Alaska Native regional corporations overview: growth and diversity drive economic engine.

• Author: Stricker, Julie
• Position: SPECIAL SECTION: Alaska Native Business

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For decades, economists have warned Alaskans that putting the bulk of their economy in the oil patch would have dire effects. And with oil prices in the tank, those warnings have proven out, with the state economy in shambles.

That was a lesson the Alaska Native regional corporations have also learned. Over the past decades, the corporations have grown and diversified and have become an economic engine in Alaska, bringing in billions of dollars annually from their businesses around the globe and employing thousands of Alaskans.

The corporations were formed under the 1971 ANCSA (Alaska Native Claims Settlement Act), which tasked them with dual financial and social mandates. Under ANCSA, Alaska's Natives ceded control of 320 million acres of land in return for title to 44 million acres and $962.5 million. This was divided between twelve regional and two hundred village corporations. A 13th corporation was later created for Alaska Natives living outside the state.

In the past forty-five years the corporations have grown, with subsidiaries operating in government services, oil, tourism, real estate, construction, natural resources, transportation, and more. In addition to creating profitable businesses to support shareholders, they also spend millions of dollars each year in support of maintaining their cultures and languages, as well as educational scholarships, internships, and technical training opportunities.

Today, some are also investing in oil and gas exploration, hoping to lower the high costs of energy in the state.

Here is an overview of the corporations' operations in fiscal year 2015 and some of their 2016 activities.

Ahtna Corporation

Ahtna Corporation is hoping to strike natural gas on land not far from its Glennallen headquarters. The corporation, with more than 1,900 shareholders and a land base in the Copper River Valley, has long had expertise in the oil and gas industry and is seeking new sources of natural gas to provide energy to local residents, as well as jobs.

In early 2016, the Alaska Division of Oil and Gas approved the Tolsona gas exploration, located on state land just eleven miles from Glennallen. A previous well drilled about ten years ago showed signs of gas but was abandoned because of high-pressure water zones.

"We are optimistic of a resource discovery that will help address the rural energy crisis in the Ahtna region," President Michelle Anderson states in a news release. "A substantial discovery would benefit not only the Ahtna region, but the state at large. It would provide a boost to the economy by putting Alaskans to work and help to alleviate the high energy costs that many residents experience."

Ahtna is a vocal proponent of the state's LNG (liquefied natural gas) project. It would be the largest single landowner along the proposed pipeline route, Anderson says in a letter to shareholders.

"We continue to meet with key project stakeholders to put Ahtna in a favorable position to take advantage of contracting opportunities and gainful employment for our people," according to Anderson.

Ahtna's business arm, Ahtna Netiye' Inc., oversees the operations of thirteen subsidiaries in areas such as government contracting, civil and vertical construction, facilities management and support services, and oil and gas pipeline maintenance and construction. In 2015, the corporation showed gross revenues of $188.4 million, slightly above 2014's $185 million.

In 2015, Ahtna Netiye' acquired AAA Valley Gravel, which is located near areas in the Matanuska-Susitna Valley that are likely to benefit from federally funded transportation projects over the next several years.

Another subsidiary, government contractor Ahtna Facilities Services, Inc., won a substantial contract to provide janitorial services on Joint Base Elmendorf-Richardson. The contract amount was not disclosed, but it involves providing services to more than one hundred buildings. Ahtna Facilities Services, which was established in 2006, is on track to graduate from the Small Business Administration 8(a) program in 2018. It current has 118 employees.

In 2015, Ahtna used a variety of forums to reach out to its shareholders and their descendants, hosting open houses, candidate forums, and receptions in Glennallen, Fairbanks, and Anchorage, as well as subsidiary offices in California and Seattle. Ahtna's shareholder development has been working with students in local schools to help them plan what courses they should be taking in preparation for future careers. Ahtna also helps shareholders at regional job fairs and is partnering with unions to develop training and apprenticeship opportunities.

The Aleut Corporation

2015 was a challenging year for The Aleut Corporation (TAC), which made several changes to its management team, including a new CEO, chief financial officer, and human resources director. CEO Matthew T. Fagnani notes some subsidiaries had "lackluster performances" in 2015. C&H Testing, for instance, saw much of its work in Bakersfield, California, dry up due to low oil prices. Some resources were moved to more successful operations in North Dakota. TAC's other major contracting subsidiary, Patrick Mechanical, continues to do well in Interior Alaska, but may feel the pinch with expected reductions in state-funded projects.

Aleut Management Services, which represents the largest source of contract revenues for TAC, saw a 34 percent increase of revenues, to $69.6 million, over FY2014. However, its net income saw a decrease of 27 percent, to $669,460.

Because of poor performance, TAC wrote off $3 million in intangible assets for C&T and Analytica. In addition, the corporation also logged a $15 million adjustment to its Deferred Tax Assets. Dividends decreased 43 percent compared with 2014, and elder benefits remained steady at $500 per elder.

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Total gross revenue for FY 2015 was $137.9 million, up from $120.3 million in 2014. Of the total, $116.6 million came through contract revenues and $9.8 million through fuel sales. Including the tax adjustment, the corporation saw a net loss of $17.4 million.

Fagnani notes the corporation has instituted an "unrelenting focus" on profitability and is setting benchmarks, strategic plans, and budgets that will allow more oversight on subsidiaries.

When TAC President Thomas Mack was growing up in King Cove, there were no culture camps, but today they are a vital part of the cultural outreach for the Aleutian-based corporation.

"As our population ages and we sadly lose fluent Unangam Tunuu speakers, we recognize the vital importance of preserving our language and culture," he tells shareholders and descendants in TAC's 2015 annual report. "Culture Camps were developed as a way to preserve and teach the language, traditional arts, beading, basketry, cooking, and dance."

Today, seven culture camps are held every year, attracting hundreds of shareholders and descendants, he says.

Nonprofit The Aleut Foundation awarded 207 scholarships totaling $708,803 in FY2015. It also provided community development training programs for forty-one individuals, in addition to funding shareholder and descendant participation on the cultural camps.

Arctic Slope Regional Corporation

Barrow-based Arctic Slope Regional Corporation (ASRC) has continued to diversify its earnings through key investments, says spokesman Morgan Thomas. The aim is to reduce the corporation's reliance on the Alpine oil field and other natural resources royalties.

In fiscal year 2015, ASRC pulled in revenues of $2.5 billion, slightly below their 2014 earnings of $2.6 billion.

In 2015, ASRC acquired both Arctic Pipe Inspection, Inc. and Data Networks Corporation, Thomas says. Arctic Pipe Inspection is a Houston, Texas-based company that has provided nondestructive testing of oil country tubular goods for more than forty years. Data Networks Corporation, based in Virginia, provides a broad range of information technology and program management services to the federal government.

ASRC also made several investments that demonstrate its commitment to communities on the North...