Taking a taste of Alaska to China

When Gov. Bill Walker announced the delegation for Opportunity Alaska: China Trade Mission, it probably wasn’t very surprising to see businesses from the timber, mining, and investment industries included. A bit more surprising? Our beer company making the list. We’re Jason Motyka and David McCarthy, co-founders of 49th State Brewing. Since 2005, the ethos of our business has guided its growth: be very good, and be very Alaskan. We jumped at the chance to join the delegation because our business thrives on bringing great beer to good people in unusual places. It all started at our Denali pub, where visitors could drink fresh brewed beer from the last frontier while listening to live music, eating locally sourced food, and enjoying North America’s tallest peak. It turns out that high-quality beer served with a down-to-earth attitude is just what Alaskans wanted — and also, a great fit in our $2.4 billion visitor industry. There was enough business for expansion far beyond our initial pub: we now have six locations and more than 600 employees. We partner with international tour and travel companies. We continue to innovate, drawing inspiration from home: our beers rely on tree-tapped birch syrups, fresh spruce tips, summer campfire smokiness, and piney hops, all unique tastes of Alaska. Our current phase of expansion is built around the idea of sending some of the many visitors to Alaska home with our beer, and making our beer available when they get home. Alaska is stunning, surprising, and overwhelming even for locals, but for people who get to visit just once, the trip is remembered for a lifetime. People want to maintain a connection to their memories made here. When we started exporting our Alaska brews down south and across the Pacific to Japan, we saw that beer helps maintain that connection. Being able to taste Alaska at home, with memories — or aspirations — of drinking at the foot of Denali helps travelers hold onto the big, fresh, wild feelings that Alaska instills. And they can share those feelings with friends from Kyoto to Shanghai. That’s why participating in the trade mission is meaningful for us. We want to partner with locals to export Alaska beer to China and open an Alaska tasting room and restaurant abroad, helping grow the Alaska brand and inspire more people to visit the Last Frontier. Our state is becoming more and more popular for our neighbors across the Pacific, and we have something unique to offer: the taste of Alaska.

GUEST COMMENTARY: Loving salmon, and against ‘Stand for Salmon’ initiative

I love salmon, but I care deeply about Alaska too. That’s why I oppose the salmon initiative. I doubt that there is anyone in Alaska that wants to protect salmon more than me. Transporting salmon, by aircraft, barges and trucks is a major part of our business, and sport fishing is my favorite pastime. Fishing has been and will continue to be a mainstay of Alaska’s economy and way of life for most Alaskans. The proponents of the so-called “Stand for Salmon” ballot measure want you to believe their proposal is just about protecting salmon, and that it won’t hinder development. If that were truly the case, I would support the measure, but unfortunately, once again, outside groups are trying to stop development, kill jobs and destroy Alaska. The “Stand for Salmon” initiative would make it extremely expensive and difficult for any type of development or community project. Whether it’s building a mine, repairing or building roads, developing an oilfield on the North Slope, or building a home, this initiative would be a major permitting impediment. We need to protect our unique and cherished ecosystems, especially in areas like Bristol Bay which rely so heavily on commercial and sport fishing industries. Many Alaskans were led to believe this would stop the Pebble Mine, but the initiative goes way beyond stopping one project in Alaska. Instead, it negatively impacts all resource development. This is a broad effort to attack Alaska statewide, and that’s why I decided to join the effort to defeat the initiative before it destroyed our state. The fish habitat ballot measure would cripple many industries by adding layers of unnecessary rules and regulations that would serve only to slow down or stop development and community projects, large and small. Building roads or runways in rural Alaska is already an expensive undertaking. Piling burdensome regulations onto those projects makes them harder to fund, if they are funded at all. Fortunately, once Alaskans find out the true meaning and purpose of this ballot measure, they are speaking out against it. Our Attorney General Jahna Lindemuth said the measure “would have the effect of categorically blocking certain mines, dams, roads and pipelines.” The Laborers and Teamsters unions oppose the measure because it would cause statewide job loss. Aaron Schutt, the president of Doyon, Ltd., one of the Alaska Native corporations, said “there will not be another significant project built in rural Alaska if this initiative passes.” Once again, Alaska needs to rally against an ill-conceived ballot measure that will be a huge roadblock to our state’s economy. Stand for Alaska is the name of an impressive coalition of businesses, native organizations, and individual Alaskans who love salmon but care about Alaska too. Lynden is a proud member of this group and we will help push back on the false narrative that Alaskans must choose between development and habitat protection. We can have both and have for many years. For more information about our coalition and the ballot measure, visit standforak.com. If the Alaska Supreme Court allows this ballot measure on the General Election ballot this November, I’m firmly voting no, and I encourage my fellow Alaskans to do the same. Jim Jansen is the chairman of Lynden and a supporter of Stand for Alaska.

Revenue flat, Alaska Communications points to unpaid rural funds

First quarter revenue for Alaska Communications Systems Group Inc. was down just 1.2 percent despite reporting $11.8 million in shortfall from the federal program for providing service to rural hospitals and medical facilities. Senior Vice President of Finances Laurie Butcher said a debt refinancing cost reflected in the 2017 first quarter made the company's net income look a little better than they were. “Last year’s first quarter recorded a $2.3 million negative impact that didn’t reoccur in a year-over-year,” Butcher said. The Anchorage-based telecom reported overall revenue of $56 million for the first quarter compared to $56.7 million reported for the same quarter last year. It was the first report after the company laid off 30 people in December, representing a 5 percent cut in its workforce. Alaska Communications has attributed the workforce cuts in part on the costs of providing the service to rural customers while only being able to charge the urban rate. It cited those costs in a shutoff notice sent May 6 to the Cordova Community Medical Center demanding nearly $1 million representing what the federal program hasn’t covered for its monthly invoices. Federal Communications Chairman Ajit Pai warned company CEO Anand Vadapalli in a letter two days later that it would be illegal to cut off Cordova or any other rural client. The Universal Services Administration Co., or USAC, normally fills the funding gap between the urban and rural rate that makes remote telehealth affordable. But last year and this year, requests for reimbursement have exceeded the $400 million pool for the first time. The unreimbursed funds are impacting all of Alaska’s telecoms. GCI Liberty reported a $6 million shortfall in the same Rural Health Care payments and also noted the Federal Communications Commission is conducting a review of the rates charged in Alaska, which consumed a bit more than a quarter of the total RHC funds at $122 million in 2016. This is the second year Alaska Communications is experiencing a funding shortage in its RHC revenue. Given overlaps in the fiscal years, with the federal funding year ending June 30, the losses were distributed over two years, Butcher said. “In 2016-2017 is when they had the first shortfall, a 7 percent funding gap. Sitting in Q1 last year, we thought we were getting the full revenue from the RHC program,” Butcher said. “But they didn’t announce their funding gap until April, so we didn’t start recording (losses) until Q2 last year. For this year, the 2017-2018 funding year, which started in July 2017, we still have not received any funding.” The cash flow impact amounts to about $1 million a month. Business revenue and wholesale revenue of $33.8 million decreased $700,000 or 2.2 percent in the first quarter of 2018. That’s down from the $34.5 million in the first quarter of 2017, and “due primarily to a $2.6 million reduction in broadband revenue driven by price compression and losses in the RHC funding levels,” Butcher said. The company’s first quarter RHC revenue was $3.5 million in 2018, compared to $6.3 million in 2017. Business and wholesale makes up just more than 60 percent of Alaska Communications’ total revenue while consumer business comprises almost 17 percent. Wholesale broadband revenue increased by $1.3 million. Business phone connections fell by 2,311 landlines, or 3.2 percent, year-over-year. Consumer revenue rose from $9.3 million last year by March 31, 2017 to $9.4 million for the same date this year. Of that, broadband helped push revenue slightly from $6.4 million to $6.5 million. Also in the consumer category, voice and other revenue decreased marginally due to 4,298 fewer connections due to loss of landlines. The consumer category overall benefitted from a rise in the average revenue per user or ARPU to $63.77 from $61.22. Regulatory income, which comprises 23 percent of its revenue, remained flat with first quarter 2017 at $12.8 million. The EBITDA tracking of earnings before interest, taxes, depreciation and amortization is a key indicator, Butcher said. “We don’t really focus on net income as much as we do EBITDA – depreciation, gains and loss on things that are non-operating expenses. These were double last year and are non-cash in nature.” Flat EBITDA was good news, she said, after the December employment cuts. “Some of the really drastic cost cutting measures we took in fourth quarter in response to what was happening with RHC impacted our employee compensation and reduced our workforce. It took serious cost cutting to keep EBITA flat,” Butcher said. An uptick in broadband is increasing revenues due to new technology that is expanding in fixed wireless for multi-dwellings and tenants, she added. “Technology enables us to provide services quickly at a much lower cost,” she said. Fixed wireless is installed via entire buildings that then enable individuals to quickly sign up for services. “Rather than the Old World of signing up for DSL where we roll a truck and hook you up, this is more customer friendly and cost efficient,” she said. Another bright spot is in new tax refunds that Alaska Communications can expect to begin collecting when 2018 taxes are filed and over the next four years. The company paid the alternative minimum tax, or AMT, that added back deductions to recalculate liability. Under the Tax Cuts and Jobs Act of 2017, the AMT was eliminated and corporations that paid it are due refunds. As for the RHC funding shortage, the Federal Communications Commission is currently evaluating how the Rural Health Care program is managed, said Sen. Lisa Murkowski’s spokesperson Karina Petersen. “Until that is finalized Alaskan participants are in limbo, which is a real problem because rural health clinics provide critical tele-medicine services for remote Alaskan communities,” Petersen wrote. ^ Naomi Klouda can be reached at [email protected]

Workforce development: Career readiness and the evolving world of work

Katrina Chertkow graduated from the University of Alaska Anchorage earlier this month with a bachelor’s degree in sociology. A member of the Honors College, she graduated summa cum laude, and is pursuing a master’s degree in integrated marketing and communications at Northwestern University in the fall. Chertkow is a high achiever by any definition. And yet, her career path is uncertain. “I’m not sure what my career options are after grad school, which avenues to take,” she said. “Should I work for a marketing agency, start my own business, or freelance?” Cherkow’s uncertainty isn’t surprising. Students graduating this spring have watched as the number of people spending their career with one employer rapidly shrinks, and an increasing number of individuals have multiple careers in their lifetime. The Freelancers Union says that 34 percent of the U.S. workforce — 53 million Americans — are working as freelancers. With the rise of the “gig economy” short-term employment contracts will become more common. Workforce development serves both individuals and businesses with the objectives of: Preparing the workforce with the skills necessary to meet current and anticipated labor needs Supporting job retention and career advancement Connecting workers and employers in the labor market — International Economic Development Council For those in workforce development, this raises an interesting question: How can we prepare Alaskans for an ever-evolving world of work? Christi Bell, executive director for the UAA Business Enterprise Institute, says that higher education is already transforming to meet workforce and employer needs: “Some universities are focusing more on certificates and very targeted proofs of learning, and others are moving toward a ‘2+2+2’ model, which essentially means that students will come to university throughout their lifetime for ‘just in time learning’ — education that provides them with the knowledge, skills, and abilities needed for the exact point they are at in their careers.” For example, students could earn an electrician certificate, return in a few years to complete a bachelor degree in electrical engineering, and later enroll in a masters program for project management or sign up for specialized arctic engineering classes. Although this may seem to be a novel approach to career readiness and education, consultant and business advisor David Eisenberg says history is repeating itself: “Prior to the divestiture of AT&T (mandated in 1982), for example, workforce development provided by the Bell System was second-to-none in the technology sector. There was a highly-structured educational system within the Bell companies which coupled all manner of training — technical, supervisory, cultural, etc. — with specific experiential tracks to build the employee bench and future leadership. “It was well accepted that individuals with this sort of Bell System training were as well prepared for workplace advancement as university graduates at the time.” Preparedness for the workplace is a growing challenge for universities. “Hiring decisions are still made based on a degree, but we’re simultaneously hearing employers from all sectors tell us that they see a lack of ‘career-spanning’ skills from university graduates,” says Bell. Bill Popp, president and CEO of the Anchorage Economic Development Corp., agrees, noting that he often hears complaints from businesses regarding the lack of available qualified workforce. “It’s one of the biggest barriers cited in our business confidence survey,” he said. “Employers aren’t finding the skilled and professional workforce they want to hire. Quality of entry level workforce is also an issue.” Of survey respondents, 59 percent said that the availability of professional and technical workforce was a barrier to business growth Skill gaps include a combination of critical thinking, critical communication, problem identification and problem solving, and increasingly a range of interpersonal skills, sometimes called “soft skills.” This spans leadership, teamwork, and networking as well as timeliness, engaging with customers, and performing to one’s highest ability.  Bell says that although universities can encourage soft skills through class presentations, internships, and work preparedness seminars, the best way for students to obtain them is through applied work environments. She sees an opportunity for economic developers to bridge between universities and employers, explaining, “Universities are going to need to incorporate more interdisciplinary and experiential learning experiences into the traditional academic curriculum.” Economic developers are already making progress in this direction. In Anchorage, AEDC recently released the Internship Playbook to help companies establish and enhance internship programs through sharing best practices, foundational information, program structures, policies and procedures. Popp explains, “Internships can be an amazing asset for any size company, as well as any job seeker looking to get an edge in their search for employment. Done right, internship programs can be a great source of new talent both for the company and the community.” Students can also look to professional associations to grow their networks and their skills. The Alaska chapters of both the American Marketing Association and the Public Relations Society of America offer low cost student memberships and deeply discounted training opportunities, and the Anchorage Chamber of Commerce’s Young Professionals Group provides leadership and networking opportunities for Alaskans ages 21 to 39. Further, a group of professionals is exploring the launch of a Code School to train Alaskans in the basics of computer science, an increasingly sought-after area of knowledge. Internships and other training opportunities outside the classroom not only build critical skills, they also distinguish applicants during the hiring process. “I used to scan resumes looking for the ‘black sheep’ — someone with unique training and experience that stands out from the rest of the flock,” says Eisenberg. “My most valuable employees were those who had a variety of unusual experiences or interests or had taken what seemed to be a somewhat eccentric career path. They tended to demonstrate — through action — a willingness to take risks, make mid-course corrections (if necessary), and satisfy a thirst for continuous learning and self-development.” For qualified job seekers, there’s no shortage of job opportunities. According to AEDC, there were 31,000 jobs posted, representing more than 700 occupations at 4,800 employers during 2017 in Anchorage alone. Chertkow says that a combination of academic and service industry experience make her feel well-prepared for both graduate school and her future career. “My undergraduate research projects taught me project management, follow through, and team-collaboration while my jobs in retail and food service taught me customer service skills.” Gretchen Fauske is marketing-minded economic developer fueled by a passion for entrepreneurship, innovation, and small business. As the associate director for the University of Alaska Center for Economic Development she is responsible for leading the entrepreneurship, marketing, and outreach efforts of CED as well as providing strategic leadership for both CED and the UAA Business Enterprise Institute.

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