Elwood Brehmer

AEDC forecast sees strong growth for Anchorage, state

The Anchorage economy showing promise can be used as an indicator for the rest of Alaska, Bill Popp, president and CEO of the Anchorage Economic Development Corp., told the Society for Marketing Professional Services at an Oct. 23 luncheon. Job growth, or lack thereof, is one of the first indicators he looks at when determining the health of an economy, Popp said. Figures were flat in 2009 and 2010 because employers were wary of faltering economies elsewhere. Companies refrained from hiring, he said, to see whether “the global catastrophe was going to come washing over us.” Anchorage lost roughly 900 jobs over that time, Popp reported. When employers determined the global recession was not going to impact the city as hard as it did other places, they flipped the hiring switch almost immediately in 2011. “We saw the biggest year of employment growth in a decade,” Popp said. Nearly 3,300 new positions were opened, equating to a 2.2 percent increase in total job numbers in one year, he said. Over 2012, hiring will slow some, but Popp said indicators his organization looks at point to 1,600 additional jobs this year, or just more than 1 percent growth, a strong yearly outcome, he said. Further projections show continued growth in Anchorage’s job market with the city adding about 6,000 jobs in the next three years, Popp said. Recent numbers released by the Bureau of Labor Statistics puts the nationwide unemployment rate at 7.8 percent. Currently, the rate for Anchorage is 5.5 percent, Popp said. Another very important economic gauge for Anchorage is the city’s population, Popp said, particularly because of Alaska’s location. “In our situation, all the way up in the upper left-hand corner of the continent, pretty much removed from other population centers, population is a big economic indicator,” he said. “If people are leaving Anchorage, we got trouble. If people are coming to Anchorage, or if all of you are getting fruitful and having kids, then we’re doing good.” Population is a better tell of Anchorage’s economic status than it is of cities in the contiguous states because of the commitment it takes to move to or from Alaska, and to do that requires the promise of a good job for most people, Popp said. To that point, if economic health is tied to population, recent growth forecasts paint a solid picture for the Anchorage economy. “In 2012, we’re pretty confident we’re going to break the 300,000 mark in population for the first time in the history of Anchorage,” Popp said. Further predictions show Anchorage growing to 310,000 people by 2015. Proposed oil, gas and mining projects hold a lot of promise for the whole of Alaska, he said. The largest projects, those by Pebble Partnership, Shell and ConocoPhillips, among others, could provide the state with over 23,000 jobs in the next 6 to 8 years, Popp predicted. He urged for tempered enthusiasm, however, because many factors play into whether or not those projects will go off as planned. “If we get a significant drop in the price of a barrel of oil, any of the oil-base projects will fall behind on the current timelines,” Popp said. He also noted that the Arctic offshore drilling projects are dependant upon oil actually being found in the amounts forecasted. If everything falls together, Popp said, Alaska could be looking at $24 billion in commercial investment along with the job growth over the next decade. Popp sees North Slope oil production remaining fairly steady until a few decisions are made, he said. “I think we’re kind of in flux until the legislature decides what it’s going to do one way or the another definitively,” Popp said. “You’re going to continue to see a holding pattern and maintenance-level work being done on the North Slope, with the exception of Shell.” Elwood Brehmer can be reached at [email protected]

Nome and Kotzebue projects await bond vote

Proposed port development and improvement projects in northwest Alaska are moving forward with environmental and planning surveys, officials in Kotzebue and Nome said. A $10 million grant for the city of Kotzebue to fund study and initial construction work on the proposed Cape Blossom access road, which would link the future port site to Kotzebue, is a part of the $453.5 million in transportation projects on the proposed state bond package up for a vote Nov. 6. If approved, the money would be appropriated to the city of Kotzebue through the Department of Commerce, Community and Economic Development. In total, Kotzebue requested $28 million, with the other $18 million still awaiting approval. Chris Johnston, project manager for the Alaska Department of Transportation and Public Facilities, said initial work has been done using $4.6 million provided by the Federal Highway Administration. “This summer we went out and did environmental and engineering fieldwork. We did break-up studies along the project corridor at Sadie Creek,” Johnston said. “We went and did some bird surveys, wetland surveys, things like that.” When asked about possible port construction, Johnston clarified that all the money currently awarded is for road development only and that it must be completed before the port project is fully undertaken. The Cape Blossom site is approximately 12 miles south of Kotzebue. A 1983 state DOT study determined it to be the closest viable spot for a deepwater port relative to the city. Overall road development cost will largely depend on the route chosen, labor costs, and, most importantly, where road-base material comes from, according to a 2011 state DOT reconnaissance study on the project. Study estimates range from about $35 million for the shortest route supplied with locally sourced materials, to more than $258 million for the longest route if material must be transported in by barge. While a route final route has not been finalized, Johnston said the more direct southerly paths appear most feasible to avoid Air Force property and trim cost. “We’re looking at the southwest option,” he said. “We may go west to the upstream part of Sadie creek to save money on culverts and bridges and environmental impact.” Using local fill material is of utmost importance for the project, Jessup said, and noted that gravel resources have been located seven miles east of Kotzebue. While it’s not yet clear as to how much usable material may be available at the site, Jessop called the find “significant.” He also said the military assisted in project survey work through the Department of Defense’s Innovate Readiness Training, or IRT, program. IRT is a way to “improve military readiness while simultaneously providing quality services to communities throughout America,” according to the program’s website. The site lists the Cape Blossom project as one that the Marine Corps Reserve and Army National Guard have both already participated in. “Once a (route) recommendation is made the city is hoping the we can continue to utilize the IRT program to lower our labor costs down the road,” Jessup said. Cost estimates from the 2011 DOT study, contingent on local material sourcing, drop as much as 60 percent when IRT labor is employed for construction versus a hiring a private firm. If the project continues on its current timeline and funding is secured, Johnston said the start of construction could be on the horizon. “There’s a lot of variables, but if we’re able to award a contract in the fall of 2014 then the contractor may be able to start work that winter, assuming we get the rest of the funding we need,” Johnston said. “Or we might just build part of the road with the funding we have available.” The timetable for the Nome port and harbor expansion project is not as clear, Joy Baker, Nome’s harbormaster said. “We’re still moving forward with the studies and concept design and looking for funding and all of those steps. When you’re talking about a big project like this it’s a slow process,” Baker said. Nome applied for an appropriation similar to Kotzebue, but for more than $181 million, encompassing the entire project cost. Early port and small-boat harbor designs submitted with the grant application call for increasing the depth of the port from 22 feet to 35 feet at average low tide, along with construction of a third large dock and several smaller maintenance projects. Estimates for the large port project come it at $150 million, according to the design summary. An expansion of moorage for small boats is needed to accommodate the growing fleet of gold-dredging vessels working offshore from Nome. The design summary states three dredging craft launched from Nome in 1996, and that number had grown to 39 in 2011. The fleet doubled in just the past year, Baker said. Small-boat harbor expansion is projected to cost roughly $13 million. The Nome project would receive $10 million through the bond package, the same as Kotzebue. “It’s not approved yet, but we’re hoping,” Baker said. Elwood Brehmer can be reached at [email protected]

Pier 1 Imports opens store in Fairbanks

Pier 1 Imports opened its northernmost store in Fairbanks on Oct. 29, with a new look for one of the home furnishings retailer’s newest outlets, said Executive Vice President Sharon Leite. “Pier 1 Imports offers merchandise that fits all decorating styles, as well as a broad array of affordable holiday décor, furniture and gifts and we look forward to sharing Pier 1 Imports shopping experience with the residents of this one-of-a-kind community,” said Leite, who was in attendance for the event. Fairbanks’ central location in the Interior was a major factor as to why the city was chosen for a store. Leite said it will allow Pier 1 to reach potential customers “in the heart of Alaska and it’s a great opportunity for us.” As a part of the opening, Leite presented the Resource Center for Parents and Children with a $5,000 donation on behalf of Pier 1. Pier 1 launched an updated store look last fall and has been using it in its new stores since, Leite said. The new appearance is designed to make the stores more inviting to customers than the company’s old interior design. “The new stores have a very neutral palette and they’re incredibly well-lit which makes it better for the product to really pop — for the product to be the star of the show if you will,” she said. “They’re beautiful, beautiful stores and we’re really proud that we can bring this new concept to Fairbanks.” Leite said the red tile floor in the Anchorage Pier 1 store is an example of the traditional décor. The Fairbanks outlet, located on Merhar Avenue, is one of about 20 the company will eventually open during this fiscal year, which ends in February, she said. “The corridor where the store was built is one of the pretty vibrant shopping areas in Fairbanks, and we’re excited to be a part of that part of the community,” Leite said. It has been several years since the retailer opened as many new outlet locations, Leite noted. Pier 1 operates 1,058 stores throughout North America, making it the largest U.S.-based home furnishings chain, according to the company’s website. Fairbanks residents anticipating the store’s opening have expressed their interest on Pier 1’s social media pages, she said. “We’ve had a few Facebook posts from potential customers in Fairbanks. It’s been fun to watch some of those posts come through about how excited they are that we’re coming to Fairbanks,” Leite said. “They’ve been people that may have lived in the contiguous 48 and they know Pier 1 from us being in the rest of the United States.” The store was built with a larger receiving area than most other Pier 1 locations because of the need to keep merchandise out of Fairbanks’ harsh winter elements. Otherwise, the stores roughly 12,000 square-foot sales floor is proportional to most stores in the chain, Leite said. Three full-time employees along with 25 part-timers will initially staff the Fairbanks location, with additional help hired each holiday season. Other than the store manager, all the hires have been from the local population. The seasonal positions are currently being filled for the upcoming shopping season, according to the company. Elwood Brehmer can be reached at [email protected]

Alaska Air Group reports record profits in 3Q

Alaska Air Group, Inc. announced record profits when its third quarter earnings were released Oct. 25. The airline company reported $150.3 million in net earnings for the quarter, compared with $131.1 million in the third quarter of 2011. Total revenue for the quarter was $1.3 billion. “This is the highest quarterly profit in our history and it’s the 14th consecutive quarterly profit that we’ve reported,” Brad Tilden, president and CEO, said. Alaska Air Group manages Alaska Airlines and the smaller Horizon Air. Gross year-to-date earnings stand at $3.5 billion, close to an 8 percent increase versus 2011. Net earnings show a more drastic improvement over last year for the same period, however. The company reported its net income at $271.1 million for the first nine months this year, nearly a 50 percent jump over the $180.5 million through the same period in 2011, according to the quarterly report. Tilden attributed the record returns to the company’s steady and prolonged success, allowing it to reduce debt, reward its shareholders and reinvest its profits. He also credited Alaska Air’s employees, adding that “our people are working together better than ever.” During a conference call on the earnings, company officials reported an eight-point reduction in debt-to-capital ratio since the start of 2012, bringing it to 54 percent. In 2004, Alaska Air’s debt-to-capital ratio stood at 78 percent. The group has also seen its equity grow from $665 million to $1.4 billion over that time. Alaska Air Group Inc. Vice President of Finance Brandon Peterson said the company’s focus on reducing debt has played a key role in reducing costs. “Net non-operating expenses were $4 million this quarter compared with $17 million in the third quarter of 2009, with much of that coming from lower interest expenses because we have much less debt than we did three years ago,” Peterson said. Peterson also noted that Alaska Air has seen more than a 12 percent return on invested capital over the past year and expects 2012 to be the group’s third straight year with a return on its investments exceeding 10 percent. In conjunction with its strong financial reports, Alaska Air Group has recently received several industry accolades. For the 12-month period ending in August 2012, the company was No. 1 in on-time performance among the 10 largest U.S. airlines, according to the U.S. Department of Transportation. Travel + Leisure magazine also awarded Alaska Airlines with its Global Vision Award for 2012 for sustainability. The magazine accredited the award to the airline’s efforts to increase fuel-efficiency and its implementation of an in-flight recycling program. In early October, Alaska Airlines announced an order for 50 new Boeing 737 aircraft that includes 37 of Boeing’s new 737 Max planes, which will be 13 percent more fuel-efficient than any similar-sized aircraft currently on the market, airline officials claim. “Over the last several years we’ve seen the advantage of having modern, fuel-efficient aircraft that are bought at the right prices,” Tilden said. “ We’re extremely pleased that we secured aircraft to continue this pattern well into the future.” Alaska Airlines opened new routes between Seattle and San Antonio and Fort Lauderdale, Fla.; Portland, Ore., and Washington, D.C., and San Diego and Orlando Fla., over the past year. In the summer of 2013 the airline will also begin non-stop service between Anchorage and Los Angeles. The expanded service represents Alaska’s continued plan for responsible growth, company officials said. Despite being in a naturally volatile industry, Tilden is confident in the future of Alaska Air Group because of its proven strategy and workforce, he said. “This sort long-term success and balanced, consistent execution has evaded most airlines,” Tilden said. “But we believe we have a solid plan and employees who know what’s at stake and are committed to our success.” Elwood Brehmer can be reached at [email protected]

Steady growth forecast for major Alaska airports

The Alaska Department of Transportation & Public Facilities recently released its forecast summaries for both Ted Stevens Anchorage International and Fairbanks International airports. The reports were prepared to provide the Alaska International Airport System, or AIAS, with data regarding trends in both passenger and cargo traffic through both airports, which will be used to aid in long-term planning strategies for both airports, according to an internal AIAS letter available on its website. Numbers in each summary “represent current economic uncertainties and trends and are a reasonable estimate of long term future activity levels,” the letter states. According to both summaries, led by HNTB Corp. of Arlington, Va., they do not take in to account capacity constraints of either location, rather they assume changes in traffic levels will be accounted for by recent or future airport upgrades. The summaries use 2010 statistics for baseline numbers and project out to the year 2030 for all airport traffic predictions. The Stevens Airport Forecast Summary estimates a 700,000-passenger increase in total enplaned passenger traffic through the facility over the 20-year period. That equates to just over a 22 percent increase from the roughly 2.4 million travelers who went through Stevens Airport in 2010. Enplaned passengers are those making their initial departure or final stop on a trip, as opposed to transit passengers using the airport to connect flights without passing through a security checkpoint. While the sheer bulk of the projected increased activity at Anchorage Airport will be due to domestic passengers, enplaned international traffic is expected to climb from 31,700 passengers to nearly 58,000, an 82 percent rise, according to the summary. During a presentation at the World Trade Center Alaska: Trade is Transportation Conference on Oct. 10, Stevens Airport Manager John Parrott said Russian carrier Yakutia Airlines and Icelandair have announced plans to start regular summer service to Anchorage starting in spring 2013. Parrott also said airport officials expect an overall increase in traffic from European tourists in the future. In contrast, transit passenger levels, particularly international transit passengers, are expected to virtually disappear almost immediately, according to the summary. In 2010, more than 165,000 international transit passengers passed through Stevens Airport. That number is anticipated to drop by nearly 89 percent to 18,000 passengers by 2015. Domestic transit service is projected to decrease 55 percent from its 2010 level of 22,000 passengers over the same period. The biggest reason for the decline is the use of newer, larger aircraft by international carriers, Parrott said. “The (Boeing) 777 makes it unnecessary and not as efficient for carriers to stop in Alaska,” he said. The Anchorage forecast summary furthers Parrott’s statement, predicting “that the introduction of additional long-haul aircraft such as the Boeing 787, coupled with security requirements and competitive pressures from other Asian and U.S. carriers, will force remaining transit carriers to operate non-stop.” Any future transit activity will be from charters flying smaller and older aircraft and from a small number of passengers flying on cargo carriers. Total traffic passing through Anchorage Airport is predicted to rise from nearly 2.6 million passengers to about 3.1 million in 2030, a 21 percent increase. These numbers include air taxi passengers, considered a separate category from domestic and international passengers. Their 1.2 percent annual growth over the 20-year period helps offset the loss of transit passengers in terms of the overall numbers. The Fairbanks summary predicts an increase similar to that of Stevens Airport in total passenger traffic, enplaned and transit passengers. The Fairbanks airport serviced 519,000 passengers in 2010 and that number is expected to increase by 26 percent to just over 654,000. Stevens Airport is the fifth-largest cargo hub in the world, Parrott said, and he expects that cargo to continue to pass through the airport at a very high rate. However, new planes with larger capacities and longer ranges combined with expansion of new world markets will impact how that cargo is delivered and where it comes from, at both Anchorage and Fairbanks airports in the coming years, according to the summaries. Boeing’s 747-200F, which has long been the standard aircraft for long haul freighters, has a range of 3,800 miles at full payload. The McDonnell Douglas MD-11F, and the larger 747-400F and 800, push range limits to more than 5,000 miles, as does the Boeing 777. Currently, Stevens Airport and Fairbanks International Airport handle about 77 percent of non-transfer cargo flights from Asia en route to North America. That number is expected to fall to 55 percent by 2030, largely due to freight carriers evolving their fleets to be comprised of long-range aircraft that don’t need to make stops in Alaska to refuel, the summary explains. Still, carriers must trade-off between flying at maximum payload and carrying less fuel or flying less-than-full planes with more fuel, and thus longer flight ranges. For Alaska’s largest airports this means fewer landings, but larger cargo loads. According to the summary “total eastbound cargo flowing through AIAS airports is expected to increase from about 1.7 million tons to 3.1 million tons,” over the same time. A similar situation exists with westbound cargo. While traffic will fall from 63 percent to 39 percent of all non-transfer North America to Asia-bound cargo flights, total cargo should see an increase from 0.7 million tons to 1.3 million tons between the two airports. As would be expected, Anchorage Airport sees many times more cargo activity than Fairbanks Airport. In 2010 Anchorage saw a total of nearly 5 million tons of cargo freight pass through its airport, to make it the fifth largest airfreight port in the world, Parrott said, while Fairbanks moved 38,000 tons. Over the next 20 years Anchorage Airport can expect its freight load to increase by 76 percent to 8.8 million tons. Fairbanks Airport, it’s predicted, will move 49,000 tons in 2030, a 29 percent increase, according to the summary. For both airports, intra-Alaska cargo amounts are expected to remain fairly flat, meaning the increases will come in cargo moving to and from the greater North America and Asia. Both forecast summaries note that much of how future Asian-origin cargo traffic is routed will determine on which country it is coming from. China, Asia’s fastest growing economy, is farther from North America than Japan, the region’s slowest growing economy. If that trend holds, “an increasing percentage of Asia-North America air cargo will need to be transported a greater distance – a factor that would increase the number of flights which require a technical stop,” the summary notes, referring to refueling in Alaska. This could be good news for Alaska’s largest airports. In his presentation at the Oct. 10 trade conference, Parrott said he is encouraged looking at Anchorage and Fairbanks airports as partners. A recent agreement between the two means aircraft with a flight-plan leading to one can be diverted to the other without being charged an additional landing fee. The original fee will cover the unexpected landing. This is a convenience issue for international carriers, particularly those hauling cargo, because Anchorage and Fairbanks are a ten-minute flight detour away from each other, Parrot said. Additionally, being separated by the Alaska Range provides a weather barrier between the two. That barrier has prevented Anchorage and Fairbanks from ever being closed simultaneously, assuring aircraft on long international journeys will always have a place to land, Parrott noted. It may not seem outwardly important, he said, but it’s one of several reasons why he see’s a bright future for Alaska’s large airports. Elwood Brehmer can be reached at [email protected]

Annual Day of Caring draws 800 volunteers

United Way of Anchorage gathered more than 800 volunteers for its 19th annual Day of Caring in September, a day devoted to giving Anchorage corporations an avenue to give back to their community, Christine Gire, communications manager for the non-profit, said. “Day of Caring is the single largest day of corporate volunteerism in Anchorage,” Gire said. “It’s a day when UWA celebrates the commitment of local business volunteers for rolling up their sleeves and taking on much needed community projects.” Groups from 36 companies and organizations tackled 44 improvement projects throughout the city. “The work ranged from painting a room for a new resident as well as dust removal at the Pioneer Home to prepping the Alaska Botanical Garden for the winter to taking on some landscaping duties for The Arc of Anchorage,” Gire said. Independent Sector, a non-profit advocacy organization, provides statistics that put volunteer work into hard numbers. According to studies done by Independent Sector, corporate volunteers, such as those involved with Day of Caring, are worth an average of $21.69 per hour to both their employer and community. Day of Caring volunteers worked about four hours each, Gire noted. When those numbers are multiplied by the more than 800 volunteers who took part, Day of Caring raised more than $70,000 in volunteer labor in one day for the city of Anchorage. Not only are these events good for the community and good public relations for the corporate participants, Gire said, but they can foster a sense of value between the two. “Many companies want their employees to know they aren’t there just to make a profit, but that together they can make a positive impact within their community,” Gire said. “A feeling of connectedness results from community involvement and for many people that starts with the company they work for.” Immediately after the Day of Caring every year, United Way holds the Day of Caring Food Drive. This year the drive gathered nearly 400,000 pounds of food in one day for the Food Bank of Alaska. Gire said the food bank calculates a meal as 1.3 pounds, meaning the drive contributed an equivalent to more than 300,000 meals. While the upcoming holidays get people thinking about donating to local food banks, Gire said, the need is year-round, and are another great and easy way for corporations to give back to their communities. Sam Kirstein at the Fairbanks Community Food Bank said her organization is serving about 15 percent more people this year, a consequence of economic uncertainties and the soaring cost of energy in the Interior. However, donations, both financial and in food, are holding generally steady, she said. ”People are giving smaller amounts of money this year but there are more people giving,” Kirstein said. Local grocery stores and food-serving institutions donate food to the Food Bank and volunteers there package these into food boxes sufficient to last one person three days, she said. The goal is a 20-pound food box but if donations are down in any one week, the box could be down to 17 pounds. All major food stores and institutions donate including Safeway, Fred Meyer, Wal-Mart and major wholesalers like Food Service of America and vendors that support the Trans Alaska Pipeline System. The military commissary at Fort Wainwright, she said, has now been cleared to make donations after some paperwork was cleared up. Elwood Brehmer can be reached at [email protected]

Late payments frustrate pilots working for DOI

Troy Cambier is a pilot for hire. He is owner and operator of Chena River Aviation, based in Fairbanks. Cambier flies his four-seat Robinson R-44 helicopter throughout Alaska filling a transportation void wherever it’s found. He specializes in “wildlife work,” which entails flying scientists or other technicians into the bush to conduct field research from radio tracking to herd surveys, Cambier said. He has contracted extensively with federal agencies, including the U.S. Fish & Wildlife Service, the U.S. Geological Survey and the National Parks Service. All are agencies within the U.S. Department of the Interior. In fall 2011, Cambier said difficulties getting paid for work for Interior began arising for him and other pilots contracted to do similar work. The issue, he said, resulted from a change in how the department handles the invoices it receives from the pilots. Bills and invoices sent to DOI specifically for aviation services go through the Aviation Management System, a subset of the National Business Center, or NBC, at Interior. “Last October (AMS) said they had to realign and change things again and it was going to be a month and nobody would get paid at all. Well, nobody got paid until February or March this spring, and it’s just gotten worse from there,” Cambier said. All told, he is owed approximately $65,000 for his services, amounting to an average summer’s income, Cambier claimed. Missing that amount of money has made it a struggle to keep his one-man business going. Bills owed to his fellow pilots are now in the hundreds of thousands of dollars. “I’ve got a leased helicopter and I have to pay a monthly lease while mine’s getting overhauled,” Cambier said. “And not having gotten paid for the work I do – I’ve drained all my savings just keeping my business going. I can’t afford to fly for them anymore.” In the past, up to half of his business came through work with different DOI agencies, Cambier said. Sharon Swisher, who owns Quicksilver Air out of Fairbanks with her husband Rick, said the new billing system is stored on the AMS website, while charges were previously handled in paper form. “It used to be that we would just fill out their form and send it in and they would process it and people would get paid. Now we have to do the processing ourselves,” Swisher said. “Billing something on one of my forms takes about five minutes. Billing something for the U.S. government takes about three or four hours.” Both Cambier and Swisher said attempts to contact someone in AMS for help resolving the payment problems have been unsuccessful. “You can’t get anyone to return a phone call or answer an email. It’s sort of layers and layers of a bureaucratic nightmare,” Cambier said. Blake Androff, press secretary and deputy director of communications for the Department of the Interior, issued the following statement for the Journal: “As soon as the department became aware of this situation, we took immediate action to address the concerns of our aviation vendors. Last fall, when Interior’s business center finished deploying several bureaus to a new department-wide financial management system, the change resulted in an unintended delay in processing some invoices. “Before the close of the fiscal year this September 30, we had most of the invoices processed and payments made to vendors. Nonetheless, with the system going off line for the end-of-the year processes and deployment of our new system to two more large bureaus, some invoices are still awaiting payment. We are expediting payments to vendors where possible and we hope to have the issue resolved in a timely fashion. We apologize for any undue hardship this has caused as we seek to improve the process to help prevent future delays in processing payments.” A source familiar with the situation said the billing problems tie into an effort to standardize contract payments through the entire executive branch. Where a paper system was used for decades, contractors now enter everything on an Internet-based billing platform. Byzantine billing system Under the current system, a DOI employee in need of a pilot must file a request with AMS and get the expenditure authorized. This is a departure from how business had been conducted for many years. In the past, an employee would choose any contractor from a list of operators preapproved to conduct work up to $25,000 per job, the source said. Now, after the expense is approved by AMS, a task order number — essentially a purchase order — is given to each flight at least five days before take-off. This number is then sent through the AMS billing network and returned to the pilot. Then the work is done. After everyone returns from the job, the pilot then enters the task number into the billing platform and can expect to be paid within one month. At least that’s how the system is designed to work. According to the source, task numbers have been disappearing in the AMS system and never getting to the pilots, preventing them from being able to enter their work into the billing platform. If the task number is ever recovered, it is not uncommon for pilots to wait more than three months to receive payment. This is apparently what happened when the system was initially implemented in 2011. Alaska’s unpredictable weather has added to the problem, the source said. Because the cost of the job must be preapproved and each job is assigned a task order number, if a job is delayed for any reason, the most common being unsafe flying conditions, a new task order must be generated in order for the computerized billing platform to properly recognize the change in working dates. “It’s been a pretty chaotic year and the vendors are really taking the brunt of the chaos of the billing system,” the source said. The Interior Department’s NBC has apologized for the delays in payments to its contractors in several emails it has sent out to those affected, Cambier said. An email sent in early October from the NBC obtained by the Journal states, “We regret the delays in payments and billings as we moved throughout the year. We also share your concerns and are working with the Department policy offices and the system developers on a long-term solution that will improve efficiencies.” The email goes on to detail a further change in the center’s billing system for fiscal year 2013, which began Oct. 1. The switch from the current Aviation Management System to Aircraft Use Reports will take place Oct. 22. Further, it acknowledges yet another delay will be experienced, “in invoice payment due to this transition and general year-end processing.” Training will be offered to assist flight operators in the transition to the AUR system, the email states. Sandy Hamilton operates Arctic Air Alaska, a fixed-wing flight service out of Fairbanks, and said training had been offered for changes in the payment system last year. Hamilton said his office manager attended the training sessions but they were of little help when the system didn’t operate smoothly. Arctic Air Alaska, a five-person operation, is owed $78,000 by DOI, according to Hamilton. “We’re having the same problem (Cambier) is having and everybody else is,” Hamilton said. Hamilton recently added to his staff to accommodate the online bill processing procedures. “I have a full-time office manager even though I’m small, because I just figured I have to pay someone to do this stuff,” he said. “I used to do it all myself, but it just got – there’s no way I could fly and do it all myself.” Earlier this month, Cambier sent an email to Rep. Don Young’s office alerting them of the payment fiasco, he said. Officials in Young’s office stated they are aware of the situation and “are doing everything we can to ensure Mr. Cambier receives proper payment for his services.” When asked about her knowledge of the circumstances, Sen. Lisa Murkowski’s office released this statement, “Senator Murkowski is aware of the situation, and over time has expressed her deep dissatisfaction with DOI’s inability to remain current on their debts and obligations to Alaska air carriers. She has been in consistent contact with all levels of DOI personnel to pressure the department to resolve the technical problems that have led to this backlog. “In our most recent interactions with DOI, we have learned they are placing a priority on addressing this situation, and also that a computer accounting requirement that was delaying payments to Alaskans has been suspended for the remainder of the year.” Cambier said he hopes the situation can be rectified because federal contracts are a large part of his business, Hamilton insists the old paper method of payment worked very well. “Before they went to this new system, they had got it where it was pretty functional,” Hamilton said. “We would do a paper (invoice), we would submit it to the biologist and then they would sign it and send it on and we were getting paid in a week, sometimes two.” Elwood Brehmer can be reached at [email protected]

USDA provides nearly $29M in grants for rural infrastructure

U.S. Department of Agriculture officials announced 16 rural Alaska communities will receive funding to improve health and water quality in the villages. The majority of the money will be used in Native villages to fund development of community water and wastewater disposal systems. The USDA will fund the projects through it Rural Alaska Village Grant program, Jim Nordlund, USDA Rural Development Alaska director, said. “The RAVG funding is roughly $21.8 million and will go to the Alaska Native Tribal Health Consortium on behalf of rural Alaskan communities, to provide assistance to construct drinking water and wastewater systems in Kwethluk, Toksook Bay, Eek and Lower Kalskag,” Nordlund said. “The projects will improve public health and sanitation conditions for residents of these communities that currently must collect and haul rain for drinking water and rely on portable waste containers euphemistically called “honey buckets.” The funding will be used to bring water and sewer services to 123 homes by 2015. The State of Alaska received an additional $6.2 million in grants from RAVG to upgrade wastewater infrastructure in 65 homes in Quihagak and Hooper Bay, with remaining money to be used in planning for projects in Seldovia, McGrath and Tununak, according to a department press release. Since 2009, the USDA Rural Development program has provided approximately $950 million to improve wastewater infrastructure and bring potable water into rural homes, according to figures from the departments website.

Alaska Airlines orders 50 planes from Boeing

Alaska Airlines announced an order for 50 new 737s from Boeing on Oct. 11, totaling $5 billion at Boeing’s list prices. The order, to be filled from 2015 to 2022, denotes the airline’s largest single order in terms of dollars spent, according to a press release from the company. “This order positions us for growth and ensures that we’ll continue to operate the quietest and most fuel-efficient aircraft available for the foreseeable future,” Brad Tilden, Alaska Airlines president and CEO said in a statement. “We value our longstanding relationship with Boeing and look forward to painting ‘Proudly All Boeing’ on the nose of our aircraft for many, many years into the future.” The order is for 13 of Boeing’s Next-Generation 737-900 Extended Range aircraft, with 20 737 Max 8s and 17 737 Max 9s filling out the sale. The Max line is the company’s newest adaptation of its ever-present 737 craft. Set to make its commercial debut next year, the 737 Max will use 8 percent less fuel per passenger than its competitor, the Airbus A320neo, Boeing claims. “The 737 Max will be a great addition to Alaska Airlines’ all-Boeing 737 fleet. This order demonstrates our hometown partner’s strong commitment to operate the most fuel-efficient single-aisle airplanes on the market today and in the future,” Boeing President and CEO Ray Conner said. Boeing and Alaska Airlines are both headquartered in Seattle. The 737-900ER can carry up to 220 passengers, 31 more than the 737-800. Alaska Airlines’ 737-900 ERs will feature leather seats with a new design that will provide passengers with increased legroom, the company said in a statement. Alaska Airlines currently flies a fleet of 120 Boeing 737s. Its recent order of 50 new aircraft is in addition to 25 the company is expecting from Boeing as a part of a previous order; 50 of the new planes will replace older 737s that are to be retired, while the remaining 25 will add to the airline’s fleet, according to Bobbie Egan, a spokesperson for the airline.

Cuts threaten budgets for Natives, veterans, contractors

Automatic cuts in the Department of Defense budget of up to 18 percent are set to kick in Jan. 2, 2013, if Congress does not act. The cuts, approved by Congress in August 2011 as a part of the Budget Control Act deal to raise the national debt ceiling, trim $500 billion off Defense Department budgets from 2013 to 2021. These cuts are in addition to $487 billion in Defense cuts President Barack Obama has said he plans to enact over the same time. The across-the-board cuts, which traverse nearly every Federal department and agency, leave active military pay and mandated spending such as Social Security and Medicaid alone, according to a summary of the Budget Control Act, or BCA, by the Bipartisan Policy Center. Active duty military pay is exempt from the cuts and though many in Washington, D.C., including the president, have promised to make veterans benefits exempt from the sequester knife, action has yet to be taken. Sen. Lisa Murkowski finds this particularly disconcerting. “We need to ensure that our military is taken care of. Sequestration delivers a harsher blow (to Alaska) because of the nature of our state,” Murkowski said. Alaska’s veteran population, at 14 percent, is nearly double that of the rest of the nation, according to the U.S. Census Bureau. The BCA cuts will be implemented through an automatic mechanism called sequestration if Congress does not agree to balance out the cuts by agreeing to $1 trillion in spending and revenue adjustments in the next federal budget. During an Oct. 2 briefing White House Press Secretary Jay Carney called sequester “not good policy” and said the president is disappointed Congress has to this point not been able to resolve the issue. Rep. Don Young points out the House has passed a budget, however the Senate has been reluctant to tackle the issue. The Senate has not passed a budget since April 2009, and the federal government has been funded through a series of continuing resolutions. “The House has done its job. The Senate’s done nothing; they haven’t passed a budget. If they passed a budget, we wouldn’t have sequestration right now,” Young said in a visit to the Journal office Oct. 8. While he’s unsure how it will all play out, Young said he doesn’t see sequestration being applied in its current form. “There won’t be an expansion of money. I think there will be a stabilization of money at a fixed figure, probably a 2012 figure,” Young said. If nothing is done about sequestration soon, before the end of the year, Young estimates the Congress will “kick it down the road,” in the form of a short-term extension to delay the budget cuts. For Alaska, the issue really hits home in terms of the possible impact on companies fulfilling defense contracts. In 2011, DOD awarded $3.1 billion in contracts to 740 companies in the state. An impact study done by the Center for Regional Analysis by George Mason University found that sequestration could cost Alaska more than 10,400 jobs, split nearly evenly between the public and the private sectors, during the first two years of the cuts. Congruent to the job losses, Alaska’s economy would take a roughly $300 million hit, the report predicts. Nationwide, the study estimates sequestration could lead to 2.1 million jobs lost, raising unemployment to greater than 9 percent by the end of 2013 as the total blow to the economy is absorbed. At 18 percent, defense cuts have garnered the bulk of attention surrounding sequestration, but 9 percent cuts to other government entities could be felt much the same. In all, the federal government spent $12.6 billion in Alaska during 2010, according to numbers compiled by the Alaska Department of Labor. The U.S. Department of the Interior, encompassing the Bureau of Indian Affairs, National Parks Service, and Bureau of Land Management spent $149 million on contracts and grants for private organizations over the same year, according to USA Spending, a government-run website for spending analysis. Alaskan Natives comprise almost 15 percent of the state’s population, compared with just over one percent nationally, according to the Census Bureau. Of the 740 companies contracted by the Pentagon in Alaska, 186 are Native corporations. Kevin Allis, executive director of the Native American Contractors Association, said the damage done by sequestration could affect more people than just those in contracting businesses. “This whole sequester thing has been very unsettling for a lot of people, especially our contractors,” Allis said. “They’re formed to provide benefits for large communities — not minimizing the damage and impact on other contractors — but there’s a very special place for these businesses, and they perform a very vitally important service and benefit to their communities.” The uncertainties surrounding the looming cuts go beyond simply whether or not DOD budgets are slashed. How remaining monies will be allocated to the different programs and projects throughout the department prevents contractors from effectively preparing for the future. “Everybody has to just wait, and wait and wait. Certain contractors with certain agencies may not see a significant drop because DOD may say, ‘OK, we’re going to put more money over here, or leave money unchanged over here but we’re going to scrap this whole thing.’ We don’t know how they’re going to vet that all out,” Allis said. The best way for defense contractors to combat the unknown right now is for them to look for new business in other areas, to focus on forming new relationships with private sector businesses, Allis noted. To make the budget calamities even worse, not being able to count on future work prevents contractors from being able to effectively manage their current workforce. Without ample work on the horizon, some companies may have to look at trimming the size of their staff. Allis said this possibility seriously troubles him. “It’s the end of the year. There’s a lot of things families have to plan for in November and December, there’s holidays. And to give somebody a pink slip at this time — there couldn’t be a worse time,” Allis said. When contacted about the potential burdens of sequestration, Alaska Native organizations were reluctant to comment. There may be legal ramifications for those companies who deem layoffs necessary. Under the Worker Adjustment and Retraining Notification, or WARN, Act, federal law requires employers with more than 100 employees to give a minimum of 60 days notice to workers affected by impending furloughs. A letter issued by the Department of Labor on July 30 addressed widespread uneasiness felt by government contractors was issued to quell fears about complying with WARN. It points to wording in the WARN Act that gives employers some wiggle-room in instances of such uncertainty. Fines cannot be levied on employers who cut their workforce in response to “some sudden, dramatic, and unexpected action or condition outside the employer’s control,” according to the letter. Additionally, the White House issued a memo Sept. 28 assuring employers worried about the legality of layoffs handed down as a response to sequestration that liability costs incurred by businesses will “qualify as allowable costs and be covered by the contracting agency.” Regardless of the outcome of sequestration, Young stresses that the U.S. must return to its roots to grow the economy and solve its fiscal emergency. “The only solution to this economic problem we have is the development of resources and the manufacturing from (resources),” Young said. “The reason this country was great was the utilization of our resources.” Elwood Brehmer can be reached at [email protected]

AFN addresses challenges, marks 100 years for Grand Camp

The 2012 Alaska Federation of Natives convention will be held Oct. 18 to Oct. 20 at the Dena’ina Convention Center in Anchorage with the theme “Success Beyond Barriers.” “It’s about our people’s repeated success at overcoming barriers and finding ways to thrive beyond the challenges that persist, especially in rural Alaska,” AFN President Julie Kitka said. The annual AFN event will be preceded Oct. 15 to 17 by the First Alaskans Elders and Youth Conference. The 29th Elders and Youth Conference, also at the Dena’ina Center, has the theme of “Native Knowledge: Respecting and Owning our Living Culture.” The Elders and Youth event, designed to preserve traditional Alaska Native culture in a modern world, is expecting more than 1,500 participants in 2012. The keynote Youth speaker at the Elders and Youth event will be Peter Squartsoff, an Alutiiq from Port Lions who works as a language mentor in Afognak, and Sam and Garrie Herman. The Hermans, Cup’iks from Ninivak Island off the Western Alaska coast, have been married for more than 60 years and are the keynote Elder speakers. Sam Herman was a member of the Alaska Territorial Guard who helped build the railroad from Anchorage to Whittier, and Carrie is a talented artist who along with her husband are active in practicing traditional values and heritage. This year’s keynote speaker at the AFN convention will be Carol Wren, director of employment and training services at Cook Inlet Tribal Council. Wren was also chosen as one of Alaska’s Top Forty Under 40 by the Alaska Journal of Commerce this past January. “It’s a big honor,” Wren said. “I can really connect with the ‘Success Beyond Barriers’ theme.” Within the theme, several specific issues are scheduled to be addressed: food security and management of subsistence resources, energy needs for Native communities, education reform and the Native community’s relationship with the State of Alaska. This month, state agencies are celebrating Energy Awareness Month, led by the Alaska Energy Authority. AEA representatives will be attending meetings concerning energy usage at the convention. Another notable part of the AFN agenda is recognizing the 100-year anniversary of the inaugural Alaska Native Brotherhood/Alaska Native Sisterhood Grand Camp gathering. “One of the great things about the AFN Convention is looking back and recognizing and celebrating our past, like (ANB/ANS), while seeing the challenges and opportunities we face at the same time,” Wren said. The Juneau-based ANB/ANS held it’s first Grand Camp in Sitka in 1912. The organization’s focus is “to improve individual and municipal health and laboring conditions, and to create a true respect in Natives and in other persons with whom they deal for the letter and spirit of the Declaration of Independence and the Constitution and Laws of the United States,” according to its constitution. Gov. Sean Parnell, First Lady Sandy Parnell, Rep. Don Young, Sen. Mark Begich and Sen. Lisa Murkowski are all scheduled to speak at the convention. In addition, Hawaii Sen. Daniel Akaka will be in attendance and recognized for “his many decades of leadership and collaboration” on Native issues, according to AFN. AFN was formed in 1966 to assure a fair lands settlements for Alaska Natives, with 400 people from 17 Native organizations attending the first three-day meeting. Today, according to AFN, the event draws more than 4,000 attendees every year and is the largest annual gathering of Native people in the United States. Elwood Brehmer can be reached at [email protected]

Incentives for wellness programs included in health care reform

With uncertainty surrounding how the roughly 2,700-page law will impact benefit costs for employers, fostering a healthier workplace, and in turn healthier employees, as a way of driving benefit costs down, was an overriding message at the State of Reform health policy conference. To grow healthy work environments, insurance providers are encouraging employers to put health initiatives into action termed wellness programs. Lynn Klassert, director of sales for Swan Employer Services in Anchorage, said wellness programs come in a range of forms, from simply replacing traditional office snacks with low-calorie options to individual goal-setting plans. His office, he said, separated into teams with specified health goals, sprouting a small inter-office competition. “This country was kind of built on competition and that model seems to work. I certainly enjoyed it quite a bit,” Klassert said. Health care reform pushes for everyone to be provided coverage, but it doesn’t aim to aggressively control cost. Jennifer Bundy-Cobb, vice president of the Wilson Agency in Anchorage, said incentives provided in the law for enacting wellness programs in the workplace are one place the act considers the root of our health care conundrum — simply put, too many people getting sick. Bundy-Cobb said encouraging an employee to live a healthier lifestyle sounds good on the surface. The challenge lies in committing to a program that will be expensive at first, but ultimately show results. “The first thing that’s going to happen if you implement a really in-depth wellness program with some teeth behind it, is everyone’s going to go to the doctor or have a blood-draw with a panel done,” Bundy-Cobb said. “That’s going to be expensive.” It’s those initial costs that have prevented employers from putting plans that could impact an employee’s premium or deductible, Bundy-Cobb said. For employers willing to bear the front-end cost of a strong wellness program she said the rewards could go much deeper than seeing a drop in health benefit costs. “Maybe I’ve created some moral in the workplace because my employees know I really care about them, and I’ve just improved engagement,” Bundy-Cobb said. “Maybe I’m going to stop 10 percent of them from quitting. Maybe I cut down on the number of sick days taken. Those are things that are much more real, frankly, in terms of numbers and potentially even easier to calculate.” Elwood Brehmer can be reached at [email protected]

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