Alaska's native corporations look beyond profits
By night, Roy Huhndorf sits among blue-jeaned students, jotting down notes on financial management and basic economics, part of his nine-year quest for a business degree.
By day, the pin-striped executive is guardian of one of Alaska's most powerful corporations, Cook Inlet Region Inc., with $95 million in assets and land holdings of 2.3 million acres.
For the president and chief executive officer of a major corporation to be taking ground-level business courses may seem odd. But Cook Inlet itself is something of a corporate oddball. It is one of the 13 regional native corporations created by Congress in 1971 to settle ancient land claims in Alaska.
Today, 11 years after the hatching of these unique ventures, the companies are slowly emerging as savvy entrepreneurs in a world that just a few years ago was as alien to them as walrus hunting is to Chrysler chairman Lee Iacocca.
They've not all been financially successful. A few have made Alaska-size bloopers and tallied losses that would have most shareholders on the warpath. But these corporations, one of the most unusual experiments in business history, are sharpening their business acumen and feeling their way.
They are caught up in trying to be profitable businesses as well as tools for the preservation of native culture. But many natives are eager to see tangible benefits from the corporate till.
''There is no doubt that with every passing year, the role the native corporations play in Alaska is growing by leaps and bounds,'' says Robert R. Richards, vice-chairman of the Alaska Pacific Bancorporation and a close watcher of the native corporations.
Under the precedent-setting 1971 settlement, the 13 regional corporations were granted close to $1 billion and 44 million acres of land as compensation for Alaska's 80,000 natives (the aboriginal Aleuts, Eskimos, and Indians).
These companies then parceled out part of the money and resources among some 200 smaller village corporations. Each native owns 100 shares of stock in the regional and village companies.
The natives have gained more political and economic clout across the state in the last decade, and these corporations have been part of the reason. At the same time, however, the rush of modern-day life has left its imprint on their rapidly changing culture, particularly in some rural villages where the life style still revolves around subsistence hunting and fishing.
Problems of alcoholism, suicide, an educational system oriented toward the white man, and the difficulties of coping with a cash economy have left their mark on native identities. More recently they have been fighting moves to repeal the subsistence hunting and fishing rights of rural villagers.
If the regional corporations today reflect these crosscurrents, they also represent to many natives what could be an instrument of stability. ''People who desire to enhance and preserve a culture are left to their own devices and, for better or worse, the one device we have now that might just work are these corporations,'' says Byron Mallott, chairman of the Juneau-based Sealaska Corporation, one of the most successful and powerful of the regional enterprises.
As money managers, the native corporations have met mixed success. About half have shown profits in recent years. But a few which are getting onto a firmer footing are branching out into new ventures, from energy development to reindeer herding. Some are making long-range plans and bringing in white businessmen.
Riding the strength of its timber sales and fish processing business, Sealaska, which owns Ocean Beauty Seafoods Inc., recently rose to No. 951 on Fortune magazine's list of the 1,000 largest US companies. It showed a $5.9 million profit in 1980 on revenues of $130 million. But this year, because of a ''fish scare'' caused by spoiled cans of Alaskan salmon, the company may see its projected 1981 profit of $2.5 million evaporate.
The corporate strategies of these enterprises are as varied as their tribal names. Sealaska's Mr. Mallott, one of the emerging breed of ''Brooks Brothers'' natives, believes one way ultimately for the local people to benefit is to forge an economically sound company and then use the power and profits to help natives.
On the other hand, NANA Regional Corporation, based in Kotzebue in the northwestern part of the state, often looks more at local concerns first and the balance sheet later. It has launched a few businesses, including reindeer herding and jade mining, more to boost local employment than increase profits.
''In a sense, our corporation is like our tribe,'' says Willie Hensley, president of NANA's economic development corporation and chairman of the native-owned United Bank of Alaska. ''We are enrolled in the corporations and registered stockholders. It is the one institution in which the natives have an identity. It just happens to be for a profit.''
A day of judgment for the corporations will come in 1991, when the natives will be allowed, under the 1971 settlement, to sell their shares of stock. Many natives are frustrated at having seen little cash in their pocket as a result of the land claims settlement, and are talking of cashing in their holdings.
''The expectation of shareholders far outstrips what even the largest native corporations can do,'' Mr. Mallott says. Sealaska has yet to pay a dividend to any of its 16,000 shareholders, but it has been pumping money into such things as scholarship funds and internship programs.
''We had absolutely no understanding, no relationship, with the corporate world until 1971. All of a sudden, whammo, we are expected to be out there functioning in such a way that the average person can come up to the spigot and take their share.''
Many native leaders are already trying to head off the possibility of outside companies and individuals swooping in to buy up stock, since the shares represent a link to the land and thus their heritage. But, says Mr. Hensley, the key isn't so much the preservation of the corporation but the preservation of the tribe.
''My perception is to try to show people that 1991 is right now,'' he says. ''It was 50 years ago. It was 100 years ago. If you want to survive as a people you have to work at it. The key is to try to keep the culture and tribes from disintegrating.''