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Leading Alaska's natives: the 13 regional corporations.

They are wealthier and own more private land in the state than any other sector in Alaska. They represent about 100,000 Natives. They are the 13 regional corporations of Alaska.

If you live in Alaska, chances are you've done business with a Native corporation. Need to buy gas in Fairbanks? Arctic Slope Regional Corp. can fill 'er up. Looking to rent a bulldozer? Cook Inlet Region, Inc. has one available. How about a cruise? CIRI can help you with that, also. Sleepy? Native corporations can accommodate you in one of several hotels they operate statewide.

From tourism to telecommunications, a hotel room to a whole city on an Aleutian island, Native corporations have hit their stride in the 1990s and are leaving footprints in every sector of Alaska's economy. This business diversity is behind the increasing success of the corporations.

It wasn't always the case. The 13 corporations were created in 1971 under the Alaska Native Claims Settlement Act. As part of that act, 40 million acres of land and nearly $1 billion was distributed among the regional corporations. Hushed with sudden wealth, but with little business experience, many of the corporations focused solely on developing the timber and mineral resources on trek lands. These companies floundered when the economy soured in the mid-1980s. Only recently have all 13 corporations been consistently profitable. Together, they account for nearly $1 billion in annual revenue in the state of Alaska.


Arctic Slope Regional Corp. accounts for the lion's share of that $1 billion. In 1997, ASRC collected $661 million in revenues, a boost of 19.8 percent over 1996, and a staggering 260 percent increase over 1992. A third of that revenue came from ASRC's petroleum refining and distribution facilities, with another 23 percent from its oil-field service subsidiaries. For the third year in a row, ASRC led all other Alaska-owned corporations in revenues. ASRC President Jacob Adams attributes the increases to plain, hard work.

"We're doing a better job of how we do things," he says. "We saw that so many (North Slope) projects got delayed that we decided that the best way to keep up the amount of revenue was to go out and do a little more work and to do it more efficiently."

The company's Sourdough Fuel subsidiary is the largest gasoline retailer in the Interior, and the acquisition of Kodiak Oil Sales, Inc. puts ASRC on the Kodiak docks as a marine diesel distributor. On the North Slope, subsidiary Eskimos, Inc. upgraded its gas station and tank farm, and expanded the NAPA hardware and auto parts store. ASRC's oil-field services subsidiaries won new contracts on the North Slope, and the corporation is exploring opportunities in Russia, Venezuela and the Lower 48.

Another subsidiary makes plastic components for computers and electronics in a North Carolina factory. Taking a step into the future, ASRC donated a television cable channel so North Slope Borough residents can monitor the location of public buses from their homes instead of waiting outside in sub-zero weather.

ASRC's corporate goal is to become a $1 billion revenue company by 2001. However, like all Native corporations, ASRC states a responsibility beyond the bottom line - its shareholders.


According to 1996 population estimates from the Alaska Department of Labor, Alaska's 100,105 Natives made up 16.5 percent of the state's population. Nearly 95 percent are members of a Native corporation.

The largest Native corporation, in relationship to the number of members, is Sealaska Corp. with 16,000 shareholders; Doyon Ltd comes in second with 14,000, followed by Calista Corp. with 12,643, and NANA Regional with 10,000. The rest have fewer than 10,000 shareholders, with Ahtna, Inc. having the fewest: 1,100.

"One of the strengths of Alaska Native corporations is that our shareholders are not just investors, they are true owners," stated Glenn Godfrey, chair of the board for Koniag, Inc., which is comprised of 3,400 shareholders.

Each corporation is actively involved in shareholder's health and culture. NANA, for example, closed its profitable bar in Kotzebue in 1982 because of the devastation alcohol abuse was having on the region. In 1997, the corporation also spent $923,000 on shareholder training, scholarships and cultural programs.

CIRI's Southcentral Foundation provides an array of health-related services, including treatment for drug and alcohol addiction, traditional therapy, mental health and family counseling, as well as education, training and social services.

"CIRI continues to recognize that safeguarding health, education, social and housing services for shareholders is an important part of our mission as an Alaska Native regional corporation," said Carl H. Marrs, the corporation's president and chief executive officer.

Aleut Corp. provides scholarships through the Aleut Foundation; Calista Corp. is home to the Calista Scholarship Fund; Cook Inlet, the Alaska Native Justice Center and Alaska Native Heritage Center; Doyon Ltd, the Doyon Foundation; and Sealaska, the Elders' Settlement Trust and Sealaska Heritage Foundation. The 13th Regional Corporation, comprised of 5,500 shareholders, plans to announce a scholarship fund in the near future.

Millions are spent annually for shareholder health care, training and education. It is especially vital corporations provide job opportunities for those shareholders who live in remote rural areas.


Unemployment among Native Alaskan: is much higher than for other ethnic groups in Alaska, says Neal Fried, an economist with the Alaska Department of Labor. In 1990, the latest year for which comparative statistics were available, overall unemployment in Alaska averaged 8.8 percent. White unemployment was 7 percent, while Native unemployment was 22.1 percent.

In some areas of the state the gap is even wider. "One thing not being captured is that you have to be actively seeking work (to be listed as unemployed)," said Fried. "In a small village, you can very often count the jobs on one hand. If you live in a small village and you know there's no work, you're not going to be looking for work."

NANA Regional Corporation works hard to put its shareholders on the job, with great success. Of its 10,000 shareholders, 600 work for NANA or one of its subsidiaries. Overall, NANA accounts for 2,000 jobs and $80 million in payroll. In late 1997, NANA commissioned a study to explore the impact it has on the Indiana-size region it serves in the Northwest Arctic Borough.

NANA, headquartered in Kotzebue, encompasses 26 business ventures, including the giant Red Dog zinc mine. It also has interests in construction, engineering, food services and lodging. A study, conducted by the McDowell Group, concluded that NANA accounts for one in five jobs in the Northwest Arctic Borough, or 550 out of about 2,500 jobs. The corporation accounts for nearly 10 percent of the personal income in the region, and 25 percent of all personal income generated by the private sector in the borough.

Shareholders' futures are also very much on the mind of the ASRC board of directors. ASRC training programs for the next generation of corporate managers are already in place. Intern programs place college students in summer jobs and extensive on-the-job training programs give shareholders exposure to what jobs are available and what they need to do to get them.

"This goes back to our board of director's philosophy of providing job opportunities and educational opportunities for our shareholders so they'll be able to have meaningful jobs," Adams says.

Without ASRC and its oil-field jobs and training programs, the North Slope would likely see an exodus of young people forced to look elsewhere for employment. Without ASRC "there would basically be no jobs," Adams says. "We need to give our shareholders these opportunities. We need to be mindful of what the desires are of our shareholders." The Arctic Education Foundation provided support for 220 college and vocational students. The Foundation also opened Inupiat House on the University of Alaska Fairbanks campus for up to 25 shareholders. Jacobs said many young people from the villages had trouble adjusting to urban university life and Inupiat House is designed to ease that transition.

"We found out that a lot of (Native students) in the first couple of years got homesick and missed village life," he said. "We thought we'd be able to retain more of the younger students with the help of the older students who were already there."


Besides making a profit and creating jobs for shareholders, Alaska's Native corporations play an important role in fostering Native culture and traditions.

Doyon Ltd. has found a way to combine all three focuses under the umbrella of tourism. The Fairbanks-based corporation owns the Kantishna Roadhouse inside Denali National Park. During the 100-day tourist season in 1997, the roadhouse realized profits of $151,087. More than a third of Kantishna's employees are shareholders, and the company is expanding programs that focus on Doyon's cultural traditions.

Tourism is an attractive investment for other corporations, also. According to Cook Inlet Region, the total number of visitors to Alaska grew 31 percent between 1989 and 1996. As a result, most Native Corporations have invested in this growing industry.

With an eye to the independent traveler, CIRI created a subsidiary in 1996, Alaska Heritage Tours, which operates Kenai Fjords Tours and Mariah Tours out of Seward and Stan Stephens Cruises out of Valdez. Over the next five years, CIRI plans to expand its tourism division into lodging and transportation. Already CIRI owns two hotels in Anchorage and one in Kotzebue. Hotels are an attractive investment for other corporations as well: Koniag, Inc. owns a 60 percent interest in the Buskin River Inn in Kodiak; Bering Straits Native Corp. has an interest in Aurora Executive Suites in Nome.

Taking advantage of the tourism upswing, Bristol Bay Native Corp. sold its largest asset, the Anchorage Hilton Hotel, in order to diversify its holdings. The sale boosted its earnings to $35 million in 1997, 86 percent of which came from the hotel sale. The board issued a special dividend of $30 per share in 1997. Since 1978, BBNC has paid 48 percent of its income, or $33.5 million, to shareholders.


Corporations are also looking beyond Alaska's borders. For example, CIRI's interests are far-flung. The Anchorage-based organization has holdings from Florida to Hawaii. Arctic Slope is looking into opportunities in Venezuela and Russia. With 45 percent of its shareholders living outside Alaska, Chugach Alaska Corp. is also putting a premium on Outside investments.

Under President and Chief Executive Officer Michael Brown, Chugach Alaska has made a strong comeback after declaring bankruptcy in 1992 after the bottom dropped out of the timber and seafood markets, its two prime investments in the 1980s. Today, with a net income of $1.4 million, Chugach Alaska's diversity is one of its strengths.

Chugach Alaska divides its holdings into four areas: government services, oil-field services, tourism and timber. It holds 25 percent of KANAS Telecommunications, which operates a fiber-optics cable running the length of the trans-Alaska pipeline. It also runs the Chugach Heritage Center in Seward, and leases properties in Prince William Sound to Stan Stephens Tours.

Brown says he has no interest in returning to the resources market. "You have no control over the end price of the product and you're totally at the mercy of the market," he says.

Although its biggest moneymaker is timber, Koniag is finding fertile ground in areas as diverse as federal contracting, tourism and urban light rail projects. The Permanent Way Corporation, in which Koniag, Inc. has a 40 percent interest, recently completed a light rail project in Dallas and is nearly finished with a Portland Metro project. The company also provided track design for the English Channel tunnel. Koniag completed 1997 with a net income of $8.3 million. Through its foundation, Koniag provided $130,910 in grants for 84 children.

Sealaska's focus also remains in the timber industry, which garnered $136 million in revenue during its nine-month fiscal period in 1997. (Sealaska changed its fiscal year to the calendar year in 1997.) Because of a downturn in the timber industry in 1997, and Asia's economic instability, Sealaska also is diversifying its holdings.

In partnership with Louisiana-Pacific Corp., Sealaska is looking into timber processing facilities in Southeast, such as a veneer mill pulp plant and sawmill on the site of the former Ketchikan Pulp Mill in Ward Cove.

In 1997, the corporation acquired a 90 percent stake in TriQuest Precision Plastics, which produces plastic components such as computer housings and cellular phone casings. The company also developed its first mining venture in 1997, a limestone operation on Prince of Wales Island under subsidiary SEACAL.

Doyon is also profiting from diversification. Its largest subsidiary, Doyon Drilling, showed a profit of $9.4 million in 1997. More than a third of Doyon Drilling, Inc. employees are shareholders. Doyon also expanded its real estate assets, breaking ground on Doyon Estates, a residential subdivision on the banks of the Chena River in Fairbanks. The company built the Doyon Industrial Facility in Fairbanks, which houses the Alyeska Pipeline Service Company's Fairbanks Business Unit.

With a land entitlement of 12.5 million acres, Doyon is the largest private landowner in North America. However, with few easily accessible natural resources to date, Doyon's biggest moneymaker in 1997 was its investment portfolio, which rode the bull market to $19.3 million in earnings, a whopping 82 percent increase over 1996.

Ahtna's key industries include pipeline maintenance and construction; oil-spill response; land management and development; and timber and security. Aleut is into government contracting; trust and financial services, commercial real estate, natural resources development; and the privatization of Adak Navel Air Station. Calista Corp. does everything from providing title insurance, to equipment leasing, to computer consulting. Thirteenth Regional Corporation has a mailbox franchise and office buildings, and also lists key industries of land development, construction, and educational video production.


The Native impact on Alaska's economy can only expect to be bigger and brighter. All 13 regional corporations are turning profits. All are dedicated to improving the quality of lives for their shareholders. All have diversified holdings. All are expanding horizons. The Native children of today are being groomed to become tomorrow's producers. They are also likely to become tomorrow's leaders.
COPYRIGHT 1998 Alaska Business Publishing Company, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1998 Gale, Cengage Learning. All rights reserved.

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Author:Stricker, Julie
Publication:Alaska Business Monthly
Date:Sep 1, 1998
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