As layoffs rise, lawyers predict increase in job bias claims

The slowdown in the Lower 48 economy has management employment lawyers predicting an increase in employment bias claims and lawsuits against employers who have gone through layoffs.They also anticipate an increase in discrimination complaints even while employees are still on the job as a measure of job protection, in the belief that employers will be less likely to terminate an employee who had previously filed a bias complaint. Also, employees who have lost their jobs and been unable to obtain another job are more likely to sue their former employers.By contrast, locally there is significant anecdotal evidence of economic expansion. There are a lot of help wanted signs in the windows of businesses, particularly entry-level jobs. The number of out-of-state license plates on vehicles is increasing. The Alaska Department of Labor reports lower unemployment figures.Thanks in large measure to the congressional delegation and the increased concern for national security measures, construction and related fields are booming. I am told there is a labor shortage in a number of areas. It is reasonable to assume that there is a substantial amount of recruiting and hiring going on in Alaska.An important way to prevent discrimination and wrongful discharge claims is to ensure that the initial hiring is done properly. Accordingly, it’s timely for Alaska employers to review their hiring policies and procedures.To begin with, Alaska law recognizes two kinds of employment relationships: employment at will and employment that can only be terminated for a lawfully recognized reason, or just cause.If the employment is for a particular length of time, it can only be ended before the end of the term of employment for just cause. Moreover, an employer’s ability to terminate "at will" can be lost through its conduct or promises.In Eales vs. Tanana Valley Medical-Surgical Group Inc., the Alaska Supreme Court recognized that an oral promise to an employee that he could work "until retirement" transformed what was otherwise an employment at-will relationship to an implied contract requiring the employer to have just cause to terminate the employee.The Supreme Court later made a similar finding in Jones vs. Central Peninsula General Hospital. There, the court required the employer to follow the representations that it had made to its employees in its employee handbooks.Under these principles, an employee who can point to promises of employment for a particular period of time or representations from which the employee can conclude that she is entitled to job security or longevity may result in a binding implied contract for the employee.In addition, Alaska law has long recognized the covenant of good faith and fair dealing in employment contracts. In that regard, generally speaking, employers are prohibited from depriving employees of their reasonable expectations under an employment relationship.For example, as in Mitford vs. de Lasala (1983), the court held that terminating an employee who had earned commissions, but had not yet been paid them, constituted a violation of the covenant of good faith and fair dealing. The covenant has been construed to place a number of other obligations on employers and is not yet fully defined.As a result of these common law decisions, employers should be circumspect in the representations they make to prospective and current employees, both during interviews and after hire. Moreover, employers should audit the representations that are made in their employee handbooks, policies, correspondence and other documents that are provided to employees.For example, if an employer’s policies or handbook sections contain progressive discipline and obligate the employer to follow a set of criteria without reserving discretion to bypass particular steps, a court may find such "rights" upon the employer and overturn a termination if all the steps were not followed.The employer may wish to terminate an employee for a gross misconduct, but its policies require a warning or suspension before termination. In this fashion, the employer may be utilizing a policy that is against its best interest. Unfortunately, time after time, employers are faced with the need for a personnel action and only then dust off the old, previously adopted policies to discover the problem.If employers are considering substantial hiring, or for that matter lay-offs or terminations, they would be wise to first review their interviewing procedures, handbooks, correspondence and other similar documents and practices in light of these governing principles of Alaska law.Paul S. Wilcox is chairman of the employment law practice at Hughes Thorsness Powell Huddleston & Bauman LLC in Anchorage. He can be reached at 907-263-8248 or via e-mail at ([email protected]). This article is copyright 2002 by Paul S. Wilcox and is used by permission.

Alaska, Canadian Natives to protect gas line interests

ANCHORAGE -- Thirty-five tribal nations from the Yukon, the Northwest Territories, British Columbia and Alaska have signed a protocol to look out for each other’s interests if a natural gas pipeline is built.One plan being backed by Alaska leaders calls for building a gas pipeline from Alaska into Canada along the Alaska Highway.Thirteen Alaska tribes, whose villages are along the trans-Alaska pipeline route, joined forces with the Canadian tribes in signing the pact at the First Nations Oil and Gas Summit in Whitehorse, Yukon Territory.The tribes want federal, state and provincial governments and energy companies to consult with them before building a pipeline.Natural gas producers in Alaska are looking at two routes to move natural gas from Prudhoe Bay to the Lower 48. The other proposed route would go under the Beaufort Sea to the Northwest Territories and then south to connecting pipelines in Alberta.Work in Washington, D.C., on the proposed pipeline is proceeding. The Senate recently approved an amendment, proposed by Sen. Frank Murkowski, R-Alaska, mandating the southern highway route.Murkowski has said when the Senate returns April 8 from its spring break, he will resume efforts to create financial benefits to improve the economic feasibility of a pipeline. One idea is to create some sort of tax credit for gas producers if prices fall below a certain level.John Browne, BP’s chief executive, has said the estimated $15 billion to $20 billion cost of building a pipeline puts it out of reach financially.BP, Phillips Alaska Inc. and ExxonMobil Production Co., owners of most of the Slope’s proven gas reserves of 35 trillion cubic feet, have finished a $125 million feasibility study. The study has not yet been released, but early indications are it found the project would not be profitable.

This Week in Alaska Business History April 7, 2002

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 TimesApril 7, 1982Shippers fear railroad to get competitive edgeThe Associated PressJuneau -- Private shippers say they don’t want their interests left in the terminal if a state-run railroad rolls into Alaska’s future.Representatives of shipping and trucking firms Tuesday told the Senate Transportation Committee the state should not give an unfair competitive edge to the Alaska Railroad if it comes under the state control.Congress is considering a bill to turn the railroad over to the state, and the Senate is working to create an Alaska Railroad Authority to run the railroad if it is turned over to the state.Union leaders, railroad managers, businesses and shippers have all expressed concerns about how the state would run the railroad.Senate President Jalmar Kerttula, D-Palmer, said he thinks he satisfied many of their concerns in a rewritten, 52-page railroad bill he delivered to the Transportation Committee on Tuesday.Anchorage TimesApril 7, 1982U.S. court to hear gas line caseBy Betty MillsTimes Washington BureauWashington -- Opponents of the Alaska gas line waiver package are prepared to square off with sponsors of the $30 billion project in the U.S. Court of Appeals here Tuesday.Led by Sen. Howard Metzenbaum, D-Ohio, 38 members of Congress, states and organizations representing consumers filed suit last January against the waiver package. Oral arguments are scheduled in the appeals court Thursday.The waiver package was enacted in December and is considered a prerequisite to obtaining private financing for the project.In their brief to the court, Metzenbaum and the others charge the waiver package was enacted in violation of congressional procedures and subjects consumers to "unjust and unreasonable rates."But in their response brief, attorneys for Federal Energy Regulatory Commission said the waiver package "is a validly enacted public law. All constitutional requirements for a valid public law were fulfilled."10 years ago this weekAlaska Journal of CommerceApril 13, 1992Miners and coal operators oppose Hickel on mental health land trustBy Tim BradnerJuneau -- Miners and coal operators are now lobbying the Hickel administration to junk the complex and controversial mental health lands legislation passed in the closing days of the 1991 Legislature."This thing is a tar-baby," one coal operator, whose project is impeded by mental health lands litigation, said privately.An alternative proposal being circulated in Juneau would be easier to implement and would quickly clear title to millions of acres of state lands otherwise held in limbo, they argue.The governor and state lawmakers are reportedly interested in any approach that will solve the problem, but legislators are waiting to see what position Hickel will take. Meetings were held in the governor’s office last week, but no decision was reached.Lawmakers say they’re willing to look at the new approach, but they want to make sure it really will end the litigation and clear title to hundreds of thousands of acres of state lands on which development is now blocked.Alaska Journal of CommerceApril 13, 1992Tesoro earnings disappoint to dateBy Ray TysonFor the Alaska Journal of CommerceWeak residential fuel oil markets coupled with the cost of mounting environmental regulations are putting the bite on Tesoro Alaska Petroleum Co.’s current year earnings."We’re disappointed so far in 1992. Earnings are not near what we expected," said Gene Burden, Tesoro’s senior vice president for marketing.Tesoro’s corporate earnings, Burden said, plummeted from $22 million in 1990 to $3.9 million in 1991. But he stopped a hair short of predicting whether Tesoro would fall into the red by the end of 1992."This is definitely not as good a year as last year," Burden acknowledged.Tesoro’s Alaska subsidiary owns a 68,000 barrel-a-day refinery at Nikiski, a 10-inch pipeline between Kenai and Anchorage, 98 branded service stations and a chain of 7-Eleven stores. The refinery’s full range of products generates 73 percent of the sales for its Texas-based parent.In past months, Tesoro stock has fallen in the wake of the company’s financial woes.-- Compiled by Ed Bennett.

No shortage of road projects planned on Kenai Peninsula

KENAI -- Millions in state and federal funds will pour into the Kenai Peninsula economy this summer as work begins on a host of vital road and trail projects from Hope and Seward to Homer.Drivers can expect some delays, but the worst will likely occur at night when traffic is down, said Murph O’Brien, assistant director of the Alaska Department of Transportation’s Central Division."It’s always the goal to keep impacts as minimal as possible," O’Brien said Friday. "But with any construction project, there will be impacts to traffic flow. Often, the complete closures will be at night. In general, we spend an awful lot of money in each contract to keep traffic moving as smoothly as possible."For many of the projects, there will be periods of time when traffic is reduced to single-lane flow, with motorists either flagged through one lane at a time or led through the construction zone by a pilot vehicle, he said.The following is a look at the major projects on the schedule for this building season, beginning with a portion of the Seward Highway not actually on the peninsula.A two-mile section of the Seward Highway at Bird Flat, at about Mile 96, is prone to closure from avalanches. The highway and the Alaska Railroad rail bed will be moved about 65 feet toward the water and the old road bed will be raised, creating a berm that will block sliding snow."It should reduce the avalanche hazard about 90 percent," O’Brien said.The Seward Highway from Mile 0 to 8 at Seward is scheduled for reconditioning and repaving, but not all the work will occur this summer. The project includes trail construction out to Timber Lane, expansion of the highway grade and bridges in the Resurrection River area to provide better flood control, and a railroad crossing to be built at Stony Creek Avenue.In all, the work will cost about $16 million. Phase 1 of the bridge construction work will be advertised early this summer.Hope Road, a 16-mile stretch connecting the remote north peninsula town to the Sterling Highway, will get a $4 million facelift starting in late July or early August. The repaving job is to be advertised in June.While there isn’t much scheduled in the way of road work in the central peninsula, a major trail project gets under way.Alaska Road Builders has been awarded the contract to build the Kenai Spur Unity Trail and the Soldotna School Trail, at a cost of roughly $2.2 million.The Unity Trail will connect Kenai and Soldotna along the Kenai Spur Highway. The Soldotna School Trail will consist of a lighted pedestrian-bike trail between Marydale Avenue and Redoubt Avenue along the west side of Soldotna High School, Soldotna Middle School and Redoubt Elementary School property.A good deal of DOT work is scheduled to begin near Homer. One project aims to rebuild two state roads, Bartlett and Hohe streets, and turn them over to the city of Homer. The roads provide access to South Peninsula Hospital.However, negotiations on utility agreements are still under way and bid advertising isn’t expected to happen before September, making it likely little will actually be done this summer. The projects are expected to cost $1.25 million.The largest project will be the reconstruction of East End Road from the Pioneer Avenue and Lake Street intersection in downtown Homer at Mile 0 to Mile 3.75, near the intersection of East End Road and Kachemak Drive.The road will be rebuilt and widened to add shoulders, and a bike and pedestrian pathway will be constructed on the uphill side of the road. The final design is being completed and the project should be advertised in May to begin as soon as possible after that, O’Brien said.The cost of the job will total $14 million, which includes $4.2 million for right-of-way acquisition and the $3.2 million for utility work.The East End Road project has been long anticipated. A public meeting scheduled for April 17 from 4 to 7 p.m. at the Homer Chamber of Commerce Visitors Center will cover traffic control issues. O’Brien said there would be times when the road will be closed completely to install culverts, but that work will likely be done at night to avoid peak traffic times. Closures will be announced well in advance, he said.Several roads will be resurfaced in the Homer area, including Pioneer Avenue in the heart of downtown, as well as West Hill and East Hill roads, the North Fork Road and Nikolaevsk Road. Those projects will include some shoulder widening, guardrails, drainage and other work where appropriate. The jobs will cost about $2.1 million, O’Brien said.While the projects may cause some temporary inconveniences to the driving public, the end results will make transportation easier and more pleasant across the peninsula, O’Brien said.

New rollover rules add to pension portability

After years of giving lip service to the need for pension portability, Congress finally passed and the president signed broadly liberalized rollover rules, including the ability to roll over between and among plans that has never been permitted.Along with the liberalized rules, which are effective for 2002, however, there are pitfalls and some uncertainty that may require further guidance or technical correction to resolve. A plan sponsor is not required to adopt these new rollover rules, so it remains to be seen how widespread the adoption of these new rules will be.The basic old rules An individual retirement account holder can roll over between IRAs, including simplified employee pensions and salary reduction SEPs. Although no longer allowed to be established, SARSEPs in existence in 1996 were permitted to continue in operation. A distribution from a qualified plan - profit sharing, pension, 401(k), stock bonus and employee stock ownership plan - can be rolled over to an IRA or to another qualified plan, if the proposed recipient plan accepts roll-ins. A distribution from a 403(b), or tax-sheltered annuity can be rolled over to an IRA or to another 403(b) arrangement, if the proposed recipient arrangement accepts roll-ins. With respect to qualified plan accounts rolled into a conduit IRA, those amounts can be transferred back into another qualified plan, provided no other funds have been commingled in that IRA.The basic new rules Qualified plans and 403(b) arrangements can accept rollovers from each other. Eligible governmental 457(b) plan accounts are eligible for rollover for the first time in 2002. However, 457(b) plan accounts of employees of nonprofit organizations are not eligible for rollover; only governmental employee plan accounts are eligible. Rollover 457 accounts can be accepted by both qualified plans and 403(b) arrangements. Qualified plans and 403(b) arrangements can accept 457 rollovers and 457 plans can accept rollovers from the other two types of plans. IRAs can be rolled into qualified plans, 403(b) arrangements and 457 plans. However, SIMPLE IRAs, Roth IRAs and nondeductible contributions to IRAs cannot be rolled over to qualified plans or 403(b)s and probably not 457 plans, either, although that is less clear.Be carefulMany employers who sponsor qualified plans, in particular, are not excited about the additional record keeping burdens that arise if rollovers from IRAs, 403(b)s and 457 plans are accepted. The plan sponsor may choose not to accept any form of roll-ins to the plan, or may limit the types of rollovers accepted, so long as such limitation is uniformly applied and is nondiscriminatory in effect.You should check with your employer to determine whether it will permit its plan or plans to accept roll-ins of various types before commencing a roll-over distribution from the present plan or account.Be even more carefulRolling different money types into a different plan type can create unintended and painful results. For example, distributions from 457 plans that are not rolled over, but are currently taxed, are not subject to the 10 percent early withdrawal penalty that is assessed if a participant withdraws money from a qualified plan or a 403(b) arrangement generally before attaining age 59 1/2.However, if the 457 money is rolled over to a 403(b) arrangement or a qualified plan, and if those amounts are subsequently withdrawn before age 59 1/2, those amounts are subject to the 10 percent early withdrawal penalty.If a participant separates from the service of the employer maintaining a qualified plan after attaining age 55, but before age 59 1/2, the 10 percent early withdrawal penalty does not apply. However, if these amounts are rolled to an IRA, for example, and then distributed before age 59 1/2, the 10 percent penalty does apply.Life insurance may be held in a qualified plan. However, that is not true for 457s, 403(b)s or IRAs. Rolling over from a qualified plan to one of these other arrangements may cause the life insurance cash value to be taxable or may require liquidation of the coverage with the proceeds rolled over.Other items to considerBefore the rollover rules were changed, the alternate payee who was the spouse, or former spouse, of the participant was able to either leave the qualified domestic relations order account balance in the plan maintained by his or her spouse, or former spouse, employer or roll over to an IRA. Now, the alternate payee may also roll it to his or her employer’s qualified plan if such rollovers are accepted by that plan, or to a 403(b) arrangement or a 457(b) plan of a qualifying governmental employer.Although the qualified domestic relations order rules have been also been extended to 457(b) plans, they have not been extended to IRAs.The hardship rules are unique for qualified plans and 403(b) arrangements. A 457 plan has unforeseeable emergency distribution provisions that are significantly different than the hardship rules. The benefit of one or the other type of "in-service" distribution may be lost if you roll over from one type of account to the other.For example, in a 401(k), the events that are deemed to be a hardship event are very well-defined: Purchase primary residence, avoid foreclosure or eviction from primary residence, pay for post-secondary education for participant spouse or dependent, or pay for medical expenses for participant, spouse or dependent.However, in order to get an emergency distribution from a 457 plan, the event must be an unforeseeable emergency. Therefore, the purchase of a primary residence, though qualifying for a 401(k) hardship, will not qualify as an unforeseeable emergency for a 457 plan.What does all of this mean? It is certainly possible for a participant who changes jobs to move his or her retirement investments to the new employer’s plan, but a thoughtful participant may want to hesitate before rushing to consolidate all accounts.J. Michael Pruett is president of Cache Pension Service Inc. He can be reached via e-mail at ([email protected])

Alyeska may scrap shut-in pump stations, move workers

Alyeska Pipeline Service Co. is studying the possible dismantling of four shut-in pump stations on the trans-Alaska pipeline system as well as removal of unneeded tanker berths and oil storage tanks at the Valdez Marine Terminal, Alyeska President David Wight said March 28.The company is also looking at new investment in the remaining pump stations. There are substantial opportunities to increase efficiencies through waste heat recovery and re-engineering of pump stations, which use technologies that are 25 years old or older, Wight said.The shut-in pump stations are costing Alyeska about $1 million a year each to maintain, Wight told the Alaska Support Industry Alliance in Anchorage. He said dismantling and removing surplus facilities are part of a long-range strategic plan aimed at reducing costs of transporting oil through the system by 30 cents to 50 cents per barrel within five years.The pipeline was designed to transport 2 million barrels a day, which it did from 1979 through 1988. It now moves half of that. If new discoveries were made on the Slope, the pump stations now operating could be reconfigured to move up to 1.5 million barrels a day, Wight said."Our energy business in Alaska is right at the margin of competitiveness," Wight said. "Alaska has huge energy resources, but to make new oil fields on the North Slope economically viable costs must be trimmed, and Alyeska must play a key part in that reduction."As part of the strategic plan, Alyeska is looking again at how its personnel and resources are located, Wight told the Alliance.A few years ago the pipeline company reorganized into separate business units, but it is now apparent that some core functions, such as human resources, accounting and some engineering, could be more efficiently done from a centralized location."Our engineers, for example, are located in the field but not where our contractors are headquartered, which is where the planning takes place," Wight said. Just where people might be moved hasn’t been decided, he said.

Two Cook Inlet areas part of offshore lease sale

KENAI -- The federal government has announced a proposal to lease a portion of its Outer Continental Shelf planning area in Cook Inlet for oil and gas development.The proposal was announced by Secretary of Interior Gale Norton. The areas in Cook Inlet are part of a proposal to put 20 offshore areas in Alaska and the Gulf of Mexico up for lease.The Cook Inlet lease sales, numbers 191 and 199, are in an area roughly between Kalgin and Shuyak Islands, according to Minerals Management Service spokesperson Robin Lee Cacy. The MMS is the agency responsible for managing oil, natural gas and mineral resources on the Outer Continental Shelf in federal offshore waters.Currently, one-fourth of all oil and gas produced in the United States comes from the OCS. The new Alaska and Gulf of Mexico sales are expected to make 10.2 million to 21.5 million barrels of oil and 40 trillion to 60.6 trillion cubic feet of natural gas available for production.Cacy said the agency has begun taking the first steps toward offering the local areas for lease."We’re beginning to work on the EIS (environmental impact statement) to cover both Cook Inlet sales," Cacy said. She said the service has worked at assessing the potential impact development could have on Cook Inlet."We’ve done four (environmental impact statements) in Cook Inlet since 1977, so we have pretty good baseline numbers to look at. Now we’ll focus on new issues that have come up," Cacy said.One of those issues may be the effect exploration could have on Cook Inlet beluga whales. Environmental groups tried to block Inlet lease sales by the state of Alaska in April 1999 based on concerns for the whales, whose numbers in Cook Inlet have seen a dramatic drop in the past decade.Cacy said the proposal is needed to renew the government’s five-year leasing program, which ends in June. The new plan must still be reviewed by Congress for 60 days before going into effect. If finalized, the sales would take place in 2004 for lease sale 191, and 2006 for sale 199.The other proposed Alaska sales include three in the Beaufort Sea, two in the Chukchi Sea and one in Norton Sound.Cacy said she did not know what kind of interest from oil and gas companies the Cook Inlet sales would receive. However, the 1999 sale garnered substantial interest from oil companies, generating roughly $2 million in Cook Inlet lease purchases.

Heart association offers free CPR class

The American Heart Association is offering free cardiopulmonary resuscitation training April 28. CPR training will run from 9 to 11 a.m., noon to 2 p.m. and from 3 to 5 p.m. at the University of Alaska Anchorage Sports Center, 3211 Providence Drive. Registration is due by April 15.If properly performed, CPR can be a critical part of saving a person who is suffering a cardiac arrest, according to American Heart Association officials.For more information or to register, call 907-263-2014 or 907-929-2014. The association Web site also provides details about heart disease and stroke, (www.americanheart.org).National group presents program about multiple sclerosis April 18The National Multiple Sclerosis Society will offer a live interactive one-hour Internet program April 18. "Moving Forward ... A Program for People Newly Diagnosed with MS" begins at 4:30 p.m. Alaska Standard Time at the group’s Web site, (www.nationalmssociety.org).The program will feature Dr. Loren Rolak, director of the Marshfield Multiple Sclerosis Center in Wisconsin, who will address the medical aspects of multiple sclerosis. Beverly Noyes, director of the National Multiple Sclerosis Society’s program and staff development, will cover the impact, such a diagnosis has on emotions, families and employment. People participating in the interactive program can e-mail presenters questions for discussion.Similar programs also are presented live in June and September. These programs can be viewed live or accessed from the Internet archive called educational programs.To contact an area association chapter, call 800-344-4867.HealthSouth Diagnostic Center receives national recognitionHealthSouth Diagnostic Center of Anchorage is one of four national recipients of a company’s award honoring teamwork. The Pulling the Wagon award was presented March 15 at HealthSouth’s annual administrators’ meeting and awards banquet in Orlando, Fla.The Anchorage center received the award in the diagnostic imaging facilities category.HealthSouth Diagnostic Center, 4100 Lake Otis Parkway, is one of nine company facilities in Alaska. HealthSouth Corp. has almost 1,900 facilities around the world.

New Anchorage jail nearly ready for prisoners

Anchorage’s new $58 million jail is slated to begin housing its first inmates in mid-April. Owned and financed by the Municipality of Anchorage, the new facility will be operated by the state Department of Corrections.It was financed by city revenue bonds. Lease payments by the state will repay the revenue bonds.Construction was largely completed in February, but some final work will be done this summer.The 180,930-square-foot facility is on a five-acre parcel just east of the existing Cook Inlet Pre-Trial Facility on Fourth Avenue, which will continue in operation. The new jail will employ 80 to 90 full-time personnel.As designed, the jail will serve as a single intake and booking center for the Anchorage area and will accommodate both male and female misdemeanor and felony-charged prisoners.The new jail also includes a courtroom designed to accommodate pre-trial court hearings involving in-custody defendents, which will reduce the number of defendents being transported to the downtown Anchorage courthouse each day.The building also contains a $1 million new Inebriate Transfer Station.Planning work for a new jail in Anchorage has been under way since the early 1990s, because the existing 40-year-old Sixth Avenue Jail is too small to meet current needs. In 1994, the state Department of Corrections sponsored a study of current and forecasted needs.In 1996, discussions began between the Anchorage Municipality and the state over a replacement for the older facility.The new jail is capable of handling 400 inmates, and can be expanded to accommodate 600. The present jail, built in 1960, has only 108 beds.Project development manager for the jail was RISE Alaska LLC. The architect was EXI/Hyer. Neeser Construction Inc. built the facility.During construction, 314,000 work hours were spent in labor, the equivalent of 151 full-time jobs. The building required 12,000 cubic yards of dirt to be moved, 13,500 cubic yards of concrete, 3.5 million pounds of reinforced steel, 628 locks and 74,000 square feet of roof area.The leaseback financing arrangement has become a common procedure in many Alaska communities. The Spring Creek maximum-security state prison, for example, was financed and built by the City of Seward and leased to the state.The old Sixth Avenue Jail will be demolished to make way for a planned expansion of the Anchorage Museum of History & Art.

City, Valley to split ferry study bill

Officials from the city of Anchorage and the Matanuska-Susitna Borough have agreed to share the cost of studying the idea of deep-water ferry landings on each side of Knik Arm.A memorandum of agreement was signed March 28 by Anchorage Mayor George Wuerch and John Duffy, Mat-Su borough manager.The agreement outlines the responsibilities of the two governments for the study, design, engineering and funding for the ferry landings at Point MacKenzie on the Mat-Su side and at Ship Creek Point in Anchorage.Marc Van Dongen, port director at Port MacKenzie, said the Mat-Su borough has received $1.2 million from the Federal Transit Administration for a feasibility study, environmental assessment and preliminary design and engineering for the ferry landings.The two governments would each share costs in required matching funds for the work, about $150,000 apiece, Van Dongen said.The municipality and borough will form a joint committee to select companies to do the work, according to the written agreement.At least 25 businesses have expressed interest in establishing operations on the Mat-Su side once a ferry system is in place, Van Dongen said.VECO Corp. in August expressed interest in building oil drilling modules at Port MacKenzie.A ferry could be running in Cook Inlet in less than two years if funding and construction schedules go right, Van Dongen said.He estimated the cost of building the ferry landings would be about $10 million, or about $3 million at Point MacKenzie and about $7 million at Ship Creek Point.The borough has in the past considered building its own ferry, a 223-foot-long, $3.5 million ship that would hold 50 vehicles and 150 passengers.The two-mile trip would take 12 minutes and would cost travelers less than $10, Van Dongen said.A private ferry operator also could be used, he said.But whether run publicly or privately, the ferry would have to be heavily subsidized, Van Dongen said, adding that ferries in the Seattle area are typically subsidized by the government by at least 40 percent.Ship Creek Point, within walking distance of downtown Anchorage, has a boat launch and boat storage facility. It is a popular waterfront sightseeing destination for tour buses.Bill Sheffield, Anchorage port director, said a deep-water ferry landing would encourage tour boat operators to run sightseeing trips in Cook Inlet.

Seafood plant lays off half its workers

After filling huge orders for a big-box membership club and other distributors, Alaska Seafood International has laid off half its work force since January, including 25 cuts March 22 at its South Anchorage facility.But many of the cuts may be only temporary, as several sales orders are on the horizon, ASI officials say.Dale Girvan, ASI production manager, said at the first of the year that ASI had been running three shifts and employed about 170 workers.Two shifts have been cut, and the work force has been trimmed to 45 production workers and 40 administrative positions, Girvan said.The company in early December sent air shipments of Alaska-caught salmon, halibut and cod to markets in England and the Lower 48, company officials said. In December, ASI sent its first 30,000-pound container of processed fish south by ship to Seattle, then by truck to an Illinois distributor that supplies restaurant chains and institutions.In January, Albertsons, a major West Coast grocery chain, and membership-based warehouse retailer Sam’s Club began selling ASI’s value-added seafood, such as appetizers, dinners and salmon steaks under private labels and with the Great Alaskan Seafood Co. brand name.The bulk of the orders have been filled, Girvan said."We’re still producing but not in the volume we were," Girvan said. "Peaks and valleys, that’s part of the fish business."Girvan said he expects business to pick up soon.He said filling the Sam’s Club order "did a lot to make us a legitimate player in the seafood market. It was a real process getting into those stores."There are a lot of things on the cusp," Girvan said. "I expect things to break loose at any time."Russell Schreck, ASI’s new chief executive and board chairman, said the number of layoffs given by his production manager and other sources were not accurate, but he would not be specific."We got rid of some dead wood," Schreck said.Schreck said several sales for the seafood plant are pending, but refused to give additional information."We are a private company," Schreck said.That’s not entirely the case.The Alaska Industrial Development and Export Authority has invested about $50 million in ASI and owns title to the company’s buildings and land. Alaska law requires the Legislature to approve AIDEA projects of more than $10 million.The investment by the state beginning in 1993 was made to create new markets for Alaska seafood products and with a promise of 450 year-round, full-time jobs.ASI, however, has been hampered by financial problems from the onset.Shortly after construction was completed of the 202,000-square-foot South Anchorage facility 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.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 return, Sunrise became the majority owner, followed by AIDEA, 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 from Outside, replacing former senior managers. A sales staff also was established in markets in the Lower 48.Bob Poe, AIDEA executive director, said he believes it’s only a matter of time before ASI becomes a success, and that the work force reduction is likely "momentary.""It takes awhile to get market penetration," Poe said. "I see nothing but opportunity here."He said the layoffs, though painful, were necessary to keep the business afloat."No one likes to see (layoffs)," Poe said. "(ASI) is doing what you’d expect a company to do and that’s scale down in reflection of the orders."

Railroad could lose millions from Usibelli

If Usibelli Coal Mine loses its contract with South Korea-based Hyundai Merchant Marine, Alaska Railroad Corp.’s revenues would be cut by nearly $4 million annually, according to railroad projections.Usibelli announced in late March that it is expecting up to a third of its 120-person work force to be laid off because it hasn’t renewed a South Korean coal export contract, which represents nearly half of its 1.5 million ton annual production.The contract expired at the end of 2001. If not renewed, layoffs could come as soon as May, Usibelli officials said.Usibelli ships about 750,000 tons of coal annually to South Korea, via the railroad from Healy to the Port of Seward.Pat Flynn, Alaska Railroad spokesman, said revenues for this year would not likely be affected, since the railroad will continue to ship three coal trains, or about 130 of the 80-ton cars weekly to Seward until mid-May. The railroad will then shift its focus to hauling gravel during the construction season.The railroad had forecasted coal-hauling revenues to rise from $3.8 million this year to $4.2 million in 2006.The railroad ships larger amounts of coal within the state for power generation in communities and military installations, Flynn said. Revenues from those operations should earn the railroad $5.75 million this year, according to railroad projections."It is important," Flynn said of coal hauling. "It is our No. 3 commodity in terms of freight revenue behind petroleum and gravel."Flynn said the railroad had forecasted about 800,000 tons of South Korea-bound coal to be shipped this year.The railroad shipped 700,000 tons in 2001, Flynn said.

World Lighting decides to put Anchorage building on sale

A retail store built in Anchorage won’t open as World Lighting. Instead, the building, on East Dimond Boulevard between Brayton Drive and Hartzell Road, is for sale or could be leased by a tenant.Hardware retailer and Washington state businessman David Heerensperger, original developer of Eagle Hardware & Garden, had intended to open the Anchorage store as a new lighting retail outlet. Construction on the building began last summer, and exterior work wrapped up in fall. Interior work remains to be completed.World Lighting began with a 25,000-square-foot store in Bellevue, Wash. Last year the company opened similar stores in two other Washington cities, Tukwila and Lynnwood.A World Lighting spokeswoman, who asked not to be named, confirmed the Anchorage store had been scratched."We were going to put a store there," she said from company headquarters in Bellevue, Wash. But World Lighting officials decided to focus on other stores in Washington rather than the Alaska store, she said. "We want to fill in here first," she said.Heerensperger did not return calls by press time.Spokane, Wash.-based contractor Douglass Properties served as general contractor for the Anchorage facility. Building owner and developer Harlan Douglass did not return calls from the Journal.The building measures 37,215 square feet on a 92,806-square-foot lot, said Chris Stephens, who is marketing the property and is associate broker for Bond Stephens & Johnson Inc. He is working with the developer’s broker in Spokane, Pinnacle Real Estate, and officials there did not respond to phone calls by press time.The price tag for the building is $3.95 million or a lease rate of 90 cents per square foot, Stephens said. While the exterior of the building has been completed, some interior construction remains, he said.Several people have expressed interest in the property, Stephens said.Other retailers are springing up along Abbott Road near the store. In February Fred Meyer opened a new store less than a mile away, and Safeway plans to build a new store later this year just blocks from the World Lighting building. Safeway is replacing its Carrs Quality Center store now at Dimond Boulevard and the Old Seward Highway.In September World Lighting officials said plans for the Anchorage store were on hold.World Lighting is the latest in Heerensperger’s retail ventures to reach Alaska. Heerensperger was once a top employee with Pay ’N Pak home improvement stores.Roughly 20 years ago Pay ’N Pak operated in Anchorage at the Aurora Village Carrs building.Next Heerensperger developed Eagle Hardware & Garden stores, which at one point employed 7,000 people.In November 1998 Heerensperger chose to merge Eagle Hardware with another home improvement retailer, Wilkesboro, N.C.-based Lowe’s Cos. Inc.Heerensperger next developed the World Lighting retail concept.

Oil, gas exploration continues apace on Kenai Peninsula

Unocal Alaska began drilling a well to explore for natural gas just south of the Anchor River in Anchor Point in late March and is actively preparing a site for a second well nearby.Motorists along the Sterling Highway could easily spot the rig topped with a large American flag March 21. A few days later, a road was being bulldozed nearby to reach another site being prepared for drilling another test well in mid-April.Meanwhile, a huge Phillips Alaska oil exploration rig that has dominated the landscape night and day near Stariski Creek about six miles north of Anchor Point disappeared from the horizon March 25.The separate operations are part of the buzz of oil and gas exploration that has swirled around the Ninilchik and Anchor Point region for months.The 148-foot tall Unocal rig, contracted from Kuukpik H.R. Drilling Co., began drilling in the privately owned Dale Griner gravel pit March 22, said Unocal spokeswoman Roxanne Sinz.At the same time, workers are building a pad at a site on borough land about half a mile southeast of the Griner well. Mineral rights under the second pad have been leased to Unocal by the state, while the first site is exploiting mineral rights leased from Griner.Once the first well is drilled to an estimated depth of about 6,800 feet, the rig will be moved to the second pad, said drilling foreman Harold Fahrlender.The Unocal consultant, who said he came out of semi-retirement in Santa Ana, Texas, to work on the Ninilchik-Anchor Point project, said the casing of the well will be perforated to test for gas after the drill rig is moved.Evaluation of the gas potential will determine whether drilling will continue at the second pad and possibly a third site planned for the northeast edge of Anchor Point, Unocal officials have said.By the time the second pad is ready to drill, Sinz said the company hopes to have evaluated the findings of a well drilled last month in Ninilchik. The same drilling rig is being trucked from site to site as Unocal continues its exploration at a rapid pace.In January, Unocal announced finding a significant quantity of natural gas at another Ninilchik area site. All of the current test wells are exploring the same potential gas field known in geologist terminology as the Ninilchik Trend.The exploration is linked to plans by Unocal and Marathon oil and gas companies to build a gas pipeline along the Sterling Highway from Kenai to Anchor Point. Enstar Natural Gas Co. is also expected to extend distribution lines from Anchor Point to Homer, if the pipeline is built over the next two years or so.In an unrelated project, the Phillips oil rig began drilling Oct. 21 from the bluff site to explore for oil by curving to an underwater site about three miles out in Cook Inlet. Test drilling at the Phillips Stariski site, said to be the biggest rig operating in the state, was originally slated to end in late December, but drilling appears to have continued at least several weeks longer.Phillips’ spokeswoman Dawn Patience would say only that the company is evaluating the operation. Patience said she could not say how long that evaluation might last or if the site had produced any promising results that might lead to oil production.

Companies practice community responsibility, reap trust, respect

All companies have a responsibility to the community in which they operate. For most that means operating ethically, turning out quality, dependable products and giving back to the community in some way.But here in Alaska, the term has a special meaning, especially for those of us in the oil industry. To the industry, corporate responsibility here means being a good neighbor to the people and communities who have supported its activities over the last 40 years. As a good neighbor we look for ways to provide jobs, to help in time of need, to add to the community’s quality of life and to protect the environment.During times of need, such as the destructive Big Lake fire in 1996, being a good neighbor means standing first in line with donations of manpower, equipment and cash to help people who lost their homes. During less stressful times, companies with a commitment to corporate responsibility routinely make grants and contributions of goods and services to help build the nonprofit organizations that make this a better neighborhood for all of us.And, perhaps most important to Alaskans, being a good neighbor means protecting the environment in every way possible. That means constantly looking for new technology to find and produce oil that leaves smaller footprints on the land. Phillips Alaska’s Alpine development, which covers a fraction of space compared with older fields, has won praise for its environmental sensitivity and is now the standard for its operations. Industry’s recycling programs, both on the Slope and in Anchorage, have won awards for their effectiveness.There are excellent reasons for a company to meet such standards. The following are just a few.First, it helps companies recruit and retain high quality employees. A number of studies have documented this. For example, a recent survey of close to 200 companies by the University of California Los Angeles discovered that employee morale was three times as high in those organizations with strong community involvement programs. A company with highly motivated employees will perform its operations with greater safety and efficiency.Second, because corporate responsibility, quite appropriately, is what the community expects of the energy industry. Alaska has played a large role in the prosperity of many of the companies that have operated here. Those committed to corporate responsibility often recognize that role by providing philanthropic budgets to support a wide variety of nonprofit organizations, by encouraging employees to get involved in volunteer programs and by giving their own time and money to important causes.But most of all, community-conscious companies practice corporate responsibility because it’s the right thing to do. It’s how they earn the public’s trust and respect. Alaskans have been good neighbors to the industry for a long time now, and hopefully that relationship will continue for a long time to come.Nancy Schoephoester is manager of philanthropy and community services for Phillips Alaska Inc. She can be reached via e-mail at ([email protected]).

Kmart brings Alaska crops to Juneau

JUNEAU -- Lt. Gov. Fran Ulmer on March 22 applauded the efforts of Super Kmart to bring Alaska-grown produce to its stores statewide, saying she hoped to encourage other stores to follow suit."Alaska farmers have produced a bumper crop," Ulmer said in a promotional event at the Juneau Super Kmart, "and it’s important for us to develop markets."With agriculture accounting for more than 3,200 direct jobs and about $52 million in sales revenue in Alaska, "this is an important step to recognize when one of the major grocery stores of the state makes a commitment to support the agriculture industry," said Ulmer, a Democrat who is a candidate for governor."We would like to use this recognition as encouragement to other produce sellers and consumers in Alaska to follow suit," she said.Ulmer also urged public institutions, from prisons to state ferries, to take advantage of a 7 percent bidding preference on Alaska products.Ulmer was joined by Super Kmart produce buyer and merchandiser Rene Perez of Anchorage; Robert Wells of Palmer, director of the state Division of Agriculture; and two Palmer farmers, Adam Boyd and Larry Devilbiss."The reason we are here today is because it has been a few years since we have been able to get Alaska-grown into Juneau markets," Wells said.Super Kmart isn’t the only grocery chain to sell Alaska produce. Glenn Peterson, district manager for Carrs/Safeway in Anchorage, Wasilla, Ketchikan and Juneau, said his company is the largest buyer of Alaska produce in the state."There is nobody that buys more," he said in an interview. "We are actually shipping Alaska potatoes and selling them as a niche item in the Seattle area."Boyd is manager of the Matanuska Valley Potato Growers, who have 140 acres in production. Devilbiss is owner of Wolverine Farms, the only commercial organic carrot producer in Alaska.Boyd’s association raised 1,604 tons of potatoes in 2001. The farmers grow six varieties of white potatoes, two russets, Yukon golds and four reds plus a novelty variety, the peanut potato, he said."Most Alaskans like whites, which have a thin skin, although people in the Lower 48 like the thick-skinned russet," Boyd said.Devilbiss cultivates 600 acres and leases another 400 acres. On most of his acreage he cultivates hay for beef cattle, brome grass and timothy grass. He produces about 200 tons of organic Nantes-variety carrots, and packages an additional 600 tons of nonorganic carrots for neighboring growers.Kmart executive Perez said the chest-high display of "Alaska Grown" carrots and potatoes in the store is only the beginning. Alaska Grown is a registered trademark marketing program run by the state."We will have a full line available in July: leaf lettuces, zucchini, summer squash," Perez said. "We are developing an air freight program that handles expediting produce from the Mat-Su area (to Juneau) twice a week."The produce will be able to compete in price with what comes north by barge from Seattle, Perez said."It comes out just about even when you add in the freight from the Lower 48," he said.

Forest Service renews Juneau helicopter permits for now

JUNEAU -- The U.S. Forest Service, unable so far to complete a new environmental impact statement, will renew the Juneau Icefield permits used by four helicopter tour companies at last year’s landing totals.The decision keeps the number of authorized landings at 19,039, the upper limit since 1997. Last year, helicopter tour companies landed on the icefield 17,783 times. No new landing areas will be authorized in this year’s permits, according to the Forest Service.The agency has faced delays in completing an environmental impact statement that will set the number of future icefield landings. The document was due in April, but Pete Griffin, Juneau District ranger, said it is being put into final form now. It could take four to six weeks to get it to the printer and longer to release it, he said."In the meantime, we’ve decided to renew the permits for the 2002 operating season," he said. "What we’re planning on doing is implementing the decision in the new EIS in the 2003 season rather than do something midstream."The delay in releasing the new EIS is tied to the 3,000 comments the agency received and the effort needed to respond, according to the Forest Service. Based on community input, an eighth alternative was analyzed in the final document. In addition, efforts to collect noise data and a failed mediation effort were time-consuming, according to the agency.Griffin said he couldn’t comment on the decision in the final EIS until the document is released."The community is working on improving the helicopter noise situation and taking a variety of approaches to that," he said. "Some are going to work faster than others. The (city) is taking an active role in resolving the problem."In the past few months, the city has been discussing the possibility of moving flights from Era’s North Douglas heliport to a new heliport in the Thane area. Griffin said the EIS addresses the idea of satellite heliports."We can’t base a decision on the speculation that one or more will be in place, but we do take it into account," he said.Tim McDonnell, vice president of tours and marketing for TEMSCO Helicopters in Juneau, described the move to renew permits this year as "a middle-of-the-road decision.""It’s not a reduction. It’s not an increase. It’s probably the best of both worlds until they get through all of what they’re trying to research and release," he said.It’s too early to say what the demand for helicopter tour flights will be this summer, he added."Our concern in the industry is because cruise lines are selling cruises at the lower end. Does the passenger have the discretionary income to buy a $200 helicopter tour? And that truly is the biggest question," he said.For others, the agency’s decision is another delay. Renewing the permits exacerbates noise problems for neighborhoods, recreational users and wildlife, said Matthew Davidson, with the Southeast Alaska Conservation Council.

One California judge dispenses justice with a few minor alterations

In the midst of a murder trial, a California judge told the defense attorney to take off his pants. The lawyer did so and gave the pants to the judge. By the way, it should be mentioned that the judge spotted a rip in the lawyer’s trousers and offered to mend them in her chambers. She did so and then returned the pants to the attorney. The trial continues.Big house wiredWant to keep up with what’s going on with the prison population? The Internet can be your guide. While no states allow inmates unlimited Net access, more and more are going online under the watchful eyes of prison officials. Prisoners are using Web pages to access legal research, plead their cases, distribute online newsletters and plot additional crimes from the comfort of their cells. Well, we’re not sure about the last thing mentioned, but we hope that’s not the case.Pierced protectionA California woman has sued her former employer claiming she was fired because she had her tongue pierced. The plaintiff is relying on a California law that prohibits employers from terminating employees for lawful conduct taking place outside the office. She also makes invasion of privacy, breach of implied contract and intentional infliction of emotional distress claims.The employer, an apartment leasing company, ordered the woman to remove the stud in her tongue. She refused and pointed out that the piercing could be seen only when she opens her mouth and sticks out her tongue. She further points out that the company dress code does not address this particular issue.Respectful burglarAn American family living in Tokyo came home from dinner one night and heard a strange noise in their house. It turned out it was a burglar who escaped out the back door. The police were called and while there, someone noticed a strange pair of shoes by the front door where the burglar had entered the house.The shoes, it turned out, belonged to the burglar who observed the Japanese custom of removing his shoes before entering a home. The shoes had a tag from a local shoe repair shop that was used to track down and arrest the burglar.Lawsuit of the monthAn inmate brought a claim for cruel and unusual punishment against his Arkansas prison for not allowing him to watch the Super Bowl.HistoricalIn 1996, a Los Angeles lawyer filed a lawsuit on behalf of his client for discrimination by a restaurant that refused his client access. The lawyer, by the way, was the client’s master and the client was a poodle. The suit alleged that since birds were allowed to come and go from the restaurant’s patio, it was discriminatory and unconstitutional not to allow dogs to enter. The judge ruled the Constitution does not protect the rights of dogs.FootnoteA California man sued the operator of a ski resort after he was injured skiing into a steel pole displaying a sign. The sign read: "Be aware. Ski with care."Have something to share with Out of Court? E-mail it to Chet Olsen at ([email protected]).

ATHENA winner helps her employees balance job, family

Employees today face the challenge of balancing the needs of a busy family with demanding job duties. This year’s ATHENA Award recipient has experienced that challenge and has endeavored to help her company’s staff achieve equilibrium between family and work.The Anchorage ATHENA Society presented the award to Kathleen Porterfield on March 22 during a luncheon at the Sheraton Anchorage Hotel.Porterfield is managing partner at the Anchorage office of KPMG LLP, now the sole major international accounting firm in Alaska.Establishing a climate where workers can strive to harmonize work and family responsibilities has been important to recruiting and retaining employees, she said."What we try to do is let people know it’s OK to go to parent-teacher meetings," Porterfield said.Such an effort is significant in a profession often requiring travel and what Porterfield called "incredible client demands."She was honored for her professional achievements, including serving as KPMG’s first and only female managing partner for a time out of 80 U.S. and 800 international offices. Last year KPMG added a second woman with that title in Albuquerque, N.M.Another certified public accountant and previous ATHENA Award recipient, Julianna Guy, recognized that accomplishment. When Guy began her career as an accountant 50 years ago, there was hardly a consideration of appointing women as partners, she said.ATHENA Award recipients are chosen by a committee of previous honorees. The award recognizes women’s and men’s business accomplishments, community service and their encouragement of women as business leaders. The Anchorage ATHENA Society lists more than 140 members and added 25 new members at the luncheon last month."She’s a well-rounded, balanced and accomplished lady," Guy said. "She certainly fits the ATHENA model."Guy also praised Porterfield’s efforts to encourage women to join the accounting firm and their promotion to positions of responsibility."More than half of our managing group are women," Porterfield said.Ten years ago women accounted for less than one-fourth of those managing roles at the Anchorage office.Porterfield earned a bachelor’s degree in economics from Goucher College in Baltimore and a master’s of business administration in accounting and finance from the University of Chicago.She came to Alaska in January 1982. At that time Anchorage was home to six of eight large international accounting firms, and Porterfield chose KPMG especially for the leadership qualities of partner Joe Heintz. Today both Porterfield and Heintz are involved in the national ATHENA program. Heintz is a member of the national ATHENA board.After working her way up through the ranks, Porterfield was appointed partner in 1993.Receiving the ATHENA Award stands as another milestone in her career. The recognition is important to her because it can inspire her children, Porterfield said."I have a 9-year-old daughter. It’s important to me that she sees what you can do," Porterfield said.Guy cited Porterfield’s accomplishments with nonprofit organizations. "She gets things done," Guy said.Both women worked on a YWCA committee and have received YWCA Woman of Achievement awards.Porterfield has been involved with the Anchorage YWCA since it started in 1989. She also is board president for the Alaskan Aids Assistance Association, vice chairwoman of the Anchorage Economic Development Corp. and treasurer of Consumer Credit Counseling Services of Alaska.Despite Porterfield’s service to community groups, Guy noted an attention to personal responsibilities as well."She keeps in close contact with her family," she said.Porterfield credits the support of her husband, Norwood Eggeling, who has been a stay-at-home dad for five years.Her future goals are focused on continued efforts to train employees KPMG gained as a result of the closure the Anchorage office of another major firm, Deloitte and Touche. The merger, which took effect last June, led KPMG to move to new offices for its now 80-member staff.Porterfield derives motivation from serving KPMG’s clients including the Alaska Permanent Fund Corp. and Alyeska Pipeline Service Co."What drives me is keeping our clients happy and satisfied," Porterfield said.

Sooner or later, marketers will pay for customer abuse

The issue of bad customer service won’t leave me in peace. Two reader e-mails that I recently received dramatically prove the point. The first was a copy of a cleverly drafted, 17-page, PowerPoint presentation entitled "Yours Is a Very Bad Hotel."It detailed the abysmally poor service that a team of business travelers received as they were checking in at a Houston property of a prominent national hotel chain. To summarize, our merry band of travelers arrived late for check-in only to learn that their guaranteed rooms had been given away. Apparently, Mike, the night clerk, was rude and unhelpful as night clerks quite often are.In response, and with no other outlet for satisfaction or retribution, the complaining duo drafted a witty but powerful PowerPoint presentation outlining the events, lambasting the hotel chain, vowing never to return and requesting that anybody who receives the PowerPoint presentation pass it along to friends virally.In the rarified world of customer service consulting, Total Quality Management, Baldridge Awards, and so on, the PowerPoint presentation has become an underground hit: must-have, must-read. Tens of thousands have passed it on virally. Callers expressing outrage have besieged the Houston hotel and its national headquarters.The PowerPoint presentation provides the mistreated and the impotent with a powerful means of venting and seeking revenge. Every traveler who has been similarly mishandled will nod in agreement upon viewing the presentation and proceed to pass it on with glee to friends and associates, just as I have done.When it’s all over, the actions of one untrained and ill-suited-to-the-job night clerk will succeed in spreading a powerful negative message to hundreds of thousands of potential customers and, in the process, do irreparable damage to the hotel brand. That’s the beauty of the Internet.Another reader writes with undisguised anger of her manhandling at the airport by security personnel who have no empathy for the traveler and no awareness of the need for customer service.She talks of the rudeness, the barking of orders, the ordering off of shoes, the conscientious invasion of body by pat down in open view, and the overall assault on dignity that $8 an hour will buy you in today’s marketplace.I can sympathize with the writer. I, too, have had bag contents strewn about for the world to view; ordered to take off my shoes; had tweezers and nail file loudly confiscated with the satisfaction that another threat to society has had his evil intentions thwarted by the just and vigilant; and bodily frisked with the seriousness and intensity that only an FBI search could match.The criticism and blame in both cases cannot be leveled solely at the employee. They’re only as good as they’ve been trained and motivated. With the exception of a couple of high-end groups, like the Four Seasons, Ritz-Carlton Hotels and Leading Hotels of the World, most hotel chains still haven’t mastered the elementary process of checking a guest in and out with speed, courtesy and a smile.They say they do, but they don’t. And the failure can be traced to two primary causes: inadequate training and lack of an obsessive culture that loudly proclaims, "the customer comes first."This airport security fiasco will have to be addressed very quickly. Even though the government has responsibility for establishing the process and hiring the screeners, the airlines must step up to the plate and demand proper treatment for the air traveler on whom they rely. Even at $8 an hour, security screeners can be taught the fundamentals of politeness and customer empathy.Somebody has to take on the role of surrogate for the downtrodden air traveler, and that somebody has to be the airlines. Up to this point, airlines have viewed their passengers, at least those not sitting in first class, as cattle to be moved from point A to B with the least bodily injury or psychological bruising. Like prisoners in restraint, they were to be watered and fed the bare minimum to survive the trip.The airlines must be made to realize that their responsibility encompasses the total travel experience and that includes the time on the plane as well as the task of getting to it. My fondest hope would be to see the Disney Co. take over airport security. Screeners with mouse ears would be a small price to pay for a friendly, speedy transaction.The lesson for the marketer is a basic one: Mess with the customer at your peril. Even as captive consumers, we’ll find a way of striking back. We’ll attack you virally, demonize your brand and withhold our dollars where we can. As marketers, you’re left with two alternatives: drive a stake through our hearts (for that’s the only action that will kill our festering need for revenge) or acknowledge the problem and fix it.Alf Nucifora is an Atlanta-based marketing consultant. He can be reached via e-mail at ([email protected]).

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