Executive Directors' Message


By John MacKinnon and Alicia Siira

 

AGC Exec Directors

 

Advocacy - the value of an association

 

THE MISSION OF AGC OF ALASKA IS TO ADVOCATE FOR OUR MEMBERS AND THE ALASKAN CONSTRUCTION INDUSTRY; TO PROVIDE EDUCATIONAL OPPORTUNITIES FOR OUR MEMBERS; AND TO MAKE THE PUBLIC AWARE OF OUR MEMBERS’ SKILLS, RESPONSIBILITY AND INTEGRITY.

 

It says it right on our homepage: “We’re your voice in the construction industry.” We take that responsibility seriously, and we’re proud to represent our members.

The fall of 2007 and early 2008 was a time of rapidly escalating asphalt oil prices — you might recall that North Slope crude oil peaked at over $150 a barrel in July 2008. Because suppliers could only offer a quote good for less than 30 days, the rapid price increases made it a challenge for paving contractors to nail down a cost at bid time when the actual paving wouldn’t happen for a year or more after the bid. Because of these price fluctuations, and with the approval of the Federal Highway Administration, the Alaska Department of Transportation & Public Facilities, or DOT, had established an asphalt price adjustment index to provide some compensation to contractors. The asphalt price index reduced the risk to contractors, resulting in more competitive bids, thus better prices to the owner: DOT. But the index had an effective date the first of July, and several large paving jobs fell into a doughnut hole. They had bid when asphalt oil prices were much lower and were likely going to be paved after oil prices jumped sharply. This was an inequity that had the potential to cost a few contractors millions.

It was apparent that the only fix for this problem — besides the do-nothing option where these contractors would eat millions in additional costs — was to get the asphalt adjustment index made retroactive to cover these projects caught in the donut hole. We were able to convince DOT this was a real problem. Federal Highways, which held the money, said they didn’t have the ability to do it retroactively. DOT, with the ability, said they didn’t have the money. We worked with DOT, identified a source of funds within the DOT budget, and AGC succeeded in getting the asphalt price index applied retroactively to those doughnut-hole paving projects, averting many millions in losses for those contractors.

One of the challenges of being a successful bidder on a project, besides having the lowest number, is having all the necessary paperwork for the bid in order. It’s been a few years since any low bid on a DOT project was declared non-responsive for failure to make a good-faith effort in meeting the goals for Disadvantaged Business Enterprise, or DBE, sub-contracting participation. It’s one thing to be second or third bidder and not get the job. But to be successful in putting together the low bid and have it rejected because you didn’t cross a “t” or dot an “i” is adding insult to injury. In 2011 and 2012, there were at least a half-dozen low bids that were rejected, largely for clerical errors. The problem was costing the industry tens of thousands in lost bid prep costs, and the DOT had to award to the second bidder, costing millions of dollars more. Our members raised the issue, we got involved, worked closely with the DOT Civil Rights Office overseeing the program and arrived at a workable solution. It was a winning result for all.

Some of the issues we help find solutions to, such as the retroactive price index, are one-time matters. Problem solved, and it won’t come up again. Some, like the improvements to the DBE program, result in continuing benefits year after year. Over the past decade, we’ve had the opportunity to help our industry in a variety of ways, and we’ve achieved a long list of successes. Like the sand and gravel exemption from the mining license tax in 2012, changes to the corporate tax rate for look-back taxes and increasing the contractor’s license bond. More recently, the changes to the Alaska Department of Environmental Conservation’s MG3 and MG9 air quality permits have made it easier for contractors to comply and greatly reduced the probability of costly violations. Like the Energizer Bunny, these benefits keep going and going, year after year.

We deal with broad industry issues, and where success can be achieved — we do. AGC Alaska has a track record that is envied in most other states.

Some accomplishments involved efforts as easy as a conversation with the right people in the right place. Some took many of our members and meetings over many months to effect a change in regulations. Still others required a more arduous process involving the legislative session and a change in state law. Whether through direct contact, efforts involving our lobbyist or our members in a working group or grass roots network, they all took sitting down at the table, convincing the right people there was a problem and working together on a solution.

Issue resolution like the previous examples are how we get things done. We take a leadership role when appropriate, and we represent the industry. We’re not in the trenches; we aren’t confronted with the problems. But when our members speak up and we hear of problems, we look for opportunities. We analyze and look for solutions. When we don’t see solutions right away, we get creative, we get our members involved and we find solutions.

Our success with these issues shows the value of AGC and the benefit of being involved in a trade association like AGC. There is truly power in numbers, and our membership combined is a force to be reckoned with. At AGC, we have more than 600 member companies representing every corner of our state. Our highest value to our members is our advocacy. And our biggest strength in that advocacy is our members.

We’ve come to understand the value of trade associations in Alaska and to truly appreciate the relationships between all trade associations in Alaska. It should come as no surprise to any of you, but this is a uniquely Alaska synergy. Alaska organizations such as the Miners Association, Trucking Association, Oil and Gas Association, Resource Development Council, chambers of commerce, Support Industry Alliance, Home
Builders Association and the Forest Association, to name a few, are representing your interests and fighting for your business and Alaska’s economy whether you’re a member or not.

We support each other, often act as a sounding board when challenges arise, and when necessary we band together on issues to protect our economy, our members and the livelihoods they’ve built. We also respectfully disagree with each other occasionally, giving a whole new meaning to the term “sister organizations.”

If you’re not a member of an organized association, we encourage you to reach out. You don’t have to be a general contractor or a miner to be involved in groups like AGC, AMA or RDC. We have members who are accountants, lawyers, insurance agents, caterers, computer techs, bankers, communications specialists and more. All you need is a desire to better our state and the policies that shape the business climate and the economy in Alaska. The dues are more affordable than you might think, and the benefits, in addition to advocacy efforts, are endless. Many associations also reap the benefits of national representation, with dollars and resources directly impacting federal issues.

Trade associations were established to protect and promote the interest of their members. This may sound like a pitch for you to get involved in one of the many associations representing your interests because it is. There are individuals out there who ride the coattails of others — they sit back and reap the benefits while others pay the bills and do the heavy lifting. There will always be some of those, just like there will always be people who don’t vote. Just look at some recent election results and tell me how that’s working out. When less than 50 percent of the people vote and a candidate wins by just over 50 percent then 25 percent of the people are controlling how it will be for the other 75 percent. The math is easy to understand.

So, for those of you who vote, who do the heavy lifting and who contribute to the cause — thank you. If you don’t, consider this a formal request. Visit www.agcak.org and let’s talk about the ways we can help our state (and your business) grow and prosper.