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South Coast Inc.: 1988 revenue: $26.2 million; employees: 150; rank: 33.

IT'S NEVER EASY IN BUSINESS TO move mountains. The proven ability to do so may be why Don Thornlow's firm is climbing so steadily to the top of Alaska's construction heap.

Thornlow is the newest owner of South Coast Inc., Ketchikan's home-grown heavy construction contractor. South Coast moves, carves or blasts out mountains to build roads, mine shafts, tunnels and dams. The firm also constructs docks and erects buildings.

"We take special satisfaction in the fact that our reputation is that we are the best at building projects on time and within budget when particularly difficult logistic problems are involved," Thornlow says. "We have prepared ourselves to deal with the weather and all the environmental problems that Alaska can produce."

South Coast is one of the fastest growing companies in Alaska and is continuing its steady rise up the ladder of the New Forty-Niners, Alaska Business Monthly's annual ranking of the top 49 Alaska-based, Alaska-owned corporations. Ranked 37th last year, the firm rose to 33rd on this year's list, based on 1988 revenues.

The business, which celebrated its 30th anniversary June 15, was founded in 1959 by the Day family - originally, of Petersburg and, later, Ketchikan - to build logging roads on Prince of Wales Island and to perform contract logging for the then-infant Ketchikan Pulp Co. It has branched into heavy construction and, most recently, into mine excavation.

South Coast's major accomplishments of the past decade read like the construction industry's equivalent of a script summary from the television program "Mission Impossible:"

*In 1980, South Coast felled 500 acres of timber and cleared steep cliffs to bedrock to permit construction of Ketchikan's Swan Lake hydroelectric dam. Besides clearing the reservoir area for the dam, the firm built the roadway to the dam site through an environmentally sensitive area.

*In September 1982, the company won the $13 million contract to build the 9-mile access road to Quartz Hill - the road U.S. Borax will someday need to proceed with its giant molybdenum mine. To build the road, South Coast had to disassemble heavy equipment and move all construction machinery and tools by helicopter in 18,000-pound lots, to six landing-reassemblage sites carved out of the woods. Among the items relocated were 1, 100 tons of dump truck parts, D-6 and D-7 Caterpillar tractors, giant shovels, drills and earthmovers.

The sites were ringed by the Misty Fiords National Monument. All equipment was reassembled in just two days, one marked by high winds, and the road was built without a serious environmental complaint about damage to the pristine wilderness.

*In 1984, the company branched into underground excavation, winning the contract to drive 6,000 feet of tunnel and a 700-foot adit under Mount Snettisham. South Coast built the water tunnel needed to bring water from Crater Lake to the nearby Snettisham hydroelectric powerhouse, whose turbines supply Juneau with electric power. The project was completed on time and far below cost estimates. South Coast won a commendation from the U.S. Army Corps of Engineers for the project, which involved a change order halfway through that more than doubled the size of the 11-foot tunnel originally being constructed.

In July 1986, South Coast tackled an even more difficult road project construction of the 14-mile access road to the Greens Creek silver, lead, gold and zinc mine on Admiralty Island. For this project, 800 tons of heavy equipment was airlifted into three sites along the upper six-mile segment of the road's route.

To further minimize the impact of the project on the Admiralty Island National Monument, few trees were felled for work sites and no grading was done at the clearings. Instead, the trees felled had planks temporarily nailed over them to turn the sites into tiny assembly pads for the air-lowered equipment. All heavy machinery was lifted into place from South Coast barges anchored in nearby Hawk Inlet. Using a rented sky crane, the 62 airlifts were completed in the unheard of time of just 10 hours.

South Coast had to construct 10 bridges, both large and small, to complete the Greens Creek access road project. One bridge, crossing the 100foot-wide Zinc Creek, was erected by two cranes simultaneously lifting pre-made steel spans into place.

Besides constructing timber, mining and hydroelectric access roads, South Coast has built everything from the north dock of the $40 million Ketchikan shipyard dry dock facility to Forest Service facilities and state and local highways.

Ed Johnson, South Coast's president and general manager and an 11-year veteran of the firm, says, "It is more than just the challenge, more than giving us something new to do. We like to tackle difficult, complex projects because they add to our experience base. We feel we have experience and knowledge about construction problems in rural, remote areas of Alaska, and that's a big selling point for our company." Viability Via Versatility. South Coast, originally founded by Bob Day and then run by his son Steve, was taken over by Dick Standerfer in 1983. Last year, Standerfer sold the company to Thornlow, who organized a leveraged buyout in conjunction with several of South Coast's long-time employees in December 1988. Thornlow had been the company's Ketchikan banker as regional senior vice president of National Bank of Alaska. He says he changed jobs because of the challenge presented by the company.

Explains Thornlow, "Dick wanted a buyer who was committed to continuing the company as an energetic, innovative concern, keeping most of the veteran management team in place. He wanted someone committed to keeping South Coast in heavy construction, but also willing to branch out, to try new projects, as long as they were related to the firm's specialties. I decided I filled that bill, so here I am."

Thornlow will take over as president of the Alaska State Chamber of Commerce this month, after serving five years on the chamber's executive board. He joined South Coast as it was coming off its best fiscal year. In fiscal year 1988, the firm took in $26.2 million in revenues, compared to $16.8 million in fiscal year 1987-a 55 percent rise in revenues.

Thornlow attributes South Coast's growth to the firm's ability to handle jobs, no matter how logistically difficult. He says the company can conquer logistical hurdles profitably because its two tugs and two barges provide a cost advantage in bidding on any project where marine staging is useful or vital.

According to Thornlow and Johnson, the company also owns a floating work camp and several land-based camps, essential infrastructure when projects are planned for the wilds of Alaska. They say the camps are important because maintaining a happy, dedicated and experienced work force is vital to performance on Alaska projects.

This summer, the company had 167 employees, many operating at South Coast's headquarters and repair facilities on the North Tongass Highway, just north of the Ketchikan ferry terminal. About 100 employees are likely to remain at work most of the year. In past years, during construction of the Greens Creek access road, for example, the company's summertime workforce has ballooned to around 220.

"Probably 95 percent of our crew are Alaskans, most of whom have worked with us more than 7 years. They know our reputation and that keeps them coming back to work for us each season, rather than shifting jobs. So we don't have to train new workers," Thornlow says. "Whether we have one large project or a dozen smaller ones, we always have supervisory talent that can take over and do a good job. Some of our people have been here long enough that all we have to do is point them at the subgrade, and they will take care of carving a road out over the most environmentally acceptable route."

He notes that on the Forest Service's Indian Point logging road the company was finishing this summer, the job involved picking a route that would not disturb 13 trees with eagle nests in the area. The road was constructed on schedule without environmental damage. Mobile Masters. Thornlow also attributes South Coast's success to a decision to purchase rather than lease its equipment. The company's $14.5 million investment in everything from barges and tugs, Caterpillar tractors, the maintenance facility for fast equipment repairs, a helicopter and a floatplane for job management, has provided South Coast with an asset base that comes in handy in cutting equipment outlays during economically depressed times.

Thornlow says the helicopter and floatplane are essential to the company's success, and helped South Coast to manage its 12 projects, stretching from Ketchikan north past Juneau, that were under way this summer. He explains, "When you are spread out like we are, having close supervisory control of projects is essential to keeping costs down. We can use our planes to fly out parts and to make sure senior management visits every job every week to give suggestions on how projects can be done better and faster."

johnson says the company has been able to weather economic recessions in the Panhandle because its reputation helps it to win bids. But, he stressed, the firm usually wins because of its management experience and its reasonable bids.

"Anyone who hasn't done work in Alaska can't know all the costs associated with working in this state. We have an in-built advantage of having pioneered so many different types of construction projects in remote areas, that we know how to properly cost them and how to save time and money," adds Johnson.

For the immediate future, Thornlow hopes to keep South Coast busy on mining-related work that likely will increase on the Panhandle. Last year, the company built the access road from Berners Bay north to the Jualin gold mine, a project north of Juneau under study for re-opening by Curator American. South Coast also drilled a 6,000foot exploratory adit - a one-way tunnel for ore sampling - for the nearby Kensington gold mine, a historic mine being studied for re-opening by Echo Bay Mines of Canada.

South Coast hopes to win additional contracts if the decision is made to proceed with development of either of the mines or with what would be the major mining project in the Juneau area-construction of the estimated $160 million facilities needed if Echo Bay decides to proceed with re-opening the giant Alaska-Juneau gold mine in downtown Juneau. That project would require construction of an 11,000-foot adit to reach the ore, a hydroelectric dam, the rerouting of a state road, and fill and construction of a 16-acre staging area. Also required would be the blasting of at least a 160,000-square-foot cavern, a mile under Mount Roberts, to be used to house the mine's mill facility, its ore separation plant, its diesel electric generators and its ore dewatering facilities.

Besides the A-J mine, companies in Southeast are seriously considering development of at least three other mineral properties, while Sealaska Native Regional Corp. owns at least eight sites with major mineral potential.

Thornlow, however, doesn't want to tie South Coast's future solely to mineral development. He says he will be exploring the possibility of increasing the company's bid area to include projects in remote areas of Western Alaska. "With our marine capabilities and our construction camps, there is no reason why we can't operate successfully in any remote area not just in Southeast," he says.

While revenues for fiscal year 1989 may be down from the 1988 totals to around $22 million, Thornlow hopes to win enough major contracts in the next year to see the firm's revenues skyrocket to around the $30 million mark. Both Thornlow and Johnson hope someday to see South Coast consistently logging between $30 million to $50 million of work a year.

"If there is one reason for our success, it is that we are optimistic about the future and about our potential," says Johnson. For South Coast, based on the past decade, there literally aren't any mountains too high for the growing company to climb.
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Title Annotation:The New Forty-Niners
Author:Kleeschulte, Chuck
Publication:Alaska Business Monthly
Article Type:company profile
Date:Oct 1, 1989
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