Doug Ward can look outside the windows of half his building and see the Coast Guard base, with all its ships that need regular repairs and maintenance.
As the director of shipyard development at the Alaska Ship and Dry Dock in Ketchikan, Ward gets steamed knowing that Outside contractors for years have had the contract to do that maintenance and repairs on those ships. The work could have been given to Ketchikan residents, he said.
"The Ketchikan shipyard was built to provide marine support to vessels in Alaska," he said. "Seeing Outside contractors come in and do this work when we have a shipyard right here was a good indication of a flaw in a Small Business Administration rule."
Those Outsiders had only one advantage: they were HUB Zone certified under the guidelines of the Small Business Administration while no company in Ketchikan had the certification. Another flaw in the rule, Ward said, was that all of Southeast Alaska, except Ketchikan, was considered a HUB Zone.
Historically underutilized business zones, or HUB Zones, are formed to help small businesses create jobs in economically distressed communities. The federal program, created in 1997, was designed to make it easier for companies in poorer areas to gain access to federal contracts.
Companies in designated zones must get certified through the SBA to have access to sole-source contracts and get a preference in competitive awards. This year, the national HUB Zone contracting goal is 3 percent of the overall prime contracting. That totals about $6 billion.
Virtually all of Alaska is considered a HUB Zone, excluding most of the neighborhoods of Anchorage, Fairbanks and Juneau. The state has about 240 HUB-certified businesses. All federally recognized Alaska Native and American Indian lands also qualify.
Ward joined with officials from the local chamber of commerce, the city and the borough to work with Sen. Lisa Murkowski to change how the HUB determination is made. Changes in the rule were included in an Omnibus Bill late last year.
The biggest rule that was keeping Ketchikan out of the zone under the old language was that its unemployment rate was too high. To qualify to be a HUB Zone under the old rules, a community had to show that its unemployment rate is at least 140 percent of the state's average rate.
"We'd be devastated if we were to meet the state requirements," Ward said.
Ketchikan has a struggling economy based largely on timber and fishing. In 1996, the borough lost its largest employer when a pulp mill shut down. Hundreds of Ketchikan workers were out of a job.
Still, the area didn't meet the requirement that year, according to a 2002 study by a University of Alaska Southeast economist. The state's unemployment rate in 1996 was 7.8 percent, compared to Ketchikan's 8.7 percent. That's only 111 percent.
In 2001, Ketchikan's unemployment rate was 7.7 percent compared to the state's 6.3 percent, or 122 percent of the state rate, the report said.
The state's rate decreased because the increase in the number of employed exceeded the increase in the labor force, the report said. But Ketchikan's rate decreased because the labor force decreased more than the decrease in the number of employed.
When Ketchikan residents found themselves out of work, they didn't stay around town long enough to fully collect their unemployment benefits. They moved. The report said the borough's population dropped 5.4 percent from 1995 to 1999. Nearly 14 percent of adults aged 25 to 44 left.
The state and the SBA counts unemployment by the number of people collecting unemployment insurance, and the place where they collect that gets credited.
"But in Ketchikan, people weren't staying until their benefits ran out, they'd leave to find a job, and students didn't come back," Ward said. "For Ketchikan to be qualified as a HUB Zone, our unemployment rate would had to have been astronomical compared to the state."
The old rule of qualification, to be within 140 percent of the state rate, was changed under the new language to allow communities to choose to compare their jobless rate with the national unemployment rate.
In December, the Alaska unemployment rate was at 7.6 percent, while the national rate was 5.1. The Ketchikan Borough's rate was 9.8 percent, enough to qualify. The SBA named Ketchikan an official HUB Zone on Jan. 22.
Just after the SBA announced that Ketchikan is a HUB Zone, Ward began the process to get the Alaska Ship and Dry Dock certified. A few other businesses around town were also starting the process, Ward said.
The chamber of commerce, of which Ward serves as chairman, plans to offer local businesses workshops on the certification process.
