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By MIKE MCKENZIE

There’s an echo in the air… LABOR labor labor… AUTOMATION automation automation…. REGULATIONS regulations regulations…. OPTIMISM optimism optimism….

These subjects echoed throughout interviews and a survey conducted by Business Pulse to get a sense of how the Whatcom County business community is feeling about, anticipating, and planning for 2018.

In short, the economic forecast locally—as well as nationally—is GOOD good good. Though not without concerns. And not surprisingly, the same concerns, regardless of the business.

For this feature, we interviewed two leaders from each of seven industry sectors that typically foreshadow the overall economic and financial outcomes across the country, the state, and our region: Agriculture, Construction, Healthcare, Manufacturing, Maritime, Real Estate, and Technology,

Their conclusions: Business is very much alive and well here. No epitaph, just epitough, across the board. There’s no Easy Street. But they’re used to that. That’s not the avenue these highly successful business leaders traveled to get where they are.

They anticipate potholes and speed bumps. Yet, they know very well how to navigate them. One of the echoing issues, across the spectrum, was labor. First, it’s the highest cost of doing business. Second, it’s hard to find workers with the necessary skill sets.  And, third, some say there are those who don’t want to work at all.

Some of this is due to automation, such as computerization, robotics, drones, artificial intelligence, and even a driverless tractor was mentioned. Some is due to the cost of healthcare and other benefits. And some is due to lack of training, education, and desire.

And government business regulations, sometimes viewed as strangulating, cropped up in most conversations. Likewise, the cost of goods and services—in both business operations and consumerism.

Comments ranged from “we’re bullish” in Real Estate to “pessimistically optimistic” in Farming. Belief is strong that 2018 will continue on a positive economic path in Whatcom County, Washington State, and America. Read it and smile.


2018 Maritime

Colin Bornstein, President & CEO | Bornstein Seafoods

Reorganization in 2010 placed Colin Bornstein and his brothers, Kyle and Andrew, in the third generation of family management that their grandfather, Myer, started during the Great Depression in the early ’30s. Colin oversees a complex operation on Bellingham Bay that surpasses $70 million in annual sales and creates more than 300 jobs, in season.

In the coming year, we’ll see a lot of consolidation going on in our commercial-fishing and processing industry. In large part, that’s due to the declining availability of skilled labor, but technology helps ease the problem.

Contrary to some rumors, the ocean is very vibrant and full of fish. We’re a very regulated industry. For example, a national regulatory change that will have significant effects in the coming year and beyond is the permitting of ground fish for one-year management, instead of monthly or weekly, as in the past. Now companies like us can plan better and process more fish. We operate with different dynamics than most because we’re not just coastal from California to Alaska; we import and export product internationally.

The public doesn’t realize that 98% of the fish on the market in the U.S. comes from abroad.

That compares with 30-40% exported from the U.S. Our commercial fisheries want to increase the opportunity for consumers to buy domestic, but it’s hard to compete with the off-shore markets.

There’s a lot of negative publicity out there, but commercial fishing is alive and massive. Future harvests will thrive. For example, we’ve seen an increase of 800%-plus over the last 15 years, and those catches will continue to grow. We’ve gone from under $5 million a year in annual sales to more than $70 million. But good news doesn’t sell.

Skilled labor is a big issue, and automation is a huge part of our industry. Technology helps us in efficiency, yet we still employ 200 people seasonally for two to three months. Our auto-fillet machinery reduces the need from eight people on the line to one or two less-skilled workers.

A major reason for industry-wide optimism is the emphasis on healthy eating and the protein and Omega-3 oil in fish. As things evolve and change, all we want is fair competition. I always think it’s going to be exciting in our business every year, and I see good things coming. The economy is moving forward, we’re at the center of the protein movement in restaurants and at home, and the industry is vibrant and growing.

I’m an eternal optimist. I can’t wait for 2018.

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Matt Hardin, President/CEO | NW Diesel Power and Cardinal Yacht Sales 

The companies Matt Hardin founded operate on Bellingham Bay. He is the elected president of the board for the nonprofit community action group Whatcom Working Waterfronts Coalition. NW Diesel Power, a Volvo Penta-certified diesel-engine repair service in the marine market, was a finalist for WBA/Business Pulse Small Business of the Year two years ago.

I’m cautiously optimistic about 2018 because we have a more stable economy. Therefore, people want to go on with their lives and do more discretionary spending. For instance, pleasure boating has regained popularity.

Overall, it’s an under-developed market in all aspects of the marine industry, so there’s plenty of room for growth.”

In our sector, businesses are being more careful and thoughtful about growth. On the one hand, the pleasure-boat business was hit very hard, and customers didn’t rush back in during the downturn. On the other, the commercial-boat business did well during that time. In any market, diversification keeps you focused on key products.

Finding a talented labor pool is key here and across the U.S. Everybody wants people who want to work and who are excited about work. People talk about automation, but it’s still a relationship business. The Internet didn’t kill brick-and-mortar businesses. Trusted personal service still makes a difference. That’s how you solve problems and make people’s lives better.

The only major concern I have for 2018 is about the developments on our waterfront that are so vital to our greater community, as well as our water-dependent business and industry. We have a great opportunity for leadership to perceive and pursue growth there. The caution I feel concerns the knowledge-level of our leadership. I wonder whether the Port, the City, and the County leaders really understand the marine industry.

I’ve worked all over the world on boats, from big ocean liners to small recreational craft, and I can tell you that we have one of the greatest, untapped opportunities for growth here in the Great Northwest in our marine industry. I have fear about our amazing maritime resources getting managed by people who don’t boat or don’t otherwise use them.


2018 AGRICULTURE

Larry Stap, Co-Owner | Twin Brook Creamery

Larry and his wife, Debbie, represent a five-generation, 185-cow dairy that is more than 100 years old. Their son, Mike (operations), and daughter, Michelle Tolsma and her husband, Mark (farm), are partners…and the 6th generation is coming soon. Twin Brook recently won an award from Seattle Business Magazine for its seed farming. Larry Stap advocates for ag issues as president of Save Family Farming and of North Lynden WID (Watershed Improvement District).

A majority of good things are happening in our industry nationally. Unfortunately, there’s one big negative that could impact 2018 – lawsuits that already have cost farm operations across the state millions—filed by the Western Environmental Law Center in Eugene, Oregon—dealing primarily with the federal Clean-Water Act.

The big question is why are they suing us in Washington? Why not Oregon or Idaho? We’ve worked hard to implement laws to protect us against frivolous lawsuits designed to drain us. We depend on our agencies—the EPA (Environmental Protection Agency) and DOE (Dept. of Ecology— and countersuits to strike a balance against these special-interest environmental groups.

They sue, and you counter but, it might take a half-million dollars to defend, and then you settle for $300,000. It becomes legalized extortion. Left unchecked, this could drive most of us out of business.

Looking ahead, labor is the biggest issue. A big factor is living in a legal-marijuana state and operating a drug-free work place, with testing regimens. Safety is a main reason because we’re producing food for the public, we have truck drivers on the road…”

The good news, in our parts and across the country (Wisconsin, Pennsylvania, New Jersey) is that national advocacy is getting stronger. We in the ag business make a huge impact on the Whatcom County economy, and we’re getting the word out. National polls show that 70-to-80% of consumers trust farmers. We’re the number-two economic driver, behind aerospace, in Washington. And we just want to do our chores and make great products.

But we’re not one big organization, like a Boeing Company. We all have to do our part as individual farms. So the big thing in 2018 is to stay engaged and continue to talk to the public, like we have the last year and a half or so.

A major impact now and in coming years is the huge change in D.C. What a breath of fresh air with the new leadership in the Departments of Agriculture and Interior and the EPA. We have good new leadership in our region, too. And we don’t have to worry about feds in black SUVs with dark windows pulling up with warrants. Nasty stuff.

Looking ahead, labor is the biggest issue. It’s not as hard on a dairy as on food production, because that’s often seasonal. Both feel it, though, when the workforce is getting smaller and smaller. A big factor is living in a legal-marijuana state and operating a drug-free work place, with testing regimens. Safety is the main reason because we’re producing food for the public, we have truck drivers on the road, and so forth.

The cost of producing a gallon of milk continues to rise, so growth creates a steep curve. I don’t see ’18 as any better industrywide, but certainly not worse, either. Ag should hold the line. Automation and efficiency will help.

I think we’re typical of the industry in the area of automation. We put in $750,000 worth of robotic auto-milkers last year. Ours take human decisions out of the equation: the cows step up when they’re ready, instead of us having to herd them in to be milked. Automation, of course, replaces labor, which is about 23%t of operational costs. But then, when you make huge capital upgrades, it’s expensive to pay down the debt.

We’ve already seen auto-feeding and food scrapers in drive-through barns, and thus the elimination of tractors and blades and drivers for cleanup. All this contributes to environmental stewardship, too. I don’t know that we’ll see it this year, but we’re halfway there to driverless tractors. A lot of co-ops have them, with GPS attached that signals a turn at the end of a row in the field.

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Andy Enfield, Vice-President | Enfield Farms

Andy is one of three siblings in the second generation of management at Enfield Farms in Ferndale. It is one of the largest producers of raspberries and blueberries in the region, specializing in the highest-grade IQF (individually quick-frozen) berries, distributed internationally. Enfield Farms also owns the Northwest Plant Company, which produces raspberry and blackberry nursery stock. Andy serves on the charter board of directors of the Whatcom Business Alliance.

This year in agriculture we have tons of challenges, as usual–probably like any business. As a farmer you have to maintain optimism that every next season that you’re going to have a good crop. I’d say we always remain pessimistically optimistic.

I can’t speak for dairy, which is the largest agricultural business in the county, but one big trend in farming is automation. We invested a great deal in 2017 in automated technology—sorters, auto-handling of crates and flats, auto-dumpers, and auto-stackers. That serves two purposes: it increases efficiency with our processes and workers, and it helps keep people safer and food safer, with less handling. A large percentage of product is never touched by human hands, and the biggest food-safety issues typically come from human contamination.

In forecasting 2018, we’re paying attention to national industry trends, even though they might differ up here (in NW Washington) to some degree. Trade agreements in the berry industry vary from other agriculture.

Looking ahead, we see challenges in regulations, labor, and trade agreements. Regulators are going to do what they do. We’re fortunate to have a nice supply of labor, though that might be different in other areas of farming. We’ve invested to cover all the bases.

“In forecasting 2018, we’re paying attention to national industry trends, even though they might differ up here (in NW Washington) to some degree. Trade agreements in the berry industry vary from other agriculture. We see challenges in regulations, labor, and trade agreements.”

Markets look strong, but a strong dollar doesn’t typically help agriculture if you’re exporting. If the dollar in any country is strong, compared with other currency, importers will pay more than normal. But if you’re competing against a country where its dollar is running flat, foreign product sells more cheaply.

If you’re competing against international product that could be coming into the U.S., they can sell it at a better rate than buying with a strong dollar. An example is Japan, where the yen is strong compared to our dollar, we can compete, whereas somewhere like New Zealand or Canada where it’s weaker, importers can go buy from Chile better than here. Canadian farmers do really well when the U.S. dollar is strong.

We’re coming off an unusual 2017 in that the crop was good but markets were tough, especially the raspberry market. Right now, it’s going through some of its toughest times because of foreign competition. Also, there’s a huge supply of blueberries, with planters all over the world. Blueberries definitely aren’t what they’ve typically been because they’ve taken off in lot of countries worldwide. They’ve become popular because of a high percentage of nice, fresh product with great health benefits.


2018 Manufacturing

Ted Mischaikov, President & CEO | Healthy Pet

In 2011, former commercial fisherman Ted Mischaikov, while pursuing higher education in math, economics and finance, took the reins of Absorption Corp, a Ferndale company producing a pet-litter product. In 2014, he repurposed Absorption as a consumer packaged goods company and re-branded its products under the name of Healthy Pet®, a natural-fiber used in pet products like litter, bedding and food. Today, it’s a $50 million enterprise, employing 150 and distributing to more than 35,000 retail stores worldwide.

The year ahead looks good for manufacturing in general and for us in particular. We just had our best year ever, and we expect 2018 to be stronger yet. Our immediate problem is supply. Business has taken off like crazy. People love our products, and we can’t make enough fast enough.

Automation is a most significant trend in manufacturing. This year we’re going into automated packaging. We’re expanding our plant in Jesup, GA–a $9.3 million investment–and moving some of our proprietary pelleting process there, creating new jobs. We’ve invested more in growth for 2017-2018 than was originally invested in the entire company.

Other major issues are available labor, regulations, taxes, healthcare and environmental concerns. Right now, the most challenging issue is finding more great people. We work hard on recruiting and will continue to. We have a seriously good team. But Ferndale, in the perspective of the U.S., sits in a cul de sac. We’re relatively remote and hiring opportunities are fewer.

Ferndale, in the perspective of the U.S., sits in a cul de sac. We’re relatively remote, and opportunities are fewer.”

Nationally, we have a debacle around healthcare and taxes. We need the corporate income tax lowered to give small businesses more flexibility, which leads to innovation and resilience. I think all the politicians should be fired. It’s so ridiculous what’s going on at the federal level in Washington, D.C. So few are looking out for general Americans, instead of their own power-hungry special interests.

Business doesn’t like poorly thought-out things. We fundamentally strive for one thing: efficiency. We want the ability to make decisions to enhance efficiency, and government has made that more difficult.

And we need the opportunity for Joe Six Pack to buy a tool belt and a truck and go earn an income for his family. That possibility is almost extinct today. We need the biggest, happiest middle class to help this great nation survive.

We’re totally committed to all-natural products and good environmental practices. In chaos theory, it’s called sensitive dependency. It manifests itself in many ways: a safer and cleaner work environment, improvements in quality assurance, better measurement, more valuable work and better logistics.

It transcends industries, and the value is not easily quantified in these sorts of investments. But it’s neither political nor emotional. It’s common sense.

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Grace Borsari, President & CEO, Altair Advanced Industries (AAI)

Drew Zogby, President, Alpha Group

Michael Perica, Chief Financial Officer, Alpha Group

Grace Borsari co-founded the original Alpha Technologies that evolved into the multinational Alpha Group. Her own company, Altair Advanced Industries (AAI) manufactures all components for the entire global operation. Based near the entrance to Bellingham International Airport, Alpha is the No. 1 privately owned firm in this area, well on the way toward becoming a $1 billion enterprise and employing more than 1,600.

Grace Borsari: We have to plan well ahead In managing a global supply chain. Overall, our manufacturing looks good for the year ahead, although a bit seasonal in places.

Michael Perica: In our industry, our fourth quarter of 2017 was our best ever. We’ve experienced double-digit growth since the global economic crisis of oh-eight and oh-nine—the great recession. That’s probably indicative with all successful manufacturing companies.

Drew Zogby: One big thing, the technicians you hire today have a lot of skills that they didn’t have in the past. We’re seeing a higher level of literacy in the computer and electronic world. Even minimum skill sets are more advanced.

MP: We’re in a sector that if you don’t keep aware of national and global trends and continue to enhance your supply chain, you’ll lose competitive advantage. Supply chain management is one of our core competencies.

GB: (addressing turnaround time as a key element in forecasting): You’ve got to be on your game because timing is everything. Altair can book and ship an order on two weeks’ notice. Alpha owns its manufacturing facilities here, in Georgia, and in several countries now. They are extensions of what we do here to locally support customers abroad.

DZ: Local jurisdictions have to get on board. Otherwise, things can drag out in permitting. Time is the biggest asset in manufacturing…you have to be on time. We benefit from incentives when we add value locally. States in places like Brazil and India are pro-manufacturing, if you keep it in their country

MP: The biggest factors in forecasting the industry are wages and the cost of raw materials. The cost of making anything keeps going up. Fuel is a major part of that.  And if you’re international—in our case, we’re doing business in 80-plus countries—you have tariffs in and tariffs out. In business planning we have a 90-day manufacturing forecast, a 12-month global financial forecast, and a five-year strategic plan. With our forecasting and planning, we book and ship about 50% of our business in the same month. That’s with more than 1,000 unique items created with 30 weeks’ lead time. We’re managing our supply chain, and we do it very well.

•••

During a visit to the National Cable TV Center & Museum in Denver, Grace Borsari noticed a display of one of Alpha Technologies’ original backup batteries that she and business partner Fred Kaiser made to launch the business.

Something caught her eye when she looked closely. “I saw the red fingernail polish that I used to hold the chips in place on the circuit board,” Borsari said. “It was cheaper than the glue that you’d normally use.”

Kaiser would design the power sources and Borsari would assemble them in an apartment in British Columbia. “Two wooden sawhorses in a bedroom with a big French door spread across them—that was our first production plant. We saved every nickel possible because we didn’t know if it would be successful.”

Alpha Technologies grew out of that two-person operation in a crowded apartment into the

multinational, multifaceted Alpha Group, with facilities all around the world. Originally a supplier of backup battery power for cable-TV poles, AG now producing power solutions for the broadband, telecommunications, and renewable-energy sectors.


2018 Construction

Kevin DeVries, CEO  | Exxel Pacific

Kevin DeVries co-founded the company in 1989 as an offshoot of a previous development company. Concentrating on integrated design, pre-construction services, and general contracting, Exxel sits as No. 1 in Whatcom County construction at more than $300 million in annual revenue and 200-plus employees—the third-largest privately owned company in Whatcom County.

Projections for our 2018 pipeline are strong based on continuing work from last year. It’s different for every contractor, but very large jobs like we have sometimes take two or three years to queue up and get ready to start.

Looking forward, Seattle is ahead of the national trend in construction. Until a couple of years ago, everything was happening in Seattle. Now the work is pushing out to surrounding areas. We read reports and see that 5,000 cars a day are driving south to work, not because they love to drive but because of the lower cost of living in the outlying areas. The cost of living is still comparatively less in Bellingham and Whatcom County. Taxes are lower, and housing less than half of Seattle’s, even though wages are better.

In construction, it’s difficult for supply in Bellingham to keep up with demand. There’s a whole lot of interest up here in mixed-use projects and building affordable housing, but all projects face unique hurdles.

The regulatory topic is a huge factor in the industry….the impact that it has on the local and national levels. People don’t even realize how much cost goes into building a project. (Often) land cost to develop projects are less than the costs of permitting and entitlements. There are special challenges, too, like the cost of storm-water management.

We keep pushing the limits of what people can afford. It’s hard to make the budgets work as construction costs and labor have increased much more rapidly than many realize.” 

There are a lot of publicly-funded projects under construction now, a national trend. Like a growing demand for schools, for instance. As you build schools, taxes go up. We keep pushing the limits of what people can afford. It’s hard to make the budgets work, as construction costs and labor have increased much more rapidly than many realize.

Operating a construction company is not getting any easier. Just the costs of keeping on top of safety and all the regulatory requirements continue year after year and require sizable investments.

As with any private development in Bellingham or Whatcom County or elsewhere, the scope of a project depends on demand and the available cash and financing is required to make the project work. If the project is “skinny,” a contractor has to build a level of product that’s worked out for a number.

Construction is the only cost in a project that can be controlled via design and by lowering the cost of products used in the project. You never hear, “OK, we’ll lower costs of impact fees….” Many local developers with cash have worked very hard and want to invest in their communities for the long term. That is a different approach than your metropolitan developers who are looking to build a project, lease it up, and sell it.

WORK CULTURE LEADS EXXEL PACIFIC

All the good contractors are very busy with a lot of work. At Exxel Pacific we have similar challenges to other contractors in finding enough skilled-trades labor to handle the work. There are fewer and fewer people getting into the skilled trades.

The work pays very well but it’s hard work and early mornings. Continuing to grow and bringing along the right people who fit our culture and way of doing business becomes an increasing challenge.

Our work culture is that we want to create a very high-quality product for our owners that every employee can be proud of and enjoy doing it. We like what we do and we like working with the various people in the industry who are all part of a project team.

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 Jeremy Carroll, VP of Construction | Dawson Construction LLC

Jeremy Carroll joined Dawson about four years ago and he presently oversees about 20 projects. Pete Dawson is president and CEO of this three-generation family owned company that’s done business regionally for 59 years. It’s the second-largest private contractor in the county ($130 million, 250 employees)

There’s a good business climate right now in the county and nationally–and good reasons to be optimistic.

I’d say that 2017 was a crazy-hot year for the construction market in Whatcom County, because all the school districts in Bellingham and the county had several schools under construction. There also was a lot of multifamily housing construction that put a real strain on manpower.

But the labor shortage is better up here at the moment.

We’re still impacted up here by what’s going on in Seattle. A lot of tradesmen and resources get pulled down into that market. They work for contractors who are based in Whatcom County but do a lot of their work down there. That goes the other way, too. During slower times, we’ll all get workers from north of Seattle, like Snohomish County, who want to come up here and work.

“Industrywide there’s a shortage of labor. After the last recession, which began in 2007, a lot of tradespeople left the workforce or the industry entirely and didn’t come back. As building picked back up, we’ve all experienced a real shortage of manpower and it put a strain on the overall labor market.”

By the nature of where we work, geographically, (contractors) have to build a diverse portfolio of projects: a school, a bank, a student residence, multifamily housing, or something like (Dawson’s) bridge renovation in Ketchican or a water-treatment plant. We don’t specialize in a particular type of project.

Most companies in the area have been growing over the last five years. The Alaska market has been in a recession the last couple of years. At Dawson, we haven’t put a heavy focus on growth, though we continue to grow steadily.

[On regulations:] The nature of our business and the regulatory considerations, like fees, are not any different than anyone else’s.

So, 2018 probably will level off in this market. We had the big surge this year, now it’s about even with pre-2017, maybe even slightly lower.

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2018 Real Estate

Troy Muljat, Owner | The Muljat Group 

One year ago Troy Muljat took ownership of the 30-year-old company from his founding father, Frank. The group has about 60 agents in Bellingham and Lynden. Troy also co-owns tech companies Big Fresh, Tech Help, and RealLaunch.com, plus Landmark Real Estate Management, and Signature Maintenance. Troy analyzes and compiles statistics regularly on all markets—residential, rental, and commercial.

The big story this year is the residential sector. Inventory sits at historically low levels. Americans continue to move to the West Coast big cities, and Seattle is No. 3 nationally for growth. Overall, it’s a very good time to sell a house.

The rise of double-digit appreciation is not sustainable. It has to pause and soften up the supply as we see more and more housing construction. With low interest rates, you can borrow more. Growth of our business is slowing 10-12 percent, and sales are slower as well, though not drastically. We’re not in a bubble, but it’s not sustainable.

In our region we have about 270 homes on the market. That’s a healthy 1-to-3 month supply. We ended the year with a record $400,000 median house price in Bellingham and below six months in selling turnaround-time from listing in an expensive market. That’s a good sign going forward.

In residential, the rise of double-digit appreciation is not sustainable. It has to pause and soften up. Commercial is an entirely different picture. There’s some synergy, but there’s more inventory than we need, nationally and locally.”

Commercial is an entirely different picture. There are four segments: multi-family, industrial, retail, and office space. There’s some synergy, but there’s more inventory than we need, nationally and locally.

We have a lot of old retail space. With a 1-to-2% vacancy rate, it creates a credit crisis. The question becomes, “How do K-Mart and JC Penney and Sears stay in business?” They either have to invest or go under.

I anticipate a stable real estate market this year – no upswing, and no downswing – after a solid last five years. Industrial and multi-family housing are booming with very strong growth. Office is strengthening, too. Lack of supply is the problem.

Especially up here in the Northwest.

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Dan Washburn, Owner | Windermere Real Estate/Whatcom

Dan and Sharon Washburn were among the migrators here from Seattle when they bought the Bellingham and Whatcom County franchise in 1995 “to move away from the urban traffic and life style and settle with family,” Dan said. Windermere, which had 25 agents at that time, has grown into the largest agency in this area, with five locations and more than 160 independent agents.

We’re bullish on 2018. The economy is a big reason, both on the national level as well as locally. Nationally, we’re encouraged and bolstered by the national GDP (gross domestic product) reaching 3% for the first time in eight years. And also, the new tax reform is driving the stock market. We’re expecting the creation of jobs nationwide.

Regionally, we’re encouraged by the Seattle boom. It’s a result of the Amazon and Microsoft technology corridor increasing job opportunities, along with aerospace. Boeing had its stock basically double from around $150 to nearly $300 a share in just the last year, another indicator of how strong the Seattle market is.

“People from Seattle are buying homes up here for cash. Because of the difference in the average price ($650,000 in Seattle vs. $350,000 in Bellingham) they sell and use their equity to buy for cash and enjoy the quality of life in a more affordable area.”

An interesting trend is the number of people moving north. They either want to get out of the traffic congestion, or they want to enjoy the quality of life up here, where it’s less expensive to live. The average price of a home in Seattle is $650,000, and in Bellingham it’s around $350,000. We’ve sold a lot of homes for cash to people moving here from Seattle.

Because of the huge difference in prices, they can sell their homes down there and have enough equity to pay cash for one up here. Some are retirees, others are just seeking quality of life and affordability, and a good number of them move here and commute. We may be seeing more of those sales than others because of our connection with Windermere in Seattle.

Another trend, heading into the new year, is the construction of more apartments, rather than condos, as in the past. That’s caused by the high level of litigation tying up condo developments due to stiff regulations.

Locally, construction is moving more and more north of Bellingham, and Ferndale seems to be where it’s happening most.  That’s why we expanded into Ferndale to start this year. The construction of between 1,300 and 1,400 new homes is anticipated there over the next 4-to-6 years. We’ll have 20 agents there dealing in both commercial and residential real estate, and the agency will center on accommodating small- to medium-sized builders.

That puts us at five locations, plus a mall kiosk, with about 160 agents. And we’ll be adding more. So, nationally and locally, and buoyed by the move into Ferndale, we’re definitely bullish on 2018.


2018 Technology

Bob Pritchett, President/CEO | Faithlife

Originally known as Logos Bible Software, Faithlife, the internationally-renowned software development company that Pritchett founded, has grown to one of the largest privately owned companies in the region with about 300 employees and more than $50 million in sales. Pritchett was WBA/Business Pulse Business Person of the Year for 2012.

I’m not directly involved in implementing new technologies, but I do track what’s developing in the industry in terms of what affects us and what the big trends are.

Among the major trends to look for in 2018 are artificial intelligence (AI) and what is referred to as deep learning. They are dramatically changing what technology does. [Editor’s Note: Deep learning, a.k.a. deep structured learning, is part of a broader family of machine-learning research and methods based on learning data representations, as opposed to task-specific algorithms (“shallow learning”) moving toward AI.]

“The concept of AI has been understood for some time, but we’re just now growing the capacity for it….we have the equipment, data and computing power to solve the code.”

We’re involved in a publishing function and building courses for people around the world. AI and other advancements are likely to come into play in deep learning that will affect us in coming years, if not this year.

The software industry is driven by computation power. We have the algorithms now and large enough capacity of data and computing power to overcome some of the past challenges of coding (software development). The concept of AI has been understood for some time, but we’re just now growing the capacity for it within the industry.

Around 75 of our employees—about one-fourth—are in specifically technical positions….(and) we have been doing various experiments with AI technologies. For example, we’re still figuring out how it will affect our work in analyzing ancient texts. Some analyses probably will become more advanced.

We’ve brought in scholars who are subject-matter experts, and they deal with a relatively small collection of written texts and tag them by hand. We may be able to feed that hand-tagged data to deep-learning algorithms and have it tag other databases.

Also, in software development we’re experimenting with conversational interface. You can ask a question in English and get a response in English. You’ve been able to navigate our user interface with a mouse and ask our software questions about the Bible. Now we’re experimenting with making that interface like using Siri on an iPhone, where you’d have a choice of using the icons or simply asking the computer what you want and it will find it.

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Ed O’Neill, Executive Director/Technology | Emergency Reporting

I’ve anointed 2018 as the Year of the Fastball Strategy, where you have to get your pitch over the plate quickly before your competitors can even take a swing. It’s an industry trend.

Companies in technology are working harder to integrate with other systems by using the internet of things where everything is connected. This allows you to move fast and extend your reach to billions of connected devices.

Impacting this year, you’ll see advances in things like drones, robotics, and in our specialty niche of emergency reporting we might soon have a self-driving fire truck. Uber, as we know, has self-driving cars. They’re all dependent on other sources and things affecting them, such as traffic and road and weather conditions.

We want to do things we don’t understand. So we rely on integration of information, on connectedness, to harvest capabilities and possibilities.

High tech is a very competitive field. You’ll see more consolidation and merger activity. It’s becoming survival of the biggest. Often, the first to market wins—like Uber and Amazon. But with scale and connectivity, mid-tier companies can go toe-to-toe—you no longer have to be an Oracle or Microsoft to win the game.”

To survive in a software business, there are just three choices: One, raise capital; two, take on partners; or three, get acquired. High tech is a very competitive, very mature field. You’ll see more consolidation and merger activity. It’s becoming survival of the biggest. Often, the first to market is the winner—like Uber and Amazon. But with scale and connectivity, mid-tier companies can go toe-to-toe with much larger ones—you no longer have to be an Oracle or Microsoft to win the game.

Because of Seattle, the silicon center of the Northwest, there’s a high demand for technical skills. Locally, we have to compete hard to find people with those skills. Where all things are equal in wages and benefits, we’ve narrowed the gap. We can win on better quality of life and a little more affordable housing. But some still want urban; it’s a matter of city strokes for city folks.

At Emergency Reporting we forecast 2-to-5 years out, and we have to remain agile in the process of efficient software development. It’s all part of the Fastball Strategy.


2018 Healthcare

James Hopper, Chief Medical Officer | Family Care Network

Dr. Hopper, a graduate of University of Washington Medical School, has been with FCN since its inception (1999). He manages a private practice half-time, Bellingham Bay Family Medicine in Bellingham (est. 2011). FCN is a physician-owned LLC, comprising 66 members. They operate 12 clinics in Bellingham, and Whatcom and Skagit Counties. The company ranks in upper one-third of the Business Pulse Top 100 privately-owned companies in Whatcom County ($40+ million in revenues, 423 employees). Dr. Marcy Hipskind is CEO.

As for 2018, I’m optimistic. We always are. We wouldn’t be in this business if we weren’t. There’s always something I can do for patients I’m seeing, and I believe that the coming year will be better than the last. Reality may become something different.

As healthcare organizers, we welcomed the ACA in March 2010 because it provided insurance for lot of patients. We had several who had lost their job, lost their insurance, and previously we could no longer see in a way they needed. We were limited by their poverty status. Our number of such otherwise uninsured patients increased from under 4,000 to about 11,000….pretty much overnight. It was beneficial.

On the other side, as a business we’re trying to insure our own employees and provide something for their families. Our choices are not sold on the (ACA) exchange programs. Costs are going up as uncertainty grows over the ACA potentially going away.

“After the Affordable Care Act became law, “…otherwise uninsured patients increased from under 4,000 to about 11,000 in a year….if the ACA is repealed, it will shift costs to people with insurance, and insurers will end up having their medical-loss ratio worsen and so they will raise premiums.”

Our model is unique—independent group practice in which our doctors own their practice. Nationally and regionally we see groups like ours throwing in the towel. Merger is the rule. Hospital systems are buying up many independent operations.

Costs go up every year for staffing, largely because of salaries and benefits. We’re limited in increasing what we can charge, based on contracts with the government and insurers. We’re also limited in ramping up income while expense goes up.

Most common medicines have relatively lower costs. But the overall cost of medications is going up dramatically. In particular, specialty prescriptions, such as immune-modulating and oncology drugs. Providers have opportunities to match prices; it’s not regular free-market conflict.

HOPPER’S PRACTICE FEATURED IN NBC-TV NEWS REPORT

Family Care Network partnered with local nonprofit Recreation Northwest to pilot their Parkscriptions program at Bellingham Bay Family Medicine. NBC News included it in a recent story about “ecotherapy,” prescribing time outdoors to treat health conditions. The local Parkscriptions program was modeled after the ParkRx program developed by Dr. Robert Zarr in Washington, D.C. The piece aired on NBC Nightly News on Nov.  26 and can be viewed on its website by by clicking the link here.

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 Dale Zender, Chief Executive of Hospital Services | PeaceHealth Northwest Network

Zender oversees hospital operations at St. Joseph Medical Center in Bellingham, United General in Sedro-Woolley, Peace Island in Friday Harbor on San Juan Island and Ketchikan Medical Center in Alaska. His educational background in business and economics includes an MBA and a CPA certification.

The last presidential election has created uncertainty in the healthcare environment. Regardless, PeaceHealth is unwavering in its commitment to the overall well-being of our community.

Technology has advanced so that more and more care can be provided safely without a hospital stay….e.g.,robotic surgery for several procedures, and refined surgical techniques for a number of orthopedic procedures.”

No matter what happens with national healthcare policy, we will shape our own future by working closely with community partners, as well as state and national associations and elected officials.

Healthcare continues to transform from a hospital-based model to an outpatient-based model. Technology has advanced so that more and more care can be provided safely without a hospital stay. Examples would be the use of robotic surgery for several procedures, and refined surgical techniques for a number of orthopedic procedures.

In some cases, healthcare practices can take place at a clinic or office located in a non-traditional setting, such as a mall or other commercial setting. The cost of care will continue to drive strategy throughout the industry, as consumers demand greater price transparency and value.

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