Alaska Railroad finds savings closer to home

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General Manager Albert Sakata gives last-minute instructions to the paint crew before they spray a clear coat onto an Alaska Railroad passenger at ship creek in Anchorage on Friday, April 13, 2018. Alaska Industrial Paint has a contract to paint Alaska Railroad cars. The cars used to be shipped to the Lower 48 to be painted. (Bob Hallinen / ADN)

The Alaska Railroad used to ship some of its 45 passenger cars on barges to Seattle every year, then put them back on tracks for a long chug to the Midwest for repairs and paint jobs.

The costs piled up, according to Tim Sullivan, the Alaska Railroad Corp. director of external affairs. Not only did it cost money for the shipping and the work. There was a price for flights and hotels for officials to inspect the work as well.

Kevin Stalder was a co-owner of Driven Auto Body, where he knew there was a major unmet need that extended beyond the bright yellow and blue train cars to body work on Kenworth trucks and Peterbilt tractors, and Holland America coaches and tour buses.

That's when Stalder got the idea to start his company.

"I sold half of my interest in the auto body business to start Alaska Industrial Paint. I knew the market was there for fixing buses and big vehicles," he said. "And I spent a year planning my business model. There wasn't anyone doing it here. Even Holland America was shipping out its (train) coaches."

Stalder's motto, printed on his business cards, is "Yeah, we can paint that."

[Alaska Railroad returned to profitability in 2017]

When he went looking for a giant-sized shop, not just any commercial building would do the job.

Rail track connections were necessary to get the cars in and out. Proximity to the Alaska Railroad was a must. Clearance for 19- to 23-foot high trains meant high ceilings. He needed outdoor yard space on rails for sand blasting and indoor space for winter painting and coating. He'd need a building long enough to maneuver 88-foot long train cars.

"I found this building and it was perfect," he said, referring to the multi-leveled gray historic structure at 229 E. Whitney Road across from Ship Creek. "If I had to build a place to do this work, it would have cost $8 (million)-$10 million.

"It used to be Chugach's old coal-fired power plant. They needed the tracks to get the coal in for supplying electricity to Anchorage and it had the spur for turning around the rail cars."

Called the Knik Arm Plant, built in 1950 to serve the swelling post-World War II Anchorage population, it was initially jointly owned by the Alaska Railroad and Chugach Electric Association. The coal burners were converted to natural gas in 1967. Then the plant was retired from service in 1985, and the building was sold into private hands.

Once an old eyesore, it formerly housed multiple boilers that were fed a steady diet of coal shipped on train hoppers from Usibelli Coal Co. With the 75-year-old rails still there, it proved the perfect place for Stalder's plans.

Stalder worked with the Small Business Administration on his pro-forma plan and obtained an SBA loan. He moved in 2014 under a lease with the building's owners, Central Environmental Inc. (CEI is an abatement company that scraps old buildings, sends the steel Outside to be recycled, then does environmental remediation.)

Starting with two employees, Stalder soon grew his crew to the present 20, and anticipates needing another 10 people by fall. They work on six to eight train cars per winter, as well as on other large vehicles.

It can take two months to sandblast, paint and coat each train car. If it was dinged in a collision with a moose or another mishap, they fix dents. The job covers every inch of the train car, including the underbelly in black paint and protective coating, and the wheels painted silver.

"I wanted an all-Alaska workforce, trained and able to work year-round," Stalder said. "I didn't want to be bringing workers up. These are Alaskans. They raise their families here, buy houses, pay mortgages or rent, buy groceries and it adds jobs to the local economy."

Stalder has direct experience in the ebb and flow of a seasonal economy. He arrived in Alaska in 1985 to earn summer money for tuition at the University of Idaho. But he met a girl and stayed and she became his wife. For work, he took a job with VECO on the North Slope. He transferred to the University of Alaska Anchorage to earn a degree in psychology.

"And upon graduation, I immediately went to work for Allstate," he said. "But I do use psychology in my work every day."

His job involved analyzing insurance claims, investigating fraud claims and going through the process of estimating for auto body repairs. He did this work for nearly 20 years, 15 with Allstate and five years as claims manager at Leader Infinity. That work led him to opening the auto body shop in 2008. And it all lent expertise for founding Alaska Industrial Paint.

Stalder's operation was one of a handful of companies recently highlighted in a report called "Alaska: State of Entrepreneurship," by the University of Alaska Center for Economic Development.

Businesses such as his account for essentially all new private-sector jobs in Alaska, on net, each year. Without them, there would be no net job growth, according to the report. Between 2005 and 2014, employer firms less than 1 year old added an average of 5,200 jobs per year, according to the report.

Because winter prep work for tourism companies dries up in summer, Stalder's business model called for doing painting and protective body coating work from May to September in rural Alaska.

The customers for that work are Crowley Marine and Shoreside Petroleum Inc. on their fuel tanks in Adak, Cold Bay, Cordova, and any place that receives winter fuel offloaded in amounts to last entire winters. Alaska Industrial Paint crews sandblast, paint and coat fuel tanks as well as other work associated with maintaining them.

In winters, Stalder's crew paints trains: Holland America's passenger coaches and domed cars, Alaska Railroad passenger coaches, and tourist buses for various companies.

He also recently purchased another four acres and a 42,000-square-foot set of warehouses at Whitney and Post roads, a grouping of high-ceilinged buildings dating back to the 1950s, to expand his coach, school bus and semi-truck repairs and painting work. That business will be called Alaska Collision Specialists, set for a September opening.

But growing too big too fast is a fate Stalder's been trying to avoid.

"I have all the work we can handle right now, and if I take on more than I can do, I risk not being able to take care of the customers I have," Stalder said.

Serving the customers he has meant he needed more space.

His goal was always to do complete fleet work. Major trucking companies have standard cars and trucks that also get into wrecks or need paint and logo upkeep.

"I want to serve the customer, in their needs for their entire fleet of vehicles," he said.

That's why the new space will be useful; he can stretch out and let his crews do multiple jobs in the new space while reserving the Whitney Road location for industrial size vehicles and trains.

But after a few years in business, Stalder said he still hasn't let his company website "go live" yet. He doesn't need the publicity.

"I don't ask for more work than I can do reliably and safely," he said.

The Alaska Railroad is happier with this arrangement, said Sullivan.

"We're saving money," he said. "The timing is better. It's a higher quality of work and we're involved in the whole process."

Naomi Klouda can be reached at naomi.klouda@alaskajournal.com.