Legislature(1999 - 2000)
02/29/2000 05:11 PM House WTR
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HOUSE SPECIAL COMMITTEE ON WORLD TRADE
AND STATE/FEDERAL RELATIONS
February 29, 2000
5:11 p.m.
MEMBERS PRESENT
Representative Ramona Barnes, Chair
Representative John Cowdery, Vice Chair
Representative Beverly Masek
Representative Joe Green
Representative Ethan Berkowitz
Representative Reggie Joule
MEMBERS ABSENT
Representative Gail Phillips
SENATE MEMBERS PRESENT
Senator Loren Leman
COMMITTEE CALENDAR
PRESENTATION: Alaska Seafood International
HOUSE JOINT RESOLUTION NO. 51, Expressing support for a
cooperative United States-Canada feasibility study on extending
the North American railroad system through British Columbia and
the Yukon Territory to Alaska.
- MOVED HJR 51 OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HJR 51
SHORT TITLE: ALASKA-CANADA RAIL FEASIBILITY STUDY
Jrn-Date Jrn-Page Action
1/31/00 2045 (H) READ THE FIRST TIME - REFERRALS
1/31/00 2045 (H) WTR, TRA
2/02/00 2075 (H) COSPONSOR(S): WHITAKER, FOSTER, MASEK
2/04/00 2103 (H) COSPONSOR(S): KOTT, COGHILL, DAVIES
2/09/00 2155 (H) COSPONSOR(S): CROFT, MURKOWSKI,
HUDSON
2/09/00 2155 (H) THERRIAULT
2/18/00 2238 (H) COSPONSOR(S): OGAN
2/23/00 2288 (H) COSPONSOR(S): AUSTERMAN
2/28/00 2344 (H) COSPONSOR(S): KEMPLEN
2/29/00 (H) WTR AT 5:00 PM CAPITOL 124
WITNESS REGISTER
HOWARD BENEDICT, Chairman
Alaska Seafood International (ASI)
1007 West Third Avenue
Anchorage, Alaska
POSITION STATEMENT: Presented information on ASI.
REPRESENTATIVE JEANNETTE JAMES
Alaska State Legislature
Capitol Building, Room 102
Juneau, Alaska 99801
POSITION STATEMENT: Sponsor of HJR 51.
BILL BROPHY, Executive Director
Fairbanks Industrial Development Corporation
515 Seventh Avenue, Suite 320
Fairbanks, Alaska 99712,
POSITION STATEMENT: Spoke in favor of HJR 51.
ACTION NARRATIVE
TAPE 00-4, SIDE A
Number 0001
CHAIR RAMONA BARNES called the House Special Committee on World
Trade and State/Federal Relations meeting to order at 5:11 p.m.
Members present at the call to order were Representatives Barnes,
Cowdery, Masek, Green, Berkowitz and Joule.
PRESENTATION: Alaska Seafood International
Number 0077
CHAIR BARNES introduced Howard Benedict, Chairman of Alaska
Seafood International.
HOWARD BENEDICT, Chairman, Alaska Seafood International (ASI),
began by distributing pictures of the new ASI plant in
Anchorage. He said it had been built at a cost of $125 million,
$50 million of which had been provided by the legislature. The
new facility is the largest seafood plant in the United States,
and the most technologically advanced seafood processing plant in
the world.
Number 0433
MR. BENEDICT explained that unlike a primary processor who takes
a fresh fish, removes the head, cleans out the belly, and sends a
whole fish to market, ASI does value-added processing, packaging
seafood so that it is ready to cook and eat. Mr. Benedict said
people today want seafood already portioned and coated or
marinated. Therefore, ASI's goal is to make seafood as easy to
cook as a hamburger or hot dog.
MR. BENEDICT said that when the chicken industry learned to put
its product into manageable amounts, with exact cooking
instructions and sauces and coatings, the industry took off; the
average American now eats 76 pounds of chicken each year. By
contrast, that average consumer eats only about 15 pounds of
fish. Thus ASI intends to do the same thing with fish as was
done with chicken, and it is well on the way to doing it.
Number 0650
MR. BENEDICT described the plant, which has almost seven acres
under its roof. Production began in January, and ASI now has 120
employees. At full production, at the end of next year, it will
employ about 450 people year-round. Behind that are another 750
jobs in rural Alaska harvesting the fish.
MR. BENEDICT said the plant ultimately will have eight production
lines. Already operating is the fresh seafood department, with
three lines for salmon/cod, halibut and flatfish. Those three
lines together will produce 25 million pounds of fish a year. He
said ASI now is adding a frozen seafood department. Its lines
will produce formed portions, breaded seafood, soups and
chowders. When finished in 2001, it will bring the plant's total
employment to 450. Mr. Benedict reported especially strong
demand for entrees, restaurant-sized portions with seasonings and
sauces, ready for the oven and ready to serve in five minutes.
Number 1111
MR. BENEDICT explained that ASI has invested very heavily in
research and development, creating 250 unique seafood products,
all easy to prepare. Major goals are to make Alaskan seafood
taste as good Outside as it does in Alaska, and to accommodate
the industry with value-added processing that makes seafood easy
to cook. Thus ASI development has intentionally concentrated on
the fish hardest for Alaskans to sell, the pink and chum salmon,
because Alaska has a surplus of them. The ASI salmon burger,
made of pink salmon, has been judged better tasting than all of
its competition.
Number 1280
REPRESENTATIVE JOULE asked where ASI is getting its chum salmon.
He recommended fall chums from the Yukon and Kotzebue Sound.
MR. BENEDICT said ASI is trying to buy quality seafood from all
over Alaska.
Number 1360
MR. BENEDICT described some of the things the ASI microbiology
lab is developing to help fishermen. One is an additive to ice
that will enable fishermen to stay out twice as long and still
bring in a very high-quality product. He said ASI is sending its
quality control people out to all the processing plants from
which it buys, providing education to help them produce a better
product that can command a higher price. The company also is
encouraging processors to operate in the winter, guaranteeing to
buy 100 percent of their winter production. Mr. Benedict said
that means more year-round jobs for Alaskans and better prices
for the fish.
Number 1579
MR. BENEDICT then asked to speak very frankly to the committee.
He said he should not have had to spend 13 years putting together
the ASI operation. The problem, he said, was that there was no
money. The legislature tries to solve its budget problem by
cutting expenditures, but it often neglects looking at ways to
increase revenues. The state does very little to encourage new
businesses that would create new jobs. He credited the Alaska
Development Association (ADA), the legislature and Chair Barnes
with making a critical difference in his venture.
Number 1840
MR. BENEDICT made it clear that he was not advocating setting up
a bureaucracy, another state agency. But he urged the
legislators to set up a fund of about $100 million to help
finance new business ventures. If he had had that, the ASI plant
would have been running for seven years. This state has no
shortage of good people with good ideas, he said, but they can't
find financing for the early stages of a project like ASI. He
advocated creating a fund and enlisting two or three venture-
capital groups in the Lower 48, as does the Permanent Fund Board,
to help raise money.
Number 2006
MR. BENEDICT emphasized that Alaska is shipping out logs when it
should be shipping out plywood. And it ships out crude oil when
the state ought to have a petrochemical industry.
REPRESENTATIVE JOULE asked if ASI would be in a position to
consider not only fish from the sea, but also fish from the
state's river systems.
MR. BENEDICT said yes. He added, "Our job, as we see it, is to
enhance any good fish we can get in Alaska."
[There was discussion of specialty markets for whitefish,
sheefish and pike.]
Number 2270
REPRESENTATIVE COWDERY asked whether ASI still was concentrating
on selling its fish within the United States.
MR. BENEDICT said plans call for concentrating on the domestic
market for the first two years, then looking overseas. The
Pacific Rim is a most attractive market, since it represents 32
times the U.S. market.
REPRESENTATIVE COWDERY asked about the nature of the U.S. market
that ASI has now.
MR. BENEDICT said it appears that two-thirds of sales will be to
food service (restaurants), and about one-third will be to retail
supermarkets. One surprise ASI has found is that buyers want
consistent supply year-round, not just seasonally, which will
take up all their frozen capacity very quickly; ASI may want to
double its freezer capacity to 64 million pounds.
REPRESENTATIVE COWDERY asked about the procedure ASI uses for
freezing.
MR. BENEDICT said it is very "high tech." The average primary
processor freezes fish in about two hours, during which time
water in the fish causes the cell structure to expand and break
down, resulting in a mushy fish. ASI freezes fish at minus 48
degrees, which takes just 20 minutes. He said he thinks the
market will pay for the quality.
Number 2439
REPRESENTATIVE COWDERY asked about possible economies in
shipping, taking advantage of freight containers that are now
going back empty.
MR. BENEDICT said ASI has taken every advantage it can. And by
paying for back-haul, ASI is going to lower the cost of the
front-haul for everybody.
REPRESENTATIVE JOULE asked if ASI could take advantage of bypass
mail rates on back-haul.
CHAIR BARNES said she thinks that Alaska is the only state in the
Union that uses bypass mail, and that Northern Air Cargo does a
lot of it within the state.
REPRESENTATIVE JOULE said that only recently has bypass mail been
used for fish, and that it could eliminate a lot of the high cost
of transporting fish from rural Alaska.
MR. BENEDICT suggested that if rural areas could fly fish into
Anchorage, they would be very competitive with other producers.
REPRESENTATIVE JOULE said that would be especially true if those
rural areas had access to ASI's ice additive to help maintain the
quality of the fish.
Number 2670
REPRESENTATIVE COWDERY wanted to know if ASI planned to deal with
shellfish.
MR. BENEDICT said the company probably will in time, especially
to use as a stuffing for some of the products.
CHAIR BARNES asked if most of the 450 ASI employees will be
working in processing.
MR. BENEDICT said yes. In response to a further question, he
said they start at about $9 an hour plus fringe benefits that
include a medical plan. He said ASI wants employees to stay for
years. ASI is building a day care center on the grounds, and
currently is contributing $240 a month toward child care for any
employee earning less than $35,000 a year.
Number 2787
CHAIR BARNES reminded Mr. Benedict that she previously had asked
him if ASI could train and hire some people from the welfare-to-
work program.
MR. BENEDICT said the company is working with three or four state
and city agencies, and hiring as many of those people as it
possibly can. He mentioned that one of the toughest challenges
to selling fish at retail in the Lower 48 is that customers
complain that when they cook it, it smells up the kitchen. The
ASI research and development people attacked that problem and
have found a way to eliminate the fishy smell. [End of
presentation.]
HJR 51-ALASKA-CANADA RAILROAD FEASIBILITY STUDY
TAPE 00-4, SIDE B
Number 2921
CHAIR BARNES announced that the next item of business would be
HOUSE JOINT RESOLUTION NO. 51, expressing support for a
cooperative United States-Canada feasibility study on extending
the North American railroad system through British Columbia and
the Yukon Territory to Alaska.
Number 2881
REPRESENTATIVE JEANNETTE JAMES, Alaska State Legislature, sponsor
of HJR 51, introduced the resolution. She said this is a very
high priority of Alaska U.S. Senator Frank Murkowski. In
January, at his request, an Alaska-Canada Rail-Link Conference
was held in Vancouver, British Columbia (BC). Among those
attending were people from the Yukon and BC, chambers of
commerce, industries, businesses and governments. This
resolution [HJR 51] was drafted at the request of Senator
Murkowski to bring a message from the legislature that it
supports his efforts to establish a bilateral commission to work
on a feasibility study. Drafting of HJR 51 was done with the
assistance of Senator Murkowski's staff, and he has now drafted
federal legislation to fund the U.S. portion of the cost of the
feasibility study. Representative James provided copies of
"Rails to Resources," the report on the conference in Vancouver.
Number 2702
BILL BROPHY, Executive Director, Fairbanks Industrial Development
Corporation (FIDC), testified by teleconference from Fairbanks.
He said the FIDC supports and encourages initiatives to expand
rail transportation within Alaska and to establish a rail link
from Alaska connecting with the Canadian and North American rail
system. This initiative will afford tremendous opportunities for
economic growth and development, create new employment
opportunities, enhance military defense, and allow responsible
utilization of significant natural resources. There are enormous
amounts of unrealized resources including forest products,
minerals and agriculture, as well as tremendous opportunities for
all-season tourism. Railroad expansion will enhance and
facilitate an intermodal transportation network for Fairbanks and
Interior Alaska. He urged moving forward with the feasibility
study to make this connective link a reality.
Number 2597
REPRESENTATIVE MASEK made a motion to move HJR 51 out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, HJR 51 was moved out of
the House Special Committee on World Trade and State/Federal
Relations.
Number 2526
REPRESENTATIVE COWDERY commented on the decreasing usefulness of
the Panama Canal, citing concern from both Europe and the Pacific
Rim that an alternative way is needed to get products to the East
Coast of the United States. He was enthusiastic about the
possibility of shipping by railroad instead.
REPRESENTATIVE JAMES said there definitely is interest in
extending the railroad line to Russia; however, this is Phase One
and that will be Phase Three. It will take six to ten years to
complete this connection between Fairbanks and the Lower 48.
Once the line reaches Fairbanks, Senator Murkowski is interested
in extending it up to the Northwest Arctic coal reserves and
bringing coal down to the Red Dog Mine. That will make it
possible to do more refining there instead of sending out all
heavy concentrates to be smelted elsewhere. The link with the
Northwest Arctic would be Phase Two. The Russians definitely are
interested in a third phase; this surface transportation is a
valid concept. Today's ships are too big for Panama Canal, which
has lived its lifetime. Surface transportation is needed. It is
easier to clean up environmental spills on land, and easier to
control. [HJR 51 was moved out of committee.]
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on World Trade and State/Federal Relations
meeting was adjourned at 6:12 p.m.
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