Gail Schubert and bering straits native corporation: providing for shareholders and their descendants.
From that simple life in Unalakleet, Schubert, an Inupiaq, went on to earn degrees from Stanford and Cornell, two of the nation's most prestigious universities. She worked in New York City at Wall Street law firms and the Federal Reserve Bank of New York before returning to Alaska in 1992. Soon after she returned she decided to run for the board of directors of Bering Straits Native Corporation (BSNC), her regional corporation. Today she is the president and CEO of the corporation.
Desire to Excel
Schubert says her desire to excel is a result of the encouragement she received from her parents--Betty and Lowell Anagick--and the teachers at the Bureau of Indian Affairs school in Unalakleet, which she attended through grade nine. "My parents could only attend school through the eighth grade, which is where education in the village stopped at that time, but they cared for our education. They wanted to ensure that we studied hard and were successful," she says.
After completing ninth grade, Schubert moved to Anchorage for high school. Two sisters were already attending Stanford, so it was natural that Schubert would follow them there. That education was a priority in her family is evident in her parents attaining their GED certificates later in life and her mother going on to get an associate's degree from the University of Alaska Fairbanks.
Her childhood dream was to become a nurse, Schubert says. "One of my older sisters had gone to nursing school and worked in Pennsylvania. I loved seeing photos of her nurse's uniform."
In time, that romantic image of a nurse in a starched uniform and prim hat faded; Schubert got a degree in political science at Stanford and went on to Cornell to study business administration. But she didn't stop after her MBA. Schubert remembers how, when she was five or six, her great-grandmother Miyugak, the oldest daughter of the last traditional chief of Unalakleet, told her, "You are going to be a lawyer someday."
It is probable her great-grandmother's words and her older sister Ella's decision to study law both played a role in Schubert entering Cornell's law school after receiving her MBA. After law school Schubert worked in New York City for eight years, but Alaska beckoned. "I missed my family. So I moved back and got a job with a law firm in Anchorage."
Not long after she came back in 1992, Schubert realized that BSNC was experiencing financial difficulties. "When I realized that BSNC was facing some critical issues and I felt my work experience and business education would be helpful, I ran for a seat on the board and was elected."
In 2003, Schubert went to work for BSNC as an executive vice president and general counsel. She became CEO in 2009 and in 2010 was also named as the corporation's president, when Tim Towarak resigned to become chair of the Federal Subsistence Board.
BSNC was one of the smaller Alaska Native regional corporations when Schubert joined its board in 1992. "We were based in Nome and we didn't have a substantial Anchorage office. We focused on opportunities in Nome, mainly construction, and our construction company built a lot of homes and the hotel there, which we own." For much of the next decade, 1992 through 2003, most of BSNC's revenues came from its Nome operation, Schubert says.
Changes began around 2003, the year when Schubert began working at BSNC. The corporation expanded its Anchorage office and shifted its work toward government contracts through the US Small Business Administration's 8(a) program. "I thought I could help in getting a handle on where we were financially and also assist Tim Towarak, who was president, to turn the company around. I had worked with a lot of other Native corporations and I was familiar with the 8(a) program when I was in private practice in Anchorage."
The foray into 8(a) contracting led to increased revenues. The SBA's 8(a) Business Development Program was set up to allow small and disadvantaged minority-owned businesses to compete for government contracts and was later expanded to include Alaska Native corporations.
BSNC started with government contract work on the service side because such work does not require a lot of capital. The benefits that BSNC has reaped are evident in its revenue growth. In 2003, the corporation posted revenues of $9 million. Ten years later in 2013, revenues reached $243 million. Revenues in 2014 rdeclined to $230 million but in 2015 increased to a record high of $304 million. For FY 2016, which ended March 31, 2016, final revenues are $326 million, surpassing the 2015 record.
BSNC's roster of 8(a) companies totals twenty-one, up from two in 2003, and much of their work is outside Alaska. Seven 8(a) companies have already graduated from the program, but are still involved in government contracting. "Companies that have graduated possess a lot of good expertise and history. They go on to compete for other kinds of work by bidding competitively, so it's not sole-source work anymore," Schubert says.
Companies that have graduated and those are still classified as 8(a) include those that provide base operations support (facility operations and maintenance, water, wastewater and heating, air field, materials, and other services) and generate 25 percent of BSNC's consolidated annual revenues. Logistic and procurement companies provide another 25 percent. Other businesses generating revenues include information technology, 19 percent; professional support, 15 percent; construction, 10 percent; and other businesses, such the Nome hotel and resource rentals, add 6 percent.
Though most of BSNC's work is out of state, some initiatives, such as at Port Clarence, are close to home. In 1976, the corporation filed under the Alaska Native Land Claims Settlement Act for land at Point Spencer, located on Port Clarence. In 2010, when the US Coast Guard announced the closure of its LORAN navigation facility there, BSNC began working with Alaska's congressional delegation to get the transfer completed. In February this year, Congress authorized the transfer of about two thousand acres of land at Port Clarence to BSNC. The Coast Guard and the state of Alaska also received lands.
Port Clarence is a "natural deep-water harbor that has been used for hundreds of years as a place of refuge. Whaling ships anchored for protection from storms in that harbor and overwintered there because the ice was stable and not shifting," Schubert says. When Shell announced its plans for drilling in the Chukchi, it appeared that the port might become a hub of activity. However, Shell abandoned its Arctic oil development plans after disappointing results from its exploratory well.
BSNC is evaluating future uses for the land at Point Spencer and realizes that "the natural harbor is more important now as a place of refuge because the longer open-water season means increased marine transportation activity through Arctic waters," Schubert says
The crucial role of Port Clarence, with its strategic location in the fifty-mile-wide area of the Arctic between Russia and Alaska, was highlighted in a recent report of the US Committee on the Marine Transportation System. That report, "A Ten-Year Prioritization of Infrastructure Needs in the U.S. Arctic" prepared for the US Department of Transportation, addressed Arctic infrastructure gaps and key requirements for a safe and secure Arctic marine transportation system. Of the report's fortythree recommendations, twenty-five were deemed near-term. Number one in the near-term recommendations was designating Port Clarence "as an Arctic maritime place of refuge," and number two was assessing whether "adequate support facilities are available at Port Clarence or in the region for a ship in need of assistance."
Those recommendations mean that the federal government recognizes the reality of increased marine shipping through the Arctic. Schubert says she sees the future of Port Clarence as a port of refuge and as a staging area for disaster response and spill response. The limited structures at the site will have to be enhanced and built out.
In the short-term, there is both excitement and concern about the increased marine traffic. The concerns arise from the lack of oil spill response equipment in the Arctic and other facilities if a ship is disabled or if there is an oil spill. But the reality is evident. "The Arctic is changing rapidly, and tourism in the region will increase because these are uncharted waters where most people have never had the opportunity to go before," Schubert says.
Pilgrim Hot Springs
For the last six years, the corporation has been busy working to complete the transfer of Port Clarence and looking at other opportunities at the site. While that was a major focus, BSNC did take the lead in another initiative, the acquisition of the 320acre Pilgrim Hot Springs property from the Catholic diocese.
The Catholic diocese operated an orphanage and school for children orphaned by early twentieth century epidemics, including the influenza pandemic of 1918. The orphanage closed in 1941, but the diocese held on to the property. The property went up for sale in 2008, when the diocese declared bankruptcy, resulting from the settlement of sexual abuse cases brought against it.
Schubert played a key role in acquiring Pilgrim. "Gail was the catalyst for bringing the other partners on board at the critical time when the property was put up for sale during the bankruptcy proceedings," according to Matt Ganley, BSNC's vice president of media and external affairs. A consortium, Unaatuq LLC, was created in less than two months and included BSNC, Sitnasuak Native Corporation, Kawerak, Norton Sound Economic Development Corporation, White Mountain Native Corporation, Teller Native Corporation, and Mary's Igloo Native Corporation, Ganley says. Teller has since sold its interest to the Council Native Corporation.
In 2010, Unaatuq LLC successfully bid and won the auction at the bankruptcy court. The area will be used for small-scale tourism, development of geothermal energy, and agriculture.
For centuries residents of the area visited the hot springs for "its curative and spiritual powers," and the place continues to hold "tremendous cultural and historical significance for the residents of the region, and many families trace their ancestry to relatives who were raised at the Catholic orphanage," BSNC said in a press release when the sale was finalized.
For Schubert the value of the purchase is not so much in what "the corporation gets out of it but about the benefits to the region that will come from the projects now being planned."
One project envisioned will supply fresh vegetables to residents from greenhouses at Pilgrim, heated by geothermal energy. Unaatuq recently received a $112,000 grant from the US Department of Agriculture for an agricultural produce marketing study for the region and a test garden, according to Ganley. That grant will be matched with in-kind labor and materials from BSNC and its subsidiaries and UAF (University of Alaska Fairbanks). Greenhouses will come in the next few years and could operate year-round, Schubert says.
Since 2010 Unaatuq has also worked with The Alaska Center for Energy and Power at UAF to evaluate the geothermal potential of the Pilgrim Hot Springs. If the project appears feasible and is built it would help reduce electricity costs for Nome or other nearby villages, such as Mary's Igloo.
With funding from the Bureau of Indian Affairs through Kawerak, Inc., Unaatuq contracted with an Anchorage firm to do a survey and building plans for the old buildings in order to preserve the structures, Ganley says.
The tourism potential of Pilgrim is not lost on Schubert, who describes the area with its vistas of mountains, the Pilgrim River, and the nearly-century old diocese buildings as "beautiful, peaceful, and calm." There are two cabins already on the site, and Schubert is hopeful that in the future some sort of food service with local produce will be offered to visitors.
This year more than three hundred visitor permits were issued, a prerequisite to visiting the site. Although Pilgrim might be a new destination, tourists have been coming to the region for years, according to Schubert.
"A large birder population has come to Nome for decades. And there are many visitors during the Iditarod. Now we anticipate an increase in visits by cruise ships," she says. The cruise ship Crystal Serenity sailed through the area on a planned transit of the Arctic and made a stop in Nome, which was muddy from rain when it stopped there August 22.
"Many passengers disembarked and they purchased items from local shops and trade fairs set up at the Mini Convention Center and St. Joes Church," Schubert says.
The increase in marine traffic is worrisome, but BSNC is now better prepared to cope with it. "Gail worked with Shell and its partners to secure four mooring systems that each have three twenty-thousand-pound anchors, which had been deployed at Kotzebue," Ganley says. When the systems are set in place at Port Clarence it would mean that "BSNC has ensured they will be available for vessels in need, as well as for future use related to Arctic shipping," Ganley says.
The state's economy might be sliding toward a recession, but economic conditions in the region are good, Schubert says. "The strong crab and salmon fishery through the CDQ (Community Development Quota) program provides good opportunities for seasonal work during summer," she says. Tourism is also strong, and the work of the region's ivory carvers sells well. The Nome School District and the Bering Straits School District in Unalakleet also provide many jobs, Schubert says.
Schubert is positive about her region's future. "Our people have survived for hundreds of years and they will continue to thrive and exist in the region. I have this hope because we are resilient. We have adapted to change and people in the region look out and take care of each other." She is grateful that the younger generation venerates its Elders and makes sure they are provided with traditional foods such as birds, berries, or greens gathered on the tundra.
BSNC's corporate identity is tied closely to its shareholders. It conducts most of its business out of state, and that will help shield it from economic downturns in Alaska, Schubert says. She hopes BSNC will continue to perform well and its shareholders will continue to receive dividends that have ranged from $2.35 per share in 2010 to $3.25 per share in 2015.
Dividends are not the only benefit BSNC provides its shareholders. Its Bering Straits Foundation provides scholarships to ensure that a new generation will be ready to lead the corporation forward. The Bering Straits Foundation awarded a total of $234,643 for the 2014-2015 academic year, and since its founding has provided more than $2 million in scholarships to BSNC shareholders and descendants for post-secondary education. BSNC also provides an Elder dividend and bereavement payments to its shareholders.
Miriam Aarons, BSNC's corporate communications director, has observed Schubert at work and is impressed with her humility and the way she pays attention to shareholders' concerns. "She is of the people, not above them. Gail imparts her strong values about education and achievement to all of us."
Schubert has dedicated more than two decades to BSNC and for her there is no greater pleasure than in knowing that she has helped in moving "Bering Straits from a position where we were in a deep financial crisis and by utilizing the opportunities available to us, like the 8(a) program, we have built our shareholders' equity and are able to provide jobs and scholarships and training and opportunities for our shareholders and their descendants."
Writer Shehla Anjum is based in Anchorage.
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|Title Annotation:||SPECIAL SECTION: 2016 Top 49ers|
|Comment:||Gail Schubert and bering straits native corporation: providing for shareholders and their descendants.(SPECIAL SECTION: 2016 Top 49ers)|
|Publication:||Alaska Business Monthly|
|Date:||Oct 1, 2016|
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