From bullets to beer

'Made in Juneau' points to new money for city's economy

Posted: Wednesday, February 20, 2002

Juneau manufacturers have banded together in an association they hope will encourage more diversity in the capital city's economy.

Most manufacturing in the United States is in the Middle West because of the ease of getting supplies and then shipping finished products to all points of the compass, said Lance Miller, executive director of the Juneau Economic Development Council. "You need a critical mass of manufacturing to get transportation going" from an isolated spot such as Juneau, Miller said.

The members of the year-old Juneau Manufacturers' Association include Juneau Truss, Taku Smokeries, Burford Concrete, Alaska Bullet Works, Boreal Controls, Architectural Cabinets & Millwork, Northern Keta Caviar, Alaska Seafood, and the Alaskan Brewing Co. All are creating products, some of which are value-added products, such as caviar, while others are made from scratch, such as bullets.

The Economic Development Council is helping the association get past barriers to success by making realistic business plans, marketing in sophisticated ways, and dealing with federal and state regulations.

"We're also steering them to funding on a case-by-case basis," Miller said.

Manufacturing makes up 2.1 percent of Juneau's economy, 4.1 percent of Alaska's and 12 percent of the U.S. economy.

"Growing the manufacturing base here will take us away from having a colonial economy dominated by state and federal government and tourism," Miller said.

A major thrust of the Juneau Manufacturers' Association is education - getting the word to the public, to consumers and to other firms that might relish hydropower and a view of the Chilkats, said Sandro Lane, owner of Taku Fisheries.

"Manufacturing is unique because it generates new dollars," Lane said. "Through exporting, I am getting yen from Japan and bringing them to Juneau and turning them into dollars. That is called 'new cash flow.' A shoe store, on the other hand, just recycles dollars already in the community. But we bring money in and replenish the well."

Juneau's top six manufacturers represent a payroll of $7.5 million, Lane said. "Manufacturing is often overlooked (as a factor in the economy) because it's not sexy, it's manual labor. But it helps to drive the well-being of the community."

Greg Smith of Boreal Controls is shipping automation controls to Montana and Oregon but not getting commensurate orders from Southeast users of water and sewer system controls, he said.

Innovation helps local manufacturers survive as they build markets. For example, Alaskan Brewing Co. had to deal with supplies of hops, malt and grain arriving and orders leaving on barges that couldn't dock in high winds and ferries that broke down. Another difficulty was acquiring carbon dioxide, used during brewing, and disposing of spent grain left over after brewing. Shipping containers of carbon dioxide by sea was expensive (about $100,000 a year), so the company devised its own carbon dioxide recovery system. It also installed a spent grain dryer so used grain could be shipped south at a lower cost.

Such innovation has helped Alaskan Brewing grow rapidly, from 1,600 barrels of Amber in 1987 to more than 82,200 barrels of five kinds of beer in 2001.

"We can't go head-to-head on a product that Seattle makes 10,000 of a day and we make 10 a year," said Don Burford, owner of Burford Concrete. "But Seattle keeps us honest. Manufacturing is basic to the infrastructure of the community as it grows."

Association members have two main concerns: Running out of land suitable for their use and variable tax incentives.

"We have brought up before the Assembly that they need to look at the availability of industrially zoned land," said Linda Thomas, chief operations officer of Alaskan Brewing. "For potential future growth, there is very little and residents need to be shielded from noise."

"Most of us have bought machinery with tax incentives in mind," said Bruce Haar, owner of Architectural Cabinets. "Now they're thinking about taking it away from us. The cost of labor is very high here, about 20 percent higher than Seattle, so our profit margin is narrow. A lot of incentive has been given to tourism in the past. Now the city needs to concentrate more on steady, year-round employment."

"We (manufacturers) are not a squeaky wheel, but tax concessions make it easier for new starts to get set up," said Carl Mielke of Alaska Bullet Works.

Juneau Assembly member Jim Powell pushed hard in 1996-97 for a tax break on business property to help exporting manufacturers. The resulting ordinance, equipped with a sunset clause, came up for discussion in November. It was adopted unanimously Nov. 19, giving manufacturers a sliding scale on water rates and property tax breaks based on number of employees.

"We had some disagreements along the way because some of us wanted to give them more," Powell said Tuesday. "There was heated discussion of whether this was a 'subsidy' or an 'incentive.' " The sunset clause was retained, so the ordinance will surface again in 2006.

Another goal of the association is to educate businesses Outside, as well, so that some will consider relocating. "Juneau has been a great place for small manufacturing, and we would like to promote that," said Thomas.

A statewide group, the Alaska Manufacturers' Association, was founded 18 months ago and has "very few formal members," said president David Arnsdorf. "We need some level of support from the Legislature, and membership organizations like the Juneau Manufacturers' Association are very helpful in explaining the issues." A project of the Alaska Manufacturers' Association is a Web site at www.alaskamfg.com that displays the capabilities and capacities of Alaska manufacturers. Listings are free.

Ann Chandonnet can be reached at achandonnet@juneauempire.com.



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