Sealaska Corporation History

Address:

1 Sealaska Plaza, #400
Juneau, Alaska 99801-1276
U.S.A.

Telephone: (907) 586-1512
Fax: (907) 586-1826

Private Company
Incorporated: 1971
Employees: 290
Sales: $102 million (2002)
NAIC: 113110 Timber Tract Operations; 114111 Finfish Fishing; 212311 Dimension Stone Mining and Quarrying; 311711 Seafood Canning; 327331 Concrete Block and Brick Manufacturing; 327320 Ready-Mix Concrete Manufacturing; 336111 Automobile Manufacturing; 424460 Fish and Seafood Merchant Wholesales; 531120 Lessors of Nonresidential Buildings; 55111201 Offices of Other Holding Companies; 813910 Business Associations; 113310 Logging; 813910 Business Associations; 423310 Lumber and Wood Merchant Wholesales; 541613 Marketing Consulting

Company Perspectives:

Sealaska's philosophy is to protect and grow our corporate assets to provide economic, cultural, and social benefits to current and future generations of our shareholders.

Key Dates:

1971:: Sealaska forms under the Alaska Native Claims Settlement Act (ANCSA).
1982:: The company is on the brink of bankruptcy; Byron Mallott is named CEO.
1984:: Sealaska joins seven other Alaska Native corporations to start the Southeast Alaska Native Log Export Association.
1985:: The company's subsidiary, Pacific Western Lines, goes out of business.
1986:: Financier R. Michael Crowson is accused and convicted of defrauding Sealaska of millions of dollars.
1989:: Sealaska receives the Governor's Alaskan Exporter of the Year Award.
1991:: Byron Mallot steps down as Sealaska's president and CEO; Leo H. Barlow takes his place.
1996:: Sealaska purchases a calcium carbonate mine.
1997:: The company purchases a 90 percent interest in TriQuest Precision Plastics for $65 million.
2001:: Chris McNeil is named the new president and CEO of the company.

Company History:

A Native-owned corporation with more than 16,500 shareholders, Sealaska Corporation is the largest private landholder in southeast Alaska. The company's principal investments include forest products, financial markets, telecommunications, entertainment, plastics, and minerals development. Its primary assets include 290,000 acres of land containing 3.5 billion board feet of merchantable timber, as well as 600,000 acres of subsurface land. The company is also invested in telecommunications, with ownership interest in more than forty markets. Since its start, Sealaska has become involved in a variety of businesses, becoming a leader in exports and an economic and political force for Alaska.

Birth of Sealaska in 1971

Sealaska Corp. was one of 13 for-profit corporations formed in 1971 under the Alaska Native Claims Act (ANCSA). ANCSA was formed in order to resolve century-old land-claims disputes between Alaska Natives and the state and federal governments. Dubbed the "Billion Dollar Deal," ANCSA offered Alaska Natives $967 million in cash and 44 million acres of land, but instead of handing over the money and land, Congress created corporations, such as Sealaska, to manage the assets. In dividing the assets, each Alaska Native born on or before December 18, 1971 received 100 shares of stock. In return, Natives had to forgo all other land claims. They were also required to contribute 70 percent of their natural resource earnings to a common fund, which would later be divided on a pro rata basis among the corporations.

On the Brink of Bankruptcy: Early 1980s

Of the 13 corporations formed under ANCSA, most, including Sealaska, sustained major setbacks. In 1982, when Byron Mallott was named CEO, Sealaska suffered a staggering $28 million loss, largely due to a botulism scare. The threat began when a Belgian man died from botulism poisoning after eating salmon that had been packed at a plant operated jointly by Whitney Fidalgo Co. and Ocean Beauty. Ocean Beauty was a Sealaska subsidiary. FDA officials recalled all cans that had been packed in 1980 and 1981. Other factors contributing to the company's 1982 losses were a faltering timber industry and sky-high interest rates. By the end of the year, Sealaska considered declaring bankruptcy.

Having escaped bankruptcy, Sealaska looked ahead. In 1984, the company formed an export trade group with seven other southeast Alaska native corporations. The export trading association, named the Southeast Alaska Native Log Export Association, would promote export sales of logs. The group had been able to form because of the Webb-Pomerane Act, a federal statute permitting limited exemption from federal antitrust law for export trading associations.

In 1985, Sealaska recovered a fraction of its 1982 losses, reporting a $1.8 million profit for the fiscal year. Nevertheless, in forming new businesses, such as the Southeast Alaska Native Log Export, Sealaska could not cash in on most of its sales for the year, which amounted to $215 million. At the same time, Sealaska was having difficulties with one of its subsidiaries, Pacific Western Lines. In 1985, the Seattle-based barge service went defunct. Excess shipping capacity, depressed freight rates, an oversupply of ships and an undersupply of cargo--all of which led to price wars--were to blame for the failed company. Pacific Western, whose revenue dropped from $24 million to $16 million bewteen 1983 and 1984, sold its equipment to another carrier, Lynden Inc. Sealaska used the money from the sale to invest in other businesses.

Another possible factor contributing to the company's enormous profit losses of the early 1980s came to light in 1986, when financier R. Michael Crowson was accused of defrauding Sealaska of millions of dollars. Prosecutors claimed that Crowson paid out more than a million dollars in kickbacks and bribes between 1980 and 1983 in return for leasing purchase contracts with two subsidiaries of Sealaska. Crowson was convicted of 19 counts of racketeering, mail and wire fraud, and tax evasion.

Meanwhile, Sealaska's future began looking brighter. While the Alaskan economy had been sluggish for years--mostly due to oil prices--Sealaska's expansion into fish and timber left them exempt from many of their former problems. Fishing had recently made a strong comeback, and timber proved especially lucrative. In 1985, Sealaska exported 150 million board feet of round logs to Asia, helping it to become the biggest timber exporter in Alaska. In 1986, Sealaska officially recovered from its financial mess of 1982, touting total revenues of $237 million and profits at $23.9 million.

Continued Growth amid Environmental Controversy: Late 1980s

In 1987, Sealaska celebrated its then best-ever year for profits, $30 million, with total revenues of $260 million. Meanwhile, its Seattle-based subsidiary, Ocean Beauty, earned sales of $187 million ($10 million more than the previous year), and Sealaska Timber Corp. earned a profit of $24 million on sales of $57 million. At the same time, Sealaska's long-term debt dropped under $25 million, from $37 million in 1986 (and far below the $106 million debt from 1982); its capital base rose to $120 million; and its assets grew to $216 million. Still, even while moving forward, Sealaska remained dedicated to the Tlingit, Tsimshian, and Haida Native people it represented; they confirmed their dedication through education programs, scholarships, and the Sealaska Heritage Foundation, which honored the Natives' traditions in an annual celebration event.

In 1988, environmentalists began speaking out against the Native corporations' logging practices, which cut down approximately 15,000 acres of trees in that year alone. The excessive logging began in 1980, when Native corporations began to receive the 470,000 acres of land they had been promised in the 1971 Alaska Native Claims Settlement Act. Because the land was privately owned by the Natives, it was difficult for environmentalists to fight the logging practices. Furthermore, corporations such as Sealaska lauded the boost in the economy resulting from the logging. The company also felt its responsibility to shareholders to maximize profits trumped other concerns. However, some restrictions were enforced: when Sealaska wanted to cut down 700 acres above Hydaburg's reservoir, the project was terminated after only 100 acres had been cut.

Sealaska received the Governor's Alaskan Exporter of the Year Award in 1989, mainly for the exports of two of its subsidiaries, Sealaska Timber Corp. and Ocean Beauty Seafoods. The timber business exported 219.6 million board feet of products to Japan, Korea, and China in 1988, with total sales of $118.1 million; Ocean Beauty's export sales reached $58 million, up from $50 million the year before. The seafood company owned twelve processing facilities in Alaska, Washington, and Oregon and had eight regional distribution centers in five western states. With 800 full-time employees (and up to 2,000 at peak times), Ocean Beauty marketed more than 100 million pounds of seafood in the United States and abroad, with combined annual sales of $200 million. These figures notwithstanding, Sealaska placed Ocean Beauty up for sale later that year, earning $14.6 million on the deal.

Ongoing Prosperity in the Early to Mid-1990s

In 1991, Native corporation Klukwan Inc. offered to purchase Sealaska for $201 million. Sealaska, which had 15,750 shareholders at the time, rejected the offer. Klukwan was the most prosperous Native corporation, with a $30 million fund that paid its 270 shareholders large annual dividends. Sealaska asserted that it was not for sale. In 1991, Sealaska's net earnings were $21.3 million on revenue of $127.3 million. Meanwhile, the company paid out dividends to shareholders totaling $7.9 million and deposited $6.7 million into the Elders' Settlement Trust fund, which had been created in 1991. The shareholder permanent fund, created in 1986, increased to $68 million. At this point, after eight consecutive profitable years, Byron Mallot stepped down as Sealaska's president and CEO. Leo H. Barlow, a key Sealaska Timber Corp. executive, took his place.

Sealaska continued its success, claiming its ninth consecutive year of profitability in 1992. In 1993, the company's net income was $19 million on revenue of $167 million. This represented a 30 percent increase from the previous year's revenue, at $128.4 million. The substantial increase was made possible by Sealaska Timber Corp., which accounted for $155 million of the year's revenue. The timber operation sold 231 million board feet of timber.

In 1994, Sealaska earned a net income of $22.7 million, 36 percent over the previous year. Again, success was owed to the corporation's timber industry. Total revenues for the year, at $227 million, exceeded the previous year's by $60 million. In 1994, Sealaska Timber Corp. had its most profitable year to date. Furthermore, while other corporations had been suffering from an erratic investment climate, Sealaska's investment portfolio closed at $238 million, up $7 million from the previous year.

Environmentalists were once again questioning Native logging practices by 1995. While public logging companies were being shut out of public lands, Native logging on private land continued. Sealaska, for one, planned to go ahead with its intense logging practices, claiming it had enough timber to log for another ten to twenty years.

In 1996, Sealaska's net profits rose to an astounding $43.4 million on $237 million in revenues, while its Permanent Fund (an investment fund that has ensured shareholders dividends) reached $100 million. However, because of a provision of the Alaska Native Claims Settlement Act, the company was required to pay about $21 million to other Native corporations. Also in 1996, Sealaska's board of directors approved the investment of $13 million in capital expenses to open a calcium carbonate mine at Calder on Prince of Wales Island. An open quarry was constructed from which Sealaska began extracting ore to make limestone. Nonetheless, it was timber, which provided $210 million in revenues, that remained central to Sealaska.

Financial Struggles and Recovery in the New Century

In 1997, Sealaska expanded into a new market, plastics, when it purchased a 90 percent interest in TriQuest Precision Plastics for $65 million. TriQuest, an injection-molded plastics manufacturer for high-tech industries, had $90 million in sales in 1996. TriQuest teamed with Sealaska because it needed the capital to fund an aggressive expansion campaign, with the goal of becoming a $200 million company. TriQuest began its campaign in 1998 with the opening of its second Mexico factory.

Sealaska requested that the U.S. Forest Service stop exporting unprocessed timber from Alaska's Tongass National Forest in 1998, claiming that the timber should be processed in Alaska. Sealaska, the largest private harvester of timber in southeastern Alaska, felt that the exported timber reduced its returns in the market. In the same year, Sealaska and another Native corporation participated in an acre-for-acre land exchange with the federal government. The government received 2,400 acres of watershed lands, while the Native corporations received an equal number of acres of national forest land, with rights to log on them.

In 1999, Sealaska Timber Corp. adopted new techniques to remain competitive in the face of a changing Japanese market. Japan represented Alaska's largest export source. Strategies included reducing overall volume and adhering to a policy of "just-in-time" production, shipping, and sales. At the same time, due to recent costly ventures, as well as large dividend payments to shareholders, Sealaska's yearly profits dropped to $10 million on $176 million in revenues.

Sealaska subsidiary TriQuest announced it would merge with another plastic manufacturer, Arctic Slope Regional Corporation, in 2000. The new company was named TriQuest-Puget Plastics. Sealaska supported the merger, hoping it would bring further expansion. Later that year, Sealaska invested in a 40,000-square-foot casino in Escondido, California, with the San Pasquel Indian tribe. While Sealaska would neither own nor manage the casino, they invested $14.7 million in the $180 million project. In another venture that year, Sealaska joined Arctic Slope Regional Corp. and Doyon Limited, with an agreement with AT&T, to form Alaska Native Wireless. The cost of the new company, which the corporations won in a U.S. government auction bid, was $459.6 million (of which Sealaska provided $40 million).

Sealaska ended the 2000 fiscal year in a state of disaster, with the company recording an astounding $122 million loss on $72 million in revenues. Largely to blame were the failings of two of its four recent investments ventures, TriQuest and SeaCal. Other contributing factors included steep competition and a bear market on Wall Street. Poor timber prices were also blamed for the losses, even as timber remained Sealaska's most lucrative market (contributing $80 million in gross revenues that year).

The company's timber market, in the face of such disaster, seemed to be its only real hope. Trees they had begun replanting in 1982 were up to fifty feet tall and eight inches thick, and about 150,000 seedlings would be planted on 1,000 acres in the following year. Such replanting figures would allow the company to maintain its harvesting rate indefinitely, creating something like a "permanent fund" for the company. Nonetheless, timber alone could not save Sealaska from its 2000 financial woes.

In 2001, Chris McNeil was named the new president and CEO of Sealaska as part of its rebuilding process. Among his top priorities was to sell Sealaska's precision plastics and limestone mining businesses. Combined, the two businesses had cost Sealaska a total of $73 million in losses. In 2000, Sealaska's permanent fund investment had fallen $24 million in value. In 2001, the company laid off 12 workers to reduce overhead, bringing its total employee count to 100.

In 2002, Sealaska sold a minority interest of TriQuest to Massachusetts-based Nypro Inc. A few months later, TriQuest closed its injection molding plant, laying off 155 employees. In addition, Sealaska's new venture, Alaska Native Wireless LLC, was put on hold, since the licenses had belonged to recently bankrupted Next Wave. Later in the year, Sealaska and its partners in the venture received 85 percent of their investments back, while the U.S. Supreme Court dealt with a dispute in the transaction.

In an attempt to regain footing, Sealaska decided to stay in the plastics business, believing its new status as a minority-owned company might eventually be profitable. TriQuest Nypro's financial situation did improve in 2002, when the company broke even. TriQuest-Puget Plastics, meanwhile, was closed and assets were sold off; at the same time, mining in SeaCal ceased. Also in 2002, the San Pasquel casino repaid Sealaska its original $14.7 million investment, as well as an extra $8.7 million in interest and management fees.

Sealaska's cost-cutting formula for 2002, which included closing down failing operations, contributed to a significant recovery for the company. By the end of the fiscal year, Sealaska recorded earnings of $40.5 million on $170 million in revenues. Also contributing to the recovery was Alaska Native Wireless, which earned the company $33 million in profits. Meanwhile, Sealaska Timber earned more than $8 million. In 2003, the timber operation won the Governor's Exporter of the Year Award and timber export sales continued to bring in strong profits. Sealaska's revenues and profits in 2003 were on a similar course to those in 2002.

Principal Subsidiaries: Sealaska Timber Corporation (STC); Alaska Native Wireless LLC; TriQuest-Nypro Plastics.

Principal Competitors: Silver Bay Logging; Titan Plastics Group; Western Wireless Corp.

Sealaska Corporation History

Company Perspectives:

Key Dates:

Company History:

Further Reading:

Read more company histories