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Native payrolls fuel part of Southeast's economy

Posted: Tuesday, December 04, 2001

Native corporations created by the 1971 Alaska Native Claims Settlement Act have a decided impact on Southeast's economy - especially in rural areas. Despite layoffs and financial problems, the corporations continue to provide jobs for hundreds of the region's residents.

For example, in Hydaburg, a village of 382, 61 residents earned income from ship-loading for Sealaska Corp.'s timber operations during 2001, with a payroll of $1.2 million, said Ross Soboleff, vice president of corporate communications. In Hoonah, a village of 860, Sealaska-related timber harvest activity accounts for one in five personal income dollars, or about $3.4 million annually.

Sealaska, a regional corporation based in Juneau, has more than 16,000 Native shareholders and is the largest private landowner in Southeast Alaska. Its principal investments are in forest products, financial markets, telecommunications, entertainment, plastics and mineral exploration and development.

Sealaska employs 27 people in its Juneau headquarters in winter, Soboleff said, 59 in summer. Regionwide, Sealaska, Sealaska Timber Corp. and its contractors employed about 870 full and part-time workers in 2000 in Southeast Alaska. These workers earned an estimated annual payroll of $29 million, making Sealaska "the largest private sector employer in the region - and probably the top employer," Soboleff said.

To assess its role, Sealaska hired Juneau-based research business The McDowell Group to produce a study, "Economic Impacts on Rural Southeast Alaska Communities." The study covers impacts in Hoonah, Kake, Hydaburg and Klawock and other Prince of Wales communities, Soboleff said.

The corporation is engaged in strategic planning for its future and a report to shareholders on plans for the next two years will be issued soon.

"We are still thinking through the process," Soboleff said, but he expects Sealaska will move more to financial investments and less to investments that would create jobs. "However, if we could create lots of jobs, that would be fabulous."

"We represent a significant part of personal income to these communities, and it's a big responsibility. Sometimes we feel we are the only one or there are not many out there," Soboleff said. He urges other organizations in the public and private sector to consider investments in Southeast's villages.

Goldbelt Inc., Juneau's urban Native corporation, has invested in tourism through the Goldbelt Hotel, the Mount Roberts Tramway, Voyager Cruise Line and Alaska's Glacier Bay Cruises and Tours. The corporation's economic impact diminishes in winter when it lays off employees. The tramway, for example, has 100 employees in the summer, but only three during the off-season. The Seadrome dock operation drops from 15 or 20 to one.

"We normally cut back to a skeleton staff - from 650 to 150 counting 60 to 70 at the hotel," said Gary Droubay, Goldbelt's president and chief executive officer.

Many of Goldbelt's employees reside in Juneau, Droubay said. "Our biggest seasonal operator is Glacier Bay, the lodge and cruise ships. We have 250 employees and cut to 50 usually, but cut to 10 this year." He said most of those employees reside in Seattle so these specific layoffs do not affect Juneau as much.

Huna Totem Inc., Hoonah's village Native corporation, has a "highly diversified balance sheet and is looking to maintain and expand upon it," said Sam Furuness, chief operating officer. "We see some real opportunities and are excited about the potential of these projects."

Huna has 1,200 shareholders. Its investments include venture capital investments in start-up companies; two shareholders who offer interpretive services aboard Holland America cruise ships in Glacier Bay, describing Tlingit tradition in that area; and income-producing properties such as a 136-unit apartment building and a 48,000-square-foot office building in Los Angeles. Earlier this year, it founded an investment management company with headquarters in Juneau, Right Star Investment.

"We are mostly passive right now with the bulk of our assets in stocks and bonds," Furuness said. However, the corporation is investigating a tourism opportunity in the Hoonah area.

At its peak in 2001, Huna Totem employed 24 people; the current figure is 13, Furuness said. He would not reveal the annual payroll, but said the corporation paid dividends four times this year of $2 per share. The trust fund paid dividends of $15.50 in February and $5 in August and November.

Small and highly diversified, Kake Tribal Corp. produces about 80 percent of the income in Pelican, and 70 percent of the income in Kake, said chief operating officer Duff Mitchell.

The village Native corporation for Kake owns Kake Tribal Logging, Timber and Construction (which includes an automotive repair shop and sells tires); Kake Tribal Fuels (including a mini-mart and a marina); Kake Foods Inc. (a seafood processing plant with a dock and cold storage, which processes salmon and halibut in season and makes smoked salmon and value-added products year-round); Pelican Seafoods (and ancillary businesses such as the hydroelectric plant, grocery and the liquor store); and Kake Tribal Tours (including ships, buses and a dance group).

The combined income from Jan. 1 to Oct. 31, 2001, of Kake Tribal Logging, Kake Tribal Fuels, Kake Foods and Kake Tribal Corp. is $1.3 million.

"I think we are the driving force of the economy in Kake (population 800)," Mitchell said. "At least one person in each family works for us. It's actually thriving. We have a huge cadre of experienced heavy equipment operators that we are moving from timber to construction."

"We have harvested most of the timber we were given in 1971, but now we harvest Sealaska's timber on Kupreanof Island," Mitchell said. "We are trying to move forward profitably in every little area we can."

Kake Tribal, which filed for bankruptcy protection in the late 1990s, has cut its administrative and overhead costs by two-thirds in the last two years. Plans for the future include building a waste incineration facility in Kake that would produce electricity. The trash of Sitka, Haines and Petersburg - now traveling to Seattle - would become BTUs.

Klukwan Inc., the village Native corporation for the Haines and Klukwan area, has investments focused in the construction, wood products, marine services, tourism and mineral industries. It owns three ships, the Chilkat Express (a high-speed jet catamaran) and two larger ships, the 150-passenger Fairweather Express and Fairweather Express II. During the summer, they are engaged in marine transportation and tours in Southeast. During the winter, all three are based in Port Townsend, Wash., where the Chilkat Express recently began offering passenger ferry service between Seattle and the historic Victorian seaport.

"Port Townsend has welcomed us with more than open arms," said president Ron Gelbrich.

Klukwan has about 600 employees between its parent corporation and its subsidiaries, Gelbrich said. Employment, which fluctuates seasonally, is concentrated in Haines and Ketchikan with additional operations in Denver and Phoenix. Ketchikan is headquarters for its construction firm, South Coast Inc. Gelbrich did not wish to share annual payroll figures.

At present, Kootznoowoo Inc. has scant economic impact on Southeast Alaska because it has a total of four employees, said Robert Hamilton, general manager of Angoon's village Native corporation.

In its heyday, when it was harvesting timber on Prince of Wales Island where Kootznoowoo has most of its land holdings, the corporation employed five people who lived in Ketchikan and worked on Prince of Wales full-time, 20 people in its Juneau office, and three office workers in Angoon, said Rose Nease, corporate secretary. A summer month's payroll during that heyday, in 1998, was about $84,000.

However, 1998 also saw the demise of another Kootznoowoo investment, the Learning Connection, a computer training center. Some of the Juneau employees were running that business, Nease said.

Hamilton is working at gearing Kootznoowoo back up, he said. "But you have to do that in a secure, low-risk manner," he added.

At present Kootznoowoo is completing a survey with the Bureau of Land Management to acquire remaining land entitlements through the provisions of ANCSA. The lands in question comprise 8,000 acres around Mitchell Bay in the Angoon area, Hamilton said.

"We will hire three shareholders next summer in conjunction with the Alaska Corporation to do that surveying work," he said. "We are developing tourism plans for those lands. But they are very sensitive because of subsistence and traditional uses."

Hamilton noted that corporations must be realistic about the type of employment they offer shareholders.

"If you look at the villages and the preferred type of jobs, they are usually seasonal and outdoors," he said. "We have to develop things that fit, like jobs of the past such as longshoring - or people won't want the jobs."

Ann Chandonnet can be reached at achandonnet@juneauempire.com.



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