The Great White North: Doing business in Alaska

BCS one of many local companies looking to boost its business in the 49th State

by Dave Gallagher
    For more than a century, Bellingham businesses have been able to find opportunities in the vast wilderness of Alaska, and one local company is hopeful that a project it is considering will help local businesses create even closer ties to Alaska communities.
    Bellingham Cold Storage is considering the idea of building a container-barge facility that would create more direct access for many Bellingham goods to Alaska. A container-barge facility would only handle the flat barges that travel up and down the coast; container ships would continue to travel to larger port locations, such as Seattle or Tacoma.
The project is only in the early stages of public hearings, but it looks promising, said Doug Thomas, president of BCS. If the company does decide to move forward with the project and there are no major permitting issues, it could be ready by the spring of 2006.
    “In our research, it appears there is enough demand to make the project worthwhile,” Thomas said. “It would also be a benefit to the community by taking some of these trucks off the freeway. At present, many Bellingham goods that go to Alaska are shipped by truck down to Seattle, put on a barge, then shipped to Alaska. If this project does goes forward, it will not only save local businesses time and money, but it will make a dent in our traffic problems going into Seattle.”
    Thomas estimated that 6,500 one-way truck trips would be taken off the freeway each year, and products coming from Alaska could reach Bellingham 10 hours sooner.

Containerized cargo barges could soon be departing from the Bellingham waterfront if BCS goes through with a project to build a cargo facility here.

    A new container-barge facility could be a big help for a Bellingham community that is already well-represented in Alaska. Throughout most of Bellingham’s history, the only significant industry tying the two states together has been commercial fishing, with boats bringing their catch into Bellingham and processing the fish through canneries and fish-processing plants. While commercial fishing has less of an impact today on the local economy than it used to, it still plays an important role. At BCS, seafood is 60 percent of the company’s total business, and 85 percent of that seafood comes from Alaska.
    However, in the past two decades the ties between Alaska and Bellingham have become more diversified. Along with seafood, petroleum, construction, engineering, consulting and retail goods now play large roles in the relationship between Alaska and Bellingham.
    The list of Bellingham companies that do business in Alaska is long and diverse, including BCS, Lynden Transport Inc., Bornstein Seafoods, BP, ConocoPhillips, Dawson Construction, North Coast Electric, Great Western Lumber, St. Joseph Hospital, Shoreside Construction, Anvil, Wilson Engineering, Wilder Construction, Mustang Survival, Strider Construction, Northern Economics Inc. and Samson Rope.
    “I would say Bellingham is well represented in Alaska, and it’s important to keep that relationship strong,” Thomas said.
    Developing business relationships is something the entire Puget Sound is actively doing, and the impact has been growing significantly. In September, the Greater Seattle Chamber of Commerce and the Tacoma-Pierce County Chamber of Commerce issued a report titled “Ties that Bind,” focusing on the economic impact Alaska has on communities between Bellingham and Tacoma. The findings show an impressive amount of growth since the last study in 1994:

— Between 1994 and 2003, exports from the Puget Sound to Alaska rose from $2.39 billion to $3.77 billion.
— More than 103,000 jobs in the Puget Sound region are either directly or indirectly related to Alaska. That is up from 90,098 in 1994 and 56,973 in 1985. Between 1994 and 2003, an average of more than 1,000 jobs a year were added to the Puget Sound economy as a result of the area’s ties to Alaska.

Tough road
    A business in Bellingham doing work in Alaska faces several challenges, however. Along with the problem of having to ship goods and equipment to Alaska via Seattle, there are no direct flights to Alaska from Bellingham. The Port of Bellingham has been looking at that issue for years, but airlines aren’t convinced there is enough demand to make it a money-making venture.
    “We just don’t have enough people making regular trips from Alaska to Bellingham,” said Carolyn Casey of the port.
    The weather is also a challenge. Construction companies and engineering firms have to time projects around the winter weather, which, of course, can get quite nasty.
    “You don’t want to go through the travel logistics and expense of sending people and equipment up there and then finding out they can’t do anything when they get there because of the weather,” said Margaret Curtis, a partner at Wilson Engineering.
    Wilson Engineering has an ongoing water and sewage contract with the city of Wrangell, located in southeastern Alaska. Curtis said the challenges of travel and weather have been reduced as people are relying on e-mails to solve problems, whether it is talking through a situation or sending engineering plans back and forth.
    “Bidding on that contract was very competitive, but it has been a productive part of our business and helpful for the city of Wrangell,” Curtis said.
    The distance between Bellingham and Alaska also makes networking more challenging for businesses. Pat Hudgens, general manager at VECO’s Bellingham office, said it was difficult to get a foot in the door when it came to working with the petroleum industry.
    “There are only a few large players in the Alaska oil industry, so developing a relationship with those large companies can be difficult, especially if they can find someone in Alaska who does what you do,” Hudgens said.
Hudgens joined the Bellingham office in 1989 when it was known as Christiansen Engineering. The company was bought by VECO in 1993 and currently has more than 200 employees. VECO is headquartered in Anchorage, and, along with local projects, the Bellingham office supplements the Anchorage office when they need extra help or equipment.
    VECO has also been making strides in solving the traveling issues. Hudgens said they are currently implementing electronic tools that will make it possible for a project team in Alaska to work with a project team in Bellingham at the same time.
    Bellingham also has the advantage of having a terminal for the Alaska Ferry, one of the few runs on the Alaska Marine Highway System making a profit. By adding a second run during the winter months in 2004, the Bellingham Cruise Terminal had 16,809 outgoing passengers and 14,015 incoming passengers, up significantly from previous years.
    That regular flow of traffic has been a nice shot in the arm economically for Fairhaven, which offers a variety of shops that cater to both the Alaskan tourist departing on the ferry and Alaska residents who want to come down to the lower 48 to do some shopping.

Getting a foot in the door
    Landing a contract in Alaska can be a difficult process, because Bellingham companies are usually competing with firms from Alaska and Seattle.
    Strider Construction entered the Alaska market in 2004, when President Jim Gebhardt said the company had grown to a point that they thought they were ready to make the move.
    “As we continued to grow, we started to get a bigger appetite as a company. We had to look beyond this area or stop growing,” said Gebhardt, after the company won its first Alaska contract – A $10.89 million contract to remodel the Cordova Ferry Terminal in southern Alaska – at the end of 2004.
    Gebhardt said the company took its time trying to find a good first project in Alaska before making a bid.
    “When you are entering into a different territory for the first time, the risk factors go up considerably,” Gebhardt said. “Suddenly you’re dealing with subcontractors and suppliers you’ve never worked with before. We wanted our first project to be one where you can minimize that risk, so we did a lot of research before deciding on this Cordova project.”
    Curtis said Wilson Engineering saw a bid proposal for the city of Wrangell in a Seattle newspaper, and decided to apply.
    “It was a very competitive process, but things just clicked. We were the right size firm for the job,” Curtis said.
    The number of business opportunities in Alaska is expected to grow in the coming years because of two major projects: The construction of a natural gas pipeline, which could get under way next year, and the potential oil drilling in the Alaska National Wildlife Refuge, which recently received the backing of the U.S. Senate.
    “There will be a tremendous amount of opportunity for companies that do business in Alaska in the next few years,” Hudgens said. “There is going to be a need for a lot of equipment, expertise and basic items if these projects get going. Those involved in these projects will have to look outside of Alaska to get what they need.”


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