic vitality of our community.

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Every day is

@

bellingham baby co. Mom-made gifts decorate the shelves By Kaity Teer

A

s with most new parents, the birth of their first child prompted Jeremy and Shelly Allen to make some changes. Though they both enjoyed satisfying careers at the Francis Ford Coppola Winery in the San Francisco bay area, they decided they needed to make a move to spend more time with their new baby. A website called FindYourSpot.com led them to the Pacific Northwest, and after a weekend visit to Bellingham they decided to make it their new home.

Jeremy and Shelly Allen, owners of Bellingham Baby Company, consign a vast variety of homecrafted goods and provide custom services at their store in Bellingham’s Barkley Village

62 | BUSINESSPULSE.COM

“We were working in our dream jobs,” Shelly Allen said, “I was going to work there till they threw me out. I always thought it was funny how new moms would say they were going on maternity leave and then didn’t return to work. But having our daughter changed everything, it really did.” That was in 2003. Now, 10 years later, the Allens have applied their years of retail experience to grow Bellingham Baby Company into a thriving local business. Their store sells baby


and children’s items sourced almost exclusively through a network of local mothers who provide handmade goods. For items not created locally, Shelly prefers to source from mom-run companies, or those that sell products invented by moms. “It’s all about the moms,” she said on a recent work day, surrounded by hundreds of items in the store. Bellingham Baby Company started as a website called Kangaroodle. When she was a new mom, Allen searched for a stylish shopping cart cover— a padded cloth liner that keeps babies comfortable and protected from germs while sitting in the front of a cart.

“…Collaborations help everybody’s sales. A customer can buy a complete outfit and the matching stuffed owl to put together a cohesive gift.” Shelly Allen

Unimpressed with the selection of fabrics available, she decided to make one to suit her tastes in a bold, modern print. She began sewing shopping cart covers for other style-conscious moms and selling them on eBay. The cart covers were such a success that she launched Kangaroodle in 2005. Shelly’s background in buying and in visual merchandising helped her grow the e-commerce site to more than 2,000 products, which she sold and shipped to a national audience. The Allens received many calls from local customers asking for their hours and location. So in 2008, Jeremy joined the company

Shelly Allen (l), co-owner, with contributing crafter moms (l. to r.): Tory Maxwell, Tiffany Rylant, and Allison Miller.

and, together, the Allens opened a brick-and-mortar store in Barkley Village, called it Bellingham Baby Company, and rebranded the website. The opening proved timely. The store experienced consistent growth even while the

e-commerce site struggled through the worst of the recession. Because of an increased need for space, Bellingham Baby Company moved to a larger location in Barkley Village in October last year. The new location offers improved visibility, which has

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Stuffed owls, some matching custom outfits, roost among a storeful of gift items, mostly handmade by local mothers, at Bellingham Baby Company, originally Kangaroodle.com before it became a storefront retailer.

helped to further increase sales. “We’ve had continual growth of at least 20 percent a year,” Jeremy Allen said. “Since moving into the new location, we were up 30 percent in December 2012 from the last Christmas season.”

The increase in sales is good for the Allens’ business, but it also benefits the network of local consignors who create goods to sell at Bellingham Baby Company. The store’s products include clothing and accessories, toys, gifts, and

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party decorations. Shelley Allen coordinates with a team of more than 50 entrepreneurial mothers and grandmothers who earn supplemental income through crafting. Many began as customers who were inspired by the store and approached Shelly about contributing. “It’s a way to earn some extra money and support my crafting habit,” said Tiffany Rylant, a mother of two and a consignor for four years. Shelley Allen brings key consignors together to collaborate on seasonal collections and clothing lines. She hosts planning events for them. Think wine and appetizers. She shares a mood board and casts vision. Once the group completes the items, a local familygenre photographer styles a shoot and photographs the collection. “We become friends, and we’ll go out for drinks to talk about new projects,” Shelley Allen said of her band of mothers. “These


collaborations help everybody’s sales. A customer can buy a complete outfit and the matching stuffed owl to put together a cohesive gift.” Bellingham Baby Company has become a favorite among shoppers purchasing baby shower gifts. The gift registry feature is helpful for new parents who want high-quality, local products for their baby. A line of personalized cotton bodysuits and tees is one of the store’s most successful products. Customers can select a design from a book of pre-made designs, or use a design of their own. “Most can be made on the spot with our heat press while you shop,” Shelley said. “It’s a personalized gift that still can be bought at the last minute. For loyal customers, this is a go-to gift item.” The company offers a punch-card program in which shoppers can buy five bodysuits and get the sixth free.

The personalized items are so popular that the Allens also sell them wholesale, and on Etsy.com and other on-line stores. At the window-front store the Allens

“We’ve had continual growth of at least 20 percent a year. Since moving into the new location, we were up 30 percent in December 2012 from the last Christmas season.” Jeremy Allen

split shifts. Jeremy works the morning shift and ships inventory sold online. Shelly spends the first part of the day sewing and creating, updating the website, and doing bookwork, then takes the

afternoon shift. Shelly Allen said, “We are known for the quality of the items in the store, mostly because the handmade items are of a nicer quality and made from designer fabrics. Our products can also be unique (design) and one of a kind. If a customer needs another size or something customized, my consignors are happy to do it for them.” Bellingham Baby Company is a true mom-and-pop shop offering Whatcom residents handcrafted items for their babies and children and a way to help creative local moms support their families.

Kaity Teer freelances, including magazine editing and writing, from Lynden where she and her husband Austin moved to last fall.

WHATCOMBUSINESSALLIANCE.COM | 65


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

Fall in love with the execution of your business, rather than your idea Use this three-pronged approach “Wow! Such fun – I invented this amazing widget, worked through how the widget looks and operates, hired someone to help me design a logo and the packaging, registered a domain name – oh, and brainstormed company names with my family. I found a company that will manufacture the components. I put a picture of the widget up on my new website a month ago….Why haven’t I sold anything?”

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s entrepreneurs we love working out the details of our new idea; however, we have a tendency to generate passion for the product, and less interest in the execution. Now is the time to fall in love with the execution of your business, rather than just the product idea. Work these three ways so you get smitten with the execution process:

I. Planning is mandatory. Business plans seem to have fallen out of favor, or are perceived as “old school” and unnecessary—lifeless documents needed only for attempts at bank financing, and then quickly shelved. Banish those thoughts. Creating and working a plan for your busi66 | BUSINESSPULSE.COM

ness will dramatically improve your chances of success. Let go of the label “business” plan, and focus on developing your plan of action. Commit your ideas and assumptions to the medium of your choice (paper, spreadsheet, or Evernote). Gather a couple of trusted friends (or find a good business mentor) and discuss your assumptions. This will become the basis for your plan. The writing requirements and financial documents typically included in business planning templates intimidate aspiring entrepreneurs. Remember that ample resources are available in our business community and online to help you complete your plan. Reach out and ask for help. Discussing your plan will only improve the final product.

II. Talk to real customers. Yes, your spouse and family members think your product is amazing and will revolutionize any industry. But what have you heard from paying customers? At some point—the sooner in the process the better—talk to potential customers about your product. Use that feedback to determine necessary changes, avoid excessive tinkering so you can preserve precious start-up capital. If, as an entrepreneur, you have reluctance about circulating your ideas, usu-

ally that stems from two reasons: 1. You do not want to hear anything negative about your idea (it is perfect as it is!), or, 2. Fear of someone stealing your idea. The entrepreneurs we work with at the NW Innovation Resource Center overwhelmingly appreciate the feedback from potential customers. On many occasions we have seen significant improvements in the product as a result from customer feedback. We have scheduled sessions in which the entrepreneur has tested a product with potential customers, resulting in design and packaging changes. Other sessions included marketing and manufacturing specialists to provide feedback to the entrepreneur about their specific customer segment. We understand the difficulties that entrepreneurs face protecting their ideas, and we identify methods to help you get customer feedback without risking your intellectual property.

III. Identify your unique market, rather than market potential. Market potential can seduce you into thinking, “The widget market is huge! If I just get 5 percent of the $50-billion widget market I will be wildly successful. . . how hard can that be?”


Instead look at your market from a different viewpoint: Shift your thinking from market potential to identifying your unique market. Define your ideal customer. In today’s marketplace the primary decision maker is female. Who is she? Where does she live? Shop? Go on line? How would she use the product? Why would she pick your product over other alternatives? After answering these questions you can determine how many customers exist for your unique market, and the number that you can reasonably reach with your message. Once determining your ideal customer you can identify the optimal methods for distributing your product and reaching that person. Investigate whether selling direct to the consumer is appropriate. Traditional methods, such as distributors or sales rep-

Success occurs when your entrepreneurial business “idea” meets “execution.” Image by Laura Bostrom

resentatives, might be a better fit. Base your marketing message on the paths you choose. So many variables lie open to

chance when you start a business. Determine a plan, talk with real customers, and identify your unique market.

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PHILANTHROPY: LIGHTHOUSE MISSION

Lighthouse at the end of the tunnel 90 years in, and with no government funding, the Lighthouse Mission provides shelter and meals by the 1,000s, and a path to rebuilding lives Articles and Photos by Sherri Huleatt

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even years ago, Paul Taft was a sad story. He was a homeless alcoholic who had dragged himself reluctantly to the doorstep of Bellingham Lighthouse Mission in a last bit attempt at finding some salvation. Not only was Taft desperately clinging to any street drug he

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could get his hands on, he had also sunk himself into about $34,000 of debt from unpaid child support. After going through the Mission’s one-year rehabilitation program, sorting through his finances with the program chaplain, and slowly

overcoming his addictions, Taft is now employed as manager of the Lighthouse Mission’s Men’s Shelter —a staff member on the front lines of repairing the many broken


members of the community who are reflections of the person Taft was just a few years ago. “Without the Lighthouse Mission, I’d probably be dead,” Taft said. Now, as an integral member of the Mission’s staff, Taft knowingly said, “Our overall purpose is to see changed lives.” With an annual budget of $1.7 million, the Lighthouse Mission employs 20 full-time and 20 parttime staff; operates four facilities 24 hours a day, seven days a week, and provides about 50,000 free meals and more than 30,000 nights of lodging a year. The Mission also holds high standards

for its guests—requiring that every visitor exhibit a willingness to change before they’re allowed to stay. Each guest is then assigned a caseworker, and must adhere to a schedule along with drug and alcohol testing. “People look at the Mission now as more than just a shelter, but a place that has diverse services,” Executive Director Ron Buchinski said. The Mission consists of four buildings, each compartmentalized to suit a visitor’s individual needs. From a casual drop-in center where a visitor can get a community meal and play ping pong, to a women’s shelter that houses about 50 women and children a night, to a mental health dorm, to a special section of rooms specifically designed for single fathers with children. “We do our best to meet the needs of our visitors,” Taft said. Apart from meeting the most

basic human needs of food and shelter, the Lighthouse Mission strives to offer services that equip people to become autonomous. “We focus on providing unique services that other agencies aren’t doing,” Buchinski said. The Lighthouse Mission offers a free eye and dental clinic, laundry services, counseling, tutoring, and job training. “We are the only place in Whatcom County that serves three full meals seven days a week,” Taft added. With every service, though, comes accountability. The Lighthouse Mission has made it clear that they’re not simply doling handouts. “People are homeless for a reason. If they are capable of being a productive member of society, our goal is to make them productive,” Buchinski said. “People come to us with many different problems. Our responsibility is to stabilize those people. The second step is to

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PHILANTHROPY: LIGHTHOUSE MISSION

RON BUCHINKSI: MAN ON A MISSION TO EFFECT CHANGE WITH THE HOMELESS AND HUNGRY The Lighthouse Mission has offered a lifeline that has the manager of the Men’s Shelter at the Mission. pulsed for the destitute in Whatcom County since 1923. Still Buchinksi is proud of the improvements that have been the mission staff submits that many community members do taking place behind the scenes the last few years as well. “We not realize that the Mission is not simply a hub for vagrants were able to improve our staff benefits,” said Buchinski. “We and homeless people looking for handouts. now offer retirement plans, good medical benefits for all of our Rather, it’s an ever-growing facility that holds high staff, and our salaries are competitive. standards for its guests and staff, and adherence to the “When we stop growing you’ll be interviewing someone shelter’s long-held values, according to the man who runs this else,” he said with a laugh. large operation. Buchinksi works closely with the Board of Directors in Much of the Mission’s recent growth is due to Ron mapping out the Mission’s future, meeting with them at least Buchinski, the Lighthouse Mission’s executive director. once a month and communicating regularly with the Board’s Buchinski’s discipline and dedication to his faith have helped executive committee. shape the Mission into a The Mission is a faith-based facility that holds its guests ministry in all areas, which accountable and its future is why all board members poised for growth. and staff must agree to the Buchinksi began Mission’s 1923 Statement working with the of Faith. Similarly, all guests homeless in 1987, while must express a willingness living in Lincoln, Neb. He to better their situations and said that after serving confess to needing help in seven years in the U.S. order to get served or to take Army and graduating residence at the shelter. This from Appalachian Bible sort of discipline is what sets College in West Virginia, Buchinski apart—he holds he felt called to help the his staff, guests, and himself disadvantaged. “I came to to the same high standards the conclusion that some that Thomas and Elizabeth of the neediest people were Ron Buchinski has served as Executive Director for the Boston had in 1923 when Lighthouse Mission since 2004. His focus has been to expand the in our country and in the they founded the Mission in shelter’s services and hold guests accountable. inner-city,” he said. “I just downtown Bellingham. came to a point where I The Mission represents a wanted to give the rest of my life to serving God and making a mixture of Christians from area churches. Buchinski’s earlier difference in people’s lives.” background is rooted in the Baptist Church, although he Buchinksi received the Non-Profit Director of the Year continues to educate himself in a variety of credos. “I read and Award while working in Lincoln, and the Lincoln Independent respect Christians from all theological backgrounds who are Business Association’s Business Resource of the Year Award. sincere seekers,” he said. While serving as the administrative vice-president of a shelter It isn’t all work and no play for Buchinski, though. Along in Nebraska, his Mission received the nation’s highest homeless with his passion for helping those in need, Buchinksi and his shelter award—The Association of Gospel Rescue Ministries wife have a passion for their Harley Davidson. Last summer Certificate of Excellence. they made a 4,900-mile round-trip ride to Arizona, and the Buchinski joined the Lighthouse Mission in August 2004. year before they went to South Dakota, visiting every National “I felt that with my experience I could add some value to the Park along the way. Buchinksi also fills his time with public Mission,” he said. Buchinksi’s wife of 39 years, Patricia, also speaking about social issues and religion, and visiting his three felt compelled to make the move. “My wife had a passion for grown daughters and eight grandchildren living in the Midwest. wanting to come to Bellingham and getting involved with the Although busy with his growing family and ever-expanding women here. We’ve had a great time working together.” Mission, Buchinski credits the many transformations he’s seen During the last seven years Buchinksi has facilitated the over the years as his motivation to continue working with the addition of three new buildings and a dozen shelters. “We’ve homeless. “It’s been a real joy,” he said, “to work every day on done nothing but grow since Ron came here,” said Paul Taft, the front lines of God’s grace.”

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assess them—why are they here? Then, where are they going? We’re not the end of the road, you have a life after you leave here.” A willingness to change is mandatory for staying at the Mission. Although some guests may be averse to receiving help, Buchinski said they must show a desire to receive assistance in order to be served. For visitors who do not adhere to the Mission’s rules or who consistently relapse into bad behavior, Mission staff will meet as a group to determine a course of action. For those willing to change and become self-sufficient, much of their journey to self-sufficiency is dependent upon getting back into the workforce, and as Bellingham transitions toward service oriented jobs, it’s becoming increasingly important to have a specific skill set. “The days of just walking into a factory and getting a job are long gone,” Buchinski said. “You need to have a marketable skill to be employed in Bellingham.” Much of what the Lighthouse Mission does, according to Buchinski, is to harness these skills and give residents the confidence to implement them. In fact, the Mission currently has seven fulltime residents who have completed the shelter’s one-year program and who now are attending college. “I encourage our guests to invest in themselves. They are their own product,” Buchinski said. “I’ve got guys trying to address themselves personally so they’re marketable. Every job is competitive—if you can’t read, you can’t get a job. If you can’t see, we have a clinic where you can get glasses. If you have dental problems, our dental clinic can make you feel more attractive to an employer. In order for a business to make money, they need good, motivated employees, and that’s what we’re trying to do.” Offering diverse services also requires a diverse staff. “There’s a

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TITLE

The Lighthouse Mission declares itself as the only place in Whatcom County that serves three full meals, seven days a week, at no charge – about 50,000 meals a year.

misperception out there that we’re not very professional, but we take what we do very seriously,” Buchinski said. Over half of the staff at the Lighthouse Mission has a college degree in fields ranging

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from human services to business to psychology. “We live in a welleducated community, so we’ve been able to hire top-tier people.” The breadth of services offered by the Mission isn’t the only

thing that’s growing; the physical size and scope of the Mission has changed drastically over the years. The Mission was founded in downtown Bellingham by Thomas and Elizabeth Boston in 1923. To accommodate growing demand the Mission moved from Bay Street to Holly Street, and in 1974 transitioned into the building that still serves as the shelter’s primary facility at the corner of Holly and F Streets. In addition to the main building, the Mission has three other facilities located there—the DropIn Center, New Life Program, and Agape Home for women and children. Buchinski said that with every expansion comes growing pains. “When we built our new women’s shelter, we went from 18 women a night to 55 women a night. It’s an adjustment. You need more staffing, you need better staffing, you need to raise more money.” Despite these obstacles, the Mission has managed to keep finances in check—consistently growing about 5 percent every year without any large surges. The Mission credits this consistency with paying strict attention to expenses and staying within budget every year. This year the Mission is celebrating its 90th anniversary by fundraising for a new elevator that will allow the many physically disabled guests to navigate all three floors of the shelter. The 90th Anniversary Elevator Fund, which seeks to raise $200,000, is the Mission’s largest capital expense in the last five years. According to Buchinski, fundraising is a daily concern. The Lighthouse Mission doesn’t receive any government funding or donations from United Way. Their progress and growth depends upon the generosity of the community. “We don’t get the kind of funding other charities out there get, but there are so many businesses


out there that respect what we’re doing,” Buchinski said. “Many people know who we are and they have supported us for years.” This loyalty from the community is not represented just in pocketbooks, though. In addition to the 40 paid employees at the Lighthouse Mission, more than 1,000 registered volunteers have stepped up to the plate to offer help to the homeless. “This is the community’s Mission; this is how the community takes care of its people,” Buchinski said. At the heart of the Mission is a staple of Whatcom County:a well-educated, disciplined staff; an organization that hasn’t sacrificed its values in over 90 years of service, despite the financial obstacles that come with such dedication, and an unfaltering passion to shape the meager into something mighty. “We serve all faiths,” Buchinski said. “We don’t discriminate in

One means of self-improvement for Lighthouse Mission residents is finding work. A bulletin board in the drop-in center displays possibilities.

any way. Our spirituality is our basis for everything we do, and our faith is to serve the lowly in God’s name at no charge.”

Western Washington University. She specializes in communications and marketing, and does freelance writing on the side.

Sherri Huleatt has a B.A. degree in English literature from

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Good values, recycling, fix-it, and set-up All at Second Time Around Computers Article and photos by Kaity Teer

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obert Pratt, owner of Bellinghambased Second Time Around Computers, purchased it from a friend as an electronics recycling company in December 2009. At the time it was called Easy and Safe Recycling. Pratt saw an opportunity to develop the business model to include electronics repairs and used computer and laptop sales. Six months later he opened a second location on Front Street in downtown Lynden. Today, the business has grown to eight full-time employees serving nearly 5,000 customers in Whatcom County, and sales have increased eightfold in three years. “I love to turn companies around,” said Pratt, who attributes his company’s growth to a business plan based on offering quality products and old-fashioned outstanding customer service. “I


get excited about it. I’m a type-A entrepreneur.” Second Time Around Computers offers customers four primary services: • Electronics recycling • Television and computer repairs • Refurbished electronics sales • Professional network solutions Both locations provide a statecertified, E-Cycle Washington drop-off site that accepts unwanted electronic equipment free of charge. They ship around eight or nine pallets to recycling processing plants each week, which separate the products into recyclable parts. Pratt, a former U.S. Marine, thrives on the challenge of building businesses. Early in his career

Robert Pratt (r.) opened this Lynden location in 2010, managed by Roger Camdanoza (l.), and the two stores serve more than 5,000 customers county-wide, including the only state-certified electronics recycling drop-off.

he started an airplane-detailing business and grew it into a franchise. Since then he has been involved in a variety of other business ventures involving furniture and media. At Second Time Around Computers, he began by identifying the connections between the different aspects of the company and maximizing them. For exam-

ple, electronics dropped off for recycling can sometimes be used for repair parts, or wiped clean and sold as refurbished products. He emphasizes the value his company offers its customers. Pratt said, “Because of our recycling and repairs divisions, our used products are significantly more affordable than those sold by our closest competitors.”

WHATCOMBUSINESSALLIANCE.COM | 75


SECOND TIME AROUND COMPUTERS

Sarah Pratt, surrounded here by Second Time Around computers and peripherals, manages sales records and bookkeeping for the goods and services

He adds to his inventory of refurbished items by purchasing equipment from asset management companies who look to sell large amounts of gently-used office equipment when corporate leases end. “We can be such a throwaway society,” Pratt said. “Not only as consumers but also as manufacturers. When things are priced inexpensively, the cost of repairing them also has to be inexpensive for repairs to make sense. Otherwise you might as well just buy a new one instead of fixing it. Having recycled parts on hands helps us make repairs worthwhile and cost effective.” Pratt saw how each division of the company could lead to other areas of expansion. “That, coupled with truly old-school service, is our secret to success,” he said. “Remember the days when people stopped in at the baker’s and stayed for a cup of coffee? “We have customers who come in and hang out with us when they have an electronics question or problem. That just doesn’t hap76 | BUSINESSPULSE.COM

pen as much anymore, especially not in a computer environment. People can be really be intimidated by it all.” The friendly, informal environment at Second Time Around Computers is due in part to Pratt’s decision to keep it a family-run business based on positive values. His daughter, Sarah, plays a key role in the daily operations; her brother, Robert III, works there, as does the family friend from whom Robert purchased the business, Paul Zemler. Two years ago the Bellingham branch moved to a larger location on Hannegan Road with a finished retail showroom, a workspace equipped with repair benches, and a warehouse for shipping and receiving recycled electronics. Renovation is underway on a recently-acquired adjacent retail space, which will add another 2,000 square feet featuring 35 state-of-the-art repair stations. Pratt grows the business conservatively, remaining debt-free through all the expansions. The company thrives mostly through


repeat customers and referrals. He anticipates that the newlylaunched professional network division will contribute to significant expansion with corporate clients for corporate network solutions, site planning, scalability reviews, and network maintenance. “We have a large clientele of small companies,” Pratt said. “I think that’s because of the goodwill that we foster. We aim to be affordable, especially if it means we can help entrepreneurs grow their businesses in Whatcom County.”

“I love to turn companies around. I get excited about it. I’m a type-A entrepreneur.” Robert Pratt, owner, 2nd Time Around Computers

Pratt plans to take a break from developing new divisions and to focus on making existing processes more efficient with hopes of attracting a larger percentage of Bellingham’s electronics recycling business. What began for him as an entrepreneurial, turnaround opportunity has become a significant venture that continues to engage his attention, especially as his children take on leadership roles in the company. From recycling projects to personable service to affordable, reliable products, Second Time Around Computers offers goods and services that keeps customers coming back, sometimes even just for a cup of coffee and friendly technical advice.

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Katie Teer is a graduate of Greenville College (Ill.), in English and social work ,and she resides in Lynden as a freelance writer and editor.

WHATCOMBUSINESSALLIANCE.COM | 77


ASK THE EXPERTS: LIFE IN THE TECH LANE

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How do you avoid Java hackers?

t the outset of the new year, the world learned that attackers were breaking into computers using a previouslyundocumented security hole in Java. A lot of information is floating around out there. This will help you understand it: First, what is Java? Java is a widely-used programming language installed on a very large number of devices and running under various operating systems. One of the most common

uses of Java Applets is gaming— on such gaming portals as Yahoo! Games, Addicting Games, Mini Clip, and Pogo. For example, when you launch a chess game, it might be rendered as a Java applet activated by clicking within its borders, after which you can move the chess pieces around. So what is all the fuss about? Historically, hackers have exploited security holes in cyber attacks against Adobe Systems, Windows, and Internet Explorer. However, last year, hackers used Java in the majority of attacks. Last April, hackers exploited a

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Java vulnerability to infect more than 500,000 Apple computers with a vicious form of malware— the largest-scale attack on the OS X operating system, ever. The exploit was particularly disconcerting because it let attackers download a malicious program onto its victims’ machines without prompting. Users did not even

have to click on a malicious link to infect their computers. The program simply downloaded itself. Hackers now are exploiting a previously-unknown security hole in Java 7 that can seize control over a computer if a user visits a compromised or malicious website. The exploits can compromise even the most benign-looking website. These are crimeware tools stitched into websites so that when visitors come to the site with vulnerable or outdated browser plug-ins (like this Java bug) the site can silently install malware on the visitor’s PC. All it takes is for attackers to insert one line of code into a compromised website, and they can have control over your computer.


What should you do? We recommend a two-browser solution to help mitigate your risk of exposure to holes in security with Java. We recommend that you use one browser, with Java disabled, for your everyday uses—email, web browsing, shopping, etc. Use a separate browser for online banking (some banks use Java) and other sites you might visit that require Java. This will prevent the Java exploits from running on a browser that might store some of your sensitive information. To find out more information on how to disable Java in your browser visit http://www.gotechhelp.com/blog/ Experts at Tech Help in Bellingham, a division of Big Fresh Media, provide answers to the questions that are trending among clients. If you have a tech question for our experts, send an email to getanswers@gotechhelp.com.

TOP 10 PRODUCTIVITY APPS YOU SHOULDN’T BE WITHOUT Whether you’re an iOS, Android, Blackberry, or Windows user, apps can help make your life more productive and manageable, thanks to their functionality and sleek designs. Here’s a Top 10 compiled by Tech Help, a division of Big Fresh Media: 1. Dropbox. The best way to swap and store files 2. Evernote. The ultimate note-taking app 3. Clear. A stylish to-do list app 4. Sparrow. The best email alternative for your Mac 5.

Quickoffice. This app brings a condensed Microsoft Office to your devices

6. Instapaper. This app saves online articles so you can read them later 7. 1Password. An app that will manage all your passwords 8. Box. This great app gives you a massive online locker to store files 9. Tripit. This is the perfect companion for frequent travelers 10. Slice. A great tool that helps you manage your expenses For more information on these great tools, visit http://www.gotechhelp.com/blog

WHATCOMBUSINESSALLIANCE.COM | 79


Whatcom Business Alliance

SPECIAL EVENT

Fostering Business Success and Community Prosperity

WBA breakfast forum on Health Care Act New taxes, other burdens surface on our state’s workers By Business Pulse Staff

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exchange because of costs and on insurance premiums in ey points from a confusion it would impose 2014. policy perspective on their citizens’ health care. 2. Tax Option B – The Double arose from the Whatcom People in those states will not Dip: Exchange Tax Plus Business Alliance’s recent have to shoulder the cost of a Diversion. Divert revenue breakfast forum addressing new program. from the existing 2 percent tax on health insurthe sweeping ance premiums from effects of the the insurance comAffordable missioner’s office Care Act to the Exchange, (Obamacare). thereby imposing a Paul Guppy, new tax on people covered through vice president the Exchange up for research to the funding at the level requested by Washington Exchange managers. Policy Center 3. Tax Option C – non-partisan Tax People in the Exchange. A tax on think tank every person who in Olympia, purchases health made several coverage through key points the Exchange. For as one of the many families, parthree panelists. ticipation in the Exchange would ‘AHA’ MOMENTS – Paul Guppy, head of research for the Washington Policy Among them:

Center, shares points about the Affordable Healthcare Act, as panelists Matt be legally required • New taxes in Heikkala (c.) and Richard DeGroot await their presentation to a full-house breakunder Obamacare’s fast at the Bellingham Golf & Country Club. (Staff Photo) immediate Individual Mandate effect this year, rule. e.g., 2.3 percent on medical • In Washington, planners pro• Officials say the Exchange devices that raised the price of pose three ways to collect tax will cost $51 million the first all medical supplies used by money for the Exchange: year, and more each followdoctors and nurses. Medical 1. Tax Option A – An Added ing year. Lifting the ban on suppliers must pay the tax Tax. Starting January 1, shopping for health insureven if they don’t make a 2015, 1 percent on every ance in other states would profit. person in Washington who cost nothing, and would give • Washington is an early adopter has health insurance, based Washingtonians access to hunof Obamacare, one of the on the value of monthly dreds of affordable health care first states to create a state premiums on top of the options. exchange. At least 21 states current premium tax of 2 • Obamacare maintains the have declined to set up an percent. Earlier, 1/2 percent federal prohibition on buying 80 | BUSINESSPULSE.COM


A packed, sellout crowd absorbed a wealth of information from experts on the new Obamacare laws at a WBA breakfast forum. Visit www.WhatcomBusinessAlliance.com for links to the detailed information.

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Staff Photo

out-of-state health insurance (a ban that does not apply to other types of insurance). • Many employers say they will drop their health coverage. Workers will be pushed into the costly in-state Exchange or, because of the Individual Mandate, be forced to pay a penalty every year. • If workers do not pay the penalty, the IRS is authorized to withhold their federal tax refunds. “As the law kicks in there are signs that, in their hurry to pass the bill, lawmakers did not understand everything it contained.,” Guppy said in prepared documents. “Given (Obamacare’s) flaws, Congress may consider repealing the law. Until then, Washington’s families and businesses face more taxes and fewer health care choices.” For comments and key points in detail of the effects of the new healthcare laws and mandates from the other panelists, please visit www. WhatcomBusinessAlliance.com.

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GUEST COLUMN: MEDICAL Roger Stark | MD, FACS Dr. Roger Stark is the author of “The Patient-Centered Solution: Our Health Care Crisis, How It Happened, and How We Can Fix It.” He is a retired heart surgeon and a health care policy analyst with Washington Policy Center, a nonpartisan think tank in Washington state. For more information, visit washingtonpolicy.org.

Medicaid: State playing with ‘free money’ fire…and will get burned T

he existing Medicaid entitlement program began in 1965 as a government safety net to help children and their families earning less than 133 percent of the federal poverty level (FPL).

Congress has steadily expanded the program to include aid for disabled and long-term care patients. Within 10 years, 10 percent of Americans had enrolled in Medicaid. This number grew to 20 percent last year. Medicaid enrollment in the state of Washington—1.2 million—has grown 50 percent faster than the overall

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population since during the last 20 years. Costs are paid in a 50-50 match between state and federal taxpayers. States have dramatically expanded the programs because of the substantial federal contribution, which feels like “free money” to state politicians. But federal taxpayers also are state taxpayers, so virtually everyone pays for 100 percent of the program. Medicaid is the second-largest budget item in Washington state (behind education), and the entitlement has grown three times faster than the overall budget since ’93 to $6.2 billion a year. The new Affordable Care Act greatly expands Medicaid by adding any adult earning less than 138 percent of the FPL. The U.S. Supreme Court ruled that the federal government cannot force states to expand their Medicaid programs. Democrats and Republicans across the country are supporting the Medicaid expansion because of the enticement of funding for expansion to come exclusively from federal taxpayers for three years, and then gradually culminate in a 90-10 federal-to-state match. State officials see this as even more “free money.” Studies predict 280,000 to 500,000 Washington residents will be eligible for the new Medicaid program.


So, if it’s such a great deal, why not support it? First, Washington state taxpayers will be obligated for an additional tax burden. Even with the federal government paying 100 percent of the health care costs for three years, our state will still have to pay immediately for the administrative costs of the expansion. Then, when the 90-10 match occurs, state taxpayers would have to pay $2.4 billion over the first 10 years. Worse, if costs rise then states are forced to pay a “blended” rate close to the existing 50-50 match, and the cost to Washington state taxpayers could jump to $12 billion or more during the first 10 years— on top of what they pay in federal tax. Second, the Medicaid expanded entitlement will crowd out lowwage workers from receiving private, employer-paid health insurance. Employers with fewer

than 50 workers will logically drop employee coverage. Under Obamacare’s mandate, these workers then would have to use the expanded entitlement program against their will. Third, people who qualify but

It is a costly, inefficient, centrally-planned government health insurance program that needs meaningful reform. haven’t enrolled in Medicaid will do so. The Urban Institute estimates 545,000 Washington residents fall into this group eligible only for the existing Medicaid plan, adding another $14 billion in state taxpayer costs for the first 10 years.

Last, and the most unfortunate fallout: Except for very specific populations such as HIV/AIDS patients, there is no solid scientific evidence that Medicaid provides better health outcomes for patients than having no insurance. Also, Medicaid pays providers an average of just 40 percent of what private insurance pays. This shifts the financial burden to private insurance companies, and reduces the number of providers financially able to accept Medicaid patients. We have had 47 years of experience with Medicaid. It is a costly, inefficient, centrallyplanned government health insurance program that needs meaningful reform. Simply adding hundreds of thousands more Washingtonians to Medicaid will not improve their health, but it will limit choices for those patients, and will be a huge burden on state taxpayers.

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WHATCOMBUSINESSALLIANCE.COM | 83


LOCAL ECONOMY Erin Shannon | Director, WPC for Small Business Erin Shannon became director of the Washington Policy Center for Small Business during January 2012. She has an extensive background in small business issues and public affairs. The Center improves the state’s small business climate by working with owners and policymakers toward positives solutions.

Growing the economy: If this is the plan, we need a new one R

ecently, Washington Governor Jay Inslee unveiled his “Working Washington Agenda,” a package of “legislative proposals to create and sustain a thriving economic climate.” The Governor claimed his plan will “create a positive climate for job growth” and “give Washingtonians the tools to get back to work.” Gov. Inslee’s five-prong plan centers on: • Expanding and enhancing STEM education (Science, Technology, Engineering, and Mathematics); • Providing targeted tax relief for research-based, high-tech industries; • Investing in the state’s aerospace industry with aerospace education and training programs and targeted tax breaks; • Investing in clean energy, and • Embracing the health care reforms and Medicaid expansion to create jobs. I guess Inslee’s plan might be good news if you are in the hightech, research, clean energy, aerospace, or health care industries. Unfortunately, this highly84 | BUSINESSPULSE.COM

targeted plan won’t improve our state’s lackluster business climate. He offers no relief to the thousands of small business owners who are trying to grow their business and create jobs. The governor’s plan doesn’t include even a mention of the issues employers have identified in statewide public forums with our staff as real obstacles to running a successful business.

Gov. Inslee’s highlytargeted plan won’t improve our state’s lackluster business climate. He offers no relief to the 1,000s of small business owners trying to grow and create jobs. Issues such as costly workers’ compensation taxes, the burdensome and unfair Business & Occupation tax, complex government regulations, high minimum wage, and sky-rocketing health insurance costs are the roadblocks the majority of business owners told us must be reformed. One plus from Gov. Inslee’s news conference was his support of a single-business portal through which businesses could interact with state agencies. A long-

standing recommendation of ours, the business community has asked for that for years. When asked by an astute reporter about the lack of relief for businesses in the nontargeted industries (the reporter used the example of a mom-andpop grocery store owner), Gov. Inslee replied that the state must “channel our scarce resources into investments that have the greatest potential for phenomenal growth.” Unfortunately for the economy of our state, focusing his attention like a laser beam on a handful of industries will not create the jobs that will help our state recover. Only government reforms will accomplish that. Small businesses are the engines of our state’s economy—96 percent of the companies in Washington State are small businesses, and they employ one- third of the state’s private sector workforce. History has taught us that small businesses will lead us out of recession. Traditionally, jobs created by entrepreneurs provide a major catalyst for revitalization during times of economic stress. But small businesses can’t blaze a path to economic prosperity with the roadblocks our state imposes on them. Sadly, it sounds like our new governor has little appreciation for the role small businesses play in our economy, or for the obstacles they face.


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GUEST COLUMN: LEAN BUSINESS Randall Benson | Title? Randall Benson is a management consultant, author, and Lean master working out of Whatcom County. You can visit his blog “The Lean Heretic” at www.leanheretic.com, and his website at www.bensonconsulting.com.

What’s up with all the Lean-guistics?? [Editor’s Note: We’re pleased to introduce a newcomer to our strong lineup of guest columnists, with expertise in the high-demand field of best practices, popularized in Japan under the familiar term “Lean.” Randall Benson, who has worked with numerous and varied organizations, brands himself as the Lean Heretic, and right out of the chute you dis-

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cover why as he challenges even the basic lingo of Lean.]

O

K, I admit it. I’ve been working on a bad Irish accent to use when I perform sea shanties on a seaman’s concertina. I’m hoping to add a bit of character to my

performance. However, as with any contrived accent, I instead risk sounding downright ridiculous. On that note, I’m wondering, what’s up with all the contrived Lean accents I’m hearing? Why do people insist on speaking Lean (the Toyota Production System)


with gratuitous Japanese phrases? I hear folks saying “muda” when they mean “waste.” Or “kaikaku” instead of “innovation, and “yokoten” instead of “sharing best practice.” Or how about “poka yoke” instead of “mistake proofing.” Dozens of such phrases spring up. I can handle a few hard-totranslate words. But when Lean practitioners sprinkle their conversations with dozens of Japanese terms, it seems as absurd as a Salish seaman imparting Irish brogue—particularly when most of the lingo has simple English counterparts. Maybe some Lean practitioners believe that using Japanese terms sounds cool or smart or educated. Instead, they sound like keepers of the truth, more committed to orthodoxy than to clarity. The affectation shouts “true believer,” even “zealot,” to the organization. It also obscures

meaning. When I hear a Lean believer in a planning meeting say something like, “We’ve got to go to gemba because that’s where the muda is, otherwise we’ll never progress to nichijo kanri,” I know that Lean is lost. When we use unneeded Japanese words, we create an in-group and, by exclusion, an out-group, separating those who know from those who don’t. The in-group shares a bond because only members can access Lean in its esoteric form, while the outgroup must depend on them for translation. Why should we care? Because Lean practitioners in the workplace are creating barriers between Lean principles and those who need to apply those principles. Lean language can be simple, elegant, understandable, and easily accessible to all— without accent or obfuscation. That will liberate the power

of Lean thinking. Here are some actions you can take: 1. Insist on open and accessible Lean concepts and language. 2. Encourage practitioners to make every concept clear to all. Otherwise, they simply are using the jargon to impress without providing deeper understanding. 3. Call for non-esoteric Lean language, even if it requires a few extra English words. 4. If you are a lean practitioner, lose the accent. Call me a Lean heretic, but how else can we achieve the Lean aim of involving everyone in the elimination of waste?

Future columns will deal with such ‘heretic’ concepts as working on flow first, then waste (the opposite of the norm); using personal Kanban boards, and why Lean is dying (meme cycle).

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What does legalized Marijuana mean for Whatcom County employers? By Cheryl Stritzel McCarthy

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ow that Washington voters have legalized marijuana, can businesses still drug test before hiring? Can they drug test current employees? What if a worker puffs weed outside during a break? Will businesses’ efforts to keep workplaces drug-free prompt legal action about civil rights? Those questions are swirling like smoke around businesses in Whatcom County and throughout the state as human resource and legal departments consider the impact of Initiative 502. The new state law legalizes recreational marijuana use by adults over 21, and will create licensed systems of growers, processors, and retail outlets for the drug.

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Many Whatcom County businesses contacted by Business Pulse responded that they haven’t had time to consider how the law will impact them— understandable, since the state is still writing the rules. The state liquor control board is creating regulatory policy for the growing, processing, and retailing of recreational marijuana. “We’re in the thick of it right now,” said Brian Smith of the Washington State Liquor Control Board (WSLCB). “The board is building expertise as we craft the rules. We are taking public input.”

“It’s business as usual for us. We have a no-tolerance policy for marijuana or liquor or anything else. That captures it.” Michael Abendhoff, spokesperson, BP Cherry Point Refinery

The board held six public forums around the state during January and February, and reported attendance as averaging about 400. WSLCB expects to issue licenses to grow recreational marijuana by August, and licenses to retail it by December. “How legalized recreational marijuana will impact employers is a question that came up early,” Smith said. Legal analysts say employers and workers have the right to a drug-free workplace, and businesses have the right to establish their own workplace policies. The liquor board is charged just with setting up rules for growing, processing, and retailing. “The liquor control board is not getting involved in what a drugfree workplace means,” Smith said, and will not issue guidelines for businesses.

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INITIATIVE 502

A LEGAL EXPERT SPEAKS Richard Davis of Chmelik Sitkin & Davis, P.S., a Bellingham-based law firm, is expert in employment and labor law. Q. How will Initiative 502 affect workplace drug-testing? Keep in mind that marijuana is an illegal substance under federal law. • Pre-employment drug testing: Employers that have used these will continue to screen for marijuana and will still be able to refuse employment for those that test positive. Initiative 502 may result in an increase in the use of pre-employment drug tests and, since the metabolites for marijuana stay in a person’s system longer, may result in more test failures. • Personnel policy manuals: Employers can still prohibit the use of marijuana since it is an illegal substance under federal law. In some circumstances, off-work use of marijuana can still be the basis for a termination. • Random drug testing: Some private employers have programs to randomly drug test employees. (Governments can only drug test when it has probable cause to believe an employee is impaired.) These tests

are used frequently for jobs where safety is an issue. • Post-accident or incident drug tests: Drug tests will continue to be used after an employee is involved in an accident or other serious incident. Q. Has your law firm fielded questions about this? Yes, several businesses have already begun a review of their policy manuals and are looking at testing options. There is significant uncertainty over whether an employer must make an exception for an employee who claims to use marijuana for medical purposes. The answer is no. Q. Are employers concerned about potential lawsuits from workers over newly legal recreational marijuana? Washington is an “at will” employment state, which means employers have wide latitude to hire and fire employees. There is no right to use marijuana. Q. What advice would you give employers about handling Initiative 502? Each business should carefully look at its operations and determine if issues of safety, customer service, or reputation would warrant a change in the personnel policy manual, or in drug testing policies. This is particularly true of employers with a multi-state work force, or with employees who travel out of state on company business. Compiled by Cheryl Stritzel McCarthy

While some Whatcom County businesses haven’t yet thought through the law, others said workplace policies remain unchanged. “It’s business as usual for us. We have a no-tolerance policy for marijuana or liquor or anything else,” said Michael Abendhoff, spokesperson at BP Cherry Point Refinery in Blaine. “That captures it.” Cherry Point, the largest oil refinery in the state, employs 800 full-time workers and 500 contractors. Ashley Kimberly, spokesperson for Ferndale-based IMCO General Construction, said IMCO company policy also remains unchanged. “It hasn’t affected our business at all. We’re subject to federal drug testing requirements, and nothing has changed,” she said. “Marijuana is still prohibited, as far as our policy goes.” IMCO’s projects include building infrastructure for the marine and energy industries. The company employs 200 during peak 90 | BUSINESSPULSE.COM


season. “The (federal) departments of transportation, defense, and energy drug-testing programs still require that we prohibit marijuana,” Kimberley said.“We work in a high-risk industry, and it’s not safe to use drugs, including marijuana. That’s it in a nutshell.” John Huntley, owner and chief executive officer of Mills Electric Company, said the state doesn’t have a clue yet about how details of the law will ultimately take shape. “There are so many unknowns associated with it,” he said. “In reality, you’re basically where you were before. We have a drug- and alcohol-free workplace. It’s not going to change.” Mills Electric Company in Bellingham engages in industrial and commercial work, and employs 200. What if some of those employees were to light up weed on a smoke break at work? “If they do, they won’t be there long,” Huntley said.

He explained that Mills Electric currently does new-hire drug testing, as well as random and testing for cause, and that won’t change. On a prominent national level, the National Football League and the National Basketball

“We work in a high-risk industry, and it’s not safe to use drugs, including marijuana. That’s it in a nutshell.” Ashley Kimberley, spokesperson, IMCO General Construction

Association have issued statements that marijuana consumption is a violation of their conduct policy, and they will continue testing. This year, until licenses are created and issued, it remains illegal

under state law to grow, process, or sell non-medical marijuana. Smoking a small amount in private is the only activity currently legal, even as all routes to obtaining it are still illegal. Washington’s and Colorado’s marijuana initiatives conflict with federal law. The federal Justice Department hasn’t said whether it will sue to block the new state laws. Washington Governor Jay Inslee and Attorney General Bob Ferguson met in January with U.S. Attorney General Eric Holder, but did not gain any more information on how the federal government will respond to Washington’s Initiative 502. Sharon Foster, chair of WSLCB, has said the board is considering adding the word “cannabis” to its name. Attendees at WSLCB public forums offered various advice. One urged the state board to establish enough controls and testing so the

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INITIATIVE 502

A BUSINESS OWNER SPEAKS Chuck Robinson is co-owner with wife Dee of Village Books and Paper Dreams in Bellingham’s Fairhaven district. The two stores employ 36 people. Addressing the impact of Initiative 502 on business, Chuck said: “I was a proponent of legalizing marijuana. We have spent millions in our society to control illegal drugs, to no effect. Our society can’t afford to do what we’d been doing. I think that’s a major reason it passed. Lots of people who voted for it probably never smoked a joint and never will. “The new law doesn’t change anything in the way we manage our business. We’ve never done direct testing. We interact with an employee based on behavior. “Few businesses have rules written against alcohol. Alcohol is a drug. Business owners don’t accept people coming to work under the influence.” Compiled by Cheryl Stritzel McCarthy

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Dee (l.) and Chuck Robinson, co-owners, Village Books

federal government joins rather than blocks Washington in legalization. Another suggested a state-run financing program, as federal law bans banks from serving the marijuana business. Citizens that attended the forum included medical marijuana providers, illegal growers, and others, according to Smith of the WSLCB. The growing of marijuana remains a thorny issue. State land-grant universities that typically aid agriculture by researching crop yields and pest controls are, so far, avoiding the industry. Marijuana remains a crop that cannot be insured. Initiative 502 does not preempt federal law, so residents involved in producing or retailing are still subject to prosecution and confiscation of assets, should federal government law enforcement so choose.


The WSLCB held its six public forums at sites geographically scattered around the state, with one in Mount Vernon closest to Bellingham. Why no forum in the city of subdued excitement itself? “We made choices based on timing and resources,” Smith said, and the board counted on Mount Vernon to capture the Bellingham area. “We’ll have more forums if we need to.” Some answers for growers, processors, and sellers will come as regulations reach finalization late in 2013, with “details ultimately sorted out in the courts,” Smith said. Meanwhile, Whatcom County employers set their own workplace drug policies as they carry on with business. Cheryl Stritzel McCarthy, based in Bellingham, writes for national and local media.

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GUEST COLUMN: H.R. PROTOCOL Bob Pritchett | President/CEO, Logos Bible Software Bob Pritchett co-founded Logos Research Systems, Inc. (now renamed for its niche-market product, Bible software) in 1992, and the business perennially has made fastest-growing companies lists regionally and nationally. He is on the executive committee of the Whatcom Business Alliance board of directors.

Business Is a Serious Game

...B

y the time I started a software company at age 14, I was fully caught up in learning the business game. I subscribed to Fortune and the Wall Street Journal. I read every business biography and history I could find. I hung out at my father’s company, and rode along on sales trips.

I focused on the excitement of business success, not the details of business operations. Business was a lark. It was easy and fun and, since student-livingat-home was my day job, it was risk-free…still just an adventure when, at 20, I quit a great job at Microsoft to co-found Logos Research Systems, Inc. Immediate success and rapid growth fueled my enthusiasm for the entrepreneurial life and puffed up my ego. Ever-increasing sales hid many mistakes and deferred

tough decisions. I remember the first time I felt the responsibility of my job—early signs of trouble in the business. I stood up on a picnic table to say a few words at the company picnic and looked out at more than 100 people—employees and their family members. Our business had been a great game to me, but it was a livelihood to these employees, and it supported their families. It was not a game to them. Within a year, I was laying off some of those employees. Our

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growth had slowed, and my mistakes had caught up with me. The business sunk lower and lower and, with it, my confidence and my enthusiasm for the great game of business. The lowest point came just after another painful round of layoffs. I went to a local business group meeting…(where) our new and difficult circumstances were not well-known: I was handed a plaque proclaiming our company “Business of the Year.” I hid the plaque in shame and never told anyone at the office.

Lessons from the Game By God’s grace, and with the help of some incredible people, we slowly turned the business around. Our financial circumstances forced me to learn discipline and focus and humility. ( I have more to learn of all three. Ask my wife.) I learned to emphasize profitability, to pay attention to operations,

and to be wiser in hiring and firing. I saw that my childish approach to business (placed) too much focus on stories of heroic business success, and not enough attention to how the heroes kept their businesses alive and growing day-to-day. The businesses I admired were not successful because they were led by heroes; those entrepreneurs were heroes because they led their businesses to success. This book is about the lessons I have learned the hard way….(and) the rules I have extracted from those lessons. If this book has a tinge of paranoia to it…it is because I have been to the edge and it scared me. I now see survival as a prerequisite to success. You do not get a chance to scale the summit if you freeze to death in base camp the night before.

counselors. I have sought a multitude of counselors (by)….visiting in person, reading widely, and buying lunch. You should do the same. My advice contains some universal business truths. Cash really is king. But for every rule I espouse, there is a successful business somewhere doing just the opposite and counting it as a virtue. And for them, it may be. There may be a different set of rules for you too. Don’t just take my advice. I could be wrong. Instead, look at your own experiences, take what you already know, and weigh that against my advice and the advice of others. The lessons you need to learn… are all around you. Some are in this book, some will be in a story you hear from another business person, and some you will have to learn the hard way on your own.

Seek Professional Help

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

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GUEST COLUMN: ENVIRONMENT Todd Myers | Environmental Director, Washington Policy Center The Washington Policy Center is an independent, non-partisan think tank promoting sound public policy based on free-market solutions. Todd Myers is one of the nation’s leading experts on free-market environmental policy and is the author of the 2011 landmark book Eco-Fads: How the Rise of Trendy Environmentalism is Harming the Environment. His in-depth research on the failure of the state’s 2005 “green” building mandate continues to receive national attention. Myers holds a Master’s degree from the University of Washington.

Wasteful to taxpayers, harmful to environment How Washington state spends $100 for a quarter’s worth of carbon emission control

I

magine a business that pays $100 for 25 cents of value. It wouldn’t take long for that business to go bankrupt. One of the strengths of the free market is that those who do more with less get rewarded, and those who waste money and resources do not. Such is not the case in politics. Consider Washington state’s policies to reduce carbon emissions. Politicians in the legislature and in cities around the state have been vocal in promoting policies they claim will cut carbon emissions. They don’t, however, actually measure how effective their policies are. Under Mayor Mark Asmundson, the city of Bellingham signed the U.S. Conference of Mayors Climate Protection Agreement and promised to cut carbon emissions to 7 percent below 1990 levels by 2012. How did the Bellingham do? Nobody knows. We’ve been asking city officials for emissions data for eight months and they still have not provided it. City officials signed the agreement, sent the press release, and then failed to take any action. 96 | BUSINESSPULSE.COM

They would not be alone. Of 32 cities in Washington that signed the agreement, 22 have completed no work at all to comply with the agreement or don’t plan to see whether they actually met the goal as promised. Ironically, doing nothing might be the best choice.

While the cost to reduce a ton of carbon emissions in California’s system is about $10, Washington spends nearly $4,000 a ton for some projects. Compared to California’s carbon price, Washington spends $100 to get 25 cents of benefit for the planet. At the state level, politicians have spent millions on emissionsreduction projects, but the policies they chose are remarkably ineffective, even when compared to California’s cap-and-trade system. While the cost to reduce a ton of carbon emissions in California’s system is about $10, Washington spends nearly $4,000 a ton for

some projects. For example, Washington state subsidizes solar power at the rate of 15 cents for a kilowatt hour (kWh) up to $5,000 a year. For every kWh of energy we use in Washington, we emit 0.298 pounds of CO2. Check out this calculation (and cringe): • If we spend 15 cents each kWh to switch to a zero-emission source it costs us $1,107 each ton of CO2 avoided. • If the solar panels are manufactured in Washington state, the subsidy goes up to 36 cents/kWh, driving the cost per ton to $2,657. • If the whole solar energy system is built in Washington, the government subsidy goes up to 54 cents/kWh, for the outrageous sum of $3,986.58/ ton of CO2 avoided. Compared to California’s carbon price, Washington spends $100 to get 25 cents of benefit for the planet. Washington’s electric-car sales tax break is also extremely expensive. People buying a Nissan Leaf save $3,528 on the base price of $36,000. The state then turns around and imposes a fee of $100 a year on electric vehicle owners, putting the benefit at $2,528 across 10 years.


Calculating the carbon reduction over the same 10 years, the cost per ton of CO2 reduced amounts to $189. That translates to about $5 of environmental benefit for every $100 spent, compared to California’s cap-andtrade price. Better than solar subsidies, but still tremendously wasteful. This, however, is not simply a waste of taxpayer dollars. These policies harm the environment by squandering resources that could be used to reduce carbon emissions, but instead are spent frivolously on projects with little environmental benefit. To make a real impact on carbon emissions, the legislature and

cities should ensure we are spending our money wisely. Reducing waste should be at the center of any environmental strategy. Given the amount of waste in our climate policy, there is a tre-

mendous opportunity to do good for the environment, and make this a cleaner and healthier world for everyone.

SCENE ON THE STREET APRIL 15 REMINDER!

Co-eds from Western Washington University can be seen on the street corner of Birchwood and Northwest Avenues in Bellingham earning some extra income as Lady Liberty-times-three (l. to r.) This trio of tax-filing reminders: Marlena Masteleo, Ann Lowe, and Rachel Martschinske. Liberty Tax Service, Jackson Hewitt, and H&R Block stand among many franchise tax preparers in the county. This Liberty office has operated about nine years at the Birchwood location.

Photo by Mike McKenzie

ADVERTISER INDEX Alcoa Intalco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Allstate Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 27 AMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Anderson Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Archer Halliday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Bank of the Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Barkley Company . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Bellingham Athletic Club . . . . . . . . . . . . . . . . . . . . 11 Bellingham Golf & Country Club . . . . . . . . . . . . . 47 Bellingham Traverse . . . . . . . . . . . . . . . . . . . . . . . . 87 Benchmark Document Solutions . . . . . . . . . . . . . 43 Best Western Lakeway Inn . . . . . . . . . . . . . . . . . . . 45 Big Fresh Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Business Person of the Year . . . . . . . . . . . . . . . . . 41 Chmelik Sitkin & Davis . . . . . . . . . . . . . . . . . . . . . . 86 Chocolate Necessities . . . . . . . . . . . . . . . . . . . . . . . 89 Corion Landscape Management . . . . . . . . . . . . . . 23 Dari Tech . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Diane Padys Photography . . . . . . . . . . . . . . . . . . . 15 Exact Scientific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 First Federal Savings . . . . . . . . . . . . . . . . . . . . . . . . 49

Fitness Gear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Gateway Centre . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Hardware Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Hotel Bellwether . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Industrial Credit Union . . . . . . . . . . . . . . . . . . . . . . 78 Innotech . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Innovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Larson Gross CPAs & Consultants . . . . . . . . . . . . 33 Laserpoint Awards . . . . . . . . . . . . . . . . . . . . . . . . . . 90 Metcalf Hodges . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Mills Electric . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Morgan Stanley Smith Barney . . . . . . . . . . . . . . . 21 Multop Financial . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 North Cascades Institute . . . . . . . . . . . . . . . . . . . . 28 Northwest Propane . . . . . . . . . . . . . . . . . . . . . . . . . 93 Oltman Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Peace Health St Joseph Medical Center . . . . . . . 64 Pott’s Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Print & Copy Factory . . . . . . . . . . . . . . . . . . . . . . . . 91 Roger Jobs Motors . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Saturna Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Scotty Brown’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Second Time Around Computers . . . . . . . . . . . . . 67 Silver Reef Casino . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Skagit State Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Sterling Savings Bank . . . . . . . . . . . . . . . . . . . . . . . 83 St Francis Health Care . . . . . . . . . . . . . . . . . . . . . . 71 St Paul’s Academy . . . . . . . . . . . . . . . . . . . . . . . . . . 63 TAG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 TD Curran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 The Unity Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Transgroup Worldwide . . . . . . . . . . . . . . . . . . . . . . 82 United Way . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 US Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Video Simple . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 VSH Certified Public Accountants . . . . . . . . . . . . 79 WBA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16, 29, 85 WECU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Whidbey Island Bank . . . . . . . . . . . . . . . . . . . . . . . . . 3 Whirlwind Services . . . . . . . . . . . . . . . . . . . . . . . . . 92 The Willows Inn . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Zervas Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 WHATCOMBUSINESSALLIANCE.COM | 97


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