Anchorage saves $7.6 million with bond sale

On June 17, the Municipality of Anchorage held a bond sale and a whole bunch of Alaskans showed up.For the first time, the city was offering bonds to individuals in denominations of $5,000, with a preference given to Alaska residents. According to municipal officials, Anchorage residents, brokerages and financial institutions bought $10 million of the bonds, with Alaskans in the rest of the state buying another $5 million.Individuals elsewhere in the country bought another $41 million in Anchorage bonds that day.The next day, big investors were allowed in the door and by noon June 18, the entire $342.3 million in tax-exempt bonds were sold.The sale was the biggest in the municipality’s history. It culminated a year-long effort by the city and the Anchorage School District to work together to improve the city’s bond rating and save transaction costs by holding one big combined sale.Leading the effort were Tony Price, the city’s senior finance officer, and Janet Stokesbary, chief financial officer for the school district. The school district can’t issue bonds directly; instead, the municipality does it for them, since school bonds are backed by the city’s creditworthiness.Price formerly worked for the Alaska Housing Finance Corp., where he gained extensive experience in issuing bonds, including retail sales with an Alaska preference. He was part of a bond management group created by the city’s chief fiscal officer, Kate Giard, to directly oversee city bond issues formerly handled by contractors. Giard said the city currently has about $1.2 billion in outstanding bonds to manage.Price and Stokesbary began meeting last August to formulate a policy for municipal bond sales. In order to get the top rating for the bonds, and thus the lowest interest, they knew that the city and the school district needed to have a reserve account. The bonds, which have maturities ranging from one to 20 years, will yield an average of 4.5 percent to investors."We needed to establish the reserve in case there’s an unanticipated event," Price said. What the bond rating agencies were looking for was one-twelfth of the annual debt service set aside. It’s like always keeping one mortgage payment in a savings account."It provides reassurance to the investor," said Stokesbary.Over the winter, all parties signed on to the reserve account policy, and in April, Price and Stokesbary went to New York to explain it and the planned bond sale to the two bond rating agencies, Moody’s Investors Service and Standard & Poor’s Corp.Stokesbary said the agencies were impressed with the cooperation between a city government and a school district, and awarded the second-highest bond rating, AA, to the bonds.The city subsequently bought insurance to increase the rating to the highest possible rating, AAA.The bond sale combined several elements. It included $54.4 million in voter-approved city bonds to pay for everything from new roads to upgrading the city cemetery. The school district portion went to pay for three voter-approved bonds totaling $131.8 million, including money for construction of a new South Anchorage High School.In addition, a total of $156.2 million in existing city bonds were refinanced, which will generate an eventual savings of $7.6 million to city taxpayers.That had Anchorage Mayor George Wuerch and Anchorage School District Superintendant Carol Comeau smiling at a ceremony held to mark the signing of the many documents required to complete the sale.Wuerch said he was amazed at the level of local participation in the sale. "It is wonderful to see our residents demonstrate such strong confidence in the financial management of the municipality," Wuerch said in a press release.One of the brokers who took orders for the bonds was the Anchorage office of Allan Johnston, the Wedbush Morgan Securities Inc. regional manager, said making bonds available to local residents an "excellent idea.""It’s good for the the community to have local investors involved," Johnston said. "It provides more local accountability and results in better decision-making by everyone."Johnston said the timing of the sale was also good. With the stock market in free-fall, investors are turning to high-quality bonds. "We have clients who are interested in stable, tax-free income," he said. "There’s more interest these days in things that are boring, like bonds. People these days are more interested in preserving capital than making big gains."

Broken belly pod? Palmer firm can do composite repairs

Certified Aircraft Composites LLC is much more than its name suggests.While the Palmer-based company specializes in repairing aircraft, there seems little the family-owned business won’t or can’t do when it comes to projects in composites, fiberglass, plastics or metal plating.Steve Apling has made everything from life-sized composite moose heads to miniature fiberglass glaciers, but aircraft-parts repair and reconstruction is the company specialty, as its name suggests. Apling is Alaska’s only Federal Aviation Administration-certified composite repairman. At 31, he has 20 years’ experience, growing up with the business run by his mother and general manager Donna Aber and stepfather Phil Aber, the company’s shop manager.For two decades, Donna Aber worked at a fiberglass shop in Anchorage but three years ago started her own business in the Matanuska-Susitna Borough area.The new business is the state’s first and only FAA-certified repair station for composite and fiberglass aircraft parts, Donna Aber said. Historically, if an aircraft owner needed a fiberglass or composite part like a nose bowl, belly pod, tail cone fairing or cowling repaired it had to be shipped to the Lower 48. With Alaska having the largest general aviation fleet per capita in the United States, the business made sense.Fiberglass has been used on aircraft at least since the early 1950s, Donna Aber said. Modern techniques and newer materials such as carbon fiber and Kevlar can make the old parts stronger and lighter than ever before.Work comes from all parts of the state and requests come from the Lower 48 but shipping costs have prohibited the company from expanding beyond Alaska, she said.Many of the parts also are of awkward size and often are fragile, so shipping a job out of state is impractical, Phil Aber said."If it’s broke when it comes up, it’s no big deal," Donna Aber said.The company recently moved to a new 4,000 square-foot building off the Parks Highway between Palmer and Wasilla. The building, twice the size of the company’s old headquarters, has high bay doors, large enough to fit and work on large boats, a service that has taken off surprisingly well, Donna Aber said.A large boat lift has been added to ease movement of the vessels into the shop and to suspend them for work on hulls.In addition to large boats, the company does a good share of repair work on smaller watercraft like canoes, kayaks and Jet Skis.Snowmachines, with their fiberglass and composite cowlings, also are an in-demand repair item.The company also specializes in ultralight aircraft parts, like fuel tanks. Its retail shop sells an assortment of plastics used for anything from bushings and bearings to runners for dog sleds. The retail shop also has materials and tools for do-it-yourself builders of boats, ultralights and experimental aircraft.Sometimes, however, the work is better left in the hands of a professional, like Apling.One customer, who had a moose stomp on his canoe, attempted to patch the hoof-sized hole himself but gave up and brought the boat in after his repair attempt proved less than perfect.Another customer recently purchased an antique meat grinder that had its old Bakelite housing broken in shipment. The meat grinder’s manufacturer, Hobart, while still in business, no longer had parts for the old machine, nor could it reproduce Bakelite, an early-era plastic.Apling was able to reproduce the housing out of a newer material that looks nearly identical to the original.The company also says it has the only gold-plating service in Alaska. Along with 24-karat gold, the company can plate in nickel, platinum, copper and silver.Guns, motorcycle parts and jewelry are popular plating items. If it’s a metal alloy, it can be plated, Phil Aber said.One woman recently had the company gold-plate the drain to her whirlpool, so that it would match the faucets and other fixtures in her bathroom, Donna Aber said.The company’s eclecticism helps pay the bills, said Donna Aber, adding that the sheer variety of work also makes the job interesting."You never know what a customer is going to want when they walk in," says Phil Aber. "When you’re a small business it’s always a struggle," Donna said. "You’ve got to do everything you can to make a living. ... We never get tired of what we’re doing."

More businesses outsourcing their payment processing

You’ve put in the required blood, tears and sweat, and your business shows it. Your client list has expanded, and the incoming payments are beginning to swamp your small business office. The overhead is higher than you expected, and you’re worried the sheer volume of transactions might affect the quality of your service. Do you hire more help? Pare down your client list? Both those options will cost you money.There is a better alternative. You can save yourself time, aggravation, and in some cases, even money by outsourcing your payment processing services.If you’ve never considered it, outsourcing might seem like a big step. In reality, however, the opposite is true. Outsourcing lets you take a step back, simplifying and streamlining your operation. It lets you focus on what you do best -- growing your business and earning more money -- while experts handle the paperwork.In fact, outsourcing payment processing has so many advantages it’s becoming a growing trend among small- and medium-sized businesses. Many of Alaska’s most prominent businesses have already come to realize the benefit of having someone else take care of this chore for them.How it worksThe premise is simple. You rent a post office box, print the address of the box on your remittance envelopes, and give your outsourcing partner (generally a bank or other financial institution) permission to open the box. At that point, your work is basically done.The bank retrieves payments from the box, processes them and deposits the money directly into your account. The payment records are collated and delivered to you, usually in an electronic format compatible with your own financial software.If handled properly by a reputable company, this entire process should be transparent to your customers. If you live in Anchorage, Fairbanks or the Matanuska-Susitna Borough, for example, it is likely that some of your monthly utility payments are already being handled in this fashion.Variations on a themeGenerally speaking, there are two variations on payment processing services, each of which is geared toward a certain type of business.The first type, sometimes called "wholesale" processing, is geared toward businesses that receive relatively few payments, typically less than 1,000 per month, in relatively high dollar amounts -- doctors’ offices, for example. These businesses generally use a wide variety of different nonstandardized envelopes and remittance slips, which must be processed manually by the outsourcing partner.The second variation, sometimes referred to as "retail" processing, is oriented toward businesses that do a high volume of transactions in what are generally low amounts -- a telephone or electric utility, for example. These businesses receive a lower rate in return for formatting their return envelopes and remittance slips in a very precise way. This allows them to be efficiently processed by machine. The bank then passes the savings on to the customer.CostsBecause it handles payments for many different businesses, the bank operates on an economy of scale that should allow it to offer very reasonable fees to each individual client.The whole arrangement, a good deal to begin with, becomes even better when it results in a net savings for your business. When deciding whether payment outsourcing is right for you, remember to factor in these considerations: Cash flow: One of the most important benefits to outsourcing is that the bank, upon receiving your payments, can deposit them into your account immediately. This works to your advantage because the funds can begin drawing interest sooner. A high volume of transactions, even at a low per-transaction dollar amount, can mean significant savings in the long run, which translates to more money in your pocket. Time and expense: Outsourcing will reduce the time and related expenses you and your employees currently spend processing payments. Every hour you save can then be reinvested back into your business. Accuracy: Because your payment processing is being handled by experts, it may well reduce the number of costly errors made on the receiving end. Security: Outsourcing separates payment processing from bookkeeping, which may provide better controls for smaller businesses.Of course, every business is different, and yours has its own unique needs. But advances in technology have brought outsourcing to the point where it can help even small- and mid-sized businesses with their operations.Alan Dablemont is vice president of deposit services at First National Bank Alaska. He can be reached at 907-777-4685.

Ambassadors hope North, South Korea can eventually be reunited

Ambassadors representing South Korea and the United States stressed the value of an eventual unification of North Korea and South Korea during a recent appearance in Anchorage. Still, current talks toward that goal are stalled.Yang Sung-Chul, Republic of Korea ambassador to the United States, and Thomas Hubbard, U.S. ambassador to South Korea, spoke July 11 at The Anchorage Hilton Hotel. The event was coordinated by the Alaska World Affairs Council and the state Division of International Trade and Market Development. South Korea is a major Alaska and U.S. trading partner.The diplomats agreed the United States plays a role in reuniting the nation, despite concerns over North Korea’s development of long-range weapons threatening other countries."We believe a strong, vibrant Korean economy is important to U.S. interests," Hubbard said. "South Korea is clearly one of the most successful and outstanding countries, but as a divided nation, Korea faces tremendous challenges no other nation faces."A strong Korean economy is important to Alaska, which lists South Korea as its No. 2 export market behind Japan. In 2001, 18 percent of Alaska exports went to South Korea or $463 million.Alaska leads U.S. Pacific states in exports to the country, Hubbard said.Yang pledged to push for reopening a South Korean consulate office in Anchorage. An office opened in 1982 but closed in 1999 during the country’s financial crisis.Yang, who was appointed in 2000, also expressed his belief that Alaska and South Korea can expand their business relations.In another look to the future, Yang envisioned an eventual end to separation between North and South Korea, despite recent setbacks. "We must be resolute, no matter how disheartening the process may be," he said.Yang described the contrast between the two halves of the divided region, which share a common language and culture. While South Korea is now the world’s 13th largest economy, North Korea has become one of the world’s poorest nations and a major recipient of food aid. North Korea also has the world’s fifth-largest standing army, he said."The contrast between South Korea and North Korea stems from fundamental leadership choices," Yang said.The different government systems have determined each nation’s economic destiny, he said."The world has changed. Communism is a thing of the past, especially the breed (of communism) in North Korea," Yang said.Although peace between the two countries may not be achieved soon, working with the United States and other countries may offer the best hope, Yang said.Economically, South Korea has recovered from its financial crisis in 1997 due to government reforms in the last four years, he said.From a nearly 7 percent drop in gross domestic product in 1998, South Korea rebounded in 1999 with gross domestic product climbing by almost 11 percent, then 9 percent in 2000. Last year the gross domestic product grew by 3 percent."The Republic of Korea is fast becoming a dynamic hub of Asia and the world," Yang said.The United States recently withdrew from talks with North Korea, but Hubbard believes the door to dialogue with North Korea remains open.He also praised Alaska’s role in promoting trade between the United States and South Korea. The state could be important to South Korea’s development of transportation and cargo operations as well as tourism, Hubbard said.

Usibelli says it's not to blame for test coal quality

A number of problems have been cited with a 90-day operating test of the Healy Clean Coal Project in 1999, which, among other things, was designed to burn coal of lower quality than used by other power plants.One was that average quality of the coal supplied to the plant by Usibelli Mines Inc. was too good -- specifically, it was 3 percent higher than the target quality required for the test.An article in May 12 issue of the Journal of Commerce reported that Usibelli was unable to supply the quantity of "waste" coal needed for the test.Steve Denton, Usibelli’s General manager, said this was incorrect. He said that his company was able to supply more than enough waste coal for the test. Waste coal is lower-quality coal that is found around higher-quality coal that can be sold commercially.One of the objectives for the Healy plant is to demonstrate a commercial use for very low-quality coal that cannot now be sold.In a May 16 letter, Denton said the higher quality coal occurred partly because personnel from the Alaska Industral Development and Export Authority and Golden Valley Electric Association were feeding higher quality coal into the plant to "blend up" the mixture.However, the higher coal quality had nothing to do with the operating problems of equipment in the plant, Denton said."Usibelli actually went beyond our initial scope of work for the 90-day test and, in good faith, advised and assisted AIDEA and GVEA in coal-blending techniques," Denton wrote. "However, blending of the coal delivered to the plant was in total control of AIDEA and GVEA."Art Copoulos, AIDEA’s project manager now in charge of the Healy plant, said there were also problems with the coal-feed system in the plant, particularly with fans used to help push pulverized coal into the combustion unit.In a Dec. 28, 1999 letter to AIDEA from Harris Group Inc., an independent consultant hired to review results of the operating test, Dennis Swann, the company’s senior vice president, recommended a redesign of the coal feed system.Harris Group found that the new-technology combustor units performed as expected, and that a retrofit is unnecessary, Swann wrote.

WorldCom could cost GCI millions

Embattled telecommunications giant WorldCom is still paying its bills to Anchorage-based General Communication Inc., but WorldCom could owe the Alaska company as much as $25 million if it goes bankrupt.GCI officials briefed investors July 12 during a conference call about the potential impacts of severe financial woes of WorldCom, GCI’s largest customer.In 2001, GCI billed WorldCom $60 million, and WorldCom voice and data traffic represented 16 percent of the Alaska company’s overall traffic, said Ron Duncan, GCI president. WorldCom also owns 5 million shares of GCI stock. Amid turbulent stock market conditions, GCI’s stock price, which was $8.64 June 17, closed at $5.75 July 16.If WorldCom files for bankruptcy, it could leave GCI with WorldCom bills of typically $15 million to $20 million, Duncan said. The receivables have ranged from $10 million to $25 million, he said.During July, though, WorldCom was still paying its bills to GCI, he said. The situation for the Alaska company is in flux pending decisions by WorldCom officials, Duncan said.Another possible impact would be if WorldCom customers begin switching to a different carrier, he said. However, Alaska telecommunications traffic is carried by GCI and AT&T Alascom, Duncan said. He predicted any such changes would be gradual.GCI officials also said its network has alternate routes and backup capacity in the remote chance of WorldCom shutting down its network. "We don’t believe that any circumstance that could befall WorldCom would have an operating impact on GCI’s network or GCI’s customers," Duncan said.GCI is compiling its second quarter results which ended June 30, company officials said. Those results will be released Aug. 7.Without adjustments for WorldCom impact, Duncan expected a strong second quarter. GCI’s long-distance and other business is healthy, he said.However, WorldCom’s disclosure of nearly $4 billion in accounting errors, and the subsequent collapse of its stock price, have affected the Alaska company."There’s no doubt the events of the past several weeks have increased the short-term risk to GCI," Duncan said.GCI was due to complete a refinancing effort when WorldCom announced its accounting errors, Duncan said. Refinancing would have provided funding for GCI projects in the next five years, he said. However, current conditions have meant scaling back that refinancing, which would have included expansion into the Lower 48, said John Lowber, GCI’s chief financial officer.GCI continues negotiations to complete the refinancing package, Duncan said. Despite the possible impacts, GCI’s president is optimistic about 2002 results. "We don’t believe that other than any amount written off for a WorldCom bad debt that the WorldCom effects will have a material impact on this year’s (earnings before income, taxes, depreciation and amortization)," Duncan said.

Housing agency puts bonding savvy to work

How do you turn $20 million per year into bonds worth $203 million? Ask the Alaska Housing Finance Corp., a state-owned corporation whose expertise in bonds has taken it far beyond issuing loans to home buyers.With a portfolio of more than 30,000 home loans and assets of about $5 billion, AHFC is one of the state’s biggest players in the mortgage industry.Formed after World War II to help provide housing to returning veterans, it rose to prominence in the 1980s as the primary source of affordable home loans during times of skyrocketing interest rates and then plummeting oil prices.With Alaska’s economy stable and more mature, private banks and mortgage companies have largely returned to the traditional mortgage business. AHFC buys many of those mortgages, and its ability to issue tax-exempt bonds has allowed it to continue offering below-market rates for first-time home buyers, low-income residents and veterans.Over the years, AHFC has issued about $13 billion in bonds, including about $11 billion in tax-exempt bonds. So it’s not surprising that when the governor or the Legislature is interested in turning a revenue stream into a big chunk of cash, they turn to the AHFC for advice."We get called on a lot," said Dan Fauske, AHFC’s chief executive.Most recently, Gov. Tony Knowles floated the idea of having the Alaska Railroad Corp. issue bonds to build a natural gas pipeline, thanks to federal legislation giving the railroad special bonding authority. Fauske said he and his staff reviewed and endorsed the idea before the governor went public with it. While not much has happened since the concept was first proposed, Fauske still thinks it has merit.Then there’s the story of the tobacco settlement between the tobacco companies and 46 states, including Alaska. Known as the Master Settlement Agreement, it was signed Nov. 23, 1998. It specified that the state of Alaska would get about $20 million per year as its share of medical costs associated with smoking.As Fauske and chief financial officer Joe Dubler remember it, three counties in New York state first had the idea of issuing bonds -- borrowing money -- and making the payments with the steady stream of revenue guaranteed by the tobacco settlement.Fauske calls the process "securitization" of revenue. "Twenty million dollars doesn’t do much, but securitizing it puts hundreds of millions of dollars on the table," he said. "You can build a lot of schools with that."In the end, that’s exactly what happened. The Legislature approved using 40 percent of the settlement money, and on Oct. 13, 2000, Alaska became the first state in the country to issue bonds to be repaid by the tobacco companies. The sale netted $93 million, which was spent building schools in rural Alaska."The Legislature said, ’Hey, that worked really well. Let’s do it again,’ " Fauske said. So on Aug. 2, the AHFC went to market with another 40 percent of the settlement and netted $110 million. The proceeds are being used for schools, ports and harbors, and University of Alaska buildings.Fauske said that while only six investors were interested in the first bond, the second was so popular that it was oversubscribed by 10 times, meaning only one-tenth of investors seeking the bonds were actually able to buy them. Fauske said the final 20 percent of the settlement will not be securitized. It is being used instead for anti-smoking educational campaigns.Fauske said one advantage of the tobacco bonds is that if they fail, investors can’t come back on either the state of the AHFC. The bonds were issued by an AHFC subsidiary created for that purpose called the Northern Tobacco Securitization Corp. and are backed solely by the ability of the tobacco companies to make their payments.Recently, four small tobacco companies filed suit challenging the Master Settlement Agreement. "If the MSA goes away, a lot of bondholders will be left holding the bag and we’re not going to give them their money back," Fauske said.That’s not true of Fauske’s first securitization project, which consists of general obligation bonds backed by the state. It was Fauske’s way of controlling the amount of AHFC profits taken by the Legislature every year, while generating funds for badly need capital projects.Fauske and his staff determined that of the approximately $100 million in profits generated by AHFC every year, the corporation needed to retain about one-fourth of that amount to maintain its reserves and keep its high bond rating. Another quarter is cash sent directly to the state’s general fund for appropriation by the Legislature.The remainder, fully half of AHFC’s annual profits, have been turned into bonds. In 1999, the agency generated $200 million, which has been used for various state capital improvement projects. Last year, the agency held another sale, netting $76 million.This year, the AHFC warned the Legislature that its income had declined because low interest rates for home mortgages had reduced revenues. The Legislature took the full, previously promised amount anyway, about $6 million more than AHFC had earned."Paying more than we make is not a good thing," Fauske said. "The state needs to deal with the fiscal gap. AHFC can’t do it."We have no problem paying a dividend, but it must be a reasonable amount that doesn’t harm the corporation."

This week in Alaska history

EditorOs note: OThis Week in Alaska Business HistoryO revisits events that shaped our past. 20 years ago this weekAnchorage TimesJuly 15, 1982Energy panel refuses to expedite tariff decisionBy Bill WhiteTimes Juneau BureauA federal panel this week denied requests to decide quickly part of the 5-year-old state challenge to tariffs set by the owners of the trans-Alaska oil pipeline.The Federal Energy Regulatory Commission said Monday the case is too complicated, the issue too new and its staff too raw for it to rule by the state requested deadline of Sept. 1.The court directed FERC to take a "fresh hard look at every aspect of the whole subject," the commission said in its decision.The state and federal governments claimed the tariff is too high. They filed suit just after the pipeline opened in June 1977.A lower tariff would cause the well-head price of oil to rise and thus increase royalty income to the state. At stake is about $3.2 billion extra to the state if it wins the case.Anchorage TimesJuly 15, 1982CIRI creates new department for real estate developmentA new real estate development department has been created by Cook Inlet Region Inc. for expansion into this field, according to Roy M. Huhndorf, president of the regional Native corporation.Huhndorf said the new department, which began operating July 1, will permit more active participation in residential subdivision development and possible future commercial property projects.Robert W. Rude, senior vice president of CIRI, has been chosen to head the new department.Working with Rude will be Charles J. Akers, CIRI vice president for real estate properties, John Evans, manager of CIRI real estate development, and Eugene Sheehan, who has been promoted to CIRI property manager.10 years ago this weekAlaska Journal of CommerceJuly 20, 1992Sealaska stronger than ever, Mallott saysBy the Alaska Journal of CommerceSealaska Corp., boasting an eighth consecutive profitable year, showed net income of $21.3 million for the fiscal year ended March 31, on revenues of $127.3 million, corporate officials said."Sealaska is stronger financially than ever before," said Byron Mallott, president and chief executive of the corporation. "Shareholders equity continues to grow each year and that means stable long-term benefits for all our shareholders." Operating income for the company, before natural resources revenue-sharing directed under the Alaska Native Claims Settlement Act, was $29.8 million, while earnings from continuing operations reached a record level of $21.8 million.During the fiscal year, Sealaska paid out dividends to shareholders totaling $7.9 million and deposited $6.7 million into the Elders’ Settlement Trust fund, a fund created by a vote of shareholders in 1991.Sealaska’s primary sources of operating income came from timber harvesting and a carefully managed investment portfolio, company officials said.Alaska Journal of CommerceJuly 20, 1992Mammoth owner faces federal payroll tax trialBy Margaret BaumanAlaska Journal of CommerceA California businessman, who owned two Alaska trucking firms, was to go on trial today on a 101-count indictment of alleged failure to pay federal payroll taxes totaling $4.7 million.Donald C. Klein was indicted May 1 by a federal grand jury in Fresno, Calif., on 49 counts of failing to account for and pay employee withholding tax returns and three counts of making false statements to the Internal Revenue Service.Klein was arrested May 1 and freed on a $50,000 bond, the U.S. Attorney’s office said.Klein was identified in the indictment as an owner of Mammoth of Alaska Inc., Progressive Transport Inc., Mammoth Freight Lines, and Kandle Co. Inc. Bill Almeida, also of Fresno and an owner of Mammoth, was not named in any of the indictments, according to the U.S. Attorney’s office.Almeida, 63, who was in Anchorage on June 12 when employees of Mammoth of Alaska and Progressive Transport received their final paychecks, never mentioned Klein’s troubles with authorities. He blamed deregulation of the trucking industry for much of the firm’s troubles.-- Compiled by Ed Bennett.

Rising demand drives health costs

One morning a colleague of mine met with a prospective client -- I’ll call him Mr. X -- who was looking for an employer-sponsored health plan for his small company. Later in the day, when I asked how the meeting went, I heard an all-too-familiar story from my colleague: the rising cost of health insurance versus small business’ ability to pay.The story is familiar because so many employers find it difficult to find a connection between the cost of health care and the cost of health insurance.My colleague had presented Mr. X a summary of rates and plan designs for a comprehensive health and welfare plan. The package included options for medical, prescription drug, dental, life and vision coverage, standard for Mr. X’s industry and group size.Mr. X responded, loudly and with colorful language, that he was not going to pay that high a premium for a health plan. I do not believe that Mr. X is a mean-spirited man, and his statement did not offend my colleague. I, however, was frustrated, and not by the use of expletives in a business meeting. I was frustrated at Mr. X’s reaction to the cost for health insurance in Alaska.We are told almost every day that the cost of health care is rising at dramatic rates. We read it in the paper, see and hear it on the news. So why are employers, such as Mr. X, and employees shocked when they learn how much they must pay to insure that same health care? Perhaps it is because they don’t understand why those costs keep going up.Clients often ask us why costs for employer-sponsored health insurance plans continue to rise. The reasons are so familiar that we can recite them from memory. More educated and aging consumers are demanding access to new and expensive services and therapies, including expensive medical technology, that require a specialized staff. Federal and state mandates that cover certain benefits require specific, and costly, administrative procedures. Health claim payers must improve infrastructure to meet federal regulations. The federal government is attempting to shift costs to the private sector. Prescription drug prices are rising. More new prescription drugs are available than ever before, and more people are demanding them in response to marketing by the drug industry. Research and development costs for new drugs increase their initial price. People are supporting more and more mandates, such as those for cancer screenings and contraceptive coverage. We all pay for mandates, even for those that don’t interest us.While I was completing an online health care economics course, the instructor asked us to chant, "If demand goes up, so does the cost." This is the mantra for anyone who owns or manages a successful business, regardless of the size. So why do employers and employees have trouble applying that principle to health care? If American consumers are truly more educated than ever, why can’t we put two and two together and get four?The United States pours more money into its health care system than any other industrialized country. People receiving care here have access to the most advanced medical technologies in the world. Yet we still think our health care system needs changing. Maybe the system needs repairing, but the fact remains that development of sophisticated diagnostic machines and new medicines carries an equally sophisticated price tag.Many small-business employers are quick to blame insurance companies or the health care system for these rising costs. They also believe larger companies get a better deal when it comes to purchasing health insurance. Large companies usually do have an advantage over small businesses when purchasing anything, such as copier paper, because of the relative volume. But even a large company will feel the pinch if the cost of paper starts doubling every five or seven years.Instead of feeling helpless in the face of rising health care costs, and angry about the corresponding rise in premiums, employers and employees need to work together to satisfy their mutual needs. Here are a few suggestions: Understand that medical care in this country isn’t free, to anyone. Even when the patient doesn’t pay, someone does. Seriously consider how necessary a major test or treatment is before accepting it. If a physician orders an expensive test, such as a MRI, find out if the problem can be diagnosed in a less expensive manner. Examine options for having lab work done at a facility other than the doctor’s office. Realize that most employers, particularly small businesses, simply don’t have the resources to pay the full amount for coverage. Employees must be willing to assume some of the cost. Work with an employee benefits professional to assemble a plan that combines basic coverage with options employees can purchase according to specific needs. Focus on the value, not the cost, of the benefits package. Buying health care coverage is not unlike buying other goods and services. Weigh the expense against the return to determine the overall value.No one wants to pay the premiums for health care insurance. But we all want to take advantage of continuing improvements in technology and treatment. As long as we keep consuming, we have to keep paying.To all the Mr. Xs out there: The next time you pay the bill for a medical procedure or service that you or a loved one consumed, think about your experience. Was it the latest and greatest? Did it help you, or someone else, feel better? I hope it did, but I also hope you understand it came at a high cost.That is why those health insurance premiums are so high.Jennifer Bundy-Cobb is a senior account executive for The Wilson Agency LLC in Anchorage. She can be reached via e-mail at [email protected]

Industry study supports tax credit for Alaska natural gas

FAIRBANKS -- Sens. Tom Daschle and Frank Murkowski are promoting a new oil company-sponsored analysis that endorses tax credits for a natural gas line from Alaska to the Lower 48.Murkowski, R-Alaska, and Daschle, the Democratic majority leader from South Dakota, issued a joint news release touting the findings of the study, conducted for Phillips Petroleum Co.The study was released as House and Senate negotiators continue crafting a compromise energy bill. The Senate version of the bill contains the tax credit for the gas line, as well as a construction loan guarantee. The House version contains neither.Charles River Associates wrote the report for Phillips, said Don Duncan, the oil company’s vice president of government relations in Washington. He said the report was prompted by lobbying in Canada by Arctic Resources Corp., which wants to build a line on an alternative "northern" route that would be prohibited under both the House and Senate bills."Arctic Resources has been levying charges and got the Canadians excited that the financial mechanism that passed the Senate would create market distortions in the United States and would do the same at the Alberta hub," Duncan said. "We knew that wasn’t the case," he said, but the company wanted an independent analysis to confirm it.The Canadians, however, haven’t been convinced. Pam Chappell, spokeswoman for the Canadian embassy in Washington, said the subsidy is bad news for Canada and the United States.The credit "will distort natural gas markets, undermine their efficiency and slow development and production in the rest of the United States and Canada," she said. "This would reduce U.S. energy security, counter to the purpose of the act."Alaska Gov. Tony Knowles and Murkowski have said Canada doesn’t have much room to complain, since it has provided subsidies to some major energy projects over the past decade.Chappell said those subsidies went to oil projects that weren’t large enough to affect the market. Duncan, though, said the Alaska gas line would only supply 5 percent of the total North American market and that it would have an eight- to 10-year development period.The Charles River report predicted that the proposed tax credits would benefit all consumers by making possible a line that will lower energy prices.At the same time, the credits would likely cost the government nothing, it said. That’s because the authors figure prices will stay high enough to prevent the tax credit from kicking in. The tax credit would start whenever gas prices at the Alberta hub fall below $3.25 per million British thermal units. The money saved must be paid back whenever prices rise above about $4.90."Since June 2001, the 35-month futures contract has indicated a price range of $3.50 to $3.75," the report said. "This signals a market expectation that over the long-term, natural gas prices will be considerably higher than they were expected to be before 1999."Murkowski said encouraging the project was important because the United States needs "safe and secure North American sources.""The study confirms our belief that the ’safety net’ will have minimal impact to the markets and the taxpayers," he said.

Activist makes Internet safer for business and children

Parry Aftab has a blunt warning about the Internet. "If they don’t make the Internet safe for kids, they’re going to turn it off." Online commerce is equally at risk, she said, until businesses can convince consumers their money and their privacy are safe."We have to earn their trust."Aftab should know. Currently a special counsel for the New York law firm Darby & Darby, she bills herself as a an Internet privacy and security lawyer. As the executive director of Wiredpatrol.org, she has recruited more than 10,000 volunteers in 76 countries to help victims of identify theft, hack attacks and online stalking.Aftab is widely quoted in the national media and advises everyone from the United Nations to the Ad Council on the topic of Internet safety. She works closely with law enforcement personnel around the country, many of whom in turn have volunteered to help victims of Internet crime who come to her Web site.Aftab has been involved with the Internet since the early days of America Online, when she hosted a forum for people with legal questions. Since she didn’t have all the answers, she recruited other lawyers to help out. She was then invited to host a similar forum for Court TV’s online chat room.Aftab said she realized she was a "cyber lawyer" when judges started quoting her chat room comments in their decisions. She eventually made it official, forming a virtual law firm based in New Jersey, farming out cases to a group of affiliated attorneys based on their specialities.Aftab spoke with the Journal last month at the office of Lt. Gov. Fran Ulmer. Ulmer, who has long promoted making state government services available on the Internet, met Aftab in November 2000, at a security conference sponsored by Microsoft Corp.When asked about the advice she gives corporations on their Internet practices, she said companies should first make sure they’re observing existing laws governing customer records. "All the laws that apply on the ground apply to the Internet," she said.Aftab said that posting an accurate and complete privacy notice on a corporate Web site is vital, since failure to do so can be a violation of state and federal consumer protection statutes."If you collect information about your customers, you must spell out what you collect, how you collect it, how you use it, who has access to it and how people can get off it," Aftab said. She said this includes "cookies," small files placed on the computers of visitors that track their progress through a Web site.Aftab said it’s important to keep the privacy statement updated as practices change. In general, she said it’s best to gather as little information as possible. "If you’re not using the information, don’t collect it, because then you have an obligation to protect it."Aftab said another issue she’s ecountered involves small businesses who want to use their existing credit card merchant account to sell products online. Often, a different merchant account is required specifically for that purpose. She also said that companies selling products on the Internet should clearly spell out any warrantees.Aftab said sales taxes can be a tricky issue in the online world. Likewise, companies who hire people online need to be aware of income tax implications. "Employers need to know whose taxes apply if the employee is in another state," she said.Aftab said she worked mostly with corporate clients earlier in her career until the day about four years ago when she saw a particularly gruesome example of child pornography. "The child I saw changed my life," she said."Before, I protected corporations," she said. "After that, I protected people." She developed her Wiredpatrol.org group to help accomplish that goal. She has also written two books designed to help parents protect their children when they go online. "I’m a free speech advocate," Aftab said. "I don’t want to suppress information. I want to empower parents."Aftab is currently in the midst of a year-long sabattical from the law firm so she can deal full time with safety issues that range from online stalking to schemes designed to defraud the elderly.She continues to be interested in online business issues as well. "The Internet is God’s gift to small business," she said, using as an example the Alaska bed-and-breakfast she was able to find via the Internet for her trip to the state.But for e-commerce to truly flourish, the security of transactions must be assured, Aftab said. "If we don’t find a way to protect people and make them secure, they’re not going to shop." She also pointed out that many people don’t have credit cards, so a means for them to safely buy things on the Internet must be found."I like to say that if we can protect our kids, our cash, and our kidneys (our health), then the Internet will be a success," Aftab said.

Air France cargo may bypass Alaska

Air France cargo executives were given the red carpet treatment June 22 by folks in Fairbanks celebrating the Paris-based airline’s 10-year anniversary of operations in town. But any future party may well be a wake for the French airline, as it has hinted it may use an airstrip in Russia as its stopover for refueling. Air France also is purchasing three new long-range freighter aircraft this year capable of nonstop cargo service from Paris to Asia, bypassing Fairbanks International Airport or any other North American or Russian airport altogether.While Air France officials enjoyed sightseeing and riverboat rides during the gala last month, the looming threat of the airline’s pulling out of Fairbanks was like bugs in a punchbowl that everyone noticed but politely ignored, said Dave Carlstrom, Fairbanks International marketing director.Carlstrom said the airline earlier this year had said it was considering switching from Fairbanks to Tashkent, Uzbekistam, as its refueling stop, but "aero-politics’’ have stopped the move, at least for now.An April 1 European ban on noisy aircraft has hit hard Russia’s aging fleet of Soviet-era airplanes. In response, the Russians have banned some flights on shortcut routes over Siberia sought by the European carriers."(Air France) was unable to procure requested overflights from the Russians," Carlstrom said. "If they had been able to work out the overflight issues, it could have been au revoir."Air cargo companies operate on razor-thin margins and if they can save money somewhere or somehow, they will, according to Ray Keiser, an aviation consultant with Keiser Phillips Associates in Oakland, Calif."Airlines will use every possible economic advantage," Keiser said.Air France moved its operations to Fairbanks from Anchorage in 1992 after 33 years of refueling in Alaska’s largest city. The move, which followed Lufthansa in moving cargo operations to Fairbanks, saved the airline about 20 minutes in flight time between Europe and Asia. The move also presumably saved the air carrier in jet fuel costs since the airport is near Williams Alaska Petroleum Inc.’s (then MAPCO’s) refinery at North Pole.In the last decade, Fairbanks has recorded 3,755 freighter landings from the French carrier, which has purchased an estimated 115 million gallons of fuel and 20,000 rooms for crew lodging, Carlstrom said."The rule of thumb is for every gas-and-go fuel stop, $25,000 changes hands," Carlstrom said, adding that most of the money spent by the airline goes for refueling.To lose the French carrier would not be devastating to Fairbanks International, but it would be significant, Carlstrom said. Air France’s landing fees account for about 20 percent of Fairbanks International’s annual $6 million revenues."It would be a major hit," Carlstrom said, adding the best the airport can do at this time is to be a good host and hope for the best."There are forces at work that are not in our favor," said Carlstrom. "There is no other industry where major capital assets can literally fly away overnight."Air France has been extremely happy with Fairbanks International and does not have any plans to move out of town currently, said Ron Auge, Air France’s station manager in Fairbanks.But, he said, "The chance is always there."By the end of the year, the airline will take delivery of three Boeing 747-400 long-range freighters, airplanes that could allow Air France to make nonstop trips from Paris to Japan with a nearly full payload.Initially, Air France, the fourth largest freight carrier in the world, will use the new aircraft on flights to Mexico and South America, according to the airline.The airline’s dozen 747-200 freighters will continue freighter service throughout the globe, including the Paris-Fairbanks-Japan trip.In the short term, it’s the Tashkent airstrip in Russia, not the long-range freighters that pose the biggest threat to North American airports, especially those in Alaska, Carlstrom said.The airstrip in Tashkent has a nearby refinery and several of the world’s airlines make stopovers there.In the past two years, Lufthansa and Air France shifted Europe-Fairbanks-Seoul, South Korea, flights to the Tashkent airstrip. Korean Air and Asiana have also shifted their Anchorage stopover to the Russian airport for their Korean flights, Carlstrom said."(Tashkent) has cleaned our clock on the Seoul routing," Carlstrom said. "One hundred percent of Europe-to-Seoul traffic that once came through Alaska now goes through Tashkent."Mort Plumb, director of the Ted Stevens Anchorage International Airport, said marketing studies have shown that the Russian airport would have little effect on Anchorage stopovers since nearly all traffic is routed from Asia to North America, instead of Europe to Asia, like Fairbanks."We would lose roughly 3 percent of our flights (to Tashkent) and none of our carriers," Plumb said.The world air cargo industry is in its worst slump in more than 30 years, due more from ailing Asian and domestic economies than from the impact of the terrorist attacks on the East Coast, according to Boeing Co. research.But the slide should be short-lived, as growth levels are projected to increase to historic growth levels by fall.

Juneau's Centennial Hall may pose problems for future conventions

JUNEAU -- Conventions contribute about $8 million to Juneau’s economy each year, but issues surrounding Centennial Hall challenge the city’s ability to draw future convention business, tourism officials say.The city-owned civic and convention center is managed by Juneau’s Parks and Recreation Department and contracts with the Juneau Convention and Visitors Bureau, a private nonprofit group, to provide marketing staff.The bureau’s Convention Solutions Department faces several challenges to enticing business to Centennial Hall, such as outdated electronic equipment and the building’s condition and size, JCVB officials said."Because of Centennial Hall’s size, we have a bit of a ceiling on how big of a convention we can go after," Lorene Kappler, JCVB president and chief executive, told a Juneau Chamber of Commerce luncheon last month. "Being that the meeting and convention industry is growing so competitive, it’s very important that Centennial Hall be brought up to speed."Kappler said a structural study has shown that a second floor could be added to Centennial Hall, but plans to expand are on hold.Dayle Tennison, Centennial Hall manager, said that keeping up with technology can be a problem, but the hall’s equipment constantly is updated and is in good condition."We ask people to come in early to test the equipment," Tennison said. "But sometimes they don’t and there can be some concerns because each piece of equipment operates differently."Tennison stressed Centennial Hall does not depend on the city’s general fund for daily maintenance and operation."All the (daily maintenance and operation) money is generated from revenues from rentals and the hotel bed tax," Tennison said. "We pay JCVB $123,800 to market Centennial Hall, which brings our portion of the bed tax down."She said the hall’s budget for the current fiscal year is $587,189, not including funds paid to JCVB."We are working hard to work with our customers and have the best audio-visual equipment we can have with our budget," Tennison said.Kappler said JCVB will contact people who have just held meetings at Centennial Hall to document problems."We need to keep it competitive," she said.The events of Sept. 11, coupled with the economic downturn, have placed a greater importance on drawing businesses to Juneau to hold conventions, Kappler said."A study by the U.S. Commerce Department recently ranked Alaska dead last in economic growth," said Sara Chambers, JCVB’s director of Convention Solutions. "We need to find ways to market Juneau."Chambers said convention attendees stay an average of 5.7 nights in Juneau. About 34 percent of the money they spend goes to hotels, 26 percent is on recreational attractions, and 15 percent is in bars and restaurants."In actual dollars, this economic impact amounts to $1,999 per convention attendee," she said.The option of changing the management of Centennial Hall from the Parks and Recreation Department to the JCVB also was mentioned at the chamber meeting."That has been discussed, there was a mayor’s task force on it, and they did talk about the benefits and cost and what would work," Kappler said. "They did come up with a conclusion that it was better off under the city because of liability and payroll."Tennison said many convention centers throughout the United States are operated successfully through city or county management."It’s a common practice," Tennison said. "Everyone is satisfied with the current management."Freda Rogers, with the Northwest region customer service department of Aetna U.S. Healthcare of Washington, presented a program about a year ago at Centennial Hall and said the audio-visual equipment needed to be replaced and the acoustics were bad. She thought it was a good idea to change the management of Centennial Hall to JCVB."They’re the experts," Rogers said. "Parks and Rec I think was intended for a different function than to oversee something of that nature."

Mining firm meets stock exchange equity requirements

COEUR D’ALENE, Idaho -- Coeur d’Alene Mines Corp. announced June 25 that the New York Stock Exchange has removed the company from its "watch list" and now considers Coeur a "company in good standing" in relation to the NYSE’s continued listing standards.Coeur d’Alene Mines Corp. is the country’s largest silver producer, and in 1995, acquired its 100-percent interest in the Kensington gold property, located 40 miles northwest of Juneau. The Kensington mine is Coeur’s only gold development project. The company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia.According to Mitchell J. Krebs, spokesperson for Coeur d’Alene Mines Corp., the NYSE has certain minimum requirements that must be met by companies listed on the Exchange. If the requirements are not met, the NYSE puts the company on the watch list and it has 18 months to get back into compliance with minimum listing requirements.Ben Prater of Edward Jones in Juneau described a watch list as a special surveillance list for investors with which irregularities can be identified regarding companies they are or potentially will be invested in.Coeur was first advised by the NYSE in November 2000 that the company was not in compliance with its continued listing standards.The company announced in a press release Jan. 11, 2001, that it had fallen below one of NYSE’s continued listing requirements that either its total market capitalization or its shareholders’ equity amount to at least $50 million. The company’s total market capitalization, based on the 37 million common shares of its common stock outstanding and the $1 per share closing price of its common stock on Jan. 10, 2001, was approximately $37 million.Coeur announced Dec. 13, 2001, that the market price of its common stock had been less than $1 per share for a period in excess of 30 consecutive trading days, and the NYSE notified the company it had fallen below the Exchange’s share price continued listing standard.Krebs told the Juneau Empire the equity market value is now more than $130 million. The stock price deficiency was cured earlier this year when prices rose above $1 per share for a sustained period of time. He said values rose due to the increasing value of gold and silver and changes in operations that cut costs for the company."We have been executing our turnaround plan over the past 12 months, and we are thrilled that this ’New Coeur’ has once again placed the company in good standing with the NYSE," said Dennis E. Wheeler, Coeur’s chairman, president and chief executive.

New Homer city dock will accommodate bigger vessels

HOMER -- Under brilliant blue skies and backed by a fire truck pumping a powerful stream of water high into the air, Sens. Ted Stevens and Frank Murkowski and others cut the ribbon dedicating Homer’s new Pioneer Dock in a well-attended ceremony July 2."Homer is one of the really bright spots in Alaska," Alaska Republican Stevens said, addressing a large gathering before cutting the ribbon. "We’ve come through a lot of storms and a lot of chaos down here, and you have persevered and maintained. It is a place we all love to come to and we know that you love to keep it up and improve it and make it more permanent."Murkowski, R-Alaska, noted Homer’s long relationship with the U. S. Coast Guard. It was the possibility that Homer might lose the Coast Guard’s presence that spurred the city to seek the help of the state and federal governments in building the new U-shaped steel and concrete facility.The wooden dock it replaces, built following the 1964 Good Friday earthquake, was too old, too weak and didn’t reach water deep enough to accommodate the new Juniper Class Coast Guard vessels or the larger Alaska ferries about to come on line.A collaboration of local, state and federal agencies found the funding to build the $12 million facility, which is capable of handling cruise ships as long as 850 feet. It will be home to the U.S. Coast Guard Cutter Hickory due to arrive next year to replace the aging Buoy Tender Sedge.It also will serve the Alaska Marine Highway ferries Kennicott and Tustumena. Its larger size makes it capable of handling containerized cargo. The dock, already in use, was designed by the Anchorage firm of Tryck Nyman Hayes Inc. and built by Hurlen Construction Co. of Seattle. Mostly cosmetic work remains to be completed by later this summer."The reason we are putting this dock together is not for the pioneers we are honoring with it, not for the current pioneers who had the vision to build it, but for the next generation," said Homer Mayor Jack Cushing.Also on hand to address the audience was Coast Guard Rear Adm. James Underwood."We are quite pleased to have a new pier waiting here for the Coast Guard Cutter Hickory as Sedge’s old berth would not have been suitable for this new cutter," Underwood said."The tremendous cooperation of everyone here today in completing Pioneer Dock is the principal reason Hickory’s crew will call this fine city home."He noted Homer’s proximity to the important port of Anchorage and critical infrastructure at Nikiski and Valdez, which, he said, had proven "quite advantageous for us as we work to safeguard the coast in the wake of the events since 11th of September."The Coast Guard, he said, has been handed a new mission, homeland security, a job he called "the mission for the Coast Guard in the 21st Century."Others on hand for the event included former Rep. Gail Phillips, now a candidate for lieutenant governor, as well as Rep. Drew Scalzi, R-Homer, along with a host of Homer city officials.Gov. Tony Knowles, who earlier had been expected to attend, was unable to make it.

Kodiak lake study uncovers centuries of salmon booms and busts

FAIRBANKS -- Traces of salmon from 2,000 years ago are telling researchers a lot about Alaska’s past, and may provide clues about how today’s salmon will fare in a warmer global climate.The salmon lived on Kodiak Island, and Bruce Finney is one of the scientists who visits there to pull up plugs of ancient Alaska from lakes. Finney is an associate professor at the University of Alaska Fairbanks’ Institute of Marine Science. He is co-author of a recent paper in the journal Nature, "Fisheries Productivity in the Northeastern Pacific Ocean Over the Past 2,200 Years."The abundance of fish during the last 22 centuries and beyond is held in the sediment at the bottom of lakes. A few years ago, Finney devised a method to estimate ancient salmon runs by measuring a specific nitrogen level in this muck.For the latest study, he teamed with graduate student Irene Gregory-Eaves and professor John Smol of Queens University in Ontario. Together, they further validated Finney’s method and came up with records of salmon booms and busts that lasted centuries and were out-of-phase with fish numbers in the Pacific Northwest. They also found correlations with salmon availability and human settlement of Alaska.Finney uses a specific form of the nitrogen atom, nitrogen-15, as an indicator of salmon past. Salmon collect nitrogen-15 in their bodies, and when they die and decompose, they release the nutrient into the water. Plankton ingest the nitrogen-15 and leave behind a history of salmon abundance when they die and sink to the lake bottom.By dating layers of sediment using volcanic ash layers and other methods, Finney and his colleagues can determine how abundant salmon were at different periods in history.Complementing this technique is the work of John Smol, who studies diatoms, single-celled algae with cell walls made of glass. Smol knows what species of diatoms prefer an environment rich in salmon-derived nutrients; he was able to complement what Finney had to say about salmon during the past 2,200 years.During the latest study, the researchers pushed off from shore in boats and pulled cores from three lakes on Kodiak Island. Two of the lakes, Karluk and Akalura, have been nurseries for ocean-going red salmon since the lakes were formed. A third lake, Frazer Lake, has a waterfall that prevented red salmon from living there until the installation of a fish ladder in the 1960s. Finney, Gregory-Eaves, and Smol used Fraser Lake as a control lake in their study.The researchers found that salmon booms and busts lasted hundreds of years, not just the decades they last today. One of the longest-running high salmon runs in Alaska began about 800 years ago and lasted until about the 1880s, which coincides with the start of commercial fishing.Commercial fishermen catch 50 to 90 percent of the salmon that would return to lakes, but the study also showed low salmon runs in the past that lasted hundreds of years without human influence, Finney said. Around the birth of Christ and 800 years afterward, few salmon were returning to the lakes compared to the millions returning today.Records of sardine and anchovy abundance from cores containing ancient fish scales taken off the California coast near Santa Barbara show that those fish were thriving when Alaska fish were in low numbers, and vice versa. Other scientists have noted the same thing today, that great Alaska salmon years are bust years for Pacific Northwest fishermen.The researchers also tied salmon abundance with archaeological artifacts found on Kodiak. A drastic increase in salmon from A.D. 800 to A.D. 1200 matches a population increase on the island and a shift toward the use of fishing gear among aboriginal people."There’s clear evidence that people shifted from relying on marine mammals to salmon," Finney said.In the future, Finney wants to return to the lakes to extract deeper cores that will allow the researchers to get a record of salmon runs since the last ice age. He’s interested in seeing how salmon reacted to a period about 5,000 to 10,000 years ago, when summer temperatures may have been a few degrees warmer than today. Looking at the warmer past in the sediment of Kodiak lakes may tell us something about our future.This column is provided as a public service by the Geophysical Institute, University of Alaska Fairbanks. Ned Rozell, a science writer at the institute, can be reached via e-mail at [email protected]

Sterling manufacturer meets Bush transportation needs

Mike Kunz has a freight-hauling answer for Alaska’s vast expanses where there are no roads, rails, runways or riverboats -- at least for most of the year.Kunz’s snowmachine sleds are a hot item in Alaska and news about them has spread through Canada and to the snow states of the Lower 48.Kunz, owner of Mike’s Welding in Sterling, started building the sleds a dozen years ago for himself. Word of the smooth-riding, straight-tracking sleds spread quickly in Alaska, where previously the standard snowmachine sled was little more than a plywood box with runners. Kunz’s sleds are aluminum, slide on skis and come with a suspension as an option."My sleds can haul eggs up to a cabin and be unbroken when they get there," said Kunz, who, in addition to building sleds, specializes in making aluminum boats, all-terrain vehicle trailers and salmon dipnets.A single freight sled with a 30- by 60-inch tub can hold as much as 1,200 pounds and can be pulled at up to 70 miles an hour. Kunz says he’s built more than 600 to date, and shipped them all over Alaska and the Lower 48, including one to New York state.Kunz and two other employees make between 30 and 75 sleds a year, mostly in the summer months.Basic sleds start at around $750 each. Options include pin striping, tail lamps, and extended skis and handlebars for someone to ride musher-style on the back.He also builds a pop-up sleeper sled, complete with heater for Bush expeditions.Kunz has used his sleds to support dog mushers and snowmachine expedition members for the annual Norman Vaughn Serum Run. The 776-mile journey from Nenana to Nome has been held each year since 1997 to commemorate the historic 1925 diphtheria serum run to Nome.With four of Kunz’s sleds, Joe Giffo considers himself a collector."I’m waiting for them to go up in value," joked the retired Anchorage dentist.Giffo got his first sled with the purchase of a remote cabin. He negotiated the sled in with the cabin’s price.He and his wife Margaret pull the sleds in tandem to their cabin, hauling barrels of fuel and supplies to the cabin."They are beautifully made and are really fantastic sleds," Giffo said.Kunz prides himself in craftsmanship."Anything I make has a lifetime warranty," Kunz said. "It’s no big deal if you do it right the first time. "If there is a problem with something I fix it and send the guy back down the road."

Oil field cleanup costs could reach $6 billion

WASHINGTON -- The Interior Department should give oil and gas companies specific requirements for cleaning up any damage from drilling in National Petroleum Reserve-Alaska, congressional auditors said.A report released July 9 by the General Accounting Office, the investigative arm of Congress, said businesses face potential cleanup costs of $2.7 billion to $6 billion from drilling for oil and natural gas in the 23 million-acre tract in northwest Alaska. The GAO cautioned that those figures are preliminary since they are based on industry estimates.Rep. Edward Markey, D-Mass., who requested the report, described the possible costs as "a world-class accounting scandal in the same league as WorldCom and Enron" since taxpayers could be left to pick up the tab.GAO’s figures are based on what industry says its total investment in oil and gas drilling will be and the Interior Department’s formula that assumes abandoning a project will cost roughly 5 percent of the original investment cost.Rep. Don Young, R-Alaska, said Markey’s comments were irresponsible."The GAO report, if anyone bothers to read it, does not allege a scandal, let alone a scandal on the scale of WorldCom or Enron. In fact, I wonder where Mr. Markey got the basis for his allegations because it’s not in the report," Young said.Markey, who has been a leading opponent of the Bush administration’s proposal to drill in Alaska’s Arctic National Wildlife Refuge, said Harvey Pitt, Securities and Exchange Commission chairman, should require a public accounting of the costs from companies.Markey also said Interior Secretary Gale Norton should require industry bonds that cover more than just a fraction of the cleanup costs.The Clinton administration opened 4 million acres of the National Petroleum Reserve-Alaska, federally owned and managed by Interior’s Bureau of Land Management, to oil drilling in 1998 with stringent environmental restrictions. The government’s latest estimates say the tract contains roughly 9.3 billion barrels of technically recoverable oil.Interior Assistant Secretary P. Lynn Scarlett said in a letter to the GAO that her agency generally agrees with the report’s findings and the BLM would now review whether companies’ financial assurances provide enough protection for the environment and taxpayers.Alaska officials said the concerns are misplaced since cleanup may not occur for 30 to 50 years from now."The state does not believe it is self-evident that it is better to adopt specific standards today for ... activities that may not take place for half a century," said Pat Pourchot, commissioner of Alaska’s Department of Natural Resources, in a letter to the GAO.-- The Associated Press

Firms should prepare for provider flameout

Technology companies have been flaming out at an alarming rate.The implications for today’s businesses that rely on information technology -- and who doesn’t? -- are equally alarming.How do you find technology partners who won’t go bankrupt a year from now and disrupt your own business?In years past, simply going with a big company was enough. Sure, you paid for the bureaucracy and sometimes ended up with mediocre service, but at least you knew they would stick around.Of course, Enron and WorldCom have invalidated that approach.There are some questions every business can ask to help mitigate the risks.Are they creative, yet practical?Business cycles have continued to accelerate over the past several decades, and companies must adapt to change faster than ever.Before you hire a company that can do exactly what you need today, ask yourself the question: What will they be doing tomorrow?I can’t count the number of business leaders I’ve met who struggle to upgrade their core business systems because their vendor hasn’t kept pace.Doing business the same way, day in and day out, producing basically the same products and the same services, isn’t called stability any more. Today, it’s called stagnation.That doesn’t mean that you should hire a bunch of theorists who can’t distinguish between what is truly useful and what is just a neat idea.You need a company with balance. Statements like "I think we will have an Internet module in the 2003 release," and "Check out our artificially-intelligent virtual reality goggles for your receptionist," are equally dangerous.Evaluate their work. Watch for the sustained use of leading, not bleeding, edge technologies.Do they use industry standards?If you buy a product based on proprietary technology and the company that produced it flames out, you may be up a creek.If the product is based on open standards, on the other hand, you can transfer the data from the dead company’s software to one of their surviving competitors.Go with solutions built on accepted industry standards whenever you can.If the vender you are considering will provide mission-critical systems, you may want to hire a consultant to provide this level of technical evaluation.What are their business values?I hear all the time that you shouldn’t mix your personal and business affairs. I would argue, though, that the same values that create strong personal relationships equally apply to business relationships.Honesty, respect, integrity and trust represent a commitment to one another’s success and to building relationships that stand up in times of trial."You shouldn’t do business with friends" is a phrase that holds true only if people don’t conduct their business relationships as they would those with their friends and family.When you evaluate a potential technology partner, ask them about their values. Better yet, ask their clients. Business is about making money, but it has to be more than that.Be wary of companies that can’t articulate their values and aren’t intellectually, and dare I say, emotionally invested in their clients.Are they or will they be profitable?You can’t have a long-term relationship with an IT company that doesn’t have a business model that’s viable for the long term.New technology businesses are built based on market speculation all the time, and there’s nothing inherently wrong with that.But speculation has to turn into future revenue. In today’s economic climate, that must be sooner rather than later.Beware of IT companies that have not learned how to be profitable. Start-up companies funded by venture capital are particularly susceptible.Can they succeed without another round of investment? Venture capital is no longer free money.Profitable today doesn’t mean profitable tomorrow, either. What is their model for future viability?Do they have a diverse client base, or will they sink if they lose a big contract? Do they offer a range of products or services, or will they tank during an industry recession?Predicting viability can be a challenge, especially when corporations have begun reporting expenses as income to skew their market evaluation.Still, make the effort. If you’re really good, please call me with stock tips.Are you planning your own future?Perhaps the most critical component of long-term success with information technology vendors lies not with the IT firms, but with your own company.If IT is core to your critical business processes, then recognizing the ever-changing nature of IT is vital for long-term survival.The software you use to perform daily business and the company which provides it will change dramatically, so plan for it.Budget for hardware upgrades, training for your staff and systems integration work at least every three years.Research demonstrates that firms which resist IT change and maintain outdated equipment and software end up paying more in the long term.Know your contingenciesDespite all your best efforts, eventually you’ll partner with a company that folds. Have a contingency plan in place that defines your strategy if this happens.Review your contracts and know all your options. Do this, and you won’t get burned by someone else’s flameout.Scott Gere is chief executive of Impact LLC, a communications and technology company. He can be reached via e-mail at [email protected]

Communities say Exxon still owes them $12 million in spill costs

ANCHORAGE -- Thirteen years after the Exxon Valdez ran aground, spilling 11 million gallons of crude oil into Prince William Sound, six communities say Exxon Mobil Corp. stills owes them $12 million in costs associated with the spill.A trial on the claim is under way in state Superior Court in Anchorage.Winds, currents and tides carried the crude oil out of the Sound, around the outer coast of the Kenai Peninsula and southwest to Kodiak Island and beyond. The plaintiffs are Kodiak Island Borough, Seward, Cordova, Old Harbor, Larsen Bay and Port Lions."People were working hard on the spill, and Exxon continues to nickel and dime them to death," said attorney Brian O’Neill, who is representing the cities.Exxon Mobil disputes the claim and says it has paid what it owes, more than $2 million.The case is independent of the main unsettled spill question: How much will Exxon Mobil be ordered to pay in punitive damages to thousands of commercial fishermen, Alaska Natives, property owners and others harmed by the spill?The 9th U.S. Circuit Court of Appeals found the $5 billion award levied against the international corporation by an Anchorage jury in 1994 to be excessive and ordered the Anchorage federal district court to reduce it. Exxon Mobil has since told the court the award should be no more than $40 million.The case in state court involves a far smaller amount, with Port Lions looking for as little as $98,000. Thousands of hours spent on cleanup by city employees that took them away from their regular duties were not reimbursed by Exxon, O’Neill said in the first week of trial.Darryl Schaefermeyer, deputy city manager of Seward at the time of the spill, has testified that during the summer of 1989, he received spill-related calls every day, including weekends. That led him and other city employees to underestimate the amount of time they worked on cleanup when reporting the hours, he said.But Exxon attorneys, who opened their case July 2, said that cities can’t ask for reimbursement years later."If I felt like we owed any money, we wouldn’t be here," said Chuck Diamond, an Exxon attorney. "We paid them all. They don’t get to come back 13 years later and submit an invoice."The state Superior Court initially dismissed the case in the early 1990s, saying municipalities and villages could not ask for money for services they were hard-pressed to provide to residents during the cleanup.But on appeal, the state Supreme Court said the cities’ claims were valid and ordered a retrial in Superior Court.

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