abm april 2014

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You expect us to be responsible neighbors; were working hard to make sure we are.

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4 Alaska Business Monthly | April 2014 www.akbizmag.com

From the Editor. . . . . . . . . . . . . . . . . . . .7Agenda . . . . . . . . . . . . . . . . . . . . . . . . 69Right Moves . . . . . . . . . . . . . . . . . . . 156Inside Alaska Business . . . . . . . . . . . 158Alaska This Month . . . . . . . . . . . . . . 161Events Calendar . . . . . . . . . . . . . . . . 164Whats Next . . . . . . . . . . . . . . . . . . . 165Market Squares . . . . . . . . . . . . . . . . 165Alaska Trends . . . . . . . . . . . . . . . . . . 167Ad Index . . . . . . . . . . . . . . . . . . . . . . 170

ABOUT THE COVERTwo partake of an executive view from a boardroom in Anchoragethe city where most corporations doing business in Alaska have of ces. Alaska Business Monthlys annual Corporate 100 special section begins on page 110. Chris Arend Photography

Ap r i l 2 0 14

T A B L E O F C O N T E N T S

ARTICLES

DEPARTMENTS

VIEW FROM THE TOP

JR

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8 | Michael WestState Seismologist

Compiled by Tasha Anderson

ICONIC ALASKANS10 | Jim Posey

By Shehla Anjum

COMMENTARY16 | U.S. Relationships with Asia-Pacific Region: A confluence of imperatives for Alaska

By Dr. Walter Skya and Dr. Ashok K. Roy

ENTREPRENEURS

22 | Path to Prosperity: Extract, Then Add Value

A unique contest in Southeast Alaska rewards innovation

By Dustin Solberg

FINANCIAL SERVICES26 | Employer Retirement Plans

More Alaska Business Owners Selling their Companies for Retirement

By Tracy Barbour

MINING36 | Donlin Golds Big Impact

A really big dealBy Julie Stricker

40 | Enormous Impact of Alaskas Producing Mines

The big six pour money into local and state economies

By Julie Stricker

CONSTRUCTION48 | Mod Man Camps for Mining

All the amenities of homeBy Louise Freeman

TELECOM & TECHNOLOGY70 | Businesses Leverage Cloud, Wireless, and Internet

Improving efficiency, expanding capa-bilities with telecom solutions

By Tracy Barbour

HEALTH & MEDICINE30 | Oil Spill Response Organizations: Always Ready

Constant training and diligence in indus-trial accident prevention and response

By Vanessa Orr

Alaska Clean Seas offshore spillresponsevesselsstandreadyontheNorthSlope.

Photo courtesy of Alaska Clean Seas

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36

See how we helped the Solbergs build their dream:

FNBAlaska.com/naturalpantry

Where Alaskas business dreams grow. 2013, Forbes Media LLC. Used With Permission

We dream big here in Alaska. But we also face challenges just as big as our dreams. And thats why choosing the right lender is so important.

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ARTICLES

LEGAL SPEAK75 | Federal Income Tax Incentives for Alaska Businesses

By Kevin Pearson

ALASKA NATIVE CORPORATIONS76 | Investing in Energy

Developing sustainabilityBy Julie Stricker

OIL & GAS82 | The Alaska LNG Project

Another natural gas partnershipBy Mike Bradner

88 | Maintaining Integrity in an Aging Oilfield

By Paula Cottrell

92 | Platform RenaissanceBuilt mostly in the 1960s, Cook Inlet oil and gas leviathans still have some life left

By Wesley Loy

TRANSPORTATION102 | Logistics and Scheduling

Alaskas unique position on the globeBy Rindi White

ECONOMIC DEVELOPMENT166 | New Business Enterprise Institute at University of Alaska Anchorage

Seeing more effective statewide engagement with business community

By Nolan Klouda


Ap r i l 2 0 14

T A B L E O F C O N T E N T S

special section

Conventions & Corporate Travel

special section

Corporate 100

110 | 2014 Corporate 100Top Citizens of Industry Directory

134 | 2014 Corporate 100By Business Category and Total Employment Figures

CORPORATE SPOTLIGHT136 | Geneva Woods

Focusing on patient-centered careBy Rindi White

140 | Fairbanks Memorial Hospital

People FirstBy Julie Stricker

142 | Franz BakeryAlaskans kneading the dough

By Julie Stricker

PHILANTHROPY144 | Trends in Corporate Giving

Year-over-year model helps execs make a difference

By Nicole A. Bonham Colby

ECONOMY148 | Economic Impact of the Corporate 100

56 | Economic Impact of CVBsAttracting travelers to communities

By Julie Stricker

62 | Corporate Travel in AlaskaRich in private, commercial, and collab-orative options for business travelers

By Tom Anderson

66 | Conventions in AlaskaTaking the one-on-one approach

By Vanessa Orr

Correction

Due to an editing error in the March 2014 is-sue, Stacy Grummett, President of Shattuck and Grummett Insurance, and Adrienne Little,Insurance Sales Executive for Wells Fargo In-surance Services, pictured above, were incor-rectly identi ed. We apologize for the error.

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www.akbizmag.com April 2014 | Alaska Business Monthly 7

Volume 30, Number 4Published by

Alaska Business Publishing Co.Anchorage, Alaska

Vern C. McCorkle, Publisher1991~2009

EDITORIAL STAFFManaging Editor Susan HarringtonEditorial Assistant Tasha Anderson

Art Director David Geiger Art Production Linda Shogren

Photo Consultant Chris ArendPhoto Contributor Judy Patrick

BUSINESS STAFF President Jim Martin VP Sales & Mktg. Charles Bell

Senior Account Mgr. Anne CampbellAccount Mgr. Michelle MelendezAccount Mgr. Bill Morris

Survey Administrator Tasha Anderson Accountant & Melinda Schwab Circulation

501 W. Northern Lights Boulevard, Suite 100Anchorage, Alaska 99503-2577

(907) 276-4373Outside Anchorage: 1-800-770-4373

Fax: (907) 279-2900www.akbizmag.com

Editorial email: [email protected] email: [email protected]

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ALASKA BUSINESS PUBLISHING CO., INC.ALASKA BUSINESS MONTHLY (ISSN 8756-4092) is published monthly by Alaska Business Publishing Co., Inc., 501 W. Northern Lights Boulevard, Suite 100, Anchorage, Alaska 99503-2577; Telephone: (907) 276-4373; Fax: (907) 279-2900, 2014, Alaska Business Publishing Co. All rights reserved. Subscription Rates: $39.95 a year. Single issues of the Power List are $15 each. Single issues of Alaska Business Monthly are $3.95 each; $4.95 for October, and back issues are $5 each. Send subscription orders and address changes to the Circulation Department, Alaska Business Monthly, PO Box 241288, Anchorage, AK 99524. Please supply both old and new addresses and allow six weeks for change, or update online at www.akbizmag.com. Manuscripts: Send query letter to the Editor. Alaska Business Monthly is not responsible for unsolicited materials. Photocopies: Where necessary, permission is granted by the copyright owner for libraries and others registered with Copyright Clearance Center to photocopy any article herein for $1.35 per copy. Send payments to CCC, 27 Congress Street, Salem, MA 01970. Copying done for other than personal or internal reference use without the expressed permission of Alaska Business Publishing Co., Inc. is prohibited. Address requests for specifi c permission to Managing Editor, Alaska Business Publishing. Online: Alaska Business Monthly is available at www.akbizmag.com/archives, www.thefreelibrary.com/Alaska+Business+Monthly-p2643 and from omson Gale. Microfi lm: Alaska Business Monthly is available on microfi lm from University Microfi lms International, 300 North Zeeb Rd., Ann Arbor, MI 48106.

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FROMTHEEDITOR

Though its hard to know if winter is really over this time of year, at least its light out, and that tells me spring is here, and with it is our annual Corporate 100 special section (page 110) where we name one hundred companies doing business in Alaska to honor their contri-butions to Alaska. This years Top Citizens of Industry all share in, well, sharing. A sense of community, actions of volunteerism, and a myriad of contributions are found throughout the ranks of the Corporate 100, across the great state of Alaska, and in some cases, beyond the borders of the United States.

Millions of dollars in both cash and in-kind donations are made to a multitude of nonpro t and educational organizations and other com-munity and service associations by the Corporate 100. We see this in ways such as ASRCs Ty Hardt climbing Mount Everest to raise funds for Boys and Girls Clubs-Alaska to corporate and personal participation in fundraising events such as the Empty Bowl project to raise money for Beans Caf and the Childrens Lunchbox.

Many employees of the Corporate 100 companies volunteer their time (both on-the-clock and off) to help Alaska communities grow and thrive in every region. Collectively, were talking about tens of thou-sands of volunteer hours a yearteaching nancial literacy classes for Junior Achievement, pounding nails for Habitat for Humanity, CANstruction for the hungry, coaching youth sportsthousands of charitable and civic endeavors. Incorporating community-minded val-ues into business models is an integral cultural component of these Top Citizens of Industry.

Companies also pay for scholarships, help fund foundations, support the arts, celebrate Alaskan events, promote health and wellbeing, and otherwise contribute time and money with the intent of making the world a better place. In fact, Trends in Corporate Giving: Year-over-year model helps execs make a difference by Nicole A. Bonham Colby (page 144) is an excellent article about this very topic.

Speaking of excellent articles, the April issue, at 172 pages, is host to a couple dozen excellent articles. The team at Alaska Business Monthly has put together another really great magazine, enjoy!

Susan Harrington, Managing Editor

JR Anchetta

ViewfromtheTop Compiled by Tasha Anderson

Michael WestState SeismologistAlaska Earthquake Center, Director

Michael WestState SeismologistAlaska Earthquake Center, Director

Th e most ambitious seismic project yet is currently ramping up in Alaska. EarthScope is a national project that is tempo-rarily blanketing the state with seismic instrumentation on a grid spaced at fi ft y miles. We have an unprecedented opportu-nity right now to leverage this project in ways that will provide earthquake monitoring in western Alaska and on the North Slope where we do not have su cient information to under-stand why earthquakes occur.

DO YOU THINK ALASKA IS PREPARED FOR ANOTH-ER QUAKE OF THAT MAGNITUDE, WERE IT TO TAKEPLACE?We will never be fully prepared for an earthquake like 1964. But if we track seismic activity well over the course of years, we can develop a good understanding of what types of earthquakes to anticipate in diff erent areas. Th is has not been done across much of the state. As a result it is hard to make well-informed development decisions in many places. I believe this is an increasing liability in Alaska.

WHATDOYOULIKEMOSTABOUTYOURWORKWITHTHE ALASKA EARTHQUAKE CENTER, THE GEOPHYSI-CALINSTITUTE,ANDUAF?Because Alaska is home to four out of fi ve earthquakes in the United States, it is a very reward-ing place to be a seismologist. I work with a spectacular team of eighteen people who maintain the seismic network and analyze earthquakes. Last year we reported 28,000 earthquakes in the state. Of these, 101 were felt by people. We never know what is going to happen on a given day. When an earthquake or erup-tion or tsunami occurs, the adrenaline is high because we know that people are counting on us to provide the right information quickly. Th is is what drives us.

CANEARTHQUAKESBEPREDICTEDWITHANYRELIABIL-ITY? Earthquakes cannot yet be meaningfully forecast. Major advances are occurring, however, in Earthquake Early Warning. California, Oregon, and Washington are currently implementing systems that can allow several tens of seconds of advance warn-ing before strong shaking beginsenough time to shut down machinery and get out of harms way. A similar system in Japan alerted many residents to the 2011 earthquake shortly before the shaking began. Th e prevalence of earthquakes in the state, com-bined with our unique infrastructure and single points of failure, make Alaska an ideal place to pursue such a system.

WHATBROUGHTYOUTOALASKA?My wife, Krista, and I were living in New Mexico when a faculty job came up at the Geophysical institute at UAF. We jumped at the opportunity. Th e job was the catalyst, but Fairbanks was the draw. Fair-banks, and Alaska as a whole, has an incredible sense of place that encourages people to think big and live deliberately. Th is fi t what we wanted in a community. It is hard to imagine raising our three boys anywhere else now.

WHATSPARKEDYOURINTERESTINSEISMOLOGY?As a physics undergraduate at Colorado College I took an intro geol-ogy course for fun. I soon discovered that the union of these two fi elds, geophysics, provided tools for understanding the natural hazards all around us. I was drawn to earthquake seismic data because it is so rich with information. Everything we want to know is recorded in seismogramsyou just have to know how to tease it out.

HOWDIDYOUCOMETOYOURCURRENTPOSITIONASSTATESEISMOLOGIST?I spent my fi rst several years at UAF pursuing projects in Russia, Mexico, and Bolivia. I was also part of the Alaska Volcano Observatory. I found myself drawn increasingly to practical earthquake applications and the sys-tems and personnel that make it possible. Th e most compelling earthquake is always the one that just happened. In 2012 I was approached to serve as State Seismologist and director of the Alaska Earthquake Center. I feel fortunate to be involved in something that directly impacts the state and is tied so closely to the landscape around us.

THIS YEAR IS THE 50TH ANNIVERSARY OF THE 1964GREAT QUAKEHOW DID THAT EVENT SHAPE SEIS-MICRESEARCH?Th e 1964 earthquake was a watershed mo-ment in earth science. Th e earthquake helped prove the idea of plate tectonics and demonstrated to the world that Alaska was the place to study these processes. 1964 changed the course of development in Alaska. Th ough the earthquakes impact was tragic and a huge economic setback just fi ve years aft er state-hood, it prompted very forward-looking decisions as we rebuilt. Most Alaskans now understand that earthquakes are part of our landscape and that developments large and small can be built wisely if the earthquake hazards are actually understood at the outset.

TheseismogramStateSeismologistandAlaskaEarthquakeCenterDirectorMichaelWestholds(facingpage)istheactualpaperhelicorderrecordfromtheMarch27,1964,GreatAlaskaEarthquake,recordedinFairbanks.Thepaperholdstwenty-fourhoursofseismicdata.ThereweretwoseismicstationsinAlaskain1964FairbanksandSitka.ThisistheactualrecordoftheearthquakeasrecordedinAlaska.AccordingtotheAlaskaEarthquakeInformationCenterwebsite,themagnitude9.2earthquakeisthe

secondlargesteverrecordedintheworld,andthedurationofrupturewasapproximatelyfourminutes.TheearthquakewasfeltthroughoutallofAlaskaandinpartsofCanadaandWashingtonstateandtriggered

landslidesandavalanches.AtsunamifannedoutfromtheGulfofAlaskatoHawaii,Oregon,andCalifornia.Theareaofsignicantdamage,accordingtothewebsite,was130,000kilometersandthequakewasfeltoveranarea1.3millionsquarekilometers.Thedamagetotaled$300millionto$400millionin1964dollars,morethan$2.3billionintodaysdollars.EarthquakeshaveneverbeenfarfromthemindsofAlaskanssince,notonlybecauseoftheculturalimpact

ofthedevastationandloss,butbecauseofAlaskasincredibleamountofseismicactivity.Thisseismicactivitymakesitanideallocationforearthquakeresearch,hencetheGeophysicalInstituteattheUniversityofAlaskaFairbanks.Atthe50thanniversaryoftheGreatAlaskaEarthquake,WestprovidesinsighttoAlaskasearthquake

historyandseismicfuture,andsharesalittlebitabouthimself.



ICONIC ALASKANS

Jim Posey was ten and living in Beau-mont, Texas, when the Alaska State-hood Act passed in 1958, stripping Texas of its bragging right as the nations largest state. Like all Texans I had an atti-tude about being number one. It bothered me that Texas was no longer the mighty, bold, and grand state of our state song.Curious about the place that had

usurped his home states top spot, Posey started reading about it. In a National Geographic article

about life in Alaska, I read about kids going to school in the dark. I thought that it didnt sound so bad. I also knew the president was not going to go back on his word to let Alaska in, and I de-cided if you cant beat them, join them.Posey made it to Alaska in 1979 to work

for Arco and to begin his career here. All fi ve of his children were born here. Now sixty-seven, Posey retired at the

end of 2013 as general manager of An-chorages city-owned Municipal Light & Power (ML&P). Poseys working life began at an early

age. I started working with my dad at his cleaning job at a savings and loan in Beaumont before I was eleven. I got my Social Security card in 1957, when one

of the banks vice presidents decided that I should get paid for my work.He continued that through high school

and his fi rst year at Lamar University in Beaumont, which he left to join the US Air Force. He served as a combat crewmem-ber at the Titan II missile underground complex in Wichita, Kansas, and began taking classes at Wichita State University. Aft er leaving the Air Force he fi nished his undergraduate degree, got his Juris Doc-tor from the law school at the University of Kansas in Lawrence, and got a job in Arcos land department in Dallas.Posey worked on the Prudhoe Bay oil

fi eld unit agreement, but what he really wanted was to get to Alaska, where the economy was booming. I knew that the real opportunities were in Alaska.

GettingtoAlaskaA year later, Arco moved Posey to Den-ver. He stayed another year with the company. When it appeared that Alaska was not in the o ng, he quit Arco and joined Worldwide Energy Corporation,

a small company dealing in oil and gas in Canada and the United States, as well as gold claims in Alaska.Th en in 1979 Arco began developing

its Kuparuk River fi eld. Th ey came to me and asked if I still wanted to go to Alaska and fl ew me and my wife Sandi up for a look. I liked the off er and we found a house. Within seven days we were back in Alaska.Th e highlights of Poseys time with

Arco include helping get the Kuparuk oil fi eld online, developing a good work-ing relationship with the North Slope Borough, and an accomplishment he is particularly proud ofensuring that the village of Nuiqsut, near the oil fi elds, got natural gas to replace expensive fuel oil. Oil was fl owing from the Kuparuk

fi eld by December 31, 1981. It was the fi rst oil to fl ow in two years, Posey re-calls. We unitized the fi eld, got all the state and federal permits, and built a pipeline in a remarkably short time.His work at Arco in Colorado gave

Posey experience in working with lo-

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Iconic Alaskan Jim Posey infrontoftheKincaidChaletatKincaidParkinWestAnchorage.PoseyisproudofthejobtheydidtorebuildwhilehewasrunningthemunisCulturalandRecreationalServicesDepartment,whichhereferstoastheDepartmentofFUN.

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P A I D A D V E R T I S E M E N T

As Anchorages first and only valet airport parking com-pany, Alaska Park LLC makes parking at the Ted Stevens Anchor-age International Airport an experi-ence marked by outstanding service to customers at every level.

The exceptional service begins the moment customers drive their vehicle in the covered drop-off area. Friendly staff members greet them with a smile, transfer their bags to an on-demand shuttle bus and transport them directly to the airportwhich is less than a mile away. When cus-tomers return to retrieve their car, theyll find it waiting, snow-free, heated up (or cooled down in sum-mer) and with a bottle of water on the seat. We want to make sure things go smoothly, efficiently and safely, said Owners Representative Roger Mc-Cracken.

SPEEDY, HIGH-LEVEL SERVICE IS CRUCIAL

Providing prompt, high-level ser-vice is critical to Alaska Parks ap-proach to doing business. Customers can leave and pick up their cars any time, as the facility is open 24 hours a day, seven days a week and 365 days a year. Their vehicles are carefully parked in individual slots inside a secure parking lot with 24-hour at-

tendants and security cameras. So customers can leave their vehicle with Alaska Park and know that its in good hands. Your car is safe with us, McCracken said. We take responsi-bility for your car, so you can travel with the reassurance of knowing your vehicle will be handled with the ut-most care.

Alaska Park, a wholly-owned sub-sidiary of Tanadgusix Corporation (TDX), gives customers the added advantage of avoiding the airport terminal traffic and parking hassles. It also allows Alaska Airlines Mile-age Plan members to earn free plan miles for each day paid for parking at the regular rate. Customers can take advantage of Alaska Parks con-venient online check-in and reserva-tion system to expedite their parking arrangements. In addition, corporate rates are available for high-volume accounts. The companys services are ideal for frequent fliers and busi-ness travelers, particularly business womenwho appreciate being able to get dropped off in a secure, well-lit area just several feet away from their heated vehicle.

FACILITYS DISTINCTIVE DESIGN CELEBRATES AVIATION

In addition to offering premium service, Alaska Park also distinguishes

itself by the unique design of its build-ing. The structure looks like a huge air-plane, with the garage replicating a wing of a DC9 and the office building serving as the fuselage. The facility is currently operating on the north side of the ex-pansive lot that it occupies off Spenard Road, and it will be fully operational by mid-summer, McCracken said.

With 30 to 50 employees, Alaska Park will be enhancing its service of-Park will be enhancing its service of-Park will be enhancing its service offerings in the near future. Ultimately, the company will offer a 3,000-square-foot meeting room, a 2,000-square-foot restaurant and a computer sta-tion where users can check into their flight and print out boarding passes on any flight (not just Alaska Airlines flights).

With Alaska Parks high level of service, valet airport parking is an amenity for travelersnot an after-thought. We make sure you look forward to your next visit to Alaska Park, McCracken said.

Dirk Whitehead, Operations Manager 5000 Spenard RoadAnchorage, Alaska 99503Phone: 907-249-4405 Fax: 907-248-3796 alaskapark.com

Alaska Park LLCBusinessPROFILE

Valet Airport Valet Airport Valet Airport Valet Airport Valet Airport Valet Airport Shuttle and Shuttle and Shuttle and Parking Parking Parking ServiceServiceService

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Andy Brinkman General ManagerAlaska Park Valet

Airport Parking


cal governments, which helped when he negotiated permit terms with North Slope Borough. In Colorado we had to go through the

county to get all of our above-ground permits. We knew it was important to respect and involve the local govern-ment in our planning. It was easy for us to accept that the North Slope Borough wanted to play a part. Posey travelled often for meetings in

Barrow and Nuiqsut and built strong rela-tionships with local people. I often spent part of my holidays going to Nuiqust and delivering gifts of food and fruits as part of our holiday cheer, he says. The people of Nuiqsut showed their

appreciation by giving Posey gifts of their precious muktuk at the holidays. Posey said he always brought it homeand enjoyed it. On the North Slope he also met Har-

mon Bud Helmericks, a bush pilot, author, and adventurer, who had home-steaded on the Colville River delta since the early 1950s. I was visiting Bud one day and he told me that he hated looking to the south anymore because it pained him to see all the gas being flared at Arcos new Alpine field.Posey thought about Helmericks

words. He knew that Nuiqsut had long wanted gas from the nearby fields. He also knew that the Alpine field would bring oil and gas development closer to it.When I worked at Worldwide En-

ergy I knew that in Canada, if we had a gas well operating on a farm, the farmer got enough gas to operate his irrigation system. I wanted to extend the same idea to Nuiqsut, Posey says. The last thing I did before I retired

from Arco in 1995 was to seal the deal to get gas to Nuiqsut. That village will have gas for the next thirty to forty years, or as long as the field operates.

PrivateWorktoPublicServiceIn 1995, during his sixteenth year in Alaska, Arco asked Posey to move to Cal-ifornia. Sandy and I had become used to Alaska and we had no desire to move. I was forty-nine and decided to pack my parachute. I left Arco on January 1, 1996. Posey knew he wouldnt be idle for

long. We had just elected a new governor [Tony Knowles] and I knew hed want me to do something in his administration. That hunch was right. About four

months later Knowles appointed Posey to the Alaska Public Utilities Commis-sion (APUC), now the Regulatory Com-mission of Alaska. I came on board at the time when lo-

cal utilities were being privatized. And the telecommunications industry, in particular, was in tremendous growth and turmoil.I managed the docket for the sale of

the Fairbanks utilities, which included water and sewer and power and every-thing, and also the docket for the sale of Anchorage Telephone Utility [ATU] to Alaska Communications Systems [ACS], he says.Mark Foster, Anchorage School Dis-

trict CFO and a former APUC commis-sioner, is familiar with Poseys work at APUC. I watched Jim work. He listened very carefully and thoughtfully to the arguments and evidence and came up with a fair disposition.What impressed Foster most was

Poseys evenhanded and thorough evaluation of the different arguments presented to the commission, especially during the contentious privatization of telecommunications. Jim had to deal with some challeng-

ing balancing acts in telecommunica-tions, such as who was responsible for what cost, which arose with AT&T, GCI, and ACS. The arguments got heated, and the cases became complicated, but he worked his way through them. He was able to discern the solid evidence from the lighter evidence that was of-

fered up, Foster says.Posey says he was satisfied with the

privatization effort overall, but feels that the Municipality of Anchorage waited too long to sell ATU to ACS and ended up with less money. But in the end it worked out and the city got a good enough deal, he says.After ending his APUC term in 1999,

Posey took a hiatus from public service and turned his attention to another press-ing matterhis childrens education. We homeschooled all our kids because when my daughter was at elementary school in Bayshore Elementary we didnt like the lack of decorum and family val-ues or the presence of drugs, he says.Dissatisfied with public schools,

the Poseys became involved with the formation and operation of the Fam-ily Partnership Home School, a home school support charter school within the Anchorage School District. But in the late 1990s the schools

enrollment, which had reached nearly eight hundred, plunged to about half when the school district forbade chil-dren from religious schools from par-ticipating in its programs.I was on the schools board and took

a year off to help rebuild it. It was our school and our kids were still in it. The effort succeeded; the school is still in operation. Having accomplished that, Posey be-

gan thirteen years at the Municipality of Anchorage in two jobs that he calls the most fun of his career.

Jim Posey inside the KincaidChalet.

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Aft er George Wuerch became mayor in 2000, he asked Posey to run ML&P, but Poseys term at APUC placed a re-striction on working for a utility. Wuerch then appointed me to run

the Department of FUN, which is what I called the Cultural and Recreational Ser-vices Department because it had all the fun things attached to itparks, librar-ies, swimming pools, the convention center, and the museum, Posey says.

EnergizingAnchorageWhen the APUC restriction ended in 2003, Posey became ML&Ps general manager. His tenure at ML&P is no-table for signifi cant achievementsenergy conservation, rebuilding, and modernizing the utility. A utilitys major assets generally have

a twenty-fi ve- to thirty-year life and need replacing aft er that. Soon aft er taking over, Posey set to modernizing ML&P. Dan Helmick, former regulatory af-

fairs manager at ML&P, complimented Poseys approach. For Jim, the modern-izing was both about replacing the old equipment and also making sure that his customers wouldnt have to pay higher costs than absolutely necessary because of those changes, Helmick says. An important measure of Poseys

success is that ML&P provided its cus-tomers with continuous service 99.99 percent of the time during his ten years. Posey, too, is pleased with the chang-

es at the utility. We accomplished our goals. We made all our substations mod-ern and cleaner and removed nearly all the PCBs [polychlorinated biphenyls] from our systems. Our new generation equipment is 90 percent cleaner in air emissions and 30 to 40 percent more ef-fi cient in fuel usage. Th e fuel e ciency translates into use of less natural gas to generate a kilowatt of electricity. Another accomplishment for Posey

was the successful management of ML&Ps ownership share in the Beluga gas fi eld. In the mid-1990s Shell was pulling out of Alaska and selling its as-sets, including its one-third share of the Beluga fi eld. Rick Mystrom, then An-chorages mayor, appointed a panel that included Posey to explore the purchase of Shells interest in Beluga.Th e panel voted for the purchase,

making ML&P one of the fi rst utilities in the nation to own its own gas. It was

the best investment the city has ever made. Th e fi eld has produced money and benefi ts and paid about $128 mil-lion in fees, dividends, and taxes to the city during his tenure, Posey says.Energy conservation was another

area of interest. Th e utility promoted it and Posey complimented entities that adopted energy conservation either in the design of new structures or in ret-rofi t of existing ones. Th e Alaska Center for the Perform-

ing Arts is a prime example, Posey says. Th e center looked at its equipment, lighting, and whatever used electricity, and found ways to reduce its electricity costs by 20 percent to 25 percent. Although Posey advocates conserva-

tion, he is not enamored with wind pow-er and opposed ML&Ps buying power from Cook Inlet Region Inc.s [CIRI] wind farm on Fire Island. Th e power is too expensive and not price competitive, he says. ML&Ps customers are in some of the citys lower-income neighbor-hoods and many of them cant aff ord it.Customers want wind power, Posey

says, but they are not willing to buy it at the price at which it is available. Th e cost diff erential is 100 percent. ML&P pro-duces power for $50 to $60 per megawatt and it would cost $110 per megawatt to buy it from CIRI, according to the price it charges Chugach Electric, he says.

HumanitarianWaysAn organizations success lies not only in good management but also in its employees, and Posey excelled at keep-ing his employees satisfi ed, says Elvi Gray-Jackson, an Anchorage Assembly member. Gray-Jackson worked for Posey for a few years at ML&P and admires his leadership qualities. Most people at the top dont

make employees feel that they really matter. Employees who feel they are not important dont want to do their jobs. But Jim made people want to do their job and do it well, Gray-Jackson says.

Its di cult for people with demand-ing jobs to fi nd time for community service, but Posey managed to fi nd the balance between the two. For about thirty of my thirty-four years here, I have been involved with nonprofi ts that are part of the safety net for the city, he says.Russell Pounds, owner of Pacifi c Rim

Media, worked with Posey on diff erent occasions. Jim is passionate about giv-ing back to the community.Pounds recalls the help Posey pro-

vided to last years Kids Day. Th at day is organized by the local nonprofi t Anchorages Promise, which provides a school club for children. For Kids Day last year, which drew about twenty thousand people, the students came up with an idea of handing out small cards with positive messages to help reduce bullying in schools.Jim decided that ML&P should sup-

port that programRandom Texts of Kindnessand we produced a dozen diff erent card designs and handed them out at the event. Posey, retired as of January 1 this

year, plans to remain active both with consulting jobs and with his communi-ty service. He looks forward to polish-ing his cross-country skiing skills and says both he and Sandi like it here too much to think about leaving. Alaska, he says, has been awe-

some for him in every wayin its size, its beauty, and its op-portunities. I wouldnt have had the chance to work on such interesting and impor-tant jobs elsewhere.

Shehla Anjum is an Anchorage-based writer.

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2013 BDO USA, LLP. All rights reserved.

Jim Hasle, Assurance Office Managing Partner907.770.2275 [email protected]

Accountants and Consultants www.bdo.com

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BDO3601 C Street, Suite 600, Anchorage, AK 99503907.278.8878


COMMENTARY

A confl uence of imperatives for AlaskaA confl uence of imperatives for AlaskaA confl uence of imperatives for Alaska

A Ground-Based Interceptor about tobeemplacedinasilo,FortGreely,Alaska.

Luck is where preparation meets opportunity.

Randy Pausch

Not all those who wander are lost.J. R. Tolkien

The threads of connections be-tween America and Asia cross and re-cross on the loom of life at various levels. Like immigrants from Europe during the nineteenth century, immigration from Asia (especially China) transformed America in mul-

tiple ways. At that time, no one could have previsioned Americas relation-ship with Asia as clearly as Cassandra previsioned the fall of Troy. Most recently, nearly seventy years af-

ter the end of the Second World War, re-lations between Japan (the worlds third largest economy) and China (the worlds second largest economy), colored by old wounds, have seen deterioration over disputed islands in the East China Sea. Th is has put the United States (the worlds largest economy), because of its military alliances with Japan and South Korea, in

an unwelcome situation. Last November, Chinas unilateral declaration of an Air Defense Identifi cation Zone over a part of the East China Sea that includes the disputed islands of Senkaku and Diaoyu drew sharp US criticism and warning. Th e Philippines is another American treaty ally. Americas Pacifi c destiny also includes an ambitious trade agreement (Trans-Pacifi c Partnership) involving the United States, Japan, and ten other countries (but not China). In 2012-13, of the 819,644 interna-

tional students who came to US univer-

DOD photo

ByDr.WalterSkyaandDr.AshokK.Roy

e views and opinions expressed herein are those of the authors alone and not the University System of Alaska or the University of Alaska Fairbanks.

US Relationships with Asia-Pacifi c Region: US Relationships with Asia-Pacifi c Region: US Relationships with Asia-Pacifi c Region: US Relationships with Asia-Pacifi c Region: US Relationships with Asia-Pacifi c Region: US Relationships with Asia-Pacifi c Region: US Relationships with Asia-Pacifi c Region: US Relationships with Asia-Pacifi c Region: US Relationships with Asia-Pacifi c Region:


sities, the majority (64 percent) came from Asia. The top three countries sending students to the United States are China (235,597); India (96,754); and South Korea (70,627). How true is the increasing inter-connectedness of the United States with Asia!

ForeignPolicyPresident Obamas announcement in his first term of a major strategic re-orientation in US foreign policythe so-called pivot or rebalancing to Asiawas a clear signal to Americas Asian allies that the United States is still an Asia-Pacific power and that it would fulfill its commitments to main-taining peace and stability in the Asia Pacific region. This appears to be a wise decision. Particularly worrisome are the tensions between the Peoples Republic of China and its Asian neigh-bors. For instance, China and Japan are locked in a bitter and emotional terri-torial dispute over the Diaoyu andSen-kaku Islands, and China has aggrieved several Southeast Asian nations, par-ticularly the Philippines, over its claims to islands far beyond Chinas borders in the South China Sea. In the so-called 2009-2010 year of assertiveness, Chi-na picked fights with and irritated rela-tions with Australia, ASEAN countries, India, Japan, the Philippines, South Ko-rea, and Vietnam. This new foreign policy re-orientation

is making Alaskas strategic presence on the Pacific Rim increasingly important. Several reasons could be cited. First, Alaskas role in Americas military force posture in Asia is being expanded. Al-though Alaska is covered under the US Northern Command, its forces based there are part of the US Pacific Com-mand. A clear example of this expan-sion was Defense Secretary Hagels announcement that the United States will be deploying fourteen new ground-based missile interceptors at Fort Greely by 2017. Shocked by Kim Jong Uns bel-licose threats to void the armistice that ended the Korean War in 1953 and to launch a nuclear attack on the United States, all this within the context of North Koreas rapid development of its nuclear weapons program and its inter-continental ballistic missiles to deliver them, prompted the United States to spend $1 billion to expand the nations


ground-based missile interceptor sys-tem to counter this nuclear threat from the unpredictable regime. In addition, the Joint Pacifi c Alaska

Range Complex, through moderniza-tion and expansion, will become one of the few places in the world with ad-equate range space to provide training for large-scale, full-spectrum joint and combined operations that also accom-modate increasing the means of enhanc-ing the militarys most advanced capa-bilities. It is a premier training locality like few others in the world, making it a critical national and allied training as-set. In 2011, for instance, more than six thousand service members from across all armed forces participated in exercise Northern Edge, receiving joint large scale training for quick response to cri-ses throughout the Asia-Pacifi c region. Whats more, the Joint Pacifi c Alaska Range Complex, being strategically located within the national territorial boundaries of the United States, pro-vides the United States with unfettered capability to train and test air, land, and sea forces for possible military opera-tions in the Arctic. Second, the worldwide interest in

Alaskas natural resources is rising. Min-ing metals is one of them. But mining nowadays is not like during the Klondike Gold Rush in the 1890s when prospectors searched for gold in creeks with pans, picks, and shovels. Today gold is mined deep in the ground with state-of-the-art high-tech equipment by Asian corpora-tions such as Sumitomo Metal Mining Pogo LLC, and mining operations are di-rected by managers fl own-in from Asia. Th e mining industry is said to have spent $275 million on exploration in Alaska during 2012. Driving this exploration is the demand for metals by Asian coun-tries such as China, Japan, and India. Ja-pan imports more than $125 million in minerals from Alaska annually. In 2009, Sumitomo Metal Mining Co. and Sumi-tomo Corporation purchased full own-ership of the Pogo gold mine. Japanese corporations have continued making signifi cant investments in other mining projects across the state and so have the Chinese. In 2013, the United States lured more than $14 billion of investment from China. Also, in 2013, Chinas Shuanghui purchased US pork giant Smithfi eld Food for $4.7 billion.

RareEarthElementsHowever, it is not gold mining that is now drawing the most rapt attention to-ward Alaskas natural mineral resourc-es. Rather, it is the strategic rare earth elements, also known as specialty or technology metals, which have become essential for production of the modern technological advances arising out of high-tech industries. Political instability and growing national rivalries in East Asia are now behind much of the na-scent push to mine and locally process Alaskas rare earth elements. In 2010, for example, the Peoples Republic of China fl exed its growing industrial power by blocking the export to Japan of crucial minerals used in high-tech manufactur-ing of hybrid cars, wind turbines, and guided missiles. Industry o cials re-ported that Chinas customs agency had notifi ed Chinese corporations that they were not allowed to ship to Japan any rare earth oxides, rare earth salts, or pure rare earth metals. Th is move, of course, sent Japan scrambling to end its reli-ance on China for rare earth elements, seeking alternative suppliers worldwide. But the ban on rare earth elements ex-ports to Japan also directly aff ected the United States because American compa-nies now rely mostly on Japan for mag-nets and other components using those same rare earth elements. Th e crux of the problem is that China has bought up a near world monopoly on the produc-tion and refi ning of rare earth elements mined for use in high-tech equipment.

One of these rare earth minerals is dysprosium, which goes in the produc-tion of many critical technologies, in-cluding in the manufacturing of smart bombs and drones. China currently dominates the global market of dyspro-sium, but the discovery of dysprosium on Alaskas Prince of Wales Island could provide the opportunity to break the Chinese monopoly. In December 2011, the United States Department of Energy published a report saying dysprosium is of strategic national importance and an element for national security. Th erefore, the United States Defense Department is desperately seeking to fi nd production of quality domestic supply of dysprosium, and with it begin to revive the American rare earths industry. Th e US military de-pends on rare earths for guided missile systems, satellites, and unmanned aerial vehicles, and NASA uses powerful rare earth metal magnets in its spacecraft . Th e key to Chinas monopoly isnt just

about controlling an abundance of rare-earth deposits, but also its expertise in processing ore into oxides and pure metal. Ucore Rare Metals, Inc., which fo-cuses on production of heavy rare earth elements, is the company that owns the Bokan Mountain-Dotson Ridge proper-ty in Alaska. According to Ucores web-site, the Bokan property is particularly enriched with heavy rare earth elements, including the critical elements dysprosi-um, terbium, and yttrium. It also states that Bokan is the highest grade heavy rare earth deposit in the United States.

A Military Police Of cer scansforthreatswhilepatrollingtheMissileDefenseComplex,FortGreely,Alaska.A Military Police Of cer scansforthreatswhilepatrollingtheMissileDefense

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Accordingly, the Department of Defense funded Ucores ore extraction research with a contract in October 2012.

StrategicAlaskaTh ird, Alaskas strategic location as Americas only arctic state enables it to as-sume a unique role in Americas national security posture and Americas desire to maintain a global order it has committed to since the end of the Second World War. As an arctic nation, the United States is a permanent member of the Arctic Coun-cil, the leading international organiza-tion for cooperation in the region, estab-lished by the eight Arctic statesUnited States, Russia, Canada, Finland, Iceland, Norway, Sweden, Denmarkin 1996, with wide participation from circumpo-lar indigenous peoples such as the Inuit. Headquartered in Troms, the largest city in Northern Norway, the organiza-tion sponsors major scientifi c research, focusing on environmental initiatives, sustainability, and development issues. Th e chairmanship of the council rotates among member states every two years, and it is the United States turn to assume this role in 2015.Non-Arctic states have expressed in-

creased interest in the Arctic region. In 2013, twelve non-Arctic counties were granted observer status in the Arctic Council, fi ve of which are Asian: the Peoples Republic of China, Japan, the Republic of Korea, Singapore, and In-dia. Th is is the fi rst time Asian countries joined this once exclusive club, which is just one more indication of a global power shift toward Asia. Naturally, some permanent members have questioned certain new members motivations for joining the Arctic Council, wondering if this is just an attempt to expand their national infl uence into the governing structure of this critical territory.It was only in May 2013 that the Unit-

ed States issued its National Strategy for the Arctic Region report. But with the Arctic Council chairmanship belonging next to the United States, Alaska must be consulted throughout in order to work out a comprehensive circumpolar north policy, since it is the only US Arctic state. Th e United States has been slow in the past recognizing the threat that Chinas global monopoly over the mining and production of rare earth elements poses to its national security. Now we must not

be slow to recognize security interests in the Arctic as we sit in the Council. It is noteworthy that India is one of the

non-Arctic Asian states. While the Japa-nese and the Chinese have extensive trade relationships with Alaska, it might seem odd that India is involved. Interestingly, the Obama administrations pivot to Asia includes an area that stretches in an arc all the way from the Indian Oceaninclud-ing Indiato Northeast Asia. President Obama and Indian Prime Minister Man-mohan Singh, in a bilateral summit held in late 2013, refl ected on the transforma-tion of United States-India relations dur-ing the past decade. Today United States-Indian relations are stronger than at any time since the birth of the Republic of India in 1947. India and the United States have much in common. Both nations are multi-ethnic and multi-racial secular de-mocracies and have a common language (English, along with Hindi, is an o cial language in India). Anchored in common democratic values, language, and strong people-to-people ties, it is not surprising that the United States and India have de-veloped a comprehensive global strategic partnership. Indias intellectual power has a presence in Alaskas higher educa-tion system, too. For instance, compared to peers, there is an enviable presence of Indian faculty on the campus on the Uni-versity of Alaska Fairbanks. In the Col-lege of Engineering & Mines, China-born faculty has a presence in the Department of Mechanical Engineering, while India-born faculty has a big presence in the De-partment of Petroleum Engineering and the Department of Mining & Geological Engineering. Th ere is even an o cial sis-ter-city connection between Fairbanks in Alaska and Pune in India.In short, along with the North Amer-

ica region, Asia has become the most economically dynamic region in the globe and remains vital to US national security as well as to Alaskas prosperity. In an in-creasingly global world, it is imperative that our students, as future leaders in the state and nation, be cognizant of Asias ex-perience in world history and its relevance in shaping the present. In this vein, the newly redirected Asian Studies Program on the campus of the University of Alaska Fairbanks is designed to provide Alaskans with a solid background in Asia-Pacifi c aff airs, an awareness of contemporary is-sues aff ecting the region, and a robust an-

alytical tool kit capable of helping forecast future developments in Asia. Today, south Texas and North Dakota

have become the largest sources of tight oil (i.e., shale oil gas). When oil prices rise, production can be ramped up quickly by drilling more holes, and when oil prices fall, the producers can simply stop drill-ing. Th is fl exibility is a huge advantage. Th is has huge long-term implications for Alaska which depends overwhelmingly for its revenues on North Slope oil pro-duction. History shows that an economy may be rich in resources but if it is not modern, adjustments become hard when external shocks hit (Argentina is a case in point). In the haze of a new Asian dawn over the global stage, a confl uence of ur-gent imperatives become more distinct and should give all Alaskans more pause to consider the consequences of our role as an actor.

Dr. Walter Skya is Associate Professor of History and Director of the Asian Studies Program at the University of Alaska

Fairbanks. He has worked in the Tokyo Head Of ce of Mitsubishi Corporation. He earned his PhD at the University of Chicago. He is the author of the book Japans Holy War: The Ideology of Radical Shinto

_ Ultranationalism, published

by Duke University Press (2009).

Dr. Ashok K. Roy is Vice President for Finance & Administration/CFO of the University System of Alaska and Associate Professor of

Business Administration at the University of Alaska Fairbanks. He holds six university degrees and ve professional certi cations. Dr. Roy has also authored over seventy-six publications in trade and academic journals including chapters in two encyclopedias.

Dr. Walter Skya is Associate Professor of History and Director of the Asian Studies Program at the University of Alaska

Dr. Ashok K. Roy is Vice President for Finance & Administration/CFO of the University System of Alaska and Associate Professor of

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ENTREPRENEURS

When Steve Helgeson sees a big Sitka spruce, he sees guitars. Lots of them. Or more pre-cisely, he sees perfect soundboardsthe blonde, straight-grained panels from which most of the worlds guitars are built. Helgeson is a boat builder who loves

to play guitar. Some years ago, he began experimenting and built his fi rst guitar. What he discovered is that making the curved lines of a guitar isnt all that dif-ferent from building boats, so he built a few more.Th e idea of heating wood to soft en it

and bend it around a frame is the same thing you would do with a boat, he says.Th e coastal town of Wrangell, Alaska,

where Helgeson has built and repaired fi shing boats for years, is a small grid of streets and houses carved from a lush rainforest where trees grow big. Sawmills have had a big part the towns history.

It wasnt lost on me, living in Wrangell, that were here right in the heart of the Tongass forest where some of the fi nest soundboard material in the world grows, he says. In the timber business, a tree des-

tined to become soundboards for cellos, pianos, or guitars earns a distinct title: musicwood.As the years ensued, Helgeson went

about running his wood shop and rais-ing a family, but he continued to watch as musicwood logs were cut in the forest and shipped off to distant factories in Japan and the Lower 48. And it led him to wonder.

The$110,000GuitarKevin Skeek grew up in the village of Hoo-nah, a days ferry ride north of Wrangell. When he was in his twenties and work-ing as an intern at Sealaska Corporation, the major private forestland owner in Southeast Alaska, he joined his superiors

on what for him was a rather plum as-signment to meet guitar company execs at an event in southern California. I was playing guitar by then. I had

an absolute passion for guitar, he says. When I was there, I was holding a gui-tar that was worth $110,000.It was the most beautiful instrument

Skeek had ever seenand its spruce soundboard had come from a Sealaska forest. It was built by the famed C.F. Martin and Co. of Pennsylvania.And they were explaining to us how

they had used our Sitka spruce for their tops. And that just blew me away. It was then that I realized I wanted to get into the guitar building business.Right then and there I said, Why

arent we doing this?

AContestforEntrepreneursBusiness ideas are not uncommon, but the good ones are. And both Helgeson

A unique contest in Southeast Alaska rewards innovation

ByDustinSolberg

Path to Prosperity: Extract, Then Add ValuePath to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Path to Prosperity: Extract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add ValueExtract, Then Add Value

The rst winners of PathtoProsperityscontestforSoutheastentrepreneurs,fromleft,SteveHelgeson,KevinSkeek,SueTyler,andWesTyler.

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and Skeek knew that turning an idea into something more, with a storefront, a URL, and a cash fl ow, is an uphill climb. Th e idea of a guitar building busi-

ness was really a dream, Helgeson says. But you know how dreams are. If youre a busy person like most people are, you have a place somewhere behind your everyday responsibilities and obli-gations where you stick dreams and its kind of where they stay.Skeeks aha moment at the Califor-

nia guitar expo hadnt gone anywhere either. Despite his zeal, his idea had lan-guished largely forgotten for seven years. Th en, in 2013, came a new entre-

preneurial contest promising prizes of $40,000 for two winning start-up businesses. Th e contest was looking for entries from people like Helgeson and Skeek. Called Path to Prosperity, it was open to aspiring entrepreneurs who live in Southeast Alaska and who are committed to a triple bottom line ap-proach to business. In short, its a busi-ness model in which profi ts matter, but paying attention to measures of how a business aff ects people and the planet are equally valuable. Haa Aan, a Sealaska subsidiary, and

Th e Nature Conservancy, a conserva-tion group with a strong Southeast Alaska presence, sponsor the Path to Prosperity contest. Helgeson was in. He draft ed a busi-

ness plan, working early in the morn-

Far Left: SteveHelgesoncraftingaguitar.Left: KevinSkeekplayingaguitar.

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ing between the hours of four to seven before he went off to work.Upon learning of the contest, Skeek

recalls thinking, Th is is my chance.He spent hours at his laptop at his

home in Hoonah, fi nally putting his

long-held dream down on paper in ex-quisite detail for the fi rst time. But the fi nal detailwhat to name his guitar venture?remained elusive. Because I am Alaska Native I wanted

something that was culturally signifi -

cant but yet a broad enough statement, Skeek says. Th en, one day, in a moment of near

exasperation, he leaned back in his chair, letting his eyes wander from his computer screen to the window and the forest outside. At that moment, a raven fl ew into view and perched in a tree.Oh my gosh, Skeek recalls saying at

the time. Th ats it.With that, an identity was born: I called

it Raven Guitars, he says. Its a very smart bird, and its so marketable, too. Anything from acoustic guitar for country players all the way to, lets say, your most heavy metal hardcore rocker that has makeup on and everything. It suits them, too.

TwoGuitarBuildersMeetTh e two guitar builders were among the contests fi ft y-nine entrants. When the twelve fi nalists were announced in the fall of 2013, both Skeek and Helgeson made the cut. Th ey were both surprised to see that

their own guitar concept wasnt the only one on the list. Ive got to say, at fi rst I was kind of

hesitant. I really was, Skeek says. Helgeson says, My fi rst reaction was

to be a little bit disappointed and quite frankly a little bit annoyed. Th en something happened when they

fi nally met at the Path to Prosperity en-trepreneur boot camp, held at a Juneau hotel conference center.Aft er we talked, we realized we had

the same vision, Skeek says. Instead of being competitors, we decided: Lets try to win this thing. Its quite a fairy tale, if you ask me.And it was also clear that we were

both passionate about natural resource utilization and sustainability, Helgeson says. And also community and social sustainability. For us those two elements are just as important as our interest in guitar building. Were both from small rural communities that have seen real economic diffi culty. And so it matters to us that our families can have good jobs.So it was decided. Th ey would build

guitars in Helgesons Wrangell work-shop overlooking the blue waters of Zimovia Strait, and they would call themselves Raven Guitars. Th e merger worked. At the Juneau Innovation Sum-mit in January, they were introduced as winners of a $40,000 prize.

ThePath to ProsperityCompeti-tion aims to support businessideas in Southeast Alaska thatwillincreaselocalemployment,haveapositivesocialandeconomicimpactontheir communities, and promote con-servation.In 2013, the programs rst year, its

callforentriesdrewfty-nineapplicants.Ofthose,twelvewerenamedsemi-nal-ists andparticipated ina three-dayen-trepreneurbootcampinJuneaufeatur-ingarangeofbusinessexperts.

2014PathtoProsperityCompetition

CallforEntriesMarchInformationalwebinarApril8DeadlineforentriesMay30

Entrepreneurbootcampforsemi-nalistsAugust31-September3Announcementoftwo$40,000winnersJanuary29,2015More details at p2pweb.org

The contest awards two prizes of$40,000inbusinessstart-upservicesto the eventual winners, but contestorganizers stress that everyone whoparticipatesreceivessomebenet.Forthe twelve semi-nalists, the entre-preneurbootcampoffersanintensivesessioninwritingbusinessplans.Visiting instructors at the rst boot

camp included entrepreneurs who of-fered a rst-person perspective onlaunching a new business. Representa-tives from University of Alaska South-east;WellsFargoBank;BainbridgeGrad-uate Institute; Longenbaugh Law Firm;Simpson,Tillinghast,SorensonandShee-han;AlaskaSmallBusinessDevelopmentCenter;CentralCouncilTlingitandHaidaIndianTribesofAlaska;andMerrillLynchInvestmentsalsoparticipated.

Otherbootcamptopicsinclude: Financial advising and cash owmanagement

Marketing Humanresources Titleandescrow Sustainabilityinbusiness Commerciallending

Path to Prosperity is a program ofHaaAanandTheNatureConservancy.HaaAanLLCisawhollyownedsubsid-iaryofSealaskaCorporationdedicatedtoimprovingtheeconomicconditionsinSoutheastAlaskacommunitiesthroughinnovation,sustainability,andcollabora-tion.Itaimstoexpandtheregionalecon-omyandfosternewandsustainablein-dustrieswithinruralcommunities.The Nature Conservancy is a con-

servation organization with a strongpresence in Southeast Alaska. Path toProsperityisonecreativewayinwhichitpursuesitsmissionofconservingthelands and waters on which all life de-pends. It accomplishes this mission byprotectingandrestoringnature;provid-ingbetterwaystousenature;andbring-ingpeopletogetherforahealthyplanet.Theproject has beenwell received

bythoseparticipating.Onebootcampparticipant, in an unsigned handwrit-tennotetothecompetitionorganizers,wrote, Thank you so much for do-ingthis.Theincredibleeffortthathasgone into thisonyourpart isobviousandthishasbeenamagnicentexperi-ence.Withorwithoutthenalaward,wehavebeenprivilegedtoenjoyaver-itablefortuneofinformation.

ThePath to ProsperityCompeti- Otherbootcamptopicsinclude:In Brief: Path to ProsperityIn Brief: Path to ProsperityIn Brief: Path to Prosperity


HowaCabinCompanyCapturesMoreValue

Sue and Wes Tylers Alaska Legacy Wood Homes and Products won the other $40,000 prize. Th e Tylers also own Icy Straits Lumber, a sawmill with a devoted customer base that has grown through word-of-mouth since they bought the mill ten years ago.Th e cost of doing business has changed

since they bought the mill. Th e biggest hurdle? Th e rise in energy prices while operating in Hoonah, a remote commu-nity accessed only by boat or plane.It just changed everything, Sue Tyler

says. Weve been trying to think of what can we do to make the business more profi table and be able to handle that in-crease in fuel. It increases all the costs. From the start, Icy Straits Lumber was

a value-added business. Th ey had made their mark not by turning out big volumes of 2 x 4s, but by fi nding the best use for their logstheir products include posts and beams, tongue-and-groove paneling and fl ooring, and molding and trim. A logical next step for their business

was creating more fi nished products.We want to change our image. We

arent just a lumber company, Sue Tyler says. We want to focus more on the home packages and the cabin packages and the elements those packages are comprised of. Th e reason for their new value-added

venture is simple.People in these remote communities

need jobs to support their families and way of life while adding value to a local natural resource, Sue Tyler says. Th ats the motive behind the whole operation.Th eir new start-up is called Alaska

Legacy Homes and Products, and its early support from Path to Prosperity has been crucial.Th is is exactly what we need. What we

need is that technical support from some-one who can say Hey, Ive been there and Ive done that, and help lead us in the right direction, she says. Its one of these things where you dont know where to start. Who can I call who would care?

ConservationandLong-TermJobs

Th ese two entrepreneurial ventures were inspired by a simple question: How to capture more value from a renewable natural resource that surrounds the ru-ral communities of Southeast Alaska?

If you innovate to extract as much value from those natural resources as you possibly can, you will create enough value to support your communitys economy, says Mike Skinner of the Bainbridge Grad-uate Institute, who has consulted with Path to Prosperity. Having said all that, there certainly are challenges: the cost of energy, the logistics of getting products in and out. I dont mean to underestimate those. But if you are smart about business, there are things [in Southeast Alaska] that can be done forever, where everyone can enjoy some level of well-being forever. Th is is what inspired the Path to

Prosperity contestants.I still believe wood manufacturing is

a viable industry in these little commu-nities on a small scale, Helgeson says. In simple terms, if Raven Guitars ma-

tures to a point where it can build one thousand guitars a year, then theyre actually consuming two thousand to three thousand board feet of select mu-sicwood a year to build guitars that may wholesale for $3,500 each. One good tree could have a thousand

guitars in it. Th ats the magnitude of value capture were talking about here.Path to Prosperity founders say they

launched their contest to inspire ven-tures to create jobs and businesses in rural Southeast Alaska communities. At Th e Nature Conservancy, we be-

lieve that entrepreneurs can help lead a community by demonstrating how local natural resources can be used with an eye to the future, says Norman Cohen, who directs Southeast Alaska programs for Th e Nature Conservancy. Th is is why we founded Path to Prosperity: Th e future of the regions rural communities lies in the sustainable use of natural resources.Can Path to Prosperity shape the future

of communities in Southeast Alaska? Haa Aan CEO Russell Dick believes so.Th is business development competi-

tion was created with a common belief that a healthy community with strong social and cultural infrastructure is the result of innovative entrepreneurship, Dick says. Th is competition can be a catalyst and support network for devel-oping successful entrepreneurs.

Writer Dustin Solberg manages communications for The Nature Conservancy in Alaska.

Sponsors Think OfficeNeeser Construction Inc.Conoco PhillipsAlaska AirlinesArctic Lights Electric, Inc.EBSC EngineeringExterior Technology SystemsGCIPfeffer DevelopmentDavis ConstructionKevin Smith PhotographyThe Anchorage MuseumThe Bicycle ShopAlaska Architectural Lighting, Alaska USA Insurance Brokers, BINW, Capital Office, Criterion General, HMS, Dennis Turnbull Inc., Don Myric, Jernstrom Engineers, Kevin Meyer, MCN Construction, Northwest Landscape Rain Proof Roofing, RSA Engineering, Inc. Tandus, Valerie Whitmore, Nancy Pollock, Wilson Agency, DOWL HKM, Coffman Engineers, Jeff Thon, Patrick Rumley, Kurt Hulteen, Professional Growth Systems.AAK, Soda Jerks, Alaska Tab & Bind, Allen & Peterson, Allure, Anchorage Symphony Orchestra, Avis Rent A Car, Bears Tooth, Blush, Bruce Johnson, Capital Office Circular, Cor Cosmetics, Crush, Escape Salon Spa, Eye Styles, Great Harvest Bread Company, Her Tern, Hotel Captain Cook, ID Project, Linda Gierczak, Mabel Mckinley, Martin Buser, Mayahs, Mooses Tooth, Orso, Senator Mark Begich, Sevigny Studio, Shuzy Q, Siss Caf & Catering, Skinny Raven Sports, Snow City Caf, Spenard Builders Supply, Urban Greens, VF Grace, 3form, Rod Shipley, The Bicycle Shop, Apex Live Sound Reinforcement, DJ Spencer Lee, Artique LLC, Davis Constructors and Engineering.

ArtistsMegan Obrien Chris SelinMary Wilts Drew MichaelAlvin Amason Sarah DaviesShoko Takahashi Linda LuckyKathy Kaulitz Garry KaulitzLinda Lyons Apayo MooreMargret Hugi-Lewis

Supporters Frank Hauser Mary WiltsLisa Sauder Rod YoungAshley Munson Rosie MorganSarah Wooley Marie ConoverPaige Petr

We would like to thank The Childrens Lunchbox and the Anchorage School District for their cooperation and support in making pupil+paper possible.

Together, we raised $40,000 for The Childrens Lunchbox and kpb architects sponsored a $9,000 student paper garment competition scholarship in November 2013. We thank our supportive and generous friends in the community for contributing.

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FINANCIAL SERVICES

More Alaska business owners are selling their com-panies as part of their retirement planning, mir-roring a trend thats taking place nationwide. Business experts in Alaska say the trend is being fueled,

in large part, by aging baby boomers who are preparing for their golden years. Alaskas baby boomers are starting to downsize as they

move into the next phase of their lives. In the process, its only logical that they step away from the businesses they began decades ago, says Bob Poe, a term assistant professor with University of Alaska Anchorages College of Business and Public Policy and previous president and CEO of the Anchorage Economic Development Corporation.Many boomers came to Alaska to build their future. Now

its thirty something years later, and theyre spinning off their enterprises to the next generation of Alaskansfolks who were born and raised in the state. Its a great opportunity to acquire an established Alaska business. But relationships run deep when it comes to doing business in Alaska, Poe says. In many cases, retiring owners are selling to their partners, managers, and key employees, as well as to third parties. Increasingly, Alaska Native corporations are becoming

more active in the purchase of existing enterprises. For instance, Nana Regional Corporation, Koniag, Inc., and Calista Corporation have acquired a number of successful Alaska businesses, which, in turn, is having a positive im-pact on Alaska as a whole.Th e real success of Alaska and Alaska Native Corpora-

tions is the next generation that we grew here, Poe says. Native corporations are educating them [shareholders] through scholarships Not only are the boomers selling a company, but theres somebody on the other side buying it that has a real view for the future.

ResourceBusinessesandDentalPracticesTransferringOwnership

Businesses with longevity beyond the individual own-ers are the ones that are most oft en being sold by retiring owners. In Alaska, that typically equates to oil and gas, en-gineering, and resource and extraction businesses. Th ats where I see Alaska Native corporations buying businesses, Poe says. Th ey used to focus more on government con-tracting, but now theyre trying to diversify.

More Alaska Business Owners Selling their Companies for

RetirementByTracyBarbour

Exit planning steps for businessowners

recomendedbyWellsFargoPrivateBank.


Such diversifi cation makes sense, given the nature of Alaska and Alaska Native corporations. Were a resource extraction state, and they own millions of acres of land, Poe says. TerriLee Bartlett, ChFC, a wealth ad-

visor with Wells Fargo Private Banks Anchorage office, has also noticed that more Alaskans are selling their business as part of their retirement planning. We see quite a bit of that, normally

coming from the construction and oil service-related companies, she says. Baby boomers in their fi ft ies and six-

ties are at the center of the trend, some selling for large sums of money to Alas-ka Native corporations and other cash-rich buyers. Word is getting around, and boomers are oft en induced by the potential of a lucrative sale. Business owners are thinking: I may as well take advantage of this opportunity now, in-

stead of later, Bartlett says. Oft en, its a larger company purchasing a smaller business in the same industry.Brian Durrell, JD, CPA, founder of

Durrell Law Group PC, also consid-ers Alaskas aging population to be a key driver of many business sales. His fi ve-attorney, Anchorage fi rm focuses on business, estate, and tax planning, including sale and gift transactions in-volving closely/family-held businesses.

TerriLee BartlettChFC,WealthAdvisor

WellsFargoPrivateBank

TerriLee Bartlett

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Brian DurrellPresidentandOwnerDurrellLawGroupP.C.

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Jave RaganSeniorWealth

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Robert Poe Jr.TermAssistantProfessorUAAsCollegeofBusiness

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But a few years ago, the selling-for-retirement trend was connected to tax consequences, Durrell says. The tax environment was a major factor for the sale of a significant number of Alaska businesses at the end of 2012when the Bush tax cuts were scheduled to expire and the capital gains rate was scheduled to increase. The last half of 2012 was absolutely manic with the sale of businesses, Durrell says. For instance, we had no fewer than six den-tists who called for help selling their practices in late 2012. Durrell, who has handled hundreds

of projects involving business trans-fers over the past thirty-plus years, sees companies change ownership in three main ways: transfers to family mem-bers, transfers to key employees, and third-party sales.

KeepingItintheFamilyIf a company is family-owned, the re-tiring owner generally first considers a transfer of the business to a family member. This triggers gift tax consider-ations and integration with the business owners overall estate plan. It creates in-teresting estate planning issues if some children are involved in the business and others are not. For smaller busi-nesses, this generally is not an option if owners dont have any children who are involved in or want to run the com-pany. However, if the company is large enough, it can hire professional man-agement, so the children wont need to actively engage in the business. If the business is large enough to be able to hire professional management, usually the transfer of the business ownership will be to perpetual trusts that will pass the business from one generation to the next free of gift and estate tax, rather than being transferred directly to the children, Durrell says. However, the owners can designate

their children as trustees of the trusts that hold the business interests, allow-

ing them to control and benefit from the business, including making deci-sions over the companys professional management team. If the business own-ership is placed in a GST (generation skipping transfer) tax exempt trust, the assets held in the trust can transfer free of estate and gift taxes from generation to generation. Often, owners dont have the option

of being able to keep their business within the family. Sometimes theres simply no one available to take the helm, according to Jave Ragan, a Se-attle-based Wells Fargo senior wealth planning strategist who works exten-sively with clients in Alaska. As you move through the generations, it be-comes more difficult to pass it along, he says. Maybe the next generation doesnt want to stick around and grind it out. For them, its a lifestyle choice.

SellingtoaThirdPartyOnly about 25 percent of transition-ing businesses go to family members, Ragan says. The rest get sold to an in-dependent third party or management group. Larger companies, in particular, are typically sold to outside parties. There are two primary types of outside buyers: financial (private equity firms) and strategic (those in the same or a similar industry). In Alaska, a private equity firm might likely be an Alaska Native corporation. Most owners prefer a full cash-out

transaction when selling to an outside company. However, the transaction can be structured any number of ways. For example, private equity firms typi-cally purchase controlling interest of the company and allow the owner to sell back the remaining interest over a certain period of time. In a lot of those instances, it is required that the owner stay on so the buyer can harvest their intellectual knowledge, Ragan says. Much of the time buyers may cash

out the sellers completely, but sign

them on to an employee agreement for a year or two. Not surprisingly, the stay of the outgoing owner often ends up be-ing shorter, as the new owners are eager to complete the transition and imple-ment their own agenda.Although third party sales are typi-

cally cash deals, sometimes retiring owners will end up with a promissory note for some or all of the proceeds of the sale. This allows them to get a steady stream of income from the loan payments for the term of the note. Regardless of the structure of a third

party sale, there are steps owners can take to dress up the business before it is marketed for sale, Durrell says. This in-cludes properly assuring a strong finan-cial reporting system, proper handling of inventory, cleaning up delinquent receiv-ables, and making sure the corporate re-cords are in order. Its a matter of think-ing in advance about what a prospective buyer will want to review during the due diligence process, and then making sure everything is in order, he says.

SellingtoKeyEmployeesA management group can be a desirable potential buyer for a retiring business owner. But financing can be an issue. However, a major challenge is that the management group may not be coming to the table with excess cash to contrib-ute to the deal, Ragan says. The differ-ence between what the group can bor-row from the bank and the companys value will have to be made up by the seller carrying the note or by the seller taking a cut on the price. Business owners typically dont earn

top dollar when selling to employees, but thats not their primary motivation with this type of sale. Many times, the seller is willing to take a cut on the price to recognize and reward employees for their hard work over the years.Bartlett says selling a business to

long-time employees for less than its worth isnt a farfetched idea when you consider the sellers relationship and emotional connection with them. Business owners are often very loyal to their employees, she says. They care about what happens to them. Often they want to integrate employees into the sale and help protect their jobs. An employee stock ownership plan

(ESOP) can also be a viable alternative.

Business owners are often very loyal to their employees. Theycare aboutwhat happens to them.Often theywant to integrateemployeesintothesaleandhelpprotecttheirjobs.

TerriLee Bartlett ChFC,WealthAdvisor

WellsFargoPrivateBank


Former Alaskan Tracy Barber writes from Tennessee.

Shares are allocated to employees and may be held in an ESOP trust until the employee retires or leaves the compan

abm april 2014

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