Sealaska hopes to be a bright spot for economic activity and job creation during a time when prospects look bleak elsewhere in Alaska, as the state wrestles with closing a multibillion dollar budget deficit.
The regional Native corporation announced Friday it would be distributing $17.5 million to its more than 20,000 Tlingit, Haida and Tsimshian shareholders on Dec. 3. The amount varies from $11.82 per share for elders, to $1.31 for descendant, village and leftout shareholders.
Sealaska CEO Anthony Mallott said during a Thursday interview that 2015 mostly laid the groundwork for future opportunities and growth, but the company will tighten the gap this year between its revenue and operational expenses.
A $35 million loss in 2013 will continue to limit dividend payouts through 2018; the portion of net profits that Sealaska pays into dividends is based on a five-year average. Sealaska narrowed that gap last year by cutting operational loses by tens of millions after selling several companies that were a drain on profits.
“The biggest change is we had to narrow operations,” Mallott said, adding that Sealaska is now focused on honing in on opportunities in the Pacific Northwest, where most of its shareholders live and work. By 2017, he expects Sealaska will have be close to filling the gap between its revenue and expenses without having to rely on 7(i) funds or investment returns.
“Work in 2015 is setting up 2016,” Mallott said. “We think it’s set up nicely, … by 2017 we’ll be close to closing the gap.”
Seventy percent of the natural resources revenue from 12 of 13 of Alaska’s regional Native corporations are pooled together into a fund called 7(i), which is then distributed to all the corporations depending on number of their shareholders. The region’s 10 village corporations accept 7(i) funds on behalf of their shareholders and decide independently whether to distribute dividend checks, invest, use for operations or a combination of all three. In Sealaska’s case, about half goes to shareholders and the other half goes to the corporation to fund programs and operations.
“7(i) is an income source for Sealaska, and some don’t see it as that,” said Sealaska spokeswoman Dixie Hutchinson, noting that Sealaska has paid more than $300 million into 7(i) since its formation. Sealaska’s dividend is derived from three sources: 7(i) funds, its permanent fund (valued at $100 million) and operational income.
Eyeing 2016
Sealaska’s dividend is derived from three sources: 7(i) funds, its permanent fund (valued at $100 million) and operational income.
Mallott said Sealaska is bracing for less 7(i) revenue in future years due to the dropping prices of commodities, but the corporation is still poised to stand on its own in a few years time nonetheless.
Sealaska received the last of its owed lands under the 1971 Alaska Native Claims Settlement Act in late 2014, adding 70,000 acres more to its decades-old 375,000-acre entitlement. The more than 68,000 acres of the new land has enough mature timber to allow harvesting for 15 years until younger growth matures. Mallott said timber harvests will create 200 jobs for Sealaska and 400 total industry and indirect jobs.
The jobs created by Sealaska’s timber activity, both direct and indirect, would nearly double the existing number of timber jobs in the region; there were 328 direct timber harvest jobs recorded in 2014, according to Rain Coast Data, the lowest since 1890.
Timber served as a major economic driver in Southeast Alaska in the 1970s and 1980s, boasting 3,543 industry jobs in 1991, but environmental and federal pressure all but wiped out the industry since.
Timber served as a major economic driver in Southeast Alaska in the 1970s and 1980s, boasting 3,543 industry jobs in 1991, but environmental and federal pressure all but wiped out the industry since.
Mallott said just because logging operations will pick up doesn’t “lessen our want to be good land stewards … and move our thinking forward.
“When we say ‘Haa Ani,’ ‘Our Land,’ … it’s Southeast Alaska. ‘Our Land’ is more than that 2 percent Sealaska owns,” he said, referring to Tongass National Forest, which at more than 20 million acres is the largest national forest in the U.S.
Of the 70,000 acres recently acquired, 1,099 will be used for small economic activity such as energy projects and cultural tourism and 490 acres include cemeteries and historic sties.
Mallott said natural resources and timber is just one leg of Sealaska’s platform, the other two being government services, and seafood and organic foods. He said Sealaska officials have spent the last 18 months looking at every aspect of the seafood industry, from processing to large fishing fleets.
Mallott said Sealaska will be picky in where it invests; any companies purchased must show a positive cash flow and Sealaska wants to see a 15 percent return in order to limit financial risks.
He also said Sealaska is interested in building partnerships for cultural tourism opportunities, praising what Huna Totem has accomplished with Icy Straights Point and the Central Council of Tlingit and Haida Indian Tribes of Alaska’s plan to turn the Thane Ore House into a cultural immersion park.
Eye on Southeast
Mallott said the company and its board are also keeping an eye on statewide developments. Even though Sealaska doesn’t necessarily rely on state funds, it won’t be insulated “any more than any other business” from the recession the state now finds itself in, he said.
In particular Mallott shared concern for the Alaska Marine Highway and how budget cuts will impact shareholders in rural communities. The 2016 ferry schedule has the fewest number of vessels in operation in decades, resulting in less frequent travel to rural villages.
“It’s made us want to understand the risk communities take … and be part of the policy conversation,” he said. “ … And we’re very concerned about AMHS.”
