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Spark seeks to ignite new markets: Fairbanks battery-maker Earl Romans takes his expertise to Russia.

Fairbanks businessman Earl Romans spent a month in Russia's Magadan earlier this year, overseeing preparations to open of a battery factory he hopes one day will market arctic-quality batteries worldwide. Romans, owner of Alaskan Battery Enterprises, teamed up with Magadan entrepreneur Valentin Tsvetkov less than three years ago to form Spark, a joint venture that manufactures batteries. Now he is making headway on a project that just a decade ago would have been unthinkable.

Spark's factory is being assembled with equipment and supplies from a dismantled Georgia plant that Romans bought and shipped to Magadan over the winter. Initially, Spark contracted with a former Soviet Union battery factory to turn out batteries to Roman's specifications. Romans intended to market Spark's batteries in the United States, in addition to alleviating shortages in what was then the Soviet Union.

Along the way, Spark successfully deflected accusations by the KGB of dealing in contraband. The charges were based on an outdated law that classified batteries and battery-making supplies as war materials.

Ironically, even as Romans is making history in Magadan, the Fairbanks battery business he started in 1961 has become embroiled in an ongoing fight with the U.S. Environmental Protection Agency over a $3.2 million Superfund cleanup. Romans also anticipates a courtroom battle with former associates making and selling batteries he says intentionally imitate the Alaskan Husky line he developed.

In mid-May Romans closed his Fairbanks battery business. "It's for economic and regulatory reasons," he says. Romans' struggles with the EPA have left him disillusioned with what he considers bureaucracy run rampant, and resolution of the dispute over battery names and logos is likely to be tedious and costly. Yet Romans relishes sharing what he knows about free enterprise with would-be entrepreneurs in Russia. "They are just pioneers in a big frontier, just like us," he says.

An orphan at 13, Romans came to Alaska in 1951 to live with his older brother, James Welker, in Anchorage. After graduating from high school, he studied for a year at the local community college, then spent a year at Colorado State University, where he was a Reserve Officer Training Corps cadet.

Romans was never called into active service, however, and returned to Anchorage to work for Welker, who had opened the original Alaskan Husky Battery business there. (That company eventually went bankrupt in a series of confrontations with the EPA in the 1980s that Romans says disturbingly mirror his own.)

In 1961, Romans moved to Fairbanks and started a branch of Alaskan Husky Battery. He bought the Interior operation in 1962 and renamed it Alaskan Battery Enterprises.

"It took us about three years to get going," he recalls. Then came the Good Friday earthquake in 1964. "For 11 months, we couldn't get any supplies," Romans says. But the operation endured. "We were doing pretty good by the '67 flood," he adds.

The company's bottom line had begun to recover again when Romans' luck took another turn for the worse. Complications during his wife's pregnancy left Romans with $20,000 in medical bills. In the end, his wife and new daughter were well, but Romans' pockets were empty. "It took everything to save those two girls," he says.

The 1970s were good. Sales peaked at close to $500,000 annually, and Alaska Battery employed a staff of 12.

The 1980s seemed to be a replay of the 1960s, but for different reasons. A series of problems that began with leaking batteries almost cost Romans his reputation. It took a year and a half to pinpoint the cause -- a defective sealer. That event cost Alaskan Battery an estimated $80,000 in sales, and later, battery casing perforations -- for which Romans never was able to track down a cause -- again meant disruptions and lost sales.

Then came trouble with EPA. "Everybody had become lead-conscious," Romans says. The agency first came to inspect the site in 1980 when lead was added to the list of materials classified as hazardous, and returned six years later to further review contamination, prior to highway improvements in the area. At that time, EPA needed to consider the area "clean" so federal funding for the highway project would be available. The site passed that test.

Suspected contamination dated back easily 20 years, when Romans routinely used crushed battery cases as fill material in and near his battery yard. Also, spent battery acid was dumped occasionally on the property. No laws prohibited either practice back then.

Controversy over the contamination and subsequent $3.2 million Superfund cleanup had all but halted production at Alaskan Battery by early 1992. Romans had begun having batteries made to his specifications in Korea, but prior to the Fairbanks plant closure, he retained a staff of five to produce and sell a smaller "Made in Alaska" line.

Although discouraged by Alaskan Battery's problems at home, Romans feels that sales potential in the Commonwealth of Independent States is excellent. He became interested in doing business with the Soviets after another of his brothers visited the country in 1985, Romans explains. As interest in doing business across the Bering Straits began to escalate in Alaska, Romans turned to the Interior Alaska Manufacturers Association for some direction.

In 1989, the group co-hosted a delegation from the Soviet Far East, and Romans took the opportunity to display his wares and state his intentions. Among those visiting was Tsvetkov, a powerful industrialist in his country.

Tsvetkov is involved in a variety of enterprises, including a large construction company. "If you eat it or build with it, he supplies it," Romans says. He adds that Tsvetkov's net worth has been estimated at $23 million rubles.

In the Soviet Union at that time, procuring the right battery for the vehicle or equipment needing it could take as long as three months. Romans recalls that in response to his proposal to the Russians for a joint venture, Tsvetkov commented, "I keep this one for myself."

The resulting enterprise began as a small contracting effort in 1989, and now is on the verge of becoming a self-sufficient, privately owned operation. Financing the effort has required some creative fund raising, including pruning reindeer horns to sell as aphrodisiacs in Korea. "You get about $10 a head," Romans notes.

Probably the biggest break, however, came with the purchase of the Georgia battery factory. Romans' brother Welker found the for-sale notice in a trade journal, and the purchase turned out to be a bargain. Says Romans, "We paid about 40 cents on the dollar of used value."

With the demise of the Soviet Union, things can only get better, Romans says. In the fall, anticipating recent events, he and Tsvetkov registered Spark with the Russian Republic. "Now we're registered with the government that's in control," Romans notes.

Last year, after charges that Spark was dealing in contraband were dropped, Romans and Tsvetkov sued the KGB for damages amounting to $167,000 and 571,000 rubles. Now that the KGB is defunct, neither partner expects that lawsuit to be resolved.

The businessmen considered the matter a major coup in its own right, though, because it was the first time the KGB failed in a case. Romans says the reversal shows democratic reforms were genuine.

Originally, the Spark factory was expected to be producing 500 batteries per day in May, but the startup has been pushed back to fall because of equipment damaged during shipment from the United States. Operation of the 4,800-square-foot plant likely will require a dozen or more employees on each of two and a half shifts.

Spark will compete with the seven state-run battery factories already in operation, Romans says. Because free enterprise is such a new concept for Russians, Spark's partners find they must play their cards one at a time. Likewise, environmental requirements are not clearly spelled out, and Romans anticipates the venture will run into its share of snags.

"We're kind of writing the laws as we go," he says. "If you abuse (the freedom), they're probably going to (write) a law you don't like."

So far, so good. "This is a nice, clean example of what can be done," Romans says. His confidence in Russia's potential goes beyond Spark. On a spring trip to Magadan, he brought along a half-dozen members of a group he calls the TAG (The Alaskan Group) Team, an assembly of 49th state experts representing some of the North American Arctic's most successful industries.

Among the visitors was Dave Heatwole, formerly vice president of exploration for Arco Alaska; Skip Winnefre, owner of 10th & M Seafoods in Anchorage; and David Snyder, a Yukon Territory gold miner. These businessmen are looking for ways to improve production and marketing that could create jobs and generate revenues beneficial to both Alaskans and Russians.

Romans participated in Expo '92 in Moscow in May. That effort likely will open the door between Russia and Alaska even wider.
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Title Annotation:joint venture between Alaskan Battery Enterprises and Russian Valentin Tsvetkov
Author:Martin, Ingrid
Publication:Alaska Business Monthly
Article Type:Company Profile
Date:Jun 1, 1992
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