Alaska Air Group posts loss, but plans to add new routes

SEATTLE -- More than $50 million in aid from the government’s airline bailout package wasn’t enough to keep Alaska Air Group profitable, as the company reported a wider loss for the fourth quarter.Hurt by the decline in air travel since Sept. 11, the parent company for Alaska Airlines and Horizon Air said Jan. 18 it had a net loss of $36.4 million, or $1.37 per share, for the fourth quarter ended Dec. 31, compared with a loss of $28.9 million, or $1.09 per share, a year ago.The results included $52.3 million in pretax funding from the government’s airline bailout package and a $10.2 million charge to retire Horizon’s fleet of F-28 aircraft. Excluding those one-time items, the company lost $62.9 million, or $2.37 per share, in the quarter.Analysts polled by Thomson Financial/First Call were expecting a loss of $2.21 per share for the quarter.Revenue for the quarter was $462.2 million, compared with $532.4 million in the same period last year.Despite the loss, Alaska officials said the company fared better than many in the airline industry. The company said traffic at Alaska was down 5.6 percent for the quarter, compared with 19 percent industrywide."The entire airline industry has been struggling in the wake of Sept. 11, but fortunately we’ve been much less impacted here on the West Coast," Alaska chairman and chief executive John F. Kelly said.To date, the company has received $81.4 million in federal assistance. It has applied for an additional $12.3 million in assistance for 2002, the company said.Kelly said there have been few layoffs and a slight increase in passenger loads. He said the company plans to have its schedule back to 100 percent by Feb. 10, and will add new routes on both airlines this year.

Alaska's road conditions slightly off national mark

Alaska compares favorably against other states in the condition of its highway and road infrastructure, Joe Perkins, commisioner of the state Department of Transportation & Public Facilities, told the House Finance Committee Jan. 18. The national road information program reports that 60 percent of Alaska’s highways and roads are in good or fair condition, compared with the national average of 68 percent of roads in good or fair condition, Perkins said."Considering the extreme weather and harsh physical conditions which we deal with in Alaska, like permafrost and thermal cracking, I think we stack up pretty well with the other states," Perkins said.Georgia, Alabama, Florida, Wyoming and Kansas are rated as having the nation’s best highways, while California, Massachusetts, Missouri, Connecticut and Louisiana have the worst, Perkins told the committee.Nationwide, 21 percent of roads and highways are in mediocre condition and 11 percent in poor condition. In Alaska, 34 percent of roads and highway are in mediocre condition and 6 percent in poor condition."We need to concentrate on improving our mediocre roads and moving them into the good category. We can do this by repaving roads," Perkins said.The Jan. 18 hearing was an opportunity for Perkins and commissioners of other agencies to present results of their departments’ "missions and measures," the performance goals set by the Legislature on which they report annually.Another performance goal Perkins is proud of is the measurement of highway lane miles maintained per full-time state employee, compared with the other Western states.During fiscal 2001 the Northern Region of the Department of Transportation and Public Facilities maintained 42.2 lane miles of highway; the Central Region, which includes Southcentral Alaska, maintained 37 lane miles and the agency’s Southeast Region maintained 35.3 miles per employee.This compares with the average of 29.3 miles maintained per employee in the 18 Western states, Perkins told the committee.The commissioner also said the department is contracting out about half of the design and engineering work for state projects under its management, which is about the level of outsourcing maintained over the past three years.Doing half of the engineering in-house and contracting out half is considered the best mix, Perkins said.The department also paid vendors in about 24 days, on average, in the last fiscal year, he said.

Brian Nerland heads KeyBank in Alaska

Brian Nerland has been chosen president of KeyBank’s Alaska district. He succeeds Michael Burns, who had earlier announced his retirement after serving as president since 1985.Nerland began his career at the bank that same year. He previously served as senior vice president and commercial banking team leader.Nerland is a fourth-generation Alaskan, a descendant of Andrew Nerland, the Gold Rush pioneer who established a furniture business in Fairbanks which lives on in Anchorage as Sleep Comfort by Nerlands."Brian brings to the position years of experience in sales and business development as well as an outstanding history of community involvement," said Burns. "I am leaving the bank in excellent hands."Burns will remain in Anchorage. He has not announced his future plans.

Business Profile: PDC Inc. Consulting Engineers

Name of the company: PDC Inc. Consulting EngineersEstablished: 1975Location: 1028 Aurora Drive, FairbanksTelephone: 907-452-1414Major focus of services: PDC Inc. Consulting Engineers provides civil, electrical, structural and mechanical engineering services as well as surveying and environmental work.History of the company: PDC traces its roots to two engineering firms founded the same year in Alaska, Rowen Design in Fairbanks and Fryer Pressley in Anchorage. The two companies merged in 1990. The firm merged with Loftus Engineering of Fairbanks in 1998. In January 2000 PDC completed a merger with Lake Boswell, the oldest Fairbanks engineering firm, started in 1973.The original merger marked the addition of different engineering disciplines. Rowen Design specialized in civil engineering and surveying while Fryer Pressley handled mechanical and electrical engineering. In the 1980s the owners recognized the importance of multiple disciplines, noted PDC Principal Ron Gebhart. Since then company leaders have aimed to add all the different engineering types at both the Anchorage and Fairbanks offices, he said. In the mid-1990s PDC added civil engineering at its Anchorage office, and last year incorporated structural work there as well. The acquisition of Lake Boswell brought electrical engineering to the Fairbanks office.These additions have led PDC to serve as a prime consultant on projects rather than a subcontractor.Past projects include structural design for the new Fairbanks courthouse, work on the Eielson Air Force Base fuel hydrant system, mechanical and electrical design for the Anchorage Consolidated Public Health Laboratory and Medical Examiner’s Office and mechanical and electrical work for the Elmendorf AFB Joint Military Mall.Current design projects include the University of Alaska Fairbanks museum addition, the Chena River Centennial Bridge and bicycle/pedestrian path, the Alaska Railroad passenger depot and the Alaska Psychiatric Institute replacement facility in Anchorage.In Fairbanks PDC employs 44 people plus another 40 employees in Anchorage.Top accomplishment of the company: Gebhart cited PDC’s "growth from a small firm with limited opportunities to the second largest design firm in Alaska." As a result of PDC’s growth, the company has gained opportunities to work on interesting and challenging projects, which attracts top engineers, he said.Major player: Ron Gebhart, principal, PDC Inc. Consulting EngineersGebhart earned a bachelor’s degree in civil engineering from South Dakota School of Mines. He worked as a transportation consultant and for the South Dakota Department of Transportation before moving to Alaska in 1984.-- Nancy Pounds

Bering pollock a fishing success story; Kodiak Tanner crab is not

KODIAK -- Late January marks the start of America’s biggest fishery, Bering Sea pollock. It’s also one of our nation’s best fish stories. Bering Sea pollock not only does great in world markets, but more importantly, thanks to good stewardship by fish managers, the stocks are healthy and at all time highs. Starting Jan. 20, Alaska’s trawl fleets set out their nets to gather a bounteous harvest of more than 3 billion pounds of pollock from the Bering. That accounts for roughly 30 percent of all fish landed in the United States and last year pumped about $800 million into Alaska’s seafood industry. That’s a lot of fish sticks. Trawl fisheries for pollock open on the same day in the Gulf, where another 220 million pounds are available for harvest. In other Alaska fisheries so far this year, by nearly all accounts, Kodiak’s Tanner crab fishery was a big blow out, both in terms of bad weather and scratchy catches. "It’s as close to being a rout as you can get," said Dave Woodruff of Alaska Fresh Seafoods. To make matters worse, much of the catch was "dirty crab," meaning very dark and covered with algae or barnacles. Woodruff, who advanced $2 a pound for the crab before he knew how bad it would look, said that price "was going to stretch him to the limit," as he scrambled to sell the crab to Japanese buyers, who purchase nearly all of the Kodiak catch. Meanwhile, the Bering Sea snow crab fishery also opened Jan. 15. By the following weekend, a fleet of 186 boats had hauled back about 2 million pounds out of a roughly 30 million pound quota. Fish managers in Dutch Harbor said the fishery was uneventful so far, although everyone was bracing for worsening weather. Crabbers there were getting $1.40 a pound for their catch, which will add up to a value of around $42 million at the docks. Alaska’s halibut harvesters will soon find out how much of the big flats will be up for grabs when that fishery opens March 15. The International Pacific Halibut Commission will decide if the Pacific coastwide catch in Washington, Oregon, British Columbia and Alaska, will be boosted to 74 million pounds, up from 73 million last year. Alaska longliners always get the lion’s share of the catch, and this year could be 61 million pounds, up from just more than 58 million in 2001. The pricey black cod, or sablefish, fishery also opens March 15, and an abruptly canceled season in Canada could boost the value of Alaska’s catch. Citing so-called "significant declines in abundance," the Department of Fisheries and Oceans ordered all gear off the water by Jan. 18. The department will assess the situation and decide if fishing for the roughly 8 million pound catch can resume at the end of the month. Alaska longliners typically get more than $3 a pound for their black cod, virtually all of which goes to Japan. There is a very limited supply of only about 25 million pounds of wild black cod each year in the whole world, most of which comes from Alaska. Seafood ratings The 16th annual survey done by SeaFood Business Magazine indicates that chefs, restaurants and grocery stores throughout the United States are optimistic about seafood sales this year. Here are some facts and figures: The supermarket industry posted its highest profits in 30 years for the 2000-2001 fiscal year, according to the Food Marketing Institute. Despite a slowing economy and increased competition from convenience and superstores, 128,000 supermarkets nationwide took in more than $453 billion in 2000. Kroger is the largest retailer with 2,328 stores, and operates full-service seafood departments in 1,500 of its stores. In all, seafood contributes 1.96 percent to total sales in our nation’s supermarkets. The National Restaurant Association projected that, even taking the economic slowdown into account, sales approached $400 billion last year, up more than 5 percent from the previous year. It’s the industry’s 10th straight year of sales growth. People in the food service industry predict that seafood sales will continue to strengthen because the population is getting older, and older folks eat more fish. Shrimp and farmed salmon are the two best selling seafood items in U.S. restaurants. What do restaurant operators look for when buying seafood? In order, they look for quality, service, price, variety and reputation. Their top five seafood sourcing issues are: availability, buying quality seafood, price, consistent supply and service.

BP bullish on Slope oil

North Slope oil fields have a lot of oil left in them, and BP Exploration (Alaska) Inc. said it expects that 7 billion barrels of oil can be produced from the existing oil fields or new satellite pools near them. "These are real barrels, creating real jobs," not potential new discoveries, Steve Marshall, president of BP Alaska, told the Alaska Support Industry Alliance’s annual Meet Alaska Conference Jan. 25. About 30 percent is oil reserves already proven in existing fields. The remainder is conventional oil that can be developed in and around the existing fields as well as the large viscous oil resource overlying the Kuparuk, Milne Point and Prudhoe Bay fields, Marshall said. There is also the large potential of commercializing North Slope gas, he said. Marshall defended BP’s decision to focus on developing new oil in and near existing fields, rather than engaging in new exploration programs. BP has not been successful in exploration in recent years and has had bad luck with two new projects, Northstar and Badami, on which the company has spent about $1 billion, he said. Despite the potential in the existing fields, making Alaska more competitive is a challenge for the company, Marshall said. "Our greatest competition is not other companies, but ourselves," he said, meaning the competition within BP to get money for new investment. The profitability of Alaska production is about one-third of what it is elsewhere in the world. The company’s efforts to reduce its support costs in Anchorage is important in improving competitiveness and attracting the investment needed. While staff in Anchorage is being cut, the North Slope work force will be increased to deal with infrastructure maintenance, Marshall said. Meanwhile, BP has a $700 million capital budget for Alaska this year, 20 percent more than it was spending through most of the 1990s, Marshall said. On the exploration front, an Anadarko Petroleum Corp. official, a company engaged in new exploration, said it has identified four separate oil and gas prospects that are good candidates for drilling, as well as seven other prospects that are in various stages of study.

Chips could lead to research park

FAIRBANKS -- Upcoming research at the University of Alaska Fairbanks through its high-tech partners could lead to commercial production and application of tiny computer chips. Economic development for Alaska is one goal for the federally funded project, as well as possible creation of a research park at UAF, according to the project leader."Our objective is to work on creating a broad technology base for Alaska," said Dave Woodall, director of the new Center for Nanosensor Technology.Creation of the center, spurred by $11.5 million in federal funding, received approval from the University of Alaska Board of Regents in December."Our program is to design and build very tiny sensors that can be applied to Alaska needs," Woodall said.Such sensors, called nanosensors, could be used to track animals and relay current data about them for research projects. They could also take measurements for environmental or pipeline uses and may have applications in mineral exploration, he said. The sensors could also be used to track products during shipment, gauging freshness of perishable foods.The key to manufacturing nanosensors, the size of a human hair in cross-section, for commercial use is a process called fluidic self assembly, Woodall said. The process, developed and patented by Alien Technology of Morgan Hill, Calif., suspends nanosensors in a fluid and then "flows" them into designated receptor sites.Nanosensors are expensive now, but research by UAF scientists will help reduce the cost and size of nanosensors to boost their commercial viability, he said.Research work could begin soon. The first lab, about 5,000 square feet, will be in the Natural Sciences Building, and $5 million of lab equipment is to arrive in April, Woodall said.

Bill takes creative, not critical, approach to solving DWIs

As the new year begins, it is a time for reflection, for many reasons. Many of us center on our faith and family and lives, but also on our dedication and responsibility to each other. House Bill 68 is a perfect example of taking responsibility one step further by truly watching out for our friends and patrons. And the state House agrees, as they recently passed the bill and sent it to the Senate.Sponsored by Rep. Norm Rokeberg, R-Anchorage, this legislation will help reduce our driving under the influence of alcohol problem. The premise behind Rokeberg’s proposal is that people fail to find an alternative means of transportation when they are legally intoxicated because they do not wish to incur the cost of a cab, risk vandalism to their vehicle, or be hindered by retrieval of their vehicle the next morning.With no perceived alternative, they opt to drive home intoxicated. Many arrive safely at home, but for those who are arrested, or cause an accident or injury, the consequences surpass the negligible cost of a cab or time spent returning the next day sober to retrieve their car.Proposed by the Anchorage Downtown Partnership and Downtown License Beverage Association, the concept is to provide a means through which an intoxicated individual, hesitant to drive because he or she is above the legal limit, can ask an employee at the participating bar or restaurant to request cab service for himself and his vehicle.The participating cab company will dispatch a cab with an extra driver who will subsequently drive the patron’s vehicle home at the same time the intoxicated patron is driven home in the cab. Not a bad idea, and best of all, public safety is not compromised.Not only does this solution instill a partnership mentality between community, patron and business, but it also reminds residents of the fact that the hospitality industry cares about your safety. Anchorage Cabaret, Hotel, Restaurant & Retailers Association, for example, wholeheartedly endorses the concept. And many establishments have endorsed the bill and are eager to participate upon enactment of the program. In the end, it’s a win-win for everyone.One concern that has arisen stems from the potential for a lawsuit if the cab company employee, who drives the individual’s vehicle home, causes an accident from negligence. The context of the bill is intended to hold harmless the driver, cab company and licensed establishment if intentional misconduct is not a factor. In other words, no one will be liable for acting responsible. To that end, we must formulate effective insurance language in the bill to maintain the integrity of the no-liability intent.During troubled times, members of society tend to find it easier to cast the first stone, rather than seek lasting solutions to issues like alcohol abuse and DWI prevention. The easiest approach is to criticize our laws and legislators, and be reactive, rather than proactive. Or, mandate harsher penalties and fill our correctional system beyond its capacity while increasing our need for more taxes.But sometimes, no matter how hard one tries, it is impossible to understand the mind-set of why people do what they do. Drunks don’t make thought-out decisions. They act and react. Driving under the influence is no exception.The solution lies in curbing behavior with quality treatment and education, or as an alternative, preventing behavior like driving under the influence from happening.HB68 eliminates the consequence of a DWI, at the same time partnering the hospitality industry with the cab industry and with the insurance industry, in concert with law enforcement at the city and state level. The innovators and sponsor of this bill should be commended for a novel and positive approach to a growing problem that doesn’t need to exist.Let 2002 be the year of understanding, neighbor helping neighbor. Let this year be one in which we stop casting stones and instead embrace, using the stones to build a bridge of cooperation. HB68 can be the first step.Frank Dahl is president of the Anchorage Cabaret, Hotel, Restaurant & Retailers Association. He can be reached at 907-243-8340.

Alaska salmon can build a niche

The salmon industry in Alaska is in big trouble. Everyone now seems to agree with that. And the cause is clear: inexpensive farm-raised salmon. Demand for salmon has exceeded supply. Last year, for the first time, some Alaska salmon fisheries’ output was essentially unwanted. Prices were so low, fishermen did not fish, and no customers cared.This situation is not going to get better. Total capacity of the farms continues to grow, and it is growing as fast or faster than market growth. At present, Alaska’s canned fish market has not been significantly impacted, but that may soon change as well. As capacity continues to grow and costs to drop, expect to see more of the farm product being canned.So, what is left for Alaska? Taste tests consistently show carefully handled and well-prepared Alaska salmon being preferred to farmed salmon. Alaska can build on this by selling the salmon to a high-end market of unique and specialty foods. This is a market idea pioneered by Copper River producers and now being considered in many other areas of the state. Developing this market will take some effort, but there are many buyers who will help if they can get the product they need to supply this market.What exactly do these buyers want? They want consistent and consistently high quality product. In order to produce this, the fishermen, tender operators and first-level processors must all follow consistent grading rules and consistent and stringent handling rules.The salmon quality project being carried out by the Alaska Manufacturers’ Association and a group of fishermen and processors in Cordova is aimed directly at producing fish to serve this market, and will be expanded to several other areas this summer.The process begins by identifying a group of fishermen and processors, and others such as tender operators if needed, who will be participating.Each participant signs a contract agreeing to adhere to the standards. The association will then set up initial training for them on the handling rules and grading rules and at the same time will begin to train the local quality inspectors. As fishing starts, there will be a combination of association experts and the inspectors who have been trained to check that participants are following the rules and to answer questions that always come up.Surefish is working under contract to Alaska Manufacturers’ Association to help design and fine-tune the handling and grading rules. The inspector/trainers will be on the docks, in the processing plants and sometimes even on the boats, particularly on tenders if they are used.How much inspection is needed is a function mostly of the processing plant environment. Plants with high turnover or that lack smooth product flow will need more inspector attention.As the local inspectors become more knowledgeable and more willing to take control when necessary, more of the task can be switched to them. And as the processors become better at this, they will need less inspection. So, costs should drop over time, but there is no way to predict how fast that will happen.The inspector job is key, and it is a hard job. Inspectors are unpopular. They have to tell people they have flunked. They are the police officers in the plant. Note also that no matter how good the system is and how well it is followed, not all salmon will pass all the tests and be shipped with the quality label.A common problem is that something happens to prevent the salmon from being delivered to the processor on time, such as a storm. The key is to be sure that no salmon ever ships with the quality label on unless all the handling standards are met.Tests on salmon coming from this program show better market acceptance and better shelf life, both of which make the fish more valuable. The handling standards focus basically on three key elements to maximize the quality of the fish: Bleed the fish. The fish must be alive to do this, so this limits some of the fishing techniques; Keep it cool. Fish must be iced immediately after being taken from the water and kept on ice at all times; and Move it quickly. The fish needs to get through the process as fast as possible to minimize lost shelf life and maintain quality.In addition, fish produced are graded using Alaska Seafood Marketing Institute grading rules. This ensures that buyers get what they are expecting. The association has created a logo to identify fish produced under this program. Any salmon being produced in accordance with this program can use the logo.Over the long term, this program will be funded by fees paid by the processors and fishermen to the quality inspectors. Fishermen and processors will need to have a quality plan, and some experience that shows they understand the rules and they can meet them.Quality inspectors will conduct regular visits to fishermen and plants to verify that they are following the handling and grading rules. All will have to meet and maintain minimum standards before they are allowed to use the quality logo. The regular third-party inspections will ensure that everyone participating maintains their quality.With this quality program in place, marketing Alaska wild salmon as a rare and unique delicacy will become feasible and will allow fishing in Alaska to continue to be a significant source of jobs and income.David Arnsdorf is president of the Alaska Manufacturers’ Association in Anchorage. He can be reached via e-mail at ([email protected]).

February-Issue-1 2002

Salmon marketing, board membership top legislative fish agenda

Alaska’s politicos got down to business on Jan. 14, and we can watch for more political posturing, postulating and photo ops than ever during the 121-day legislative session.There are 57 of the 60 House and Senate seats up for election in November. To add to the drama, because of redistricting, most of those running for office won’t know whom they will be running against, or even where, before the session ends.As usual, the state’s budget will be in the spotlight as legislators again face a dwindling bottom line. Gov. Tony Knowles’ fiscal 2003 budget of $7.3 billion is an increase of nearly $189 million from last year. As proposed, it will need an infusion of $115 million in new funds just to maintain the current level of services.On the fish front, the governor is proposing a $10 million marketing appropriation to help the ailing salmon industry. Debate will also begin over continuing the 1 percent salmon tax that fuels the Alaska Seafood Marketing Institute’s efforts to get more wild fish into American mouths. That tax is set to expire next year.According to longtime legislative fisheries watchdog Bob Tkacz, here are some other issues to watch: The Legislature will consider a new bill that would ensure commercial fishermen three seats on the seven-member Board of Fish; another would limit the board’s ability to consider fish proposals outside of the normal three-year cycle. A primary issue facing the Department of Fish and Game is its ability to recruit and retain employees in the biological job classes. According to the department’s Frank Rue, state salaries and benefits have eroded to the point where the department is no longer competitive with other employers. Other commercial fisheries priorities Rue highlighted as being in need of increased funding stem from more demands on that division because of dual state-federal management of subsistence fisheries; Steller sea lion fishing restrictions and accompanying research; marketing challenges facing the salmon industry; assessing and developing policy to manage new fisheries; allocating existing fisheries; researching poor salmon returns to Western Alaska; and maintaining the department’s research and support vessels and aircraft.Solving sockeye mysteriesSome of the world’s largest runs of sockeye salmon get their start in the lakes and rivers that empty into Bristol Bay. Yet no one really knows where these salmon go, what they eat, or what eats them once they leave the safety of fresh water for the open ocean. According to Alaska Sea Grant, Stephen Jewett, a fisheries scientist from the University of Alaska, hopes to change all that via a multiyear study with funding from, of all places, the pollock fishing industry."It’s been 30 years since anyone has really looked at the most critical period for sockeye salmon smolt, and that is when they first enter the ocean," Jewett told Sea Grant.Jewett is among 14 scientists funded by the Pollock Conservation Cooperative Research Center, a partnership between Alaska’s pollock fishing industry and the University of Alaska Fairbanks School of Fisheries and Ocean Sciences. Since its inception in 2000, the PCC Research Center’s top priority has been to learn more about the Bering Sea ecosystem, including issues like climate change and regime shifts and impacts of commercial fishing.Beer batter beats fatAn old English recipe of using beer to make fish and chip batter can cut fat absorption almost in half. WorldCatch reports that New Zealand researchers found that using one cup of beer for each cup of flour absorbed less frying fat and kept the fillets moister. The fat content of fish fillets cooked in the beer batter was nearly 40 percent lower than fillets fried with commercial batter under identical conditions.The researchers speculated that the 5 percent alcohol content of the beer could have caused the batter to dry more quickly during cooking. This produced a hardening layer on the surface that reduced moisture loss and fat absorption.Researchers said the best fat-lowering method is to cook the fish in beer batter at 356 degrees for six minutes, then bang the frying basket at least twice before draining for at least 20 seconds. The research also revealed high frying temperatures and frying times only one minute longer boost the amount of fat absorbed by the fish batter, WorldCatch said.Kodiak-based free-lance writer Laine Welch can be reached via e-mail at ([email protected]).

City tallies record year in sales, taxes despite Sept. 11

The Anchorage Convention & Visitors Bureau chalked up a record year in 2001 despite some meeting cancellations and poor attendance during the prime fall convention season.The city reported record bed tax receipts of $10.9 million, up from $10.8 million in 2000, ACVB officials said. About $5.5 million of the bed taxes go the city general fund. The other half fund ACVB’s marketing functions."We had a good year in 2001," said President and Chief Executive Bruce Bustamante during ACVB’s monthly luncheon at the Egan Civic & Convention Center Jan. 17.The organization reported tourism sales of $86.5 million from tourism operators tracked by ACVB, compared with $80.6 million recorded in 2000. ACVB listed 442,009 hotel room night stays last year, up from 399,000 during 2000.However, ACVB’s total conventions held in 2001 dropped to $81 million from $82.3 million in 2000. The organization estimates about $3 million was lost or failed to meet expectations for those events due to some convention cancellations and poor attendance at other events that went on despite the East Coast terrorist attacks. Before the cancellations, the conventions held in the 2001 category total would have surpassed 2000’s figures, he said."We were on track for a record year," Bustamante said.Of the total number of conventions in Anchorage last year, 58 percent were national or regional events while 42 percent were in-state events, he said. ACVB worked with 617 conventions last year, down from 778 conventions in 2000.Convention sales during 2001 totaled $78.2 million, up from $70.3 million in 2000, ACVB reported. ACVB uses the International Association of Convention & Visitors Bureaus’ formula for convention economic impact. IACVB estimates that a national conference delegate spends $839.53 per trip and a state conference delegate spends $405.39 per trip."In 2001 we secured business as far out as 2006," Bustamante said.Several events contributed to the strong economic impact ACVB reported for 2001. Last March the city hosted the state’s largest event ever, the Special Olympics World Winter Games, which attracted 10,000 athletes, coaches and other visitors, Bustamante said. The games recorded an estimated economic impact in Alaska of $3.8 million including $200,000 in revenue to the city general fund from bed and rental car taxes, he noted.Last year 42 percent of conventions sold or those events booked in 2001 for upcoming events were state events and 39 percent were national or regional conventions or meetings, he said.Several repeat events were sold last year, including the 2002 event for the Credit Union Conference with 230 delegates. The group last met in Anchorage in 1996, he said.ACVB is the state’s largest business membership organization and tallied 1,319 members at year-end 2001, down from 1,394 in 2000, the group reported.ACVB officials developed 2002 goals before September and didn’t revise its objectives after Sept. 11, he said. The group aims to sell $83 million in conventions, meetings and events in Anchorage in the future. Last year’s goal was $77 million, he said.Events booked for 2002 look strong, and ACVB is working with meeting planners to maximize attendance, he said.Goals for the leisure travel market will match 2001’s $84 million goal, he said. A $12.5 million request to the Legislature by the Alaska Travel Industry Association would help ACVB’s marketing efforts. Other states have received similar appropriations for travel marketing, he added."With the uncertainty of the leisure market, we know we have our work cut out for us," Bustamante said. "We have a dynamic team, and we’re going to do our very best to achieve our goal."He asked audience members to help achieve these goals and boost Alaskans’ awareness on tourism’s economic impact."We’ve got some big goals so it will take a collaborative effort," he said.

Knowles spending plan, amount draw jeers from Republican side

Republican legislative leaders were predictably critical of proposals put forth by Gov. Tony Knowles in his State of the State address Jan. 16.The governor’s plan to increase spending came in for the heaviest criticism."When you’re in a hole, the first thing you do is stop digging," said Senate President Rick Halford, R-Chugiak. "It simply doesn’t make sense for the governor to dramatically increase spending when we’re facing a $1 billion deficit."House Speaker Brian Porter said, "I’d like to tell you I support every part of the governor’s speech, but I can’t. The very first thing he mentioned was increased spending, and that is the very first thing Alaskans tell us they want to curtail."Porter, R-Anchorage, also said he was disappointed the governor didn’t include a proposal involving Alaska Permanent Fund earnings. The fund was created to help sustain public services when oil production declined, he said.Porter also said that he supported a personal income tax, but he was sure a majority of the House Republicans did not.House Finance Committee co-chairman Rep. Eldon Mulder challenged the governor’s figures on a proposed $180 million increase in the state operating budget. Mulder, R-Anchorage, said his tally showed the increases really amount to $300 million in increased general fund spending.Knowles has proposed about $190 million in new social services and education spending, $55 million for Medicaid and $47 million in his homeland security initiative, Mulder said.When combined with expected requests for supplementals to the budget, the increases will hit $300 million, he said."Proposing $400 million in new revenues and $300 million in new spending only nets $100 million," Mulder said. "It doesn’t get you very far," in addressing the fiscal gap.Senate Finance Committee co-chairman Dave Donley, R-Anchorage, said 26 states have responded to projected budget deficits by "implementing well-constructed budget reductions and by setting priorities for state services."Donley urged Knowles to instruct state agencies to prepare contingency plans for reduced budgets.

Gas line study group disbanding

The North Slope gas producers group, working on the feasibility of a gas pipeline, is winding up work and closing shop, at least for now, a state legislative committee was told Jan. 16.Results of more than $100 million in engineering and environmental studies have been sent to the three companies sponsoring the effort, BP Exploration (Alaska) Inc., ExxonMobil Production Co. and Phillips Alaska Inc., and what happens next is up to them, Dave MacDowell, external affairs manager for the joint project team, told the House-Senate Natural Gas Committee in Juneau.However, one of the producers, speaking separately, voiced continued optimism about prospects for a pipeline along a southern, or Alaska Highway, route."We believe a project along the southern route has the best chance of being developed in a timely fashion and will be the one most supported by the various stakeholders," Mike Hurley, a Phillips spokesmen, told the legislators.MacDowell said that at the peak of the study last fall, the three-company effort employed as many as 800 contractor employees as well as 100 people assigned by the companies.The effort is now down to about 200 contractor employees and 60 company staff and will be "close to zero" by February, he said.One project that remains is a test of new permafrost trenching technology that will be conducted in early February near Deadhorse and in the Interior north of Fairbanks, MacDowell said. If the procedure works as expected there could be big cost savings.Efforts will continue on federal legislation and initiatives with the state to get fiscal clarity and certainty for a gas project, he said, but these involve the individual companies, not the joint project group.The major effort with federal legislation is a provision that streamlines regulatory review. Language doing this is now in proposed energy legislation in the U.S. Senate.Alone among the three producers, Phillips supports a federal tax credit that would become effective if gas prices dropped. It would be a form of protection with a very high risk project, Phillips’ Hurley told the legislative committee.On the state initiatives, Hurley said fiscal clarity refers to clearly defined rules and understanding on administration of state taxes and royalties and involves discussions with the state departments of Natural Resources, which administers royalty, and Revenue, which administers state taxes.Fiscal certainty, however, means some understanding with the state that taxes on a gas project will not change over time, Hurley said. With a billion-dollar fiscal gap facing the state, this is a matter of some concern to the gas producers.BP, ExxonMobil and Phillips are now analyzing the information, and the next step is up to the individual companies, MacDowell said.

An effective rainmaker can make it pour sales

The constant quest for most businesses, small, medium and large, lies in generating qualified sales leads. For the company marketing to a highly targeted base of hard-to-corral prospects, especially high-level executives at large corporations, the need becomes more pressing, the process more complex and the success more elusive. Enter the rainmaker, the subject of sales mythology, part-man, part-god. Like the Loch Ness monster, such people are rarely evidenced, but sometimes considered as a solution of last resort when business is down or flat and "for some unknown reason, our message isn’t getting out to prospects and we’re not getting invited to the pitch." In most cases, the hired-gun rainmaker fails to deliver. Why? The expectations are unrealistic; the time frame for the delivery of results is too immediate and short term; the company is not really committed to the process; or the incentive compensation basis is out of skew. Rainmaking works In spite of the difficulties and risks associated with the process, rainmaking can work if executed with strategic discipline and managed with professional care. Rainmaking can deliver the serious pre-sales meetings with senior management. Successful rainmakers are familiar with the reconnoitering techniques that result in usable market intelligence. What are the projects on the horizon and what’s the timing for associated spending decisions? Will there be request for proposal competition? Have preliminary budgets been developed? The professional rainmakers don’t close the sale. That’s not their job. Their responsibility is to profile the prospect, fill the information gaps and conduct a highly qualified pre-sell that establishes the foundation for a cost-effective and time efficient follow-up sales blitz. The bottom line is: Good rainmakers know how to get in the door and make a strong pre-sell. Naturally, the stronger the pre-sell, the better the ultimate close rate. Introducing Corporate Rain Corporate Rain Inc., with headquarters in New York, is one of a handful of rainmaking consultancies servicing the corporate marketplace. The company, which boasts clients such as insurance giant AIG, Amadeus, Deloitte&Touche, E*Trade and Avaya Communications, employs 35 associates, both full-time employees and independent contractors who have had extensive experience in a corporate executive position. These high-level sales cowboys work the phones on behalf of CRI’s clients, which run the gamut from medium to very large companies. Because the biggest obstacle in getting to the prospect decision maker is making it through the gatekeeper, persistence coated in trust and lacquered in courtesy is a must. For that reason CRI associates are experienced, more than 35 years old, and carry significant business and corporate scar tissue, which allows them to exhibit executive judgment and demeanor. Most have chosen to exit the corporate rat race, yet still practice in their chosen field, executive sales. CRI maintains that it averages a 10-20 percent pre-sell hit rate. CRI associates position themselves as staff members of the client they are representing, make repeated calls to targeted prospects, qualify the prospects according to client criteria, set up meetings for client top executives and glean detailed information from each prospect that will assist the client in tailor-making the pitch in each case. The process The CRI process follows a logical course of action. The procedure commences with client-provided prospect lists normally culled from in-house contacts and files, selected listings from local area business journals, as well as prospects from national list brokers. CRI will offer to confirm the client-provided prospect lists by appending names, addresses and direct phone numbers of the appropriate decision makers. This cleaning up process helps to significantly drive up the appointment rate during the call cycle. Each calling campaign is preceded by an introductory letter-mailing campaign, executed by the client, not CRI, at a suggested mailing rate of 80-100 letters per month. In this way the client controls the volume and rate of mailing. The client is also asked to appoint an internal administrative assistant to monitor response and resends. Mailing blitzes will sometimes be executed in support of trade shows and as an introduction to calls that are made seeking sales appointments during the shows. CRI manages an up-to-the-minute prospect database. The monitoring system calls for immediate notification to the client as soon as an appointment has been set together with information like time, date, location, key prospects attending, as well as background data like prospect needs or issues, level of purchase interest and competitor involvement. Databases continue to be updated with new contacts and contact information, all of which is transmitted to the client on a regular, ongoing basis. Evidently, the process works. According to Brad Smith, CRI executive vice president, "Amadeus is a classic example of how the system works and delivers." CRI executives met with key Amadeus players to plan strategic coordination, undergo pitch training for CRI associates, and learn company background and capabilities. In less than five months, CRI landed 70 meetings with key prospects and provided competitive feedback that helped Amadeus further fine tune its sales process. Alf Nucifora is an Atlanta-based marketing consultant.  

Boston Pizza's building first restaurant in Alaska

A franchise operator for Boston Pizza Restaurants USA Inc. aims to open the first Anchorage location April 2, with other possible area sites to follow in future years.A Fairbanks restaurant also is planned and could begin construction this spring, restaurant officials said.Construction of the eatery, at Benson Boulevard and C Street, should be finished in March, said Don McMillan, general manager of franchisee Great White North LLC.McMillan already operates a Boston’s Pizza restaurant in Salmon Arm, British Columbia, between Vancouver, British Columbia, and Calgary, Alberta.The restaurant’s menu features pizza, pasta, soups, sandwiches and salads with a sports bar on one side and a restaurant on the other.Boston Pizza Restaurants also have operated a restaurant in Yellowknife, Northwest Territories, and another in Whitehorse, Yukon Territory, for several years, said company chief executive and owner Jim Treliving. Those restaurants have done well, "so it was natural for us to go to Alaska," he said."We thought Alaska would be a great spot for us," Treliving said in a telephone interview.McMillan’s franchise agreement allows him to develop three restaurants in the Anchorage area, said Rick Villalpando, director of franchising and development."We see there’s a real opportunity for us in the Anchorage market," he said, adding that the area has only recently added other casual dining restaurants like its competitors Chili’s and Applebee’s. The separate areas for the sports bar and family dining help set Boston’s Pizza apart, he said."There’s a niche there for that type of concept. We think we’ll do very well there," he said.McMillan said future Anchorage store development depends on diners’ response to the first restaurant."We hope to build one every year and a half in the next three to four years," he said.The company plans to open another Boston’s Pizza in Fairbanks, said Villalpando, who is based in Vancouver. Negotiations are under way for property, and Villalpando hopes construction can begin in spring.McMillan began planning for the Anchorage franchise nearly two years ago and obtained the franchise rights last August. Construction began in late September led by Anchorage-based general contractor Linder Construction Inc.The restaurant measures 5,600 square feet and will seat 204 diners including 73 in the sports bar, he said. Another 52 seats will be available on the patio.Boston’s Pizza will employ 75 to 80 people in full- and part-time positions, said McMillan, who in early January drove to the new Anchorage site from British Columbia.McMillan said he initially chose the franchise for its dining concept and because of the people he met at the corporate office.Boston’s Pizza traces its roots to the first store, which opened in 1964 in Edmonton, Alberta. The company later expanded across western Canada. The Richmond, British Columbia-based restaurant, which now operates more than 150 locations in North America, tallied more than $300 million in 2001 annual revenue. The company aims to open 30 to 45 restaurants in eastern Canada and 35 in the United States by the end of 2003.Company owner Treliving believes a slowing economy won’t hamper growth plans, since Boston’s Pizza is a midprice restaurant.The company operates a regional office in Dallas. Boston’s Pizza, which first entered the U.S. market in 1998, operates restaurants in Tempe, Ariz., Spokane, Wash., and Denver among others and is now building a restaurant in Grand Junction, Colo.

Providence looks to expand mental health services

Providence Alaska Medical Center officials are planning to build a $25 million, 60-bed psychiatric facility in Anchorage. The hospital has applied to the state Department of Health and Social Services for approval.The state must determine a need for health care facilities before construction.The project would expand Providence’s mental health services to meet community needs for children 12 and younger, said Susan Humphrey-Barnett, assistant administrator. In Anchorage, Alaska Psychiatric Institute doesn’t serve that age group, although North Star Behavioral Health System does, she said.Alaskans send some adolescents, age 13 to 18, out of state for long-term care since these types of residential care facilities are available outside Alaska, she said.A new facility would be built off campus and allow Providence to convert its existing 27 mental health services beds to medical/surgical beds, thereby decreasing the need to divert some emergency patients to other facilities because rooms aren’t available, she said. Diversions have also been caused by a lack of qualified hospital staff, she said."Both the mental health needs of the community would be served through this, and the diversion, although it would not necessarily be solved, but could be ameliorated," Humphrey-Barnett said.The project could be completed in 2004, according to a state public notice.Providence in Anchorage is certified by the state for 345 patient beds. The new certification would increase that total to 405 beds, including the mental health care beds.Planning for the facility traces its roots back several years when hospital officials looked to move some ancillary services off campus, Humphrey-Barnett said. The goal was to gain more medical/surgical beds. They next studied what patient services could be relocated and chose mental health services.Last summer Providence submitted a certificate of need application to the state health department for approval of a 60-bed child/adolescent psychiatric facility, Humphrey-Barnett said.After submitting the application, Providence and state health officials discussed the possibility of the hospital starting designated evaluation and treatment services, she said. This type of evaluation and treatment for all ages is involuntary and often is a court-ordered process, she said.The hospitals in Fairbanks and Juneau provide these services, and the state wanted a hospital in Anchorage to provide them as well, she said.Based on these discussions Providence chose to alter plans for the facility. Although the number of beds will remain the same, fewer beds will be used for children and adolescents. Of the 60 beds, 18 will be designated evaluation and treatment beds, the existing 10-bed adult unit will be moved to the new facility, and 24 beds will be designated for adolescents and eight for children.At Providence’s current 27-bed unit, 11 beds are for adults and 16 are for adolescents.Public comments on the project change were due Jan. 26, and officials from the Department of Health and Social Services were to review the project through Feb. 12. Next the department commissioner would issue a decision on the certificate of need application, Humphrey-Barnett said.As part of the planning process, Providence officials have selected six possible sites near the Anchorage campus, she said.Further planning, including site selection and design, could begin after hospital officials receive approval from the state, she said.Although the facility, if approved, would be certified for 60 beds, Providence may choose to start with fewer beds and eventually expand, said hospital spokeswoman Karina Jennings.

Start-ups need skilled advisors

The Alaska economy is in dire need of an active private capital network. Many well-intentioned local investors invest directly in exciting entrepreneurial opportunities, but more often than not they are neither making a wise investment nor really helping the entrepreneur.In Alaska, frequently the business plans for new businesses are underdeveloped and the operational skills of management are untested. It is very important for most new ventures in Alaska to seek active capital before seeking passive uninvolved capital.The active capital investor should have documented successes in operating and investing in businesses similar or related to the new business opportunity. The active investor should be on the board of directors or have a representative on the board.He or she would usually own a more senior class of stock than the founders and require rights. For instance, if certain operating benchmarks aren’t attained, then the active capital investor has the right to do whatever it takes to salvage the business. This type of investor is very important to the future of high-growth business opportunities in Alaska.Alaska has very few "business validators," but we do have numerous "real estate validators." There are several real estate developers who have successful track records as well as repeat investors waiting for the next opportunity. This is the type of successful network we need to grow for nonreal estate opportunities.Seldom do first-time entrepreneurs realize that the appropriate initial money usually has many strings attached, but those strings frequently turn out to be lifelines that rescue the company.In concert with active investors, developing a strong board of directors or advisory board is often the difference between success and failure for many companies. The initial "business validator" helps a new business establish credibility. This investor is considered an active capital source and helps the entrepreneur validate his or her business model and provides valuation to other potential investors.Most available capital sources in Alaska are considered passive and should not invest in local deals unless they have a "business validator" that has committed to the opportunity. It isn’t that Alaska is lacking in investment capital so much as it is lacking in lead investment capital.One of the proven ways of nurturing this process is by developing an "Angel Network." This is normally a formal network of successful business individuals and organizations that are "business validators" in various types of business.It also includes wealthy individuals and organizations that are looking for suitable investment opportunities, but the successful business individuals and organizations with documented operating skills are initially the most important seed in growing the network.This network usually evolves into one of the most important sources of active capital, co-investment capital, advisory board members and prospective directors for new businesses.This initiative is now under way in Alaska under the Alaska InvestNet banner. It is an excellent opportunity for village and regional Native corporations to nurture shareholder development by signing up some of their current and future leaders and dealmakers into these types of self-help organizations.Alaska InvestNet’s mission is not to replicate any existing support activities, but rather to initiate missing components and encourage collaboration among like-minded existing organizations. To get a feel for the incubation process in action, I encourage prospective participants to watch Bruce Borup’s Alaska Business Plan Competition at Alaska Pacific University.In the competition, master of business administration students are paired with an Alaska entrepreneur or develop an idea from one of their student team members. The students develop and refine a business plan with all the appropriate financial information and compete in a well-rehearsed and dynamic investor presentation.Hopefully, the business plan competition model will expand statewide and other schools will have feeder competitions that will lead to an annual competition co-sponsored by all institutions of higher learning in Alaska, all financial service organizations and all for-profit Native corporations.I envision that the Alaska InvestNet "Angel Investors" will be involved in numerous advisory boards on winning business plan competitions. Some of the winning business plans will probably receive active funding from their advisory board members, and many students will find jobs either from the entrepreneurial businesses or from one of the advisory board contacts that were impressed by the students’ thought process, initiative or other factors that were displayed through the competition.Alaska InvestNet needs early adopter civic entrepreneurs to join to help the organization reach critical mass. Early investors in the organization shouldn’t be too concerned about what type of deal flow they will be exposed to, but how they can help support and incubate the process.Allan Johnston is chairman of the Alaska InvestNet Advisory Board and a co-founder of the Alaska Business Plan Competition. He can be reached via e-mail at ([email protected]).

Tourism data available as tough season looms

An Alaska research company recently completed a visitor industry survey, pooling statistics into a database it can tailor for different clients.The report comes as the national travel industry seeks to regain its footing and Alaska tour operators prepare for an uncertain summer season.Last year Juneau-based McDowell Group interviewed more than 4,500 visitors as they left Alaska, according to Susan Bell, senior manager at McDowell Group. Interviews were conducted in Anchorage, Fairbanks, Juneau, Ketchikan, Kodiak and Sitka.Locations for the interviews included airports, cruise ship piers and state ferries, with an emphasis on talking to people exiting to Prince Rupert, British Columbia, and Bellingham, Wash., Bell said. Some surveyors also worked in Tok, interviewing highway travelers.An Alaska study late in 2001 showed bookings to date were off pace with previous year’s statistics. The Alaska Travel Industry Association plans to petition the Legislature for $12.5 million to boost marketing efforts this year."One of the things we’ve been hearing is that people need to market aggressively," Bell said. Precise information from the database can help, she added.Some key findings include the significance of the Internet to travelers. More than half of study participants used the Internet for trip planning, and one-fifth of participants purchased at least one Alaska travel product electronically.The research firm estimates May to September 2001 visitors totaled about 1.3 million. Cruise ship volume slowed in growth compared with previous years, and the noncruise market was flat.Also, the survey showed repeat visitors have increased to become one-third of the total market thanks to a high satisfaction rate of 4.8 on a five-point scale.Travelers are reducing their trip planning times, the survey noted. More than one-half of the participants made their arrangements less than 90 days before their trip.Visitors cover less of the state than in previous years and are more likely to focus on specific areas and activities, the survey said.Niche sectors like wildlife viewing, adventure travel and cultural tourism are gaining in importance. Also, the survey showed cruise visitors are buying more shore excursions than in the past.McDowell Group can produce a tailored report for different clients from communities, regions, nonprofit organizations or private businesses, Bell said.The price of the reports is negotiated with each client and varies based on the sample size and degree of analysis used for each report, she said. Reports can be crafted for various aspects of the industry, from different areas of the state to types of visitor activities, she noted.McDowell Group, which started this survey in summer 2000, last year interviewed 2,100 cruise passengers and 2,400 noncruise passengers.A few clients signed up before the study was complete and have received reports already. "The first few reports we did do, the people were delighted with the information we had gathered," Bell said.The report results will help future marketing plans for one of those clients, the Alaska Marine Highway System, said marketing manager Sharon Gaiptman."I will be going over all the results and using it as I tweak our marketing plan," she said.McDowell Group’s analysis showed Anchorage was the No. 1 destination for summer ferry passengers, she said. Also, most summer passengers originate from the West Coast and see the Alaska Marine Highway as part of their travel experience rather than a transportation link, Gaiptman said. The report revealed 60 percent of summer ferry passengers were pleased with service on state ferries."I’m very happy with what the Alaska Travel Survey does for the Alaska Marine Highway," she said.Other visitor industry leaders agree the information is valuable.Although not a client for McDowell Group’s survey, Julie Saupe, executive director of the Matanuska-Susitna Convention and Visitors Bureau, believes the survey results come at a critical time. The research firm’s experience in tourism also is helpful, she said.Specific data would be useful for Matanuska-Susitna CVB since the area typically is lumped in other research with other Southcentral Alaska areas like Anchorage and the Kenai Peninsula, she said.Officials from Alaska Wilderness Recreation & Tourism Association note the importance of tourism research."Any effort to add to research is positive," said executive director Sarah Leonard.AWRTA added some questions to a state survey conducted last year that is set for release this winter, she said.Researchers are now compiling findings for a summer Alaska Visitors Statistics Program study, she said. AWRTA plans to release its findings at a conference in Fairbanks in March, she said.

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