Alaska Native corporations launch variety of new businesses: from gravel pits to employment...

Alaska Native regional and village corporations engage in a wide variety of businesses to benefit their shareholders and the state. Some of their latest ventures involve a gravel pit, residential property development, an employment agency and larger investments into other businesses. This article

NEW GRAVEL PIT FOR EKLUTNA INC. AND CIRI

The opening of Alaska Aggregate Products (AAP) on about 60 acres of Eklutna land created the first Native-owned aggregate company to be based in the Anchorage area.

AAP has a five-year agreement with Eklutna Inc. and Cook Inlet Region Inc. (CIRI) to develop the Eklutna gravel pit and other aggregate sites. Eklutna Inc. owns the surface lands in the development area, while CIRI owns the subsurface rights. AAP is a wholly owned subsidiary of Alaska Interstate Construction LLC (AIC). AIC--jointly owned by CIRI and Nabors Industries Ltd.--has historically provided labor and equipment for construction and mechanical maintenance, gravel or ice road and pad development, and bridge construction for the greater Prudhoe Bay area.

With the current construction boom, AAP is poised to meet the Anchorage area's growing demand for aggregate, said Curtis McQueen, Eklutna's director of corporate affairs. In the past, most of the sand and gravel used for Anchorage-area construction has been transported from the Mat-Su Valley. The gravel pit in Eklutna promises to reduce transportation costs and provide contractors with a new source for high-quality, competitively priced sand and gravel products, McQueen said.

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"All the aggregate coming into the Anchorage market was being railed or trucked in from Wasilla and Palmer," he said. "In the average summer, an average of four to six million tons of aggregate is coming in from Wasilla and Palmer."

AAP began selling aggregate in May. Its initial customers include the Eagle River Wal-Mart expansion, the University of Alaska Anchorage and CIRI's Tikahtnu Commons retail center in northeast Anchorage.

By the third month of operation, the sand and gravel pit was well on its way to processing 100,000 tons of aggregate, McQueen said. According to estimates, up to 50 million tons of gravel could be extracted. With more than a billion dollars worth of highway work happening in Anchorage over the next five years, AAP is planning on providing a lot of aggregate for concrete, asphalt and other uses.

However, McQueen said AAP isn't out to take over the market. It's merely providing another alternative to the local area. "There was plenty of room for smaller players to come in, and that's what we've done."

The timing was right to create the sand and gravel business, according to CIRI. "We started the business because of strong market conditions and the fact that we had a resource that was ready to go to market," said Kim Cunningham, CIRI's land and natural resources director.

CIRI is one of 12 Alaska-based regional corporations established by the Alaska Native Claims Settlement Act (ANCSA) of 1971 to benefit Alaska Natives who had ties to the Cook Inlet region. The Alaska Native regional corporation is owned by more than 7,400 Alaska Native shareholders of Athabascan and Southeast Indian, Inupiat and Yup'ik Eskimo, Alutiiq and Aleut descent.

Eklutna Inc., an ANCSA village corporation, is the largest private landowner in Anchorage. It has significant holdings in the Mat-Su Valley, owning or entitled to receive more than 90,000 acres of land from Eagle River to Palmer, said McQueen. Currently, Eklutna represents more than 160 shareholders and manages a variety of investments, including shopping centers, office buildings and residential developments. Recently, it formed a new subsidiary, Eklutna Services LLC, to focus on construction, development, facility design/ build and leasing and government contracting. The new subsidiary is the development and management arm of Eklutna Inc. and encompasses the sand and gravel enterprise.

The agreement between Eklutna Inc. and CIRI represents the collaboration of a village corporation and regional corporation exercising a mutually beneficial arrangement. They receive an equal share of the royalty income resulting from the mined gravel. "We have an agreement or contract that benefits both sides," said Jim Jager, CIRI's corporate communications director, clarifying the nature of the enterprise. "We try to work with villages whenever the opportunity presents itself."

CIRI considers the gravel business to be a successful venture. It provides financial rewards, jobs and other opportunities for its shareholders, as well as benefits for other stakeholders, Jager said. "We're very happy with the project," he said.

So is Eklutna Inc., according to McQueen. Eklutna is also pleased by the potential broader opportunities made possible by the gravel business. For example, the mined-out areas could be transformed into pools, ponds and lakes that could facilitate raising salmon. And in 20 to 30 years, housing could even be built around the mined sites.

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But, for McQueen, perhaps one of the most appealing aspects of the sand and gravel pit is intangible.

"One of the biggest things is that we're able to make money off our land, and we're not having to sell it," he said. "We're selling gravel."

Earning a royalty from selling gravel provides capital for reinvesting in new ventures and diversifying. "We're getting more diverse, so we're not relying on the housing market," McQueen said.

While Eklutna is using the gravel pit to promote diversity, it's also enhancing its residential property development business. The corporation is wrapping up its development of the popular Powder Ridge subdivision in Eagle River. Next spring, Eklutna plans to begin transforming more than 400 acres into an upper-end neighborhood with green spaces and service areas for residents to enjoy. "Our board really wanted to develop this neighborhood in a way that it was not crammed," McQueen said. "Yeah, we could have made more profits, but our main objective is not about damaging the land. We've taken on a sensitive style of development. It's a 12- to 20-year build out, depending on the housing market."

TATITLEK CORP. CREATES NEW SUBSIDIARY

The Tatitlek Corp. has added a fifth subsidiary to its corporate umbrella: Tatitlek Training Services Inc. (TTSI). Tatitlek's other subsidiaries are Tatitlek Management Inc., Tatitlek Contractors Inc., Tatitlek Response Services Inc. and Tatitlek Support Services Inc.

Essentially, TTSI is an employment agency. The company was formed to fill the need for temporary help services and intends to provide services nationally to government agencies, commercial firms, and internally to other Tatitlek subsidiaries while continuing to provide shareholder employment opportunities. TTSI offers a range of services, including temporary help services, employment placement, human resources and executive search consulting, administrative management, office administration, language schools, translation and interpretation and other business support services.

The Tatitlek Corp. is an Alaska Native Corporation (ANC) as established by Congress under the terms of ANCSA. The village of Tatitlek is located 30 miles south of Valdez in Prince William Sound. The Tatitlek Corp. represents its 265 shareholders through the establishment and work from its subsidiaries, three of which have current 8(a) status through the Small Business Administration (SBA), and one with application pending.

TTSI began doing business late last year recruiting and vetting employees to act as role players for its sister subsidiary, Tatitlek Support Services Inc.'s, predeployment training contracts. Tatitlek created the new company in response to the large amounts of time its personnel were spending recruiting, interviewing and evaluating potential new hires to fill large contacts.

"Because we had the need for this service internally, we decided to spin the service off as a separate business line," said Tatitlek President and CEO Roy Totemoff. "We have identified several external markets where we believe this subsidiary can develop new work."

So far, the new subsidiary has exceeded Tatitlek's goals. "I think it's doing exactly what we wanted it to do," Totemoff said.

In addition to creating an employment agency, Tatitlek is expanding its construction business and information technology product lines. "We are also evaluating two potential acquisitions, local businesses with expertise in areas complementary to work we are doing now," Totemoff said. "We would like to have businesses in Alaska that are not dependent on government contracts."

The impending IT expansion will enable Tatitlek to capitalize on TTSI's background in e-learning. And as for the acquisition of local businesses, they have yet to be named, but they would be an adjunct to Tatitlek's construction company. "One of the acquisitions would happen this year," Totemoff said.

SEALASKA CORP. MAKES ADDITIONAL BUSINESS INVESTMENTS

Sealaska Corp. also has made a number of recent business investments. The Native-owned company, which focuses on forest products, telecommunications, entertainment and plastics, has launched a new subsidiary: Olympic Fabrication.

Olympic Fabrication LLC is a manufacturing company that brings complementary capabilities to Sealaska's existing manufacturing platform, according to Todd Antioquia, Sealaska's director of corporate communications. Olympic Fabrication specializes in the welded fabrication and manufacture of a wide variety of precision components and assemblies for the aerospace, nuclear and military industries.

"We are excited about the formation of Olympic Fabrication LLC," said Russell Dick, Sealaska group operations director. "We will deliver even more cost-effective and quality turnkey solutions to satisfy the needs of our customers.

Sealaska also recently acquired the assets of the Shelton, Wash.-based Olympic Tool & Engineering, a leading fabricator of welded assemblies in the commercial and defense sectors. Olympic Fabrication will expand on the current work force of 53 employees, operating in the same 60,000-square-foot facility at the Port of Shelton.

"The company has proven industry processes and a skilled work force in place with a unsurpassed commitment to quality," said Chris E. McNeil Jr., Sealaska president and CEO. "Sealaska brings the financial capacity and manufacturing expertise to ensure that Olympic Fabrication will be a best-in-class provider of manufacturing services."

In addition, Sealaska Environmental Services (SES), a wholly owned subsidiary of Sealaska Corp., has purchased a majority ownership in two Native-owned environmental remediation companies in an effort to diversify and strengthen SES.

The acquisition gives SES a 5 percent ownership of Kingston Environmental Services Inc., and sister company Kingston Supply Co. LLC. The two Kingston companies will operate as subsidiaries of SES. "These acquisitions significantly expand Sealaska Environmental Services' capabilities and Sealaska's presence in the industry," said Sealaska President and CEO Chris E. McNeil Jr. "The combined efforts of SES and Kingston will contribute positively to Sealaska's bottom line." Dr. Tom Cason will continue in his current position as president and CEO of the two Kingston companies, McNeil said. "Dr. Cason, who is a member of the Choctaw Nation of Oklahoma, brings exceptional qualifications and a highly regarded reputation in the industry," he said.

Headquartered in Kansas City, Missouri, Kingston Environmental Services offers a range of environmental management services, from indoor air-quality testing to hazardous-waste management. Kingston Supply Corp. manages non-core contracts and services of the overall business.

The acquisitions combine SES' experience in environmental remediation project management with Kingston's hands-on capabilities--enabling the companies to offer a broader range of services and pursue more complex, larger contracts, McNeil said. "Joining forces allows us to offer the full spectrum of environmental services through the three companies," he said.

Sealaska has also increased its ownership in global information and technology subsidiary Managed Business Solutions LLC (MBS) from 51 percent to almost 91 percent. MBS has been providing IT services since 1993 and has delivered national and global solutions for commercial and government clients.

"We exercised an option to acquire additional equity in the company earlier than originally planned due to the successful integration of MBS into Sealaska's family of companies," McNeil said. "MBS is one of our fastest-growing companies, and we are proud to offer the MBS suite of services to Fortune 500 companies worldwide."

Sealaska is the largest private landowner and the largest for-profit private employer in Southeast Alaska. Formed as a Native corporation under ANSCA, the corporation unites more than 17,300 Alaska Native shareholders, primarily of the Tlingit, Haida and Tsimshian people.