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Sealaska Corp. and Arctic Slope Regional Corp. announced Thursday they are combining their plastics manufacturing operations in the Pacific Northwest.
The two regional Alaska Native corporations have been competitors in providing parts for manufacturers of computers and telecommunications equipment.
But now they also will be partners. A partial merger is being undertaken as part of the ongoing response to the relocation of Hewlett Packard, previously their main regional client, from Vancouver, Wash., to Guadalajara, Mexico.
Juneau-based Sealaska's Vancouver operation, run by subsidiary TriQuest Precision Plastics, and Arctic Slope's Tualatin, Ore., operation, run by subsidiary Puget Plastics, are being merged into a new company based at the Oregon site.
``It didn't make sense to have two companies running at 39 percent capacity,'' said Al Kookesh of Angoon, a board member of both Sealaska and TriQuest. ``The problem with the Vancouver plant is that most of the big companies have moved out of that area.''
``Basically, the business that's left in the Pacific Northwest is not only quantitatively different but qualitatively different as well,'' said Jim Stotts, vice president of operations for Arctic Slope Regional Corp. ``What's left is smaller runs. You change your molds more often. ... We find our client lists are more complementary than competitive.''
The merger does not affect TriQuest's and Puget Plastics' other operations. Both have two other manufacturing divisions doing business in the United States and in Mexico.
TriQuest has had turnover in its management and reportedly incurred a substantial loss in 1999, although Sealaska did not include a bottom line for the subsidiary in the recent annual report for the corporation.
TriQuest reportedly had 1,400 employees at the time of its acquisition by Sealaska in December 1997. Puget Plastics has 320 employees, including about 150 at the Oregon plant, according to Stotts.
Puget Plastics President and CEO Dale Behm said layoffs will take place evenly on both sides in forming the merged operation in the Pacific Northwest.
But Stotts, Behm and Kookesh didn't say exactly how many jobs will be lost. Sealaska Vice President of Corporate Communications Ross Soboleff and TriQuest President Joseph Devine did not return phone calls.
The merger is the latest ripple from the North American Free Trade Agreement, or NAFTA, which smoothed the way for business across international borders.
Hewlett Packard had used a Vancouver facility to produce most of the ink-jet printers it offered for sale in the United States. But in early 1999, the company rapidly moved the operation to Mexico and turned the manufacturing over to subcontractors, Behm said.
With labor costs 25 percent to 30 percent lower in Mexico, TriQuest and Puget Plastics, with their U.S.- and Canadian-based operations, could no longer compete as suppliers, he said.
Proximity to clients also was key, Kookesh said. ``They expect services, and they expect it today.''
TriQuest and Puget Plastics already have been making the transition to Mexico. TriQuest closed a Calgary, Alberta, operation last year and recently opened a new plant in Monterrey, Mexico. The Sealaska subsidiary already was operating a plant in Guadalajara. Puget Plastics opened an operation in Guadalajara in late 1998, Stotts said.
A letter of intent between Sealaska and Arctic Slope was signed Thursday. Final agreement on the Northwest merger is expected by mid-summer, according to the two corporations.