Native corporations leap into wireless

A trio of Alaska Native corporations is working together to enter the wireless industry and plans to serve major markets that include Los Angeles and New York.However, some critics are questioning the outcome of the process that helped the consortium acquire rights to those markets.Arctic Slope Regional Corp. of Barrow, Doyon Ltd. of Fairbanks and Juneau-based Sealaska Corp. formed Alaska Native Wireless to bid on wireless licenses auctioned by the Federal Communications Commission. The spectrum auction, which began Dec. 12, was completed Jan. 26.Officials from Alaska Native Wireless believe the bids represent the largest acquisition ever of federal communications licenses by a minority-controlled entity.Alaska Native Wireless, with its partner AT&T Wireless, was the high bidder on almost $2.9 billion in wireless licenses covering 43 markets with a total population of 71 million. Markets include Los Angeles, New York City, Denver, Tampa, Fla., Cleveland, Jacksonville, Fla., Minneapolis, New Haven, Conn., and Portland, Ore.While the FCC is finalizing the bid award process, the Alaska consortium is now studying how to serve those markets, said Conrad Bagne, head of ASRC Wireless, the managing partner for Alaska Native Wireless.Although the company has not yet prioritized which markets it would serve first, the two markets for which Alaska Native Wireless paid the most are important, said Bagne, who also is ASRC’s chief administrative officer."New York and L.A. are obviously a priority," he said, noting that the total price for those two licenses represented two-thirds of the company’s total bids.Alaska Native Wireless also is developing a business plan for licenses it acquired in Fairbanks and Juneau, he said. One consideration is how the FCC’s incentives for companies serving Native communities around the nation will apply to the two Alaska cities, he said.The Alaska consortium submitted further FCC filings and deposits in mid-February, but Bagne said the process could continue for 30 to 180 days. Part of the federal procedure includes the FCC’s review of the applications followed by a period for challenges to be filed against the auction bids."We fully expect there to be a bump in the road in the process," Bagne said.An article published in The New York Times on Feb. 12 quoted critics who said some of the largest U.S. wireless companies took unfair advantage of FCC rules to win a majority of licenses aimed at small businesses. Criticism was not logged specifically against Alaska Native Wireless but the company does have a partnership with major player AT&T Wireless.In March the FCC will issue another public notice for the auction’s high bidders who have sufficiently completed a long form application, said FCC spokesman Mark Rubin. Once the public notice is published, a 10-day period begins to file petitions to deny the bid awards, he said. Challenges could include if a company can be proven to be owned by a foreign company or if it violated auction rules, rather than objections to policy, he said."The petition to deny phase is not the phase to question the rules," he said. "The FCC can make a change for the next auction, but not for this one."Rubin did not believe any lawsuits had been filed on this auction.Bagne of Alaska Native Wireless said the consortium followed the FCC regulations, and he believes the bids will be found valid."Our response has been that the FCC put out rules and requirements for small entrepreneurs. We believe we fit those requirements."AT&T Wireless has said it will pay $2.6 billion of that total, while the three Native corporations and other consortium investors will contribute $260 million.The broadband personal communications service spectrum licenses are important for AT&T Wireless’ future plans. Last November the wireless giant formed a subsidiary to develop multimedia applications for its current network and a new wireless network built for graphic presentation of data, video e-mail, high-quaility music downloads and streaming audio and video, according to Alaska Native Wireless.The Alaska consortium will employ few people in the state, but will hire others in markets where it operates, Bagne said.To serve the markets, Alaska Native Wireless will either use AT&T Wireless’ infrastructure, build its own network of repeaters or work with another company in areas not served by AT&T Wireless, he said."In the long term we hope to be an operator of our licenses and maximize the return on our investment," he said.Alaska Native Wireless plans to continue its relationship with AT&T Wireless for at least five years, he said. "Where it goes beyond that remains to be seen," Bagne said.He also is optimistic about other opportunities in the industry.Another Native corporation, Cook Inlet Region Inc., has invested in the wireless industry through VoiceStream Wireless Corp., which has proven successful for CIRI. A special FCC ruling last year allowed CIRI to transfer its interest in four limited partnerships and limited liability companies to VoiceStream in exchange for VoiceStream stock and cash. The CIRI board chose to use corporation assets to pay for the program and reimburse itself later by selling those shares.In December CIRI paid the largest distribution ever by a regional corporation, totaling about $314 million to nearly 7,000 shareholders.Alaska Native Wireless would consider a similar payout to shareholders "if we can be as successful as CIRI," Bagne said. "Our deal is definitely different. It took them five years. It doesn’t happen overnight."

Birchwood's Arctic Sparrow new Antares ultralight distributor

Arctic Sparrow Aircraft Inc. of Birchwood Airport in Chugiak recently announced that it will reassume the North American distributorship for the Antares ultralight aircraft, and will offer the aircraft both as a legal Part 103 air vehicle and as a 51 percent homebuilt kit.Part 103 refers to Federal Aviation Administration rules governing ultralight aircraft."We want to make these aircraft for the U.S. and Canada," said Mike Jacober, president of Arctic Sparrow.Arctic Sparrow is an ultralight service center and flight school. The company also manufactures skis for ultralight and experimental aircraft, and mixture controls for two cycle engines. Arctic Sparrow recently re-assumed the dealership from Sergei Zozulia, proprietor of Antares Ltd. of Zoporizhe, Ukraine.Arctic Sparrow turned the dealership over to Leading Edge Airfoils Inc. of Colorado Springs, Colo. in 1996.Zozulia and Jacober will offer the Antares MA-33 both as complete two-place Part 103 aircraft and as a 51 percent home built plane that can be registered with the FAA as an experimental amateur-built glider, or experimental amateur-built airplane."This should work perfectly," said Zozulia. "We are very experienced at building and flying these ultralights."The Antares is offered with several wing options from Aeros Ltd. of Kiev, Ukraine; all will be 51 percent kits or can be ready to fly. The Antares, both in kit form and as complete units, can be fitted with either the Rotax 503 52-horsepower or 582 64-horsepower two-cycle engines. Complete kits with engines start at $12,000, with additional accessories also available. The Arctic Sparrow ultralight kits can cost as much as $18,000, and can be built in approximately 100-200 hours. These kits can be built as FAA experimental amateur-built airplanes or experimental amateur-built gliders.Zozulia and Jacober met in 1992 in the northern Alaska community of Wales after a group of seven Russians, Ukrainians and Czechs touched down there after crossing the Bering Strait with ultralights.

Offices, hotel among investments

Besides its Adak activity and Aleut Enterprise Corp., the Aleut Corp. owns four office buildings in Anchorage, and one in Colorado Springs, Colo., and land in Colorado Springs where future office development is planned.The corporation owns a trailer court near Valdez and 10 percent of a new hotel in Portland, Ore.SMI International is a subsidiary engaged in government and commercial facility operations in several states and overseas. SMI is expanding into information technology areas with the acquisition of other firms.TEC Star Inc. is another wholly-owned subsidiary formed to do federal operations and maintenance contracts. The Aleuts also own 40 percent of Akima Corp., a partnership with NANA Regional Corp., which also does federal facility management.In addition, the Aleuts own 73 percent of Alaska Trust Co., an Anchorage-based firm specializing in trust management services for well-to-do clients, many from other states. In its third year of operation, the company is now profitable, officials said.The corporation maintains a "Permanent Fund" of investments with an asset value of about $3 million. When the fund reaches $10 million, 50 percent of its earnings will be paid out in dividends to shareholders, according to company officials.

Money-losing subsidiaries have to go

Although timber harvesting, Sealaska Corp.’s core business for 21 years, is doing well even in a down market, things have gone sour on some promising new ventures and the stock market hasn’t cooperated.For the first time in 17 years, the Southeast Native regional corporation will report a loss. On top of that, Sealaska has lost its key chief executive, Bob Loescher, a long-time top manager and president and chief executive since 1997. Loescher stepped down in January for a variety of reasons. A search for new CEO is under way.Before he left the top job, Loescher had put Sealaska on a correction course."These are rough waters for Sealaska right now, but we’re taking the appropriate actions to deal with them," Loescher said in a December report to shareholders."We are implementing an immediate action plan to correct the financial situation, by selling off or writing down unproductive assets," he said.A new strategic plan will have Sealaska move away from operating companies and toward venture-capital type opportunities and partnerships with other businesses.For example, a new wireless telecommunications venture with AT&T, Arctic Slope Regional Corp. and Doyon Ltd., two other regional corporations, is showing great promise. So is an investment in a resort development near San Diego with the San Pasqual Band, a local Native American group.Among the businesses Sealaska will sell are its holdings in TriQuest, a precision plastics and injection molding firm owned by Sealaska, a small limestone mine at Calder, on Prince of Wales Island, and some real estate outside of Alaska owned by the corporation.TriQuest has been hurt by the tumult in the computer and high-tech industries, which are its key customers. The mine at Calder, which produces a very high quality limestone used in the making of fine paper, has cost more to start than was thought, Loescher said to shareholders.Rick Harris, Sealaska’s senior vice president for resources, said the Calder mine has the potential of growing into a solid business for the right company, but that its expected return on investment is no longer appropriate for Sealaska.

BP nearly doubles quarterly profits

LONDON -- Higher prices for crude oil and the integration of newly acquired businesses more than offset pinched profits in the chemicals business and helped BP Amoco PLC nearly double its fourth-quarter operating profit to $4.09 billion.The company said Feb. 13 that increased oil and gas production and its success in cutting costs contributed to the quarterly 93 percent rise from last year’s operating profit of $2.12 billion.On an annual basis, BP Amoco’s operating profit, not including one-time gains and losses, more than doubled to $14.2 billion from $6.21 billion.Chief executive Sir John Browne called the result "outstanding." BP Amoco benefited from a surge in world oil prices that was beyond its control. The price for a barrel of North Sea Brent crude rose to $29.56 in the fourth quarter compared to $24.13 during the same three months of 1999.Operating profit for BP Amoco’s exploration and production business rose to $4.7 billion from $2.63 billion, after an adjustment for one-time gains and losses.The company helped its bottom line by increasing quarterly output volumes by 9 percent over the previous year, due entirely to an increase in its production of gas. BP Amoco expects soon to reap profits from a gas project in Vietnam and discoveries of oil off the coast of Angola and in the Gulf of Mexico.Improved profit margins and the contribution from BP Amoco’s buyout of Atlantic Richfield Co. drove a 211 percent increase in quarterly operating profit in its refining and marketing business. The unit’s quarterly profit soared to $1.44 billion from $464 million.Adjusted earnings at the company’s chemicals business almost halved in the fourth quarter, due to steeper prices for oil -- its main raw material. A spike in gas prices and a weak euro exacerbated the downturn to $140 million from $266 million.BP Amoco’s Gas and Power boosted its quarterly operating profit to $60 million from $48 million, the company said.Browne forecast that the company’s business environment would stay "generally positive" in 2001, notwithstanding signs of a slowdown in global economic growth. Oil and gas prices would likely remain volatile, albeit at levels below those of last year, he said.Short-term tightness in inventories of refined products should benefit profit margins in refining, while chemicals were expected to come under greater pressure from a slowing economy and excess production capacity in the industry, Browne said.

Hospital delay angers senator

FAIRBANKS -- Alaska Sen. Frank Murkowski is angry with the U.S. Army Corps of Engineers for a delay in plans for a new Army hospital at Fort Wainwright.The $130 million project to replace 47-year-old Bassett Army Community Hospital is on hold because contractors’ bids to build the 250,000-square-foot structure exceeded the federal government’s budget. Murkowski blamed the corps for not anticipating the high bids.The Republican senator also said contractors are leery of working for the Department of Defense because of problems that surfaced when a new hospital was built at Elmendorf Air Force Base in Anchorage. Contractors, who were locked into a price, allegedly lost money on that project and litigation followed."We’ve got a situation where the contractors are scared to death,’’ Murkowski said at a briefing Feb. 17 on the new hospital.The senator, who holds a seat on the Senate Veterans Affairs Committee, was in Alaska accompanying Anthony Principi, the Bush administration’s secretary of Veterans Affairs, on tours of veterans facilities in the state.Murkowski criticized the Corps for not checking back with consultants who, before the project went out to bid, had said that the project’s parameters corresponded with the project’s budget.The Army is faced with either scaling down plans for the new hospital, seeking more money or persuading contractors the project is well-planned and hope they lower their estimates.Ground near Bassett has already been dug up in preparation for the new hospital.

Sealaska works to keep timber its bright spot

While it hasn’t been the best of years for Sealaska Corp., the Native regional corporation for Southeast Alaska based in Juneau, one thing is going exceedingly well: timber. Sealaska’s 220 million acres of commercial timber lands in Southeast have become a natural resource "Permanent Fund" for Sealaska, earning steady revenues. "If we manage this right, it’s a sustainable resource," said Rick Harris, the corporation’s senior vice president for natural resources. "We can continue harvesting at our present rate indefinitely." Last year Sealaska Timber Corp., a subsidiary, contributed $80 million in gross revenues to the parent corporation and other Native corporations, since 70 percent of the net resource revenues must be shared under terms of the 1971 Alaska Native Claims Settlement Act. "We have a substantial sharing obligation to other regional corporations. Every Alaska Native benefits from our timber harvesting in Southeast Alaska," Harris said. Seedlings are planted near Klawock as part of Sealaska’s extensive tree replanting program. This year Sealaska will harvest 123 million to 125 million board feet of timber from its lands. Managing it right, however, means backing up the forest’s natural regeneration with a program of replanting native Sitka spruce seedlings in selected places. Southeast Alaska’s moist climate allows nature to take care of itself in most logged areas, but Sealaska’s reforestation program provides a boost in some places. About 150,000 seedlings are being planted this year on 1,000 acres of logged land, Harris said. Sealaska maintains its own seed bank from native trees, collecting seed cones from several regions because of potential genetic adaptation to local conditions. Southeast’s forests can regenerate themselves. When areas are harvested, young seedlings are usually left in the overburden. That’s not true in all forest states, Harris said. In Maine, for example, the forest industry must be much more aggressive in reforestation. Sealaska began replanting in 1982 and has been working on reforestation with scientists from Oregon State University for 15 years. In some places, replanted trees are now 50 feet tall and six to eight inches thick, Harris said. As replanted forests grow, the corporation also thins them so that excessive shade doesn’t crowd out vegetation on the forest floor, which is important in maintaining habitat for wildlife. "If you get too much shade you limit the variety of other plants that can grow. We work carefully to enhance the undergrowth," Harris said. "We do these things for economic as well as social reasons. We’re enhancing the value of our assets as well as benefiting wildlife." That’s important, too, in retaining support in communities near Sealaska’s harvest areas. The corporation works closely with U.S. Forest Service scientists in Juneau to develop computer models predicting the outcomes from timber harvest and the planting and thinning that is part of forest management, Harris said. In this way, strategies are developed to restore and maintain deer habitat. "Everyone uses our logging roads for hunting. The deer are abundant, and hunting success is quite high," he said. The corporation likewise works on maintaining good forest habitat for salmon spawning in a program with the U.S. Environmental Protection Agency, the Alaska Forest Association and other Native-owned forest companies like Koncor Forest Products and Chugach Alaska Inc., a Southcentral regional corporation with timber resources. Sealaska’s economic importance to the Southeast region is also quite high, and the corporation is keen on employment and training for shareholders and other local residents. "We want local people involved in our operations, because that creates a sustainable economy for our communities," Harris said. Maintaining a sustainable resource has also turned out to be a key marketing advantage, and it has helped Sealaska maintain sales to its key customers in Asia, even through the recent economic downturn in the region. "We’re in a tough, competitive timber market, but we’re doing quite well given the circumstances," Harris said. While timber demand in places like Japan has declined, so has supply on the market for the types of timber Sealaska sells. Harris thinks the market has now reached stability. What gives Sealaska an edge over competitors are the dependability of its timber supply, its ability to offer a mix of several species of timber, long-established relations with customers and a reputation for quality, Harris said.  

Bering Sea crab fleet buyback details still must be worked out

UNALASKA -- It’s called the Capacity Reduction Program for Bering Sea/ Aleutian Islands Crab Fisheries -- buyback for short. In late December Congress created the $100 million program to reduce the crab fleet. Fishermen say it’s necessary for their survival in a time of slashed crab quotas. It’s good policy, says its sponsor, Sen. Ted Stevens, R-Alaska.But classic free market purity it’s not, and in a visit to the Aleutian Islands last year, Stevens described a fellow senator’s objection."He seriously questioned whether we should use taxpayer money to buy boats back that had been brought into the fleet as the product return had gone up," Stevens said. "He felt that when it went down, that should be part of the risk taking of being an entrepreneur." But buybacks can work, Stevens said."I think it will help. I was hoping they’d just be buying permits, and not permits and boats," said Gary Stewart, president of the Alaska Marketing Association, which negotiates prices for Bering Sea crab fishermen. "If we could have just bought permits, we could have got a lot more boats out of the fleet. That way, we’d get a lot more bang for our buck.""It will let a lot of boats get out of the business without going into bankruptcy, maybe keep their homes. It will reduce the fleet so the boats that stay in the fishery will have a chance of surviving these hard times," said Aleutian Lady owner Rick Shelford.Shelford expects lots of interest, at least 75 boats, "more than what the money’s there," exceeding the $100 million. "There are a lot of guys that are in pretty tough shape right now." The $100 million has yet to be appropriated, and $50 million must be repaid to the boats remaining in the fishery. Final approval for the buyback requires a majority vote of the crab fleet. The buyback involves a "reverse auction," with vessels ranked according to catch history. The more crab a boat caught, the more likely it gets bought out."Those that appear to remove the most harvesting potential from the fishery for the least amount of money will be accepted," said Phil Smith of the National Marine Fisheries Service in Juneau.Currently 330 boats are among the "closed class" allowed to fish Bering Sea crab, Smith said. But as to who is eligible for the buyback is unclear. One set of qualifying dates is based on a 1998 action of the North Pacific Fishery Management Council that never became federal law, he said."The statute itself is internally inconsistent and contradictory," regarding buyback eligibility, said Smith, adding that the agency’s legal staff is reviewing that issue."Congress passed it in December, and put it in NMFS’ lap" to work out the details, said Gretchen Harrington of the National Marine Fisheries Service, in Juneau. "We’ve only had one month to try to create this whole program. We want to create a good program, and that takes time."Still undetermined is if retired crab boats could continue in their summer work as salmon tenders, transporting fish from small catcher boats to processing plants."That question was asked by a fisherman, and we haven’t figured out the answer. We don’t think so," Harrington said."The fishing history of that vessel evaporates, and the fishery endorsement is voided. They can’t be used in a commercial fishery. I guess you could use them to run tourists out to watch whales," Smith said. Other possibilities mentioned by fishermen include yachts and research vessels, although the fuel consumption might be a bit much for a pleasure craft.The buyback program is being developed by NMFS staff at the agency’s Silver Spring, Md. headquarters, including some of the same people who devised East Coast boat buyback programs, Smith said. The buyback law sets a May 1 deadline for final regulations."It’s a complex issue. There’s many things that have to be addressed, but at least it’s a start," said crab fisherman Larry Hendricks, who sees individual quotas as the logical next step. The buyback legislation requires a study of various rationalization schemes, including cooperatives and quotas for fishermen, processors and communities.Jim Paulin can be reached at ([email protected]).

Divers trace Cook Inlet oil leak to hole in undersea pipeline

ANCHORAGE -- The source of a Cook Inlet oil leak, and the resulting weeklong shutdown of Unocal’s Dolly Varden production platform, was traced Feb. 15 to a hole smaller than a quarter-inch in an undersea pipeline.Divers were able to pinpoint the hole, but ice floating in the Inlet made it unsafe for them to conduct further testing that would help Unocal figure out how to fix it, company spokeswoman Roxanne Sinz said.Until the line is fixed, Unocal will send crude oil through a natural gas line that leads to the platform, Sinz said. It is a former oil line, so Unocal made the switch with minor modifications at either end, she said.Before the platform shut down for testing, it was pumping 3,800 barrels of oil a day, she said.Sinz said she couldn’t provide a cost estimate for the spill, but said it would run higher than the weeklong loss of oil revenues.Sinz has said the amount of oil believed lost is small, possibly 2 to 20 gallons.

Bristol Bay faring well

Bristol Bay Native Corp. has not been afraid to tackle big, high-profile commercial ventures. Two of them, purchasing and later selling Peter Pan Seafoods and the Hilton Anchorage Hotel, turned out well.Luck ran out on the third deal, though. If it’s any consolation, the recently failed Alaska Marketplace grocery venture, in which BBNC was a 34 percent minority partner with $2.3 million invested, was more modest compared with the earlier seafood company and hotel acquisitions."It didn’t help that Alaska Marketplace announced its store closures just as we convened a shareholder meeting in Anchorage," said Tom Hawkins, BBNC’s senior vice president and senior operating officer.In a $135 million corporation, a $2 wobble in stock values in the company’s investment portfolio would be accepted gracefully. But when the high-profile Alaska Marketplace deal went down, "it was noticed" around Alaska, Hawkins said.  Bristol Bay Native Corp. Chairman Hjalmar Olson and board member Dorothy Larson expect good earnings from their environmental cleanup subsidiary.PHOTO/Danny Daniels/AJOC"When it comes to something we do every day like shopping for groceries, we all become experts," Hawkins said. And so, BBNC’s shareholders had lots of advice for management at the meeting, he recalled.The investment portfolio isn’t doing that well this year either, but it turned in a good performance last year with a 17 percent return. That helped BBNC’s net profit reach $11.5 million. Mainly because of the stock market, BBNC’s profits will be down this year, Hawkins said.The first three quarters of the corporation’s fiscal year, ending in December, saw net income of $4.5 million, and BBNC is on track for an estimated $5.5 million profit this year, Hawkins said."Our ideal is for our investment portfolio to provide half of our annual profit and our businesses to provide the other half," Hawkins said. "We’re not there yet, because we’re still too dependent on our portfolio. But our businesses are making progress."Except for Alaska Marketplace, BBNC’s other business ventures are doing well. Bristol Environmental and Engineering Services, which provides environmental, engineering services and construction management, started out with three employees in 1994 and now has 40 year-round staff members and 60 to 70 in the summer, Hawkins said.The company has a contract with the U.S. Navy to do cleanup at the closed Adak naval air base in the Aleutian Islands, and recently landed another cleanup contract at Amchitka, near Adak, the site of underground nuclear tests. The company is expecting to earn a $2 million profit this year, up from $1.44 million last year, Hawkins said.He said CCI, an oil and industrial services contractor, also is doing well with an upsurge of petroleum support work on the North Slope, where the company does 45 percent of its business.PetroCard, a company operating fleet refueling services in the Seattle region, is growing fast and doing well, Hawkins said. PetroCard’s earnings from operations grew 50 percent in 2000, to $1.9 million, compared with $1.3 million in 1998 and $209,000 in 1998."Our gallons sold are up and prices are high, so margins are good for PetroCard," Hawkins said. "But one problem is the State of Washington business tax, which comes off gross revenues. As prices go up, that takes a bigger slice."PetroCard is expanding further this year. Higher volumes, high prices and good margins will translate into another good year for the company, Hawkins said.In years past, the Peter Pan Seafoods and Hilton Hotel deals were interesting challenges for BBNC. The corporation purchased the former Anchorage Westward Hotel, a landmark hotel in Anchorage, refurbished it and brought in Hilton Hotels to manage it. Eventually Hilton bought the hotel, a transaction in which BBNC made a nice profit, Hawkins said.The corporation bought Peter Pan in its early years, when it seemed logical to be in commercial fishing, in which many Bristol Bay shareholders also were engaged. But Peter Pan turned out to be too big for BBNC to adequately finance, Hawkins said."The tail was wagging the dog," he said. The annual "pack," or start-up and operating, loans needed for the company were tough for the corporation to handle, particularly at then-prevailing high interest rates, Hawkins said. Peter Pan was sold at a profit and luckily just before a downtown in the fishing business.Reflecting on BBNC’s recent investment in Northwest Retail Ventures, which operated the Alaska Marketplace stores, Hawkins felt the business plan was good, but financial difficulties prevented Associated Grocers, the majority partner, from fulfilling key parts of the business plan.The deal also was troubled from the start because the state of Alaska, in negotiating the divestiture of grocery stores when Safeway Inc. acquired the Carrs grocery chain, allowed Safeway to divest its lower-performing stores, according to BBNC sources.

Movers & Shakers February 25, 2001

Keith A. Laufer and Joseph N. Levesque have become members of the law firm Foster Pepper Rubini & Reeves. Laufer focuses his practice on corporate and real estate law. Laufer previously served as financial and legal affairs manager for the Alaska Industrial Development and Export Authority and as an assistant attorney general for the State of Alaska. Levesque focuses his practice on general municipal law and litigation. Levesque previously served as borough attorney for the North Slope Borough. Napoleon Ebro has been appointed engineer/checker for HCI Steel Building Systems’ West Coast operations that include Alaska. Ebro, who has relocated from a 12-year assignment in Saudi Arabia, has 20 years experience in both pre-engineered steel buildings and structural steel. Rob Recine has been chosen managing partner of the Alaska general office of New York Life Insurance Co. Recine, a chartered life underwriter and a chartered financial consultant, is New York Life’s top executive in Alaska overseeing 55 agents and nine support staff. Recine joined New York Life in 1994. Christopher Lease has joined the Fairbanks office of USKH Inc. as a computer-aided drafting design technician. Lease received a bachelor’s degree in architecture from Kent State University in Ohio. Evelyn Rousso recently joined USKH Inc. as a project architect working primarily in the firm’s Juneau office. Rousso is a member of the American Institute of Architects. Rousso’s previous projects included the Skagway Air Terminal, the Alaska National Guard Armory in Juneau and renovations at Valley Park School in Ketchikan. John Layton, payment systems manager at Denali Alaskan Federal Credit Union, has received the Accredited Automated Clearing House Professional designation from the National Automated Clearing House Association. To earn the designation, Layton passed tests demonstrating knowledge of managing electronic payment services, appropriate federal regulations, the association’s rules and regulations as well as required technical skills. The Alaska Rural Electric Co-op Association has appointed Britt Sandberg insurance underwriter. Sandberg has more than 16 years experience in the insurance industry and previously served as a workers’ compensation underwriter II with Fremont Compensation Insurance Group in Anchorage. Catholic Social Services has hired Gene Faulk as the agency’s special events coordinator. Faulk primarily will focus on developing fund-raising events to support CSS programs. Faulk has more than 10 years of experience in marketing and coordinating community events. Michael Saville joins the agency as its director of finance. Saville served 18 years as administrator of finance and operations for Hope Community Resources and most recently as accounting manager for Assets Inc. Darcy Mollet will serve as Family Pathfinders coordinator for CSS’ Beyond Shelter Program. Mollet will be responsible for recruiting and training community groups to help families transition from welfare to work. Mikunda, Cottrell & Co. has promoted John McIntyre to senior tax manager. McIntyre is a certified public accountant and a certified specialist in estate planning. McIntyre has been employed by firm since 1996. Steve Elliott has been hired as manager of the small business accounting and consulting department for Mikunda, Cottrell & Co. Elliott is completing the final course of the University of Alaska Anchorage’s master of business administration program. The Anchorage Concert Association board of directors has appointed Ruth Glenn as executive director. Glenn has been with the association since 1989 and has served as deputy director since 1997. Glenn was appointed acting executive director in 2000. Jayson Smart has joined the Anchorage Concert Association as marketing director. Smart previously managed the University of Alaska Anchorage Concert Program and UAA’s Conference and Casting Services. Lisa J. Moore has been promoted to business and events director. Moore previously served as office manager. Lainie Dreas has been promoted to education and events director. Dreas previously served as events manager.  

Wave Wholesale in Chapter 11, halts Bethel project, shutters other businesses

BETHEL -- Wave Wholesale Co. has halted construction of a retail center in Bethel, laid off workers and plans to sell off some businesses as part of its effort to reorganize under federal bankruptcy protection, company officials said.The company filed for Chapter 11 bankruptcy protection Jan. 12. It has 120 days from that date to come up with a reorganization plan.Wave Wholesale was formed 3 1/2 years ago as a cooperative to supply groceries to village stores. The collective buying power of the cooperative helped to bring down prices at 60 village stores. The company also has a wholesale operation that served schools, hospitals and other big customers in Western Alaska.Jerry Dunn, manager of Wave Wholesale, told The Tundra Drums the company grew too quickly."We just acquired too many businesses and didn’t have the money to take care of them," Dunn said. The company has $15 million in debts and $15 million in assets, he said.The company’s financial troubles were compounded by the Western Alaska salmon disaster, which left some customers unable to pay their bills at village stores. The stores were then unable to pay Wave for supplies bought on credit.The company is backing away from plans to build the Wave Center in Bethel, which would have housed a retail grocery store, a movie theater, restaurants and a bank. Dunn said it was unlikely that the company will go forward with the project, and Wave is considering selling the land.The company’s financial problems have led to the layoffs of 28 workers in Fairbanks and Anchorage."It’s unfortunate but it’s something we have to do," Dunn said.The company has closed its Fairbanks warehouse, halted its food service operations and is deciding what to do with its other acquisitions, which include a general store in Unalakleet, Northwest Motorsports in Kotzebue and a gift shop at the Alaska Native Heritage Center in Anchorage.Wave Wholesale was formed by two Native regional corporations -- NANA Regional Corp. and Calista Corp. -- as well as 15 Native village corporations.

How to avoid taxes on gifts to grandchildren

Most people are aware that any gift exceeding $10,000 per year constitutes a taxable gift and that once lifetime taxable gifts exceed $675,000, gift taxes are imposed on additional taxable gifts. Taxable gifts made to grandchildren or others who are considered more than one generation removed from the donor, are subject to a second tax, the generation-skipping transfer, or GST, tax. This tax is imposed on taxable gifts exceeding the lifetime exemption amount of $1,030,000 (as of 2001, indexed annually for inflation). Early planning can yield great benefits with the generation-skipping transfer tax exemption. You might want to consider creating a trust, which can be used for funding and owning a new business. First, the trust can be funded with cash; the trust can then purchase a business interest. This strategy avoids valuation challenges if the business interest appreciates rapidly and minimizes the initial GST tax-exempt allocation. Other GST tax planning opportunities include: * Maximize the direct payment of college and medical expenses that are exempt from gift tax and disregard them when computing the $10,000 annual gift tax exclusion. * Consider making as many $10,000 annual exclusion gifts as possible. A powerful way to use the annual exclusion is to take advantage of Section 529 qualified state tuition programs. A grandparent may give up to $50,000 per grandchild and spread this amount over five years and shield the gift from tax by using the annual exclusion. The income on a qualified state tuition program account grows tax-free, and the grandchild is taxed when he or she withdraws the funds for college education expenses. * Use the $1,030,000 GST tax exemption during your lifetime and focus on leveraging the transfer with assets with the greatest potential for appreciation. Long-term GST trusts should be created for the exclusive benefit of grandchildren, if the parents can afford to forgo the income. If children need trust income, consider making them discretionary, rather than mandatory, beneficiaries. The optimal trust term to defer transfer taxes is a trust that will end on the expiration of the period established by the Rule Against Perpetuities limitation. Alaska, Delaware and other jurisdictions that have abolished the rule make excellent jurisdictions to establish dynasty trusts, designed to build up as much trust corpus as possible for future generations. When designing a dynasty-type trust, a trustee should have broad discretionary powers, including the power to make distributions. To optimize a transfer of wealth to future generations, a trust should purchase assets, such as a business or a home, for grandchildren’s use. Senior family members should consider loaning money to a GST trust to invest in new business opportunities. Charitable lead unitrusts are also useful in GST tax-exemption planning. Charitable lead unitrusts are more attractive, because a GST tax exemption can be allocated when the trust is funded; the GST tax exemption can be allocated only after the charity’s income interest has expired for a charitable lead annuity trust. A charitable lead unitrust should be considered only if it is estimated that trust assets will perform at a rate of return in excess of the Section 7520 rate, which is computed on the value of partnership interests, after any relevant discounts are considered. A possible strategy to exceed the Section 7520 rate is to first place assets in a family limited partnership, or FLP, and contribute partnership interests to a unitrust. The prohibitions against self-dealing apply to charitable trusts. Charitable trusts should not purchase an asset from a related party, including the grantor’s FLP or closely held business. Also, the self-dealing rules apply if a beneficiary uses trust property. John McIntyre is senior tax manager at Mikunda, Cottrell & Co.

Reeve's departure hampers Alaska's ties with Russian Far East

When Reeve Aleutian Airways ended its scheduled flights between Anchorage and the Russian Far East late last year, Alaskans lost a regular, convenient link to the region. In the past three years, other airlines have dropped the route, which Alaska business people frequent to build their ventures in areas like Yuzhno-Sakhalinsk, where oil development is under way. However, Magadan-based Mavial recently announced plans to start serving the area this spring. At a Feb. 13 roundtable discussion, trade officials said the loss of the link between Alaska and Russia will impede business between the countries. However, airline representatives say there is not enough passenger and cargo volume to efficiently operate the route. The discussion was part of the Pacific Rim Construction Oil Mining Expo and Conference in Anchorage. In late 1998 Alaska Airlines ended its service from Anchorage to Magadan, Khabarovsk, Yuzhno-Sakhalinsk and Vladivostok. In December 1999 Aeroflot, too, discontinued routes between those cities. "The absence of adequate transportation connections has a tremendous impact on economic ties," said Charlene Derry, manager of the Federal Aviation Administration Alaska Region’s Office of International Aviation. Derry also is the U.S. transportation representative for the U.S. West Coast Russian Far East Ad Hoc Working Group of Seattle. "Busy executives do not have the time to spend a week to go there and come back," said Michael Allen, general director of the American Business Center in Yuzhno-Sakhalinsk. Current travel, including connecting flights, between Anchorage and Yuzhno-Sakhalinsk is inconvenient, he said. The departure of Reeve has forced Russian Far East passengers and freight forwarders to use a long and expensive route from Japan through Korea that ends up with a connection to Yuzhno-Sakhalinsk on Korea-based Asiana Airlines. Phil Bray, director of operations for Era Aviation Inc.’s fixed wing operations, said Alaskans may see a different type of service to the Russian Far East. A special designated flight might be the answer rather than regularly scheduled flights or regular charters, he said. Such a flight would be similar to oil companies’ dedicated North Slope shuttle, he said. Yuzhno-Sakhalinsk-based Allen said such a service would be too expensive for the small- and medium-size Alaska businesses who could participate in future development on Sakhalin Island. In late December, Era commissioned an e-mail market survey concerning Era offering service to the Russian Far East. According to the survey, 61 percent of business people Era polled started travel in Anchorage bound for the Russian Far East, while 39 percent began travel in Seattle, Bray said. Bray, former chief pilot for Reeve who flew its Russian Far East routes, said Era is still considering operating a route to the region, perhaps as a special shuttle. The perfect aircraft to fly between Alaska and the Russian Far East, probably something similar to Boeing’s 737-700 combination passenger and cargo plane, has not yet been built, he said. Such an aircraft would cost $30 million to purchase and $30,000 an hour to operate, Bray said. One airline is adding a new route between Anchorage and the Russian Far East starting April 1. Mavial or Magadan Airlines officials in mid-February announced plans to begin flying regular scheduled weekly flights between Magadan, Petropavlovsk-Kamchatsky and Anchorage. Connecting flights from Petropavlovsk-Kamchatsky can transport passengers to Khabarovsk via Khabarovsk Aviation or to Vladivostok aboard Vladivostok Aviation. The flight from Anchorage will depart Sundays at 6:30 p.m. bound for Petropavlovsk-Kamchatsky then Magadan. Mavial officials decided to add the route since no other carriers were flying to Petropavlovsk-Kamchatsky, said Mavial’s U.S. manager, Vladimir Melnik. Travel agents and U.S. companies asked the airline to consider serving the route, he said. From Petropavlovsk-Kamchatsky and connecting flights to Khabarovsk, Alaskans can reach Yuzhno-Sakhalinsk via flights from Khabarovsk. The airline already flies between Anchorage, Magadan and Khabarovsk, with the next flight departing March 14. Most cargo between Alaska and its Russian neighbor -- 93 percent between 1997 and 2000 -- was loaded in Anchorage and bound for the Russian Far East, said Linda Close, marketing manager for Ted Stevens Anchorage International Airport. Allen noted that Sakhalin Aviation may be interested in operating routes between Yuzhno-Sakhalinsk, Petropavlovsk-Kamchatsky and Anchorage, although the airline has not formally applied for the route. The carrier is looking for an aircraft to serve such a route and also is considering a Honolulu route, a city which offers connections to Anchorage, he said. Operating any route depends on the bottom line, and carriers could nix routes in favor of more profitable ones, said Greg Wolf, director of the state Division of International Trade and Market Development. Wolf noted his experience with travel companies that bought seats for Japanese tourists to ensure service. "Companies or organizations willing to guarantee seats would reduce the risk for carriers," he said. State trade officials met with company representatives in mid-February to discuss possible service to the Russian Far East, said Jeff Berliner, Russian trade specialist with the state trade office. Some companies, like Reeve until it filed for bankruptcy, had profitable traffic flying the route, he said.  

The sinking of the Titanic: An analogy of leadership that failed

"We have struck iceberg ... sinking fast ... come to our assistance." Burning the airwaves came those words late in the cold evening of 1912. Before they tapped the last bit of Morse code, those words became the epitaph of the 1,200 people lost on the Titanic. The ship was doomed as it slowly sank into its watery grave. Why did the largest, most advanced ship of the century sink?Those of us who study history or remember the movie may know why. It wasn’t the iceberg that caused the disaster. It was something else. Clear in my mind was the real cause -- leadership had failed.The Titanic still rests on the bottom of the ocean, but we can resurrect the truth. The lessons we learn can help us become better leaders.Leadership is always responsibleLeadership is more than a wooden figurehead. Leadership is not a position, a job title or in this case, merely the captain of the ship. Leadership is not just power, ego and pride. Leadership is ever-present, touching, motivating, talking and checking, barrier removing, training, preparing, breathing and moving about.This was Capt. E.J. Smith’s retirement trip. He was headed for the easy life. All he had to do was get to New York. God only knows why he ignored the facts, why he ignored seven iceberg warnings from his crew and other ships. Leadership is responsible for everything the organization does or fails to do.Biggest is not the bestIt took more than 30 seconds before the Titanic turned away from the iceberg ... but it was too late. The larger an organization becomes, the greater its inflexibility. It soon becomes a bureaucracy where rules, regulations, policies, procedures and "I need permission to make a decision" becomes the norm. Today’s businesses must change course quickly.Rank has its privileges?Ranking is good for command and control, not good for change and innovation. Ranking people limits potential. Today, businesses rank and classify people -- sometimes unintentionally. However, the results are the same, whether it is reserved parking spaces, blue collar, white collar, temporary, part-time, those with cubicles, those with desks, and so forth.Ask yourself, when the ship sinks, who gets in the lifeboats first? Who gets severance pay, bonus, stock options or nice hotels? Clear the lines between the classes and make everyone feel they are rowing in the same direction for the same purpose. In a disaster, everyone is an equal.The truth changesThe Titanic was unsinkable - so they thought. So confident were they that they only had enough lifeboats for half the passengers. The thinking that made us successful yesterday is the very same thinking that will cause us to fail tomorrow. Our unlearning curve must be greater than our learning curve.Technology not a substitute for leadershipWhen technology fails, leadership must prevail. Capt. Smith said years before the Titanic’s voyage, "I cannot imagine any condition which would cause a ship to founder. .... Modern shipbuilding has gone beyond that."Many businesses today have placed the wrong people in charge. They are not leaders, but managers. So, when disaster strikes who is going to lead and will your technology pull you under?Leadership is always trainingAs the stern of the Titanic lifted out of the water, the crew and passengers struggled with the lifeboats. There were no drills, no rehearsals and the crew stood unfamiliar with their responsibilities. The boats were improperly loaded and only one boat went back to try to recover survivors. Help people improve their skills so they can become more productive.Leadership looks below the surfaceThe greatest danger as well as the greatest opportunities lie below. The ocean in 1912 was like glass, deceptively dangerous. The biggest part of an iceberg lies below - unseen. Like steel fangs, it tore at the rivets along 300 feet of the Titanic’s hull. Those below, the "crew and steerage," felt and saw the damage first. Like a gasping breath, the steam billowed above as chaos reigned below.Just like then and now, those who know what’s wrong with your "ship" are those below. Furthermore, those below usually have the best ideas and solutions to your problems. Start looking toward those on the front line for the ideas, problems and solutions. Do it before you hit the icebergs.Leadership looks beyond the horizonSuccess causes problems. A good "captain" is on the lookout for changing trends, changing needs, storms and icebergs. Sam Walton identified the need, and Sears, Roebuck and Co. didn’t. Apple computer saw the need before IBM. The vision of the Sony Walkman existed in Akio Morita’s mind before RCA. Many dot-coms were prepared, many were not. Get the picture? Be out there scanning the horizon for the next change.Gregory P. Smith leads the management consulting firm called Chart Your Course International in Conyers, Ga. He can be reached at 770-860-9464.

Japan boosts estimated need for LNG

Japan’s largest natural gas utility now expects that the same forces fueling rapid increases in demand for gas in the United States will propel gas consumption in Asia much higher than forecast.This means there could be more room for Alaska gas in Asia than is currently thought possible. North Slope producers have looked at the Asian market but have concluded that slow economic growth in the region, coupled with ample supply from other countries, make an Alaska project to export liquefied natural gas, or LNG, to Asia uneconomic.The North Slope producer companies are now working on a plan to ship Alaska gas to the contiguous United States via a new overland pipeline.Shigeru Muraki, manager of supply for the Tokyo Gas Co. Ltd., told state legislators in Juneau on Feb. 15 that use of gas in Japan for electrical generation is increasing faster than expected. Muraki spoke in Juneau to a combined meeting of the Senate Resource Committee and the Oil and Gas Committee of the State House.Consumers in Japan are concerned about the environmental effects of traditional fuels like oil and coal and the safety of nuclear power plants, Muraki said. Natural gas is seen as a cleaner fuel with fewer greenhouse gas emissions.Muraki said his company foresees demand for LNG reaching as much as 135 million metric tons per year in 2010, or 109 million tons annually in a "low growth" case. The region now consumes about 80 million metric tons of LNG yearly.Extensions of current contracts can continue to supply about 80 million tons yearly to the East Asia region, but Tokyo Gas expects to see new demand for 28 million to 53 million tons yearly on top of existing supply, he said.Muraki’s message to Alaska that Asia is interested in North Slope gas was welcomed by Yukon Pacific Corp., a company that has been working to develop an LNG export project in Alaska."Their new demand projections are about 50 percent higher than what people expected 10 years ago," said Jeff Lowenfels, president of Yukon Pacific. "We always felt the demand for gas would be there, but others were more cautious."Muraki said Tokyo Gas has contracts sufficient to meet its growth to 2005 and will be looking for new supplies of LNG after that. But Korea and possibly Taiwan will be buying additional LNG before 2005, according to the Tokyo Gas analysis. Muraki said China will soon be entering the LNG market as well, looking for supply.Alaska and Sakhalin, in the Russian Far East, are seen by Tokyo Gas as possible sources of major new supplies of LNG, Muraki said. In Sakhalin, two consortiums led by major Western oil companies are planning projects to export gas to Japan and Korea.A group led by Shell Oil is planning an LNG project, expected to be in production in 2006. A second consortium led by Exxon Mobil Corp. is planning a gas pipeline to northern Japan and expects to be in production in 2008.Muraki said the LNG pricing picture is complicated by the growth of gas in the market. The price of LNG in the Pacific is now linked with crude oil, in terms of units of energy. But as more and more gas is used for electrical generation, its cost is weighed by utilities against coal, nuclear, hydro and other energy sources.Also, if gas is brought into Japan by pipeline from Sakhalin, LNG -- which is transported by ship -- must be competitive with gas moved by pipeline.The effects of this is that LNG may become "decoupled" from crude oil in price, which could lead to a lowering of the price utilities are willing to pay because it will be competing with pipeline gas, coal and other energy sources. Today it is mainly an alternative to fuel oil, Muraki said.Muraki also told legislators his company hopes to secure lower-cost LNG in the future. In new purchase agreements expected to be concluded soon, prices for LNG are expected to be about 10 percent lower than at present, he said.Yukon Pacific Corp., a subsidiary of CSX, the major U.S. transportation company, isn’t the only industry group looking at an LNG project. A consortium of Phillips Petroleum Co., BP, Foothills Pipe Lines and Marubeni, a Japanese trading company, is also studying the idea. This consortium, led by Phillips, has now focused its work on a possible spur pipeline to a southern Alaska LNG plant from a pipeline to the Lower 48 that would parallel the Alaska Highway.Muraki said that Australia, Indonesia and Malaysia, which now supply most of the LNG to Japan and Korea, will continue to be important suppliers to both countries.But increased regional demand for gas in Indonesia, Malaysia and Thailand to fuel domestic industrialization will limit future growth in LNG exports, he said.While there are very large supplies of gas in Qatar and Abu Dhabi in the Persian Gulf, LNG from suppliers there is now being sold in East Asia. In the future it may be more profitable to supply new LNG customers in India and eastern Mediterranean countries because of the long distance LNG tankers must travel to reach Japan and Korea, Muraki said.Tokyo Gas would like to obtain its future supplies of energy from diversified sources, Muraki said. Consumers in Japan and Korea are now too dependent on the Middle East and Southeast Asia, he concluded.

City's no-smoking ordinance covers more than restaurants

Anchorage’s new nonsmoking ordinance has raised concerns for restaurant owners but also for some office and commercial building operators. A health inspector from the city department dispatched to enforce the law helped outlined some answers for an industry group. Jason Froehle, one of five health inspectors, spoke Feb. 9 to the Building Owners and Managers Association of Anchorage at the Hilton Anchorage Hotel. "The Department of Health and Human Services enforces public health laws," Froehle said. "Secondhand smoke is an important public health issue." The ordinance, which took effect Dec. 31, prohibits smoking in many enclosed workplaces and enclosed public areas. The change effects restaurants, sports arenas, convention halls and other facilities, Froehle said. Anchorage Assembly members approved the legislation last June. Exemptions include some bars with no employees or customers younger than 21, plus bingo halls and pull-tab establishments, which must provide a smoke-free area for patrons, he said. Another exception includes offices not open to the public with four or fewer employees, he said. One possible example could be a small delivery company that has no walk-in traffic, he said. The city health department requires buildings that do fall under the ordinance to post no- smoking signs, typically at every entrance, Froehle said. Stickers can be obtained from the city health department. Also, every business affected by the ordinance must have a written policy onsite regarding nonsmoking conditions, he said. Business operators should inform employees about the policy, he said. The ordinance requires people to smoke a reasonable distant outside a building so smoke doesn’t drift back inside, he said. However, each workplace can have its own definition of how far is far enough to comply with the law, he said. Typically at least two inspectors visit a site where a complaint has been filed so they both agree that smokers are a suitable distance from the building and smoke is not drifting inside, he said. At Froehle’s municipal building, city officials have set 25 feet as a reasonable distance. Also, smoking is prohibited in public vehicles including buses, taxis, police cars, limousines and vehicles for designated use by city officials, he said. The city health department is enforcing the ordinance as complaints come in rather than visiting businesses, similar to health inspections performed by its inspectors. "When complaints about a business are made to Health and Human Services we send them a warning letter," he said. A second complaint is followed by a letter and a call from the health department. After a third complaint, the business is referred to a code enforcement officer or the Anchorage Police Department, he said. "We’re trying to make this as educational as possible and avoid getting ugly with this," he said. Those who do not comply with the ordinance face fines up to $300 for each violation and could receive penalties up to $1,000, he said. The city health office has issued several warning letters, and so far the ordinance has not been challenged in court, he said. Wording in the ordinance calls for a review at its one-year mark. The mayor, city health department and the police department will present a report to the Assembly detailing its effectiveness in reducing secondhand smoke, the number of violations and penalties, the practicality of enforcement, the ordinance’s economic impact and any possible revisions.  

Around the World February 25, 2001

STATEJoblessness jumpsJUNEAU -- Unemployment in Alaska increased 1.7 percent to 7.8 percent in January, following a typical midwinter pattern, the Department of Labor and Workforce Development reported.The number of unemployed Alaskans increased to nearly 25,000, said Rachel Baker, a labor economist.January is typically the peak month for unemployment in Alaska as seasonal industries reach a midwinter low point. Jobless rates moved higher in most areas of the state except Kodiak, where tanner crab, pollock and cod openings shrank the island’s unemployment rate from 13.3 percent to 11.4 percent. Prince of Wales Island had the highest rate at 19.1 percent.Retail trade, services, construction and government were the largest contributors to the loss of 7,100 jobs. Seafood processing employment provided the only employment boost in January, adding 3,200 jobs.Unemployment rates elsewhere in the state were:* Anchorage, 5 percent, up from 4.1 percent in December.* Matanuska-Susitna Borough, 9.6 percent, up from 7.3 percent.* Kenai Peninsula Borough, 13.1 percent, up from 10.4 percent.* Fairbanks North Star Borough, 7.2 percent, up from 5.4 percent.Judge rules for pulp firmANCHORAGE -- Alaska Pulp Co. has won another round in its ongoing claim of damages over the loss of its timber contract with the U.S. Forest Service.The U.S. Court of Federal Claims ruled Feb. 14 that the forest service erred in modifying the company’s 50-year timber contract, due to run through 2011, following passage of the Tongass Timber Reform Act in 1990.Next up could be a further hearing to determine damages if the government does not appeal to the U.S. Supreme Court.Alaska Pulp Co. is seeking $1.4 billion in damages.Phillips promotes MeyersAnchorage -- Phillips Petroleum Co. has promoted Kevin Meyers, senior vice president of Alaska production and operations, to executive vice president of Alaska production and operations. Meyers, 47, continues as president and chief executive of Phillips Alaska Inc. He was president and chief executive of Arco Alaska Inc. and senior vice president of Atlantic Richfield Co. when Phillips bought Arco’s Alaska assets last April.Shellfish rules to easeJUNEAU -- The state will change some of its proposed regulations for shellfish farming in response to an industry outcry that the rules made it too hard to get permits.Farmers hope that under milder rules the current "dismal" number of farms, which produce only about $500,000 a year of product, will grow, said Bob Hartley, former president of the Alaska Shellfish Growers Association.The state also will extend this year’s deadline for applying for site leases and farming permits to June 30, so applicants can meet the requirements of the new rules. The agency expects to offer revised rules for comment late this month.Thirty-eight shellfish farms produced about $485,000 worth of product in 1999, according to preliminary state figures. Most of that value came from oysters.NATIONEddie Bauer revampsDOWNERS GROVE, Ill. -- The Spiegel Group plans to close 25 Eddie Bauer stores this year as well as open 10 new stores with merchandise that extends beyond the retailer’s traditional casual, rugged style.The Downers Grove-based company has not announced which stores will be closed, but spokeswoman Debbie Koopman said Feb. 16 they are stores whose leases expire this year. She did not know how many employees would be affected.The closings, along with the new stores, will bring the number of Eddie Bauer stores to 451 nationwide by the end of the year, excluding outlets.For the quarter ended Dec. 30, Spiegel reported a 13 percent drop in earnings to $65.4 million or 50 cents a share, from $74.7 million or 57 cents a share a year earlier.Comparable-store sales at Eddie Bauer locations that have been open for at least a year fell 8 percent for the year and 9 percent in the fourth quarter. Net sales fell by 2 percent in the quarter to $670.3 million and 2 percent for the year to $1.75 billion.Kmart speeds checkoutTROY, Mich. -- Kmart plans to install speedier cash registers that should cut a customer’s checkout time by about 20 percent.The Troy-based retailer will allow IBM to replace registers in 2,100 Kmart stores with a faster, more powerful model. The deal is worth about $200 million.The machines -- along with faster printers, hand-held bar code scanners and improved in-counter scanners installed by Kmart last year -- are expected to cut the wait, Kmart spokeswoman Mary Lorencz said Feb. 15.Cashiers also will be able to tell customers when an out-of-stock item will be delivered or if the product is available at another store.Lorencz said 300 stores are using the machines and installation in the remaining outlets should be completed by 2002.Wal-Mart tops $2 billionNEW YORK -- Wal-Mart Stores Inc., the world’s largest retailer, managed to cross the $2 billion earnings mark for the first time despite what executives described as a "challenging environment." The fourth-quarter results beat Wall Street expectations.For the three months ended Jan. 31, Wal-Mart earned $2.004 billion, or 45 cents per share, up 4.5 percent from $1.92 billion, or 43 cents per share, in the year-ago period, the Bentonville-based company said Feb. 20.Analysts surveyed by First Call/Thomson Financial were expecting 44 cents per share.Sales jumped 10 percent to $56.56 billion, up from $51.39 billion in the year-ago period.The results come as many merchants struggle with a slowing domestic economy and plummeting consumer confidence.United sets merger plansCHICAGO -- Its proposal to buy US Airways is still under federal review, but United Airlines is charging ahead with a marketing campaign to promote the benefits of the merged airline to consumers.A spokesman for United confirmed the plan Feb. 20, some six weeks before the U.S. Justice Department is expected to announce a verdict on the merger, which was announced nine months ago.Spokesman Matt Triaca would not confirm or deny a published report that newspaper ads touting the benefits of the enlarged airline will appear in mid-March, ahead of the government’s decision."It just makes smart business sense to be thinking about these things in the event the merger is approved," United’s Matt Triaca said. "We want to get out there and tell our customers about it."Compiled from business wire services.

Pollock group gives $1 million to study Steller woes

Alaska’s pollock industry is donating more than $1 million for research on sea lion declines and ecosystem changes in the Bering Sea. The Pollock Conservation Cooperative, a group of companies that operate catcher-processor vessels in the Bering Sea, gave the money to the University of Alaska Fairbanks School of Fisheries and Ocean Sciences.Fifty-nine Alaska communities are partial owners of these companies. Research began last spring when the PCC provided $385,000 to UAF. An additional $637,000 was awarded in January to support research and a research endowment, as well as two fisheries faculty positions."Alaska’s Bering Sea pollock fishery is the nation’s largest fishery," said Trevor McCabe of the At-Sea Processors Association, the PCC members’ trade group. "We want to protect this amazing resource, and to do so, we must learn everything we can about the ecosystem that sustains it. This is the first of a multiyear research effort by our industry sector, and it is just the beginning.""We welcome the partnership with the state’s pollock industry to understand what’s causing changes in the Bering Sea," University of Alaska President Mark Hamilton said in a press release. "Their generous gift to the university will help our scientists answer important questions that will improve fisheries management and help unravel the causes of marine mammal declines."Eat fish, see betterWomen who breast-feed their babies, or who eat oily fish while pregnant, have children with better than normal visual development. That’s the conclusion of researchers at Bristol University in England, who have examined eyesight development of more than 400 children at the age of 31/2 years."Our results suggest that children whose mothers ate oily fish in pregnancy or who were breastfed reach the adult depth of perception sooner," said researcher Cathy Williams. "As far as we know this is the first time that diet in pregnancy has been shown to be associated with a child’s visual development."Oily fish is the richest source of DHA, a fatty acid that is an important structural component of neuronal membranes in the brain. Williams said DHA is also present in breast milk but not in standard formula milk.Department seeks hikeThe Alaska Department of Fish and Game is requesting an increase of nearly $122,000 in its 2002 budget for the Board of Fisheries and local advisory committee support.The board would get $76,700 of the request, to make up for a $71,000 reduction imposed by the Senate last year. The remaining $45,000 would primarily be used to help local advisory committee members in remote areas to send representatives to fish board meetings.The House Finance Subcommittee will send a formal recommendation to the full committee later this month.Copper River scoop?Salmon from the Columbia River could scoop Copper River as the year’s first fresh salmon. Seafood Trends reports that the run of Columbia River king salmon could be about 364,000 fish this spring, well above last year’s 179,000 kings.That makes it the largest salmon run since the Bonneville Dam was built in 1938. Last year the Columbia yielded a small commercial catch of about 400 king salmon. There is also the possibility of a small experimental fishery in April to test a new type of gillnet.Kodiak-based free-lance writer Laine Welch can be reached by e-mail at ([email protected]).

February-Issue-1 2001

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