In grim price market, state's miners have hope, plans for future

Alaska’s miners are grim-faced these days. Metals markets, with the exception of certain specialized minerals, are in dismal shape. No turnaround, at least in the near term, seems likely.Still, the problem is worldwide and Alaska is positioned better than any region in attracting what exploration funds there are, according to Steve Borell, director of the Alaska Miners Association.The state’s big advantages are that a huge area of land, about 150 million acres including state and Native-owned lands, is open to exploration. All of this acreage is underexplored and much of it is prospective for minerals, in terms of its geology, Borell said.Another plus for Alaska is that it has major mines that have not only been developed in a high-cost, remote locations in recent years, but continue to operate despite low prices and poor market conditions, he said.These include the Red Dog Mine in Northwest Alaska, now the world’s largest lead-zinc mine; the Fort Knox gold mine near Fairbanks and the Greens Creek silver and zinc mine near Juneau.The Usibelli coal mine at Healy, in Interior Alaska, continues to sell about half of its annual production in Pacific export markets, successfully competing against coal from Australia and other sources.And despite poor markets, companies are continuing development work. Permitting is continuing on the Pogo mine near Delta, a large, high-grade gold mine planned for development by Teck Cominco.In Southeast Alaska, Coeur Alaska Inc. has initiated a new round of permitting for its large Kensington gold project, based on a new development plan that could lower production costs.In Southwest Alaska, Nova Gold continues exploration on the large Donlin Creek gold mine, on land owned by Calista Corp., the Native regional corporation for the area. The company is working on a farm-out arrangement with Placer Dome, which has the lease with Calista.Nova Gold has commissioned a scoping engineering study for development of the mine, which could lead to more advanced pre-feasibility engineering work next year. The company will also release new reserve estimates to the mine next spring.But the market situation for many metals appears bleak. Zinc is at historically low price levels due to poor economic conditions in many industrialized nations, according to John Rense, chief operating officer of NANA Development Corp., the landowner at Red Dog Mine.Technology changes have also led to substitutes for zinc, reducing reliance on the metal in many industries, he said. This means that even when there is an economic recovery, zinc prices may not return to robust levels.The gold situation appears equally uncertain. Large amounts of gold are still held by governments and there is a long-term trend toward less reliance on gold to support currencies, and for governments to sell gold to raise cash.In recent months, as soon as there has been an uptick in gold prices governments have sold gold, which then pushed prices back down.

Recession worst since 1970s for air cargo industry

The world air cargo industry is in its worst slump in more than 30 years, mostly because of ailing Asian and domestic economies rather than from the impact of the terrorist attacks, according to Boeing Co. research.But the slide should be short-lived, as growth is projected to increase to historic levels by next fall. Despite the largest dip in three decades, the Seattle-based aircraft maker still expects air cargo traffic to triple over the next 20 years."This recession is the worst the air cargo industry has seen since 1970,’’ said Tom Hoang, Boeing’s regional cargo marketing director.World air cargo traffic levels are down 8 percent from January through September this year, compared to the same period in 2000, Hoang said."Even prior to the events of Sept. 11, the world air cargo industry had been in a state of recession,’’ Hoang said. "Sept. 11 fueled the current situation we’re in.’’The world air cargo industry has enjoyed an average annual growth of nearly 8 percent annually over the last three decades, Hoang said.The slump began a year ago, Hoang said, and is blamed on economic turmoil in Asia and the United States and the collapse of computer and telecommunications equipment sales, which represent about a quarter of all domestic air imports and exports.The war in Afghanistan actually leveled some of the losses from the electronic equipment shipping slowdown, Hoang said."The U.S.-led coalition military ramp-up in the Mideast has absorbed a great deal of freighter capacity, at least temporarily,’’ Hoang said. New federal rules diverting mail and cargo from the bellies of passenger planes to freighter aircraft also helped.Historically, Hoang said, growth in air cargo jumps significantly immediately after slow or negative-growth years.Hoang said the company’s projections for air cargo growth over the years have nearly hit the actual numbers.Ted Stevens Anchorage International Airport, one of the busiest cargo airports in the United States, uses projection data from Boeing and other aircraft makers to forecast future growth.Last month, airport director Morton Plumb said a forecasted 6 percent annual growth in cargo operations in Anchorage is probably overly optimistic, and he pegged the number at about 2 percent annual growth over the next few years. The new projections lessen the need for airstrips to be built outside of the facility’s current boundaries by 2020.Plumb said cargo activity from Federal Express and United Parcel Service was up in November compared with the same month a year ago. Passenger flights from Alaska Airlines, Northwest Airlines and Peninsula Airways also increased over the same period, he said."It’s been better than we expected,’’ Plumb said. "There are some positive indicators that provide for some cautious optimism.’’Dave Carlstrom, director of marketing at Fairbanks International Airport, said passenger traffic in October was up 3.6 percent over a year ago and cargo levels there have remained steady.Jack Walsh, an Alaska Airlines spokesman in Seattle, said the airline has kept all of its flights in Alaska since the events of Sept. 11. Ridership on the routes the airline serves Outside is down less than 5 percent, compared with a 20 percent average downturn for other carriers, he said."We’re very pleased with that,’’ Walsh said. "We’re still losing money, but we haven’t parked any of our airplanes in the desert and we haven’t laid off any people."

Challenges of 2001 aren't likely to disappear in new year

Alaska’s big commercial fishing industry is facing its challenges, but there are bright spots.Salmon fishermen and processors continue to be hammered by their competitors, farmed salmon in the case of the higher-value sockeye fishermen, and Russian wild-caught pink and chum salmon in the lower-value range.Bristol Bay sockeye fishermen saw a poor harvest in 2001 with low prices, and the outlook for 2002 is worse. In the Kuskokwim and Yukon River regions, another failure in the chum salmon run means continued hardship.Yet, amid all of this gloom some salmon fishermen did OK in 2001. There were large pink salmon runs in Southeast and Prince William Sound, and chum salmon runs and harvests met the estimates made by biologists, according to Chris McDowell, a fisheries economist who monitors Alaska fisheries.Around Kodiak, sockeye fishermen did better than other sockeye fishermen working further west in Bristol Bay and along the Alaska Peninsula.Overall, Alaska’s 2001 salmon harvest was large, although not a record. Markets for pink and chum salmon, which are mostly canned, remained fairly stable.Next year is more uncertain. The Bristol Bay harvest will drop even further, biologists predict, and no relief appears in sight for hard-pressed fishermen in the Yukon-Kuskokwim Delta.Farmed salmon will continue to flood markets, and production will increase from Russian and Japanese salmon hatcheries, which may undercut markets for pink and chum salmon, said Geron Bruce, deputy director of the state Division of Commercial Fisheries.Halibut continues to be a bright spot for the industry. Since a quota system for halibut and sablefish was implemented, the season for fishing has expanded and fishermen have developed new markets for fresh halibut, with strong prices.The outlook for the state’s big pollock and cod fishing industry in the Bering Sea is also good with an increase in the allowable catch in 2001 and similar harvest levels expected in 2002, according to Frank Kelty, resource specialist with the city of Unalaska.Gulf of Alaska communities with fleets fishing for pollock and cod will not fare so well next year, however. The allowable harvest has been cut substantially to allow fish stocks to rebuild.A positive note for the entire groundfish industry is that controversy related to Steller sea lions have cooled a bit. New research shows the causes of the sea lions’ decline to be more complex than believed earlier.

With new managers, ASI 'for real'

Business at the once floundering Alaska Seafood International is now going swimmingly, according to Russell Schreck, the company’s new chief executive officer and chairman of the board.The company in early December sent air shipments of Alaska-caught salmon, halibut and cod to markets in England and the Lower 48. On Dec. 18, ASI sent its first 30,000-pound container of processed fish south by ship to Seattle, then by truck to an Illinois distributor which supplies restaurant chains and institutions.In January, Schreck said, a major West Coast grocery chain and a membership-based warehouse retailer will carry the value-added seafood as appetizers, dinners and salmon steaks under private labels and with the Great Alaskan Seafood Co. brand name.Schreck declined to name the two new major buyers until the products reach the retailers’ shelves next month."ASI is for real,’’ said Schreck, who took over the South Anchorage company earlier this year. "There is new energy here and things are going extremely well ... we will be a very dominate player in the seafood marketplace.’’No one could have said as much just a few months ago.Shortly after construction was completed in early 2000, Bank Sinopac, a major Taiwanese investor, did not extend a promised line of credit for operating capital, nearly sinking the $125 million seafood manufacturing plant.The near-failure fueled critics, namely established Seattle fisheries companies, who argued Anchorage was too costly a place to process fish.Others believed otherwise.In a complex restructuring deal, Sunrise Capital Partners LP put $5 million in equity into the ailing company and arranged a line of credit to begin operations last spring, in time for the summer fishing season in Alaska.In return, Sunrise became the majority owner, followed by the Alaska Industrial Development and Export Authority, Bank Sinopac, and a group of individual investors, including founder Howard Benedict.Sunrise is associated with the New York investment firm Houlihan, Lokey, Howard & Zukin, which specializes in turning around troubled companies.Schreck and a management team with expertise in food manufacturing and fisheries were brought in, replacing former senior managers. A sales staff also was established in markets in the Lower 48, Schreck said."There were no salespeople before I got here,’’ Schreck said.The new sales staff is aggressive and has landed major accounts, including a big-box membership club, a major grocery chain and Sterling, Ill.-based DOT Inc., a distributor that sells to restaurants, colleges, schools, hospitals, military installations and corporations that provide meals to employees, Schreck said.The market is growing for Alaska seafood, and ASI can and will be a major supplier, Schreck said."We can produce hundreds of thousands of pounds of fish a year, no problem,’’ Schreck said."Having salespeople where the markets are is very comforting to us,’’ said Jim McMillan, AIDEA’s deputy director of credit.AIDEA has invested about $50 million in ASI and owns title to the company’s buildings and land, which are valuable assets should the seafood venture fold.But McMillan said the company’s once-grim outlook has changed."There have been some naysayers out there and some bumps in the road," McMillan said. "Since Sunrise has come in (ASI) seems to be moving forward.’’McMillan said the company was immediately put at a huge disadvantage by having investor problems early on."Any business would have had the same problem, the rug pulled out from under their financial feet while they were ramping up," McMillan said.AIDEA, a state agency that promotes economic development through long-term loans, wants to see the business succeed and create new jobs, McMillan said.And that’s what the seafood company is now doing.The company has 150 workers on the payroll in Anchorage, and will add a second shift and about 20 new employees after Christmas, Schreck said. "It’s a whole new ball game," said Schreck, pointing out the phrase that is plastered on signs throughout the South Anchorage facility and on employees’ uniform hats.

Charities find uniting makes giving richer

One of the most successful holiday charitable programs anywhere in the United States started right here in Anchorage, at least partly because of hard times in the oil patch in 1995.In those days the oil industry was struggling because of low crude prices and a sagging economy. Holiday giving was a long-established tradition in the industry, and many of the nonprofit organizations had come to expect that the oil companies and their contractors would be a major source of such support.My colleague Joan McCoy looked around and realized that, because of layoffs, five of the six people who had helped in the company’s charitable gift-giving program the previous year were gone. Not wanting to be a grinch, McCoy did some head scratching to see how the company might meet nonprofit expectations that year with diminished resources.At the same time the Salvation Army, Catholic Social Services and members of the United Way of Anchorage board of directors looked at the industry’s decreasing size and economic conditions. They too knew it might be difficult to meet the hopes of those they served and wondered what could be done differently to make up the difference.The Marine Corps Reserve also was simultaneously deciding that its Toys for Tots program needed a better way to distribute the presents that the folks in Marine uniforms were collecting.Dennis McMillian, executive director of United Way of Anchorage, calls those simultaneous happenings "a harmonic convergence" that resulted in a better system for doing things, a cooperative system that seems uniquely well suited to Anchorage.The various agencies asked McMillan to help them get something organized, and all parties started brainstorming. They knew from the start that part of their dilemma was that many organizations were running their own programs, each with its own set of overhead costs.Their solution was a cooperative effort called Giving From The Heart, or GIFT for short. GIFT pulled together 40 organizations to collect toys and presents, raise money and provide Christmas food to Alaskans encountering hard times. They decided on a one-stop distribution system where individuals and families could come to receive presents and enjoy a seasonal feast.Because thousands of people were expected, GIFT needed a large space in which to handle the distribution. McMillan called the Anchorage Telephone Utility, which offered its big warehouse on Telephone Avenue. ATU became one of the two major corporate sponsors, a commitment later adopted by Alaska Communications System when that company purchased ATU from the Municipality of Anchorage. Phillips Alaska’s predecessor company, ARCO Alaska Inc., became the second large corporate sponsor and that relationship has lasted through the years as well.GIFT served 9,000 people that first year, and this year will probably serve 11,000 to 12,000. In developing the program, the many agencies found that they could serve more people, more effectively, than they could when working alone. The program also draws support from thousands of volunteers.McMillian says the program is uniquely suited to Anchorage because the nonprofit organizations here are much more open to working together than their counterparts are in most areas of the country. At one point McMillian’s enthusiasm for the GIFT way of doing things prompted him to offer it as a model program at the United Way of America Community Leaders Conference in Cincinnati. The response he got was that other parts of the country probably could not match the cooperative spirit in Anchorage and that the GIFT approach would have tougher sledding out there.Though I find it difficult to believe that they couldn’t do it our way in other parts of the country, it does say something nice about Anchorage that we can.Nancy Schoephoester is manager of philanthropy and community services for Phillips Alaska Inc. She can be reached via e-mail at ([email protected]).

State ACS contract, local phone competition to mark '02

The Alaska telecommunications industry in 2002 will be marked by the launch of a five-year, $92.5 million contract to provide state government telecommunications services and other issues. The state signed the contract with Alaska Communications Systems in December, but a transition period precedes an April start date.Also in the new year, General Communication Inc. plans to begin providing local telephone service in Juneau, an area previously served solely by ACS.ACS will serve the state contract via an Internet protocol network that can handle voice, video and data, said Mary Ann Pease, ACS vice president of investor relations. The effort is one of the biggest projects for the company in 2002, she said."The state will be our anchor tenant" for the new network, she said."This is a state-of-the-art system. We’re the first to market in Alaska," Pease said.The company projects capital spending in 2002 between $70 million to $80 million, most of which will be directed for the state contract, she said.In the first year, ACS would spend $16.6 million to replace existing phones with new ones capable of handling voice, data and video services.Other capital spending will fund the first stage of construction of a 2.5 gigabyte wireless technology system, she said.In 2002 GCI plans to begin local phone service to Juneau, said David Morris, GCI public affairs manager. In summer 2001 the company started a similar service in Fairbanks.During the new year GCI expects to negotiate an interconnection agreement with ACS to provide local service to 10 other communities including Homer, Kenai and Soldotna. Service could begin in 2003, company officials said.GCI also anticipates offering its cable modem Internet product to more Alaska communities in 2002 and develop wireless Internet service in rural Alaska communities, Morris said.A key issue for Alaska telecommunications will be decisions concerning a fiber-optic cable owned by WCI Cable, he said.That company, which filed for bankruptcy earlier this year, operated a $165 million undersea fiber-optic cable between Whittier and Oregon and a cable between Whittier and Fairbanks.Justice Department officials were reviewing GCI’s bid for the cable since the company already has its own undersea fiber-optic cable to the Lower 48.Another major telecommunications player, AT&T Alascom, plans to begin service early in 2002 on an advanced data service known as frame relay/asynchronous transfer mode, said President Tom Posey. Such systems are now widely used in the Lower 48, although Alaska previously had not had a connection to those systems, he said.The company already installed a switch for the system, and the first customers should be online in the first quarter, he said.AT&T Alascom has noted an increase in requests for audio and video conferences since the Sept. 11 terrorist attacks, said Lori Eussen, business sales manager.State regulators expect some changes in 2002, said Agnes Pitts, Regulatory Commission of Alaska spokeswoman.One item new next year stems from a Federal Communications Commission ruling to allow Bush residents to use Internet access for schools and libraries during nonschool hours, she said.The FCC granted a waiver Dec. 3 to the state’s part in a federal program that provides funds to eligible schools and libraries to reduce the cost of providing Internet services at those facilities.

Movers & Shakers December 30, 2001

Eric Bingham has been promoted to vice president and chief financial officer at Denali Alaskan Federal Credit Union. Bingham, a certified internal auditor, previously served as the credit union’s assistant vice president/internal audit and compliance. Bingham is directly responsible for Denali Alaskan Federal Credit Union’s accounting and payment systems departments. Bingham has more than 11 years experience at the credit union.The Alaska Hotel & Lodging Association recently announced its 2001 Member Awards. Jeff Butcher, general manager of the Goldbelt Hotel in Juneau, received the Most Valuable Volunteer award for his efforts for the industry. Randy Comer of GCI Cable was presented the Sourdough Award for dedicating the most time to association’s causes. Jeannette Duenow of NANA Management Services, Hotel Division, received the King Midas Award for the largest financial contribution to the association.Lucinda M. Eckert has been promoted to president of Kachemak Bay Title Agency Inc. in Homer. Eckert has been with the title company for more than 13 years, most recently serving as assistant secretary and office manager. Eckert is president of the Alaska State Escrow Association and treasurer for the American Escrow Association for 2001-2002. Jolene Grady has been promoted to assistant secretary of the company.Kara Nyquist has joined the law firm of Birch, Horton, Bittner & Cherot as an associate. Nyquist graduated cum laude from the Seattle University School of Law in 2000. Nyquist previously served as law clerk for the State of Alaska District Court at Anchorage. Nyquist’s practice focuses on representation of public utilities, regulatory proceedings and general litigation.Larry Hatswell has joined The Chariot Group Inc. as an account manager. Hatswell most recently worked for the Visual Systems Division of 3M Alaska. Hatswell has been in the audio-visual presentation industry, specializing in multimedia projectors and presentation products since 1989.Swee Lin Hines has been appointed a sales agent for the Alaska General Office of New York Life Insurance Co. Hines’ office is located in Anchorage. Hines previously worked for American Credit Card Systems. Hines speaks several languages including Malaysian, Indonesian, Cantonese, Mandarin and other Chinese dialects and plans to use them in her work.The architectural and planning firm of Bezek-Durst-Seiser has hired Hayden Van Wormer as a computer-aided design specialist. Van Wormer is majoring in architectural engineering technology at the University of Alaska Anchorage and plans to graduate next summer.The Soldotna Chamber of Commerce board members elected for 2002 are: Tim Pope, Natron Air; Barb Elson, individual chamber member, and Mike Frost, First National Bank Alaska. Continuing on the chamber board are: Lisa Wimmer, Dan Mortenson, Dena Cunningham, Paul Gray, Betty Obendorf, Mike Sweeney and Kurt Olson.Barry Begenyi has received his professional engineer license. Begenyi has worked for Haight & McLaughlin, Consulting Electrical Engineers, for two years providing electrical design, project management and construction administration services. Begenyi provided design services for the recently remodeled Bartlett Regional Hospital cafeteria and the Southeast Regional Health Consortium. Begenyi developed the electrical system design for the City of Fairbanks’ new police station and continues to assist with construction issues.Darren Venters has been appointed as product support manager for N C Machinery Co. in Anchorage. Venters will oversee product support activities in the company’s construction machinery branches which include Anchorage, Fairbanks, Juneau and Dutch Harbor. Venters most recently worked as N C’s Seattle area sales manager for the forestry, governmental, waste, heavy construction and the trailer markets. Venters began his career with the company in 1974 and has held a number of management positions within N C Machinery.The American Association for the Advancement of Science has awarded Syun-Ichi Akasofu the distinction of fellow. Akasofu is director of the International Arctic Research Center at the University of Alaska Fairbanks. Akasofu received the award for his contributions to the study of the aurora borealis and to the understanding of the sun and Earth’s atmosphere. Akasofu has served as director of the center since 1999 and previously was employed as director of UAF’s Geophysical Institute for 13 years.

Alaskans invent safe way for workers to sort U.S. mail

Two Alaskans have crafted a special box as a method of sorting mail and limiting exposure to potentially tainted letters. In early December Dan Mingo and Les Leturno kicked off marketing efforts, promoting their ME-1 Mail Safe Delivery System around the country. Although many Americans have exchanged anthrax worries for holiday cheer, and the U.S. Postal Service asserts mail delivery is now safe, the Alaskans believe there may still be a need for their product. "I think we’re in a mode of holiday positive thinking and a lot of other things," Mingo said. "I think it’s nationwide." According to Mingo, the men would not be heartbroken if their product is no longer needed and anxieties evaporate about disease spread via the mail. "We’re happy we don’t have the perceived threat," he said. However, if problems persist they would be pleased their product could help. "The box is the best way to handle hazardous mail. Nobody can afford an irradiation machine," he said. The two men developed the product, named ME-1 for minimum exposure, beginning in late October. While East Coast areas experienced anthrax outbreaks, businesses nationwide adjusted mail handling procedures. Many companies instructed people sorting mail to wear gloves and a dust mask, although these procedures did not protect the rest of the worker’s body or the person sitting next to him or her, Mingo said. He was inspired to create the ME-1 because his pregnant girlfriend sat next to the designated mail sorter at Terra Surveys. The company now uses the ME-1 to sort mail. Mingo called Leturno on Oct. 25 to brainstorm ideas for the project, Leturno recalls. Both men are promoting their invention while working other jobs. Mingo is senior vice president of TNT Painting & Contracting Inc. of Anchorage, and Leturno is a Federal Aviation Administration certified aircraft mechanic. Their company, Mail Safe Delivery Systems, is based in Wasilla. The pair also used their knowledge of hazardous materials handling to develop the system. "We’re selling a whole lot more peace of mind than a mask and a respirator," Leturno said. They applied for a patent in mid-November. The ME-1 has a glass panel on the lid to view mail handled inside the box. One side has two carefully sealed arm holes with attached protective gloves so mail can be sorted. If a substance is considered suspicious, the ME-1 can be locked and handed to response personnel. Designed as a tabletop model, the ME-1 weighs 32.5 pounds. Leturno provided technical expertise on the project and experimented with designs in plastic and steel before settling on wood. "We had a cabinet shop in town make it out of wood," Mingo said. During research they studied similar products made from various materials. Mingo and Leturno said their product is less expensive at $399 than other models at $850 and more. U.S. Marshals use similar containment systems for checking materials, Mingo said. The wood design is more suited to an office setting than other models, they said. "We have the only furniture-style one," Mingo said. They are marketing the ME-1 to East Coast businesses via an e-mail to 11,000 companies. That region has the greatest perceived threat, Leturno said. Arctic Office Products of Anchorage added the ME-1 to its showroom for several weeks in late November and early December, said sales manager Jerry Greer. "I think there’s a place and a time for everything so we decided to try it to see if this is the time and the place," he said. However, by mid-December the retailer had removed the product from display since post office leaders asserted the mail was safe, Greer said. Arctic Office Products had not sold any ME-1s, he said. A master cabinet maker in San Francisco is prepared to produce orders, Leturno said. It didn’t make good business sense to ship materials to Alaska for production then ship a finished product back to the Lower 48, he said. Plaschem Supply & Consulting Inc. of Anchorage is producing some parts for the ME-1, Leturno said. Products for the Alaska market will be manufactured here, Mingo said. They are prepared to produce 10,000 to 20,000 units in the next year, Leturno said. That number could rise if demand increases based on more anthrax outbreaks, Mingo said. For now there’s an obvious need for the product, Leturno said. "If the need goes away then everybody will be safer," he said. Mingo and Leturno are now developing the ME-2, which features a negative atmosphere and an exhaust filtering system. They also can design custom mail room safety systems.  

New fishing areas, seasons, quotas for pollock, cod to slam Kodiak

"It’s a triple whammy," said Alaska Groundfish Data Bank’s Julie Bonney of Kodiak, referring to next year’s reduced fishing areas, new fishing seasons and slashed quotas for pollock and cod in the Gulf of Alaska.The decisions by fishery managers cut the pollock catch nearly in half, from roughly 220 million pounds to approximately 119 million pounds. For codfish, the catch was reduced from 66 million pounds to 54.3 million pounds.To make matters worse, fishermen will have to venture farther for fewer fish at different times. New regulations continue a patchwork approach to fishing to protect endangered Steller sea lions, splitting Gulf of Alaska pollock seasons into four starts and stops and dividing cod openers into two seasons.More area closures also mean traditional grounds for pot cod boats will be off limits, and it’s unlikely the entire catch will be taken in state waters, or within three miles, Bonney said. Likewise, pollock trawlers will be forced to fish primarily in waters of the treacherous Shelikof Strait, an area that’s hostile to smaller boats."Boats accustomed to fishing in the Kodiak area can be out on the grounds in one to three hours," Bonney said. "The Shelikof is about a 12-hour run, and it’s an area that offers little protection. Most of the smaller boats (under 60 feet) simply won’t be able to fish."Just how important are pollock and cod to the community? From 1986 to 2000, the value of groundfish to Kodiak, primarily pollock and cod, increased from $23.5 million to nearly $45 million. Last year alone, pollock accounted for more than 35 percent of the total poundage of fish that crossed Kodiak’s docks, or 102 million pounds worth $9 million.Cod landings of 65 million pounds were 23 percent of the total poundage, valued at $24 million, fully 25 percent of the total value. By comparison, salmon landings of roughly 62 million pounds accounted for 21.3 percent of Kodiak’s total poundage last year, worth $21.5 million, or 22.7 percent of the total value.The slow bleed of Kodiak’s bottom line will be felt most severely by the town’s fish plant workers, whose processing days for pollock and cod will slip from 70 to about 33 for the year."What makes our town run is pounds across the dock," Bonney said. "We’ve got a residential work force. They’ve got to have the hours to get a paycheck." The cuts to next year’s catch quotas are so severe, Bonney said Kodiak may need to file for economic aid for the community.On a more positive note, at least for pollock, the harvest reduction could be a one year event.Tom Pearson of the National Marine Fisheries Service Sustainable Fisheries Division said that while this year’s stock assessments were way down from a year ago, surveys indicate that a strong age class of recruits appears to be on its way and the catch could begin to rise in 2003.Conversely, the pollock stocks in the Bering Sea are at an all time high. That allowed fish managers to boost the 2002 catch to roughly 3.3 billion pounds. That represents just 15 percent of the estimated total adult stock of 10 million tons. The Bering’s exploitable pollock population has been in excess of 10 million tons for 13 of the last 20 years. Bering Sea pollock is the world’s largest fishery with an estimated value of more than $700 million annually.The continued success of the Bering Sea pollock fishery prompted market analyst John Sackton to say: "At a time when many consumers believe wild fish stocks are on the verge of commercial extinction, it is important to publicize the fact that the single largest commercial fishery in the U.S. is enjoying robust health and record populations following nearly 25 years of effective fisheries management."Crab fleet buyoutCongress appears poised to authorize a $100 million buyout of boats that compete for king and Tanner crab in the Bering Sea. The legislation is similar to a measure that was passed last year, except that it does not call for half of the buyout money to come as a congressional appropriation. Instead, the entire package would be a federal loan to be repaid in full by the fishing fleet over 30 years. The U.S. Senate has passed the legislation; from there it went to a joint budget conference committee.The $100 million is estimated to be enough to buy out around 20 percent of the crab fleet, which numbers nearly 300 boats. If all goes according to plan, crab fishermen will participate in a bidding process sometime next year to determine how many are willing to sell out of the fishery and for how much.By next summer or early fall, the fishermen could vote on whether to go forward with the buyout. A two-thirds majority is necessary, and the vote will depend largely on whether they feel enough of the fleet will be bought out to justify saddling the remaining crabbers with a 2.5 per cent assessment on their landings for the next 30 years to repay the loan.Eat fish, be healthyThere’s more good news on the health front for fish eaters. A National Institutes of Health study has revealed that eating seafood and the presence of omega-3s in breast milk correlate with lower incidence of postpartum depression.The study was conducted in 23 countries using 14,532 subjects, and reported in the Journal of Affective Disorders. Researchers also discovered that the breast milk of women who eat a lot of fish contains high levels of DHA, a valuable fatty acid credited with reducing the risk of heart disease, and essential to the development of a normal nervous system in infants.Columbia vs. CopperIf a new plan is adopted by Oregon fishery managers, king salmon from the Columbia River could be available to buyers beginning in February. Number crunchers project a run of around 300,000 kings. The early fish are considered to be the premier salmon from the Columbia, where runs reached a record high of 417,000 earlier this year, rebounding from just 12,000 kings in 1995.Small numbers of king salmon continue to be taken by Southeast Alaska trollers through the winter, but the first significant, and widely heralded, catch comes from the Copper River near Cordova in early May.Kodiak-based free-lance writer Laine Welch can be reached via e-mail at ([email protected]).

North Slope, Cook Inlet output look steady

Lower oil prices are casting a shadow over the state’s petroleum industry, but with new oil fields on line, production is actually increasing for the first time in years.More oil is being produced in the Alpine field, now a year old, and the new Northstar field began producing this year. With oil from the older fields, a total of about 1.1 million barrels per day is now moving down the trans-Alaska oil pipeline.Not too long ago, pipeline throughput had dipped as low as 950,000 barrels per day.The near-term outlook for the state’s oil patch is for fairly steady levels of activity on the North Slope, with Phillips Alaska Inc., Anadarko Petroleum Corp. and Alberta Energy Co. planning new exploration drilling. BP Exploration (Alaska) Inc. will be concentrating on further development of the existing producing fields, according to President Steve Marshall.One major project planned by BP is an expansion of the Schraeder Bluff heavy oil deposit that is part of the Milne Point oil field.Much attention will focus on what decisions the three major North Slope producers, BP, ExxonMobil Production Co. and Phillips Alaska Inc., will make with results of a $100 million feasibility and engineering study of a natural gas pipeline from the North Slope to the Lower 48.Preliminary indications are that the economics of the project are not attractive, but the three companies will complete their analysis early in the new year and will also consider ideas put forth by a consortium of pipeline companies being formed by Foothills Pipe Lines Ltd. of Calgary.Foothills said the pipeline group hopes to make a proposal to the producers by the end of this month. The expectation, however, is that no decision will be made soon to move forward with the project.Although there is still confidence that long-term market trends in North America will generate demand for gas from the Arctic, the short-term price weakness and a rush of new gas supply on the market will cause the industry to be cautious.The oil and gas outlook in Cook Inlet is more upbeat. Forest Oil Corp. is moving ahead with development of its new 50 million barrels-plus Redoubt Shoals field.Unocal and Marathon Oil Corp. say their proposed Kenai-Ninilchik gas pipeline on the southern Kenai Peninsula appears economic.Permits for the pipeline have been applied for, and the first phase is expected to be in operation in 2004. Marathon and Unocal say their exploration drilling for gas has been successful in the Ninilchik area but did not disclose details.Oil field construction companies expect their business to be down in 2002 compared with 2000 and 2001, but that’s because big module, pipeline and other oil field construction projects with the Alpine and Northstar fields are completed.Aside from a possible gas pipeline, which is likely to be several years away, contractors are looking to a probable major expansion of the Alpine field processing facilities by Phillips and Anadarko to allow for more oil production there, and ExxonMobil’s gas recycling and condensate production project at Point Thomson.Point Thomson has an estimated reserve of 9 trillion cubic feet of gas. Until a gas pipeline is built, ExxonMobil plans to produce the gas condensate, a hydrocarbon gas liquid that condenses out of the gas as it is produced. The dry gas, with condensate removed, will be reinjected into the underground reservoir.

Right work environment can boost employee creativity

I always marvel at those rare individuals whose pores sweat creativity without the slightest effort. I’ve always believed that they were endowed by their creator with a special, almost supernatural talent that was denied the rest of us mere mortals. That is not necessarily so. The truth is that creativity is more often the product of the right environment and a carefully contrived set of conditions. What is creativity? It’s more than the unique and compelling idea, thought or concept. At the core, it involves building a relationship between two disparate entities finding the connecting point that, in turn, leads to the creative solution. In such a world, problem finding becomes just as important as problem solving. It’s also one of the reasons business environments, where lack of questioning and autonomy are the norm, tend to be noncreative. As one would expect, researchers now tell us that there is a direct link between the physiology of the brain and the creativity of the individual. As expected, stress is the big killer, stress caused by time constraints and perceived lack of control. Evaluative activity, or being judged, is particularly stressful in that it activates the limbic system. When the limbic system is activated, the cerebral cortex shuts down, thereby inhibiting creative production. The best antidotes: brainstorming, working in teams and increasing fun. And let’s not forget the power of exercise to boost brain power and stop stress in its tracks. Research clearly shows that regular physical activity improves reaction time, concentration, creativity and mental vigor. It’s simply a matter of getting more blood and more oxygen to the brain. Conversely, lack of sleep and/or relaxation act as toxic counterweights to the creative state of mind. How do we become creative? It starts with leadership. Creativity thrives in a culture where managers lead by example; by coaching, not directing or demanding; by giving employees ample opportunity to discover. A staff that understands the leader’s priorities and goals and is able to develop a clear feel for the why rather than the what of the leader’s requirement. "A leader’s expectations significantly determine creative output," said AmyK Hutchens, president of AmyK International, specializing in neuro-sales technique. "The best leaders induce creativity by communicating principles, not setting rules." Hutchens also notes that creativity can only blossom in environments where the attitude prevails from the top down. "Authentic creativity doesn’t just happen on casual Friday. Why shouldn’t every day be Friday?" she asks. Creating creative environments The advice is elementary. Allow autonomy within the working environment. Believe in strong communication, so that everyone clearly understands the culture, principles and goals of the task or the exercise. Constantly provide people with new challenges, new tools, new situations, everything from training in new technique to Outward Bound courses that bind. Put people in situations where they can learn from new experiences and apply that learning to their jobs. Ironically, in recessionary times when they’re needed most, the creative-building programs are the first to receive the ax. Yet it is that perceived creative "fluff" that is most needed for survival. Take the time and effort to hire properly. Lessen the preoccupation with job descriptions. Support cross-departmental team formation for problem solving. Encourage staff to continually experience that which is new and most often unrelated to the job itself, for example, travel. Be willing to hire the "third eye," the outside help or perspective that is quite often needed to break the internal sclerosis. Institute an "asking" culture. Always be probing for what the competition is doing and how we can be better, in spite of how good we are. Organizations that excel creatively tend to focus on the things that count, setting high expectations and constantly challenging the already successful status quo. Their concern is with how high is high, rather than setting policy about leaving dirty dishes in the kitchen sink. Contrary to the admonishments of the cynics, creativity flows most freely from a structured environment. Space must be defined, parameters laid down, goals and objectives clearly enumerated, but within that structure, independence must be allowed to explore, to have the freedom to fail. As Hutchens notes, "It’s not just achieving the goal but what you discover on the journey." Make allowances for the brain. The physiologists tell us that the brain works best in 20-minute cycles. Go on too long, and it switches off. It’s one of the reasons why most team meetings are failures. Ultimately, the most creative organizations are those that are driven by leaders who "stimulate rather than tell." They understand that creativity derives naturally from pollination rather than dictate or fiat. Those same leaders are driven by fear: not the fear of failure, but rather the fear of not taking the chance. Alf Nucifora is an Atlanta-based marketing consultant.  

Economist sees small boom with new stores, restaurants

The new retail year in Alaska will be marked by the opening of several national retail stores as well as the addition of chain restaurants.Retailers opening additional stores in the Anchorage market include Fred Meyer and Lowe’s, with Home Depot set to open in Fairbanks. New restaurants due to open are Applebee’s, Chili’s and IHOP, all in Anchorage.Neal Fried, economist with the state Department of Labor, anticipates 2002 may prove to be a small retail boom."I’m expecting it to be, because of the new store openings, from an employment standpoint better than this year," he said.Retail could be one of the bright spots in Alaska in 2002, said Jeff Pokorny, research director for Anchorage Economic Development Corp. He also noted Fred Meyer officials are pursuing plans to build a store in Eagle River, although construction may not begin until late next year or in 2003.Officials for Portland, Ore.-based Fred Meyer have said they plan to open a ninth store in Alaska and fourth in Anchorage early in the year.The $28.5 million store, near Abbott Road and Lake Otis Parkway, would total 170,000 square feet and feature a gas station.Fred Meyer is owned by grocery giant Kroger.This spring Home Depot expects to open it first Fairbanks store. The 130,500-square-foot building is being built off the Johansen Expressway and will employ 150 to 200 workers.Another home improvement retailer is expanding operations in Alaska. Lowe’s, the Wilkesboro, N.C.-based chain, plans to open its second Anchorage store in spring or early summer, according to officials. The new Lowe’s store should total about 150,000 square feet, including 28,000 to 30,000 square feet for a lawn and garden center, and is under construction at the corner of Old Seward Highway and O’Malley Road. Stores of this size typically employ 175 to 200 people, Lowe’s officials said.Other retailers could announce projects later in the year and begin construction shortly thereafter, Fried said.Restaurants also will play a significant role in the retail sector for 2002. Consumers are spending a bigger part of their food dollar away from home, Fried said. Besides the new incoming national eateries, other independent restaurateurs also could begin operations next year, he said.Work continues on a second Applebee’s restaurant on DeBarr Road in Anchorage. Local operators expect to open the restaurant Feb. 28.A new-to-Alaska franchise, Chili’s Grill & Bar, should open by spring at 88th Avenue and Abbott Road in Anchorage. The restaurant will tally 5,500 square feet and seat 215 diners.The franchise operator also aims to begin building a second Anchorage Chili’s in May at Tudor Road and C Street.Another U.S. restaurant franchise premiers in Anchorage next year. Several Alaskans will operate an IHOP Restaurant in Midtown, set to open in early 2002. The 5,000-square-foot eatery, which will seat 176 diners, is being built at the corner of Tudor Road and Denali Street.

Burns to retire as KeyBank president

Michael Burns announced Dec. 18 that he will soon retire as president of KeyBank’s Alaska District. Burns will remain chairman of the bank’s district advisory board and also assist in the selection process of a new district president.Burns became president of Alaska Pacific Bank in 1985 and served in that position until October 1987. At that time, Alaska Pacific Bank and its sister bank, First National Bank of Fairbanks, combined to form KeyBank of Alaska and Burns assumed the president’s role at the larger bank.As president and chief executive officer, Burns directed the growth of the bank from eight to 17 branches and moved it into position as the third largest bank in the state.Burns has been active in community, state and civic organizations and recently completed his third term as chairman of the Board of Regents for the University of Alaska and is a trustee of the University of Alaska Foundation.Burns was elected to seven terms as chairman of the Anchorage Telephone Utility, has served twice as chairman of the United Way Campaign and is former commissioner of the Public Broadcasting Commission.

Industry officials see lean year after Sept. 11 terrorism

Alaska tourism officials believe the upcoming tourist season will experience declines in total visitors in the wake of terrorist attacks earlier this year.Some industry representatives are pushing legislators for increased marketing dollars in an effort to improve a grim outlook for travel nationwide for 2002.The travel industry has faltered because of slackening demand after the East Coast terrorist attacks. A U.S. recession hasn’t helped the industry either, some industry leaders noted."The biggest issue for the upcoming season is what will happen as a result of people’s reluctance to travel and how it will affect the visitor industry in Alaska," said Tina Lindgren, president of the Alaska Travel Industry Association.Alaska tourism has seen slowing growth in visitor numbers in recent years but never faced such expectations for possible significant declines, she said. Last summer an estimated 1.2 million people visited the state, Lindgren noted.Economic reasons may keep potential visitors from traveling or curtail spending if they do, she said. Some tour operators are discounting packages as a way to attract visitors to Alaska, she said.An increase in highway travel also could affect Alaska tourism because most visitors arrive by air, Lindgren said.In early December the Alaska Travel Industry Association reported results from a survey showing an average decrease of 23 percent in advance bookings compared with the same period last year. Inquiries from potential visitors were also down by 23 percent overall, the findings showed.Survey results depict a 2002 season tallying declines in total visitors and direct spending to Alaska tourism businesses, she said.Also, ATIA expects inbound travel from overseas destinations to be soft.In mid-December a governor’s task force recommended the Legislature approve $12.5 million for tourism marketing.The new year could be a challenging year for Alaska tourism, said Deb Hickok, executive director of the Fairbanks Convention and Visitors Bureau. FCVB plans for 2002 include building a new Web site, starting a visiting friends and relatives local business incentive program and conducting direct sales efforts on the West Coast.Juneau tourism marketing efforts aim to encourage potential travelers to visit Alaska since its a safe, domestic locale, said John Beiler, director of tourism development at the Juneau Convention and Visitors Bureau.Altered travel attitudes also have prompted cruise companies to make changes.For 2002 cruise lines plan to deploy four additional ships to Alaska, a result of repositioning ships away from less attractive Middle East and Mediterranean routes. This summer 25 large cruise vessels will serve the state: 21 based in Vancouver, British Columbia, two each based in Seattle and San Francisco.Cruise operations in Alaska could see changes depending on the outcome of a proposed merger between Princess Cruises of London and Miami-based Royal Caribbean Cruises. Princess also is considering a subsequent offer from Carnival Corp., also based in Miami. All three companies offer cruises in Alaska. In Alaska Princess and Royal Caribbean both operate separate fleets of ships, buses and rail cars while Princess operates four hotels with a fifth under construction.ATIA’s Lindgren said the companies’ 2002 packages are already in place, and any effects of a merger would occur in 2003.Anticipated new hotels opening this spring include the 125-room Hilton Garden Inn and the 109-room Dimond Center Hotel, both in Anchorage.Princess Tours plans to open its 84-room Copper River Princess Lodge in May. In the same area the U.S. Park Service plans to open a Wrangell-St. Elias National Park and Preserve visitors center.

Governor's task force adopts call for $12.5 million for post-Sept. 11 tourism ads

JUNEAU -- Lacking its own independent analysis, a task force appointed by Gov. Tony Knowles recommended the Legislature approve a special interest group’s request to spend $12.5 million in promoting tourism in Alaska.The 13-member panel tapped to study how terrorist attacks on the East Coast affected Alaska’s economy has adopted a call by the Alaska Travel Industry Association to spend state funds to target potential vacationers.Debby Sedwick, commissioner for the state Department of Community and Economic Development and co-chairman of the panel, said tourism is one area where spending could have an immediate impact."The trickle-down effect from tourism is really pretty big," Sedwick said.Sedwick said the panel lacked the time and resources to analyze the request by the Alaska Travel Industry Association, but she said it was important to act proactively to stave off potential losses in the industry.The recommendation was not unanimous and some members opposed specifying a dollar amount for a marketing campaign, the report said.Tourism accounts for 30,700 jobs in Alaska and is the state’s second largest private sector employer, the report said. A 1999 study by the McDowell Group showed 20,300 direct jobs are derived from the industry, including nearly 16,000 wage and salary jobs.The tourism industry expects to lose about $223.8 million next year and 3,596 jobs if its initial forecasts hold true.The tourism association said a recent poll showed a 30 percent drop in airline bookings and a 39 percent drop in cruise ship bookings.Association members reported about a 23 percent decline in inquiries and bookings from the same time last year."If it’s a bad year this year, it’s likely to draw a lot of small businesses out of business," said Scott Goldsmith, an economist with the University of Alaska Anchorage and a member of the panel.The panel recommended targeting advertising to West Coast markets through cable TV, direct mail and the Internet. It said the state could cut projected losses to tourism by as much as 57 percent, but Goldsmith conceded that "it’s very difficult to forecast consumer behavior in an area like this."Knowles’ spokeswoman Claire Richardson said the governor has not read the report but will consider its recommendations. Republican leaders in the Legislature also have not read the report, a GOP spokesman said.Elsewhere, the group concluded Alaskans will pay more in insurance and businesses will spend more on security costs in the short term.In the long term, the forecast is unclear, the panel said. It recommended that the panel continue to meet next year.Among its findings are: The cost of insurance, including aviation insurance, is expected to continue to increase. Some quotes for reinsurance have been 300 percent to 1,900 percent above previous premium levels for the same coverage. The attacks on Sept. 11 had no effect on jobs in Alaska. The state’s unemployment rate actually dropped from September to October.

This Week in Alaska Business History December 30, 2001

Editor’s note: "This Week in Alaska Business History" revisits events that shaped our past."Those who cannotremember the past arecondemned to repeat it."-- George Santayana, 1863-195220 years ago this weekAnchorage TimesDec. 30, 1981Developer may build dormitories at UAABy Bob MillerTimes WriterAn Anchorage businessman said today he is working with a group of developers who are very serious about building dormitories for the University of Alaska Anchorage.Bob Vogt, who owns the Alaska Development Co. and also serves as Alaska’s commissioner of athletics and statewide task force coordinator for Alaska ’84, said the group may contract to build the dormitories by the end of January.Vogt declined to name the other developers and said they haven’t committed themselves, "but they are very involved in the Anchorage real estate and development market. They have the funds and they are interested in building the dormitories."Vogt said the group is interested in building $10 million-$15 million facilities that could accommodate 400 to 600 students.Anchorage TimesDec. 30, 1981Owner of bankrupt airline agrees to partial payment planBy Maureen BlewettTimes WriterThe former president of a bankrupt commuter airline, Polar Airlines Inc., has agreed to sell the firm and repay his unsecured creditors 10 cents on the dollar.Five months ago, Tim Ewell, executive director of the Moral Majority in Alaska, pledged as a matter of "Biblical principle" to repay his creditors dollar for dollar. But in a surprise settlement after six days of jury trial, Ewell’s attorney, Richard Smith, asked that the state Superior Court settlement not be made public.The settlement grew out of a lawsuit filed in June 1980. In it, Ewell charged that former owner Royce Morgan misrepresented the financial condition of Polar Airlines when Ewell purchased the airlines. In a response to Ewell’s suit, Morgan claimed Ewell mismanaged the financial condition of the airline and misconducted its business.Ewell bought the business in 1977 and declared bankruptcy June 17, 1980. In January 1981, he became executive director of the conservative, church-backed Moral Majority.10 years ago this weekAlaska Journal of CommerceDec. 30, 1991Don’t expect too much to changeBy Tim BradnerAlaska Journal of CommerceOptimists call it stability, pessimists see stagnation. Whatever it’s called, Alaska’s economy seems flat going into 1992.That’s a perception, of course, because the most important economic indicator for the state -- wage and salary employment -- was still growing during November, the latest month for which there is data. Considering how things are in other states, things aren’t all that bad. Overall employment in the state is near 1985 levels, the peak of the mid-1980s boom.But attitudes are powerful influences, and a recession psychology in Alaska’s business community can help create a real one. The national recession is having an impact in Alaska. It used to be that Alaska was counter-cyclical. If things were down in the Lower 48, Alaska was perking. No more, it appears.This recession is different. The national economy is suffering while oil markets remain soft, and in fact are getting softer. Low demand for fuel, one result of the recession, is helping keep oil prices down. That has major impacts here through less oil industry activity and lower state revenues.Alaska Journal of CommerceDec. 30, 19911991 economy was flat, but with exceptionsBy Margaret BaumanAlaska Journal of CommerceFlat to minimal growth described the Alaska economy in 1991 with real estate agents hustling to maintain sales volume, while the good news for business owners was a definite employer’s job market."It was flat for some people and others had a better year than they anticipated," said Ernie Hall, chairman of the Anchorage Chamber of Commerce. "I don’t think it was a terrible year for anyone. If so, I haven’t heard of it. Everyone has basically maintained or done a little better than last year. If next year is as good as last, I’ll be pleased.""Employers have had very little problems finding people, from the technical to the less skilled workers," said Neal Fried, state labor economist. "The previous two years, employers were having a tough time finding enough workers."The year drawing to an end saw no great hot spots for employment, although generally speaking there was a stronger demand for professional and technical skills, Fried said.-- Compiled by Ed Bennett.

Business Profile: Best Western Golden Lion Hotel

Name of the company: Best Western Golden Lion HotelEstablished: 1977Location: 1000 E. 36th Ave., AnchorageTelephone: 907-561-1522Major focus of services: The 83-room Best Western Golden Lion Hotel features a full service restaurant, lounge and banquet facilities. New features include a sauna and an exercise room.History of the company: The hotel was built at its current size in the 1970s by the Linton and Groseclose families. "When this property was built, it was one of a kind," said general manger Terry Latham. "There were not many places like it. It was the place to be."Today, Best Western Golden Lion Hotel is still owned by the Lintons.Hotel operators have altered the facility since opening, incorporating new features as travelers’ desires have changed.In the last three years remodeling work has upgraded guest rooms and common areas. In 1999 hotel operators installed self-service laundry facilities for its segment of guests who stay for a week or more. In April 2000 Best Western Golden Lion installed a computerized front desk system. Last June the company added a sauna and exercise room. A few months ago the hotel installed a new telephone system.Best Western Golden Lion Hotel employs an average of 35 people, although that number climbs during busy summer months.Despite an increase in hotel rooms in the city, the Best Western Golden Lion holds its own in the area, Latham said. "In the last five years the Anchorage hotel market has been very competitive," he said.Top accomplishment of the company: The hotel’s general manager cited Best Western Golden Lion’s donations to nonprofit organizations and other efforts. "This company has always been very community service minded," he said. Since opening the hotel, operators have hired people with disabilities, he said. Last year the hotel was honored for its efforts, receiving the governor’s award for small business for employing people with disabilities.Major player: Terry Latham, general manager, Best Western Golden Lion Hotel.Latham came to Alaska in 1969. He has worked in the hospitality, hotel and tourism industry for the past 15 years. In July 1998 he joined Best Western Golden Lion.-- Nancy Pounds

Railroad forecasts higher revenues but less profit in '02

The Alaska Railroad Corp. is expecting more revenues from freight and passenger service for 2002, but increased costs in fuel, insurance, personnel, lawsuits, maintenance and other factors will drive profits down by more than $2 million.The state-owned railroad is predicting revenues of just less than $107 million next year with profits of $4.2 million. That compares to an estimated $105 million in revenues for 2001, with profits of $6.4 million, according to railroad’s budget Dec. 5.Nearly $78 million in rail improvements are planned next year, with the bulk of the money coming from federal sources, augmented with about $13 million from the railroad.The railroad receives no money from the state.More than $3.5 million in additional corporate overhead costs will hurt the railroad’s bottom line in 2002.According to Bill O’Leary, the railroad’s chief financial officer, corporate overhead includes such things as litigation, personnel costs not reflected elsewhere in the budget, and charges between departments.Not all details of those expenses are made public, as railroad officials only discuss the costs behind closed doors in executive session.The railroad is forecasting freight revenues to be $80 million for 2002, up from $74.9 million this year. Freight revenues have more than quadrupled in the last five years.Petroleum makes up most of the freight revenue for the railroad, projected at $36 million for 2002, up $270,000 from 2001.Decreased oil activity on the North Slope will hurt revenues by more than $1 million for the railroad’s joint rail-barge venture with Seattle-based Lynden Inc., according to O’Leary. The shipments, barged from Seattle then transferred to rail, mostly include pipes and other supplies and heavy equipment used in oil field operations and maintenance.Freight revenue for the railroad is projected to increase in all other categories, including coal and gravel, which was hauled in record numbers this year and last.O’Leary said after next year it’s unlikely the railroad will see another spike in gravel hauling for a few years, and expects the loads to decrease in 2003.Passenger revenues are estimated at $14.2 million for 2001, and railroad officials are projecting an increase to $14.9 million for 2002.Passenger numbers are projected to be about 500,000 for 2001, about the same as the prior year. Those numbers are down from 679,000 in 1999.The reduction in ridership and revenues is blamed on the 2.5-mile Anton Anderson Memorial Tunnel, which opened Whittier to road traffic in June, 2000, according to railroad officials.The state-owned railroad has taken steps since then to move more passengers along its 525-mile line, including streamlining its marketing operations and adding more locomotives.Real estate revenue from land the railroad leases is expected to increase from $5.3 million to about $5.7 million, according to the railroad’s budget.Costs associated with the railroad’s executives and seven-member board will increase from $1.5 million to $2.1 million for 2002, according to the railroad’s budget.A temporary hiring freeze will contribute to a decrease of about $1 million to $37.5 million in salaries for employees for 2002, according to O’Leary.The cost of benefits to employees including health insurance and pensions will increase more than $1 million in 2002, to $9.1 million, according to the railroad’s budget.Fuel costs for the railroad are forecasted at about $500,000 more for 2002. The railroad had been paying for fuel under a contract that was below market rate. The contract expires at the end of 2001, and the railroad expects to pay the going rate, O’Leary said.

Red Dog Mine owner to pay fine for air quality violations in 2000

Teck Cominco Alaska Inc. has agreed to an $827,000 settlement with the state of Alaska over air quality violations at the company’s Red Dog Mine in Northwest Alaska.According to state Department of Environmental Conservation Commissioner Michele Brown, $300,000 will be paid in cash, with $278,900 to be spent on environmental projects in the region and $248,100 suspended if the terms of the settlement are met.Eighteen violations of permit emissions limits on diesel generators and improper reporting were found during a three-day audit of the mine and port facility in August 2000 by the DEC, the U.S. Environmental Protection Agency and other agencies.During the audit, DEC found that several of Cominco’s large diesel generators had exceeded allowable levels for several air pollutants. Teck Cominco was upgrading its generators at the time to lower nitrous oxide emissions.The modifications led to unexpected increases in other emissions, and the company was working with the manufacturer on corrective actions at the time of the audit."We were conducting emission tests and sending reports to ADEC, but we realize now there should have been much better communication with the agency," said Bob Jacko, manager of the mine. All units have now been brought into compliance.DEC said Teck Cominco failed to notify the agency when the emissions exceeded limits and continued to operate the equipment while attempting to bring emissions down to permit levels. The company had also failed to monitor certain other pieces of equipment, DEC said."Alaska’s permitting system places a large responsibility upon the company to self-monitor and report problems and immediately take corrective action. When the operator fails to do so, they also fail to meet the community’s and our expectations of operating in full compliance," Brown said."Teck Cominco has now fixed the problems and demonstrated its commitment to improve by instituting an environmental management system and dedicating more staff resources to tracking environmental compliance," Brown said.Jim Kulas, Teck Cominco’s environmental manager, said that monitoring and reporting requirements have become increasingly complex in recent years."Our previous management tools did not track these requirements as effectively as needed," he said.The $278,900 to be spent on environmental projects as part of the settlement will include $230,000 donated to the NANA Regional Subsistency Advisory Committee to help assess subsistence needs in the region and any impacts on subsistence of mine activities.The company will also pay for a certified inspector to survey the drinking water system and water use practices in Kivalina, a village on the Chukchi Sea coast that is near where streams carrying water runoff from the mine area reach the ocean.Air quality monitoring will also be done in Kivalina and Noatak, another village in the region, to measure breathable airborne particulate matter. Samples will be analyzed for any lead dust particles that may be carried by high altitude winds from lead-zinc mining operations at Red Dog.The agreement also stipulates a number of safety measures for trucks carrying lead-zinc concentrate from the mine to the Chukchi Sea port, to reduce the potential for accidents and spills of concentrate.

Princess shareholders to pick between two suitors

LONDON -- P&O Princess Cruises PLC has changed course and put itself up for auction, announcing Dec. 19 it would give shareholders time to study a $4.4 billion takeover bid from Carnival Corp. that it had spurned in favor of a merger with Royal Caribbean Cruises Ltd.The winners in this three-way tussle would become the world’s biggest cruise ship operator. All three companies offer cruises to Alaska.In a concession to Miami-based Carnival, Princess has scheduled a shareholders’ meeting Feb. 14, six weeks after the company’s board plans to issue a circular urging investors to approve the planned merger with Royal Caribbean.If Carnival makes a "credible and superior" offer by Jan. 18, then shareholders would have sufficient time before their meeting to decide between the two alternatives, Princess said.Carnival’s chairman and chief executive, Micky Arison, had insisted that Princess executives postpone a planned January meeting for shareholders to approve the deal with Royal Caribbean."We must be absolutely certain that we are not jeopardizing our merger with Royal Caribbean, a committed partner, in return for a proposal which simply turns out to be a spoiling tactic designed to disrupt the creation of significant value for P&O Princess’ shareholders," said Princess chief executive Peter Ratcliffe."The timetable we have set in place today both honors our agreement with Royal Caribbean and still gives time for Carnival to put forward a credible, deliverable and more valuable transaction," he said.Carnival, in a response, denied that it was trying to torpedo the merger between Princess and Royal Caribbean Cruises. It said it was trying only to establish a level playing field so that Princess shareholders can then consider both proposals on the basis of value.Princess at first rejected Carnival’s bid even though it is larger than the $3 billion merger with Royal Caribbean because executives believed regulators would veto the deal due to antitrust concerns. Carnival is currently the world’s largest cruise operator.Princess’ proposed merger with Royal Caribbean would create a combined business worth $6 billion and overtake Carnival in size. Miami-based Royal Caribbean is the second-largest cruise line operator, while Princess, headquartered in London, is No. 3.


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