2002 RDC Annual Meeting: Native Corporations:
The Future Face of Alaska's Economy

Jacob Adams, President,
Arctic Slope Regional Corporation

Thank you Janie. I would also like to thank Carl Portman and the members of the RDC board for inviting me here to today to participate in this panel discussion. My perspective today is to look at how I see Alaska Native Corporations contributing to and participating in the state’s economy in the future. Before I do that, though, I have one issue on which I would like to set the record straight. There is no such thing as an “Alaska Native Business”.

With some apology to Mark Twain, it might be said that “it can be shown by facts and figures that there is no distinctly Alaskan Native business.” It always confounds me, when I read news articles or see directories on businesses in Alaska, to see sections on “Alaska Native Businesses”. What is that we do that is “Native”? Who hires us to be a “Native?” Are we selling our “nativeness” or somehow different in what we do because of our unique ownership? Other businesses are listed as banks, engineering firms, mining companies, etc. There are Alaska Native Corporations in the timber business, that build roads, provide oilfield services, run hotels, mine minerals and many other industries and sectors. It is much more meaningful to look at the particular industry or type of business, not just the Native ownership. These are not second class business operations, they are held to the same standard for quality, price and performance as any business in the state. Do not “pigeon-hole” us, and thus put us down, as one of those “Native Businesses”. [This is the problem with some of the Affirmative Action programs that do not help a business succeed in the long term, so the support which is intended to be temporary becomes so pervasive that the business can not make it on its own.]

I do not mean to make light of the significance of that Native ownership. While Alaska Native Corporations, or at least the Regional Corporations, are in many ways like public companies concerned with dividends, published annual financial statements, and shareholder relations, we remain different. We are a product of a grand experiment by the U.S. Congress in settling aboriginal land claims, and it is an “Epic Story”. However, the land and a sense of place remain extremely important to our people. As Quentin Simeon much more eloquently put it, we truly do exist in two worlds. I have just returned to my office from participating in the annual Spring whaling activities in Barrow. Our culture and the value of traditions are part of our life every day, even as we pursue more Western business type activities. [And our traditions will survive what appears to be yet another challenge by the International Whaling Commission—we will continue to hunt the Bowhead whale.

So, let me give you my perspective—and it is just that, my view. You would probably like to hear that I performed some special Native ritual or communed with some mystic spirit to divine the future. Unfortunately, that is not the case. I invite you to keep these comments in mind and pull them out five, ten or twenty years from now and see how I did. However, I make no apologies (other than to Mr. Twain) if things take a different path. As they say, the one thing that is constant is change.

Generally, I am very optimistic on the future of the economy of this state. We do need to get control of our governmental spending, but that is not my topic for today. Alaska will continue to be dependent upon natural resources—both renewable ( timber or fish) and extractive (oil, gas and minerals). Tourism will remain strong as more of the “baby boomers” seek to fulfill that long term dream to visit Alaska. Alaska Native owned businesses will participate in all those industries and more.

The land base of the Alaska Native Corporations is one of the biggest factors in our future success and contribution to the future of the state’s economy. The land claims act transferred approximately 44 million acres into private ownership. Much of this land is available to support development or be developed for its natural resources; in many cases it is strategic to development efforts. Alaska Native lands are part of the largest new oil field to be developed in the state in the last decade—the Alpine oil field. I remain very bullish on the opportunities for increased discoveries to the West of the Alpine area as more exploration progresses in the National Petroleum Reserve Alaska. Alaska Native Corporations will be a significant part of that effort.

The Alaska Native Corporation lands will also be a source of new major regional development projects. The Arctic Slope Regional Corporation owns massive coal deposits in the far Northwestern part of the state. Development of this resource, particularly as a source of electric power for the Red Dog mine, has a good chance of happening in the next ten years. The Calista Corporation has made increasingly encouraging announcements about the potential for development of gold on its lands. Other Native Corporations are evaluating resource opportunities on their lands as well that have the potential for major new contributions to the states’ economy in the next twenty years. The long delays in conveyancing of lands to the Native Corporations has contributed to the long nature of this evaluation process.

My corporation, the Arctic Slope Regional Corporation, owns a small part of the subsurface in the Coastal Plain of the Arctic National Wildlife Rufuge and has championed opening that area to oil and gas development. If we are successful at that effort, it will be a tremendous boost to the future of the oil industry and economy of this state. I remain cautiously optimistic about our chances of seeing this happen yet in this Congress as the Senate and House conference on a final energy bill. Whether we prevail in this Congress or not, I do see ANWR as making a significant contribution to the State’s economy in the next twenty years. I also expect that oil prices will significantly increase in the next two decades as well, and that this will help to keep existing assets producing and support expanded exploration.

I also fully expect to see a decision on commercialization of natural gas in this state before the end of the decade. Alaska Native Corporations will be an integral part of that decision as well, with the various business interests we operate. They are a source of significant investment capital and may well seek more direct participation in any project that does prove feasible. My crystal ball is a bit cloudy here, but I am looking to see increased innovation coming from Alaska based research in energy alternatives that will help to minimize total reliance upon crude oil production for so much of our energy needs. Alaska Native Corporations are involved in such efforts today [e.g. Koniag and our own PSI] and support increased research and development in this area.

In the longer term, I expect it will be the Alaska Native Corporations that will move into primary roles in the operation of oil and gas facilities in the state. As the larger major oil companies begin to focus elsewhere, smaller independents commonly assume more operational roles. This will be repeated here in Alaska. We have seen some individual Alaskans seek to play in the oil industry in this state and I see that growing as the Native Corporations also begin to join that game, not only on their own land but on state and federal lands as well.

The shareholders of Alaskan Native Corporations are another important aspect of the future of the state’s economy. The shareholders, and their descendants if they have not been made shareholders in a Corporation, will be a powerful source of labor for any project in the state in the future. Many of the corporations and their non-profit “associates” have contributed substantial time and money to improving the skills and training of their shareholders. Lack of training and discriminatory practices have kept many of our people out of the workforce in the past. This will be addressed and must change. While location and small rural economies make this a particular challenge, it is a powerful force at a time when much of the original workforce in many of our service industries is reaching retirement age. We all need to do more here, but it is a significant part of the future contribution of Alaska Native Corporations to the economy.

There are also an increasing number of individual entrepreneurs in this state that are Alaskan Native. While this is not part of the “Corporations” as such, the Corporations have contributed to this skill development through support for education or job experience. They will become an increasingly important part of the future economy as they start and buy businesses to operate. When young Alaskan Natives go outside to attend college or university, they typically return to the state. This is a growing pool of well educated, motivated and bright people entering the state’s economy. We at ASRC have made special efforts to support this through our education foundation grant and scholarship program. In addition, we have supported a special business development company that helps to fund businesses, especially rural and minority owned entities, to grow and expand in the state. This has used both state and federal funding, matched with corporate dollars, to provide a source of funding for growing the Alaska Native contribution to Alaska’s economy.

The future of Alaska’s economy will also be much richer and stable because of the contribution of the cultural values of the Alaska Native Corporations. The Corporations seek to apply the cultural values of the people in the businesses they operate. Again, Quentin Simeon’s story provides some perspective into this. Without contradicting my earlier comments on what is a “Native Business”, I believe that Alaska’s economy has a much improved opportunity for long term success because of the values we have learned from our generations past. Respect, cooperation and integrity are ingrained into business operations, not because some business school text says so, but because it is part of us and always will be. Businesses, and the economy they are a part of, built on that foundation will succeed.

One area where I am concerned that presents a particular challenge for the State of Alaska and the Native Corporations themselves, it the future of smaller rural economies. Alaska Native Corporations are not only the twelve regional entities, there are nearly two hundred villages that also have corporations. Some of these have merged with the Regions, others have joined together for economic strength. Reducing the conflict between rural and urban areas is paramount; failure to do so will severely weaken the future of the entire state’s economy. Ensuring adequate educational and infrastructure for rural communities is essential. Improved communication and transportation systems can help make opportunities for rural residents more meaningful and a contributing part of the state’s economy. Recognizing that much of the wealth of the state comes from rural areas is also important to reducing this conflict. This does not mean that I expect the same services in Atqasuk as Anchorage, but their must be a mutual respect.

Alaska Native Corporations are committed to the future success of this state. Many of us have made investments outside the state, but our primary focus and activities will always be Alaska. Alaska Native Corporations will not move to some lower 48 or foreign headquarters. We will continue to operate and distribute our profits here in Alaska. With the restructuring of the Claims Act that was approved by Congress in the late 1980’s, I do not expect to see a major sell off of Alaskan Native Corporations to outside corporations or investors. We may see some consolidation or merging, but we will always be here as part of the Alaskan economy.