Business

Sealaska recently sold its Global Logistics business to 20Cubed, a much-larger firm with offices in about 10 countries.

The subsidiary managed international shipping, warehousing and related services, as does its new owner.

“We didn’t believe that that particular type of logistics would be able to grow to the size of company that we expect,” said Chris McNeil, Sealaska’s president and CEO.

He said the Southeast-based regional Native corporation is reengineering its portfolio and narrowing its variety of companies. That includes those accessing a controversial federal contract-preference provision.

“Some of the smaller companies were set up to take advantage of the section 8(a) opportunities,” he said. “And where the 8(a) opportunities have existed and been strong we’ve expanded our platform. But where we think that perhaps it will not going to be able to meet our goals, then we’re moving in other directions.”

While Sealaska’s shed one subsidiary, it’s looking for another.

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McNeil said the board and management are discussing an investment closer to home.

“We’re expecting that we would move forward with an operation that would more strongly reflect our Native values, more particularly capacity building and leadership (and) the possibility of competitive advantage in the sector,” he said.

“We’re very interested in the impact an operation could have on our tribal-member shareholders in the region, as well as possibly in the Pacific Northwest.”

He won’t name the company or its line of business.

But he said this and other changes could reduce revenues in the short term.

“We’re doing it from a position of strength because we have a very strong balance sheet that will support us to be able to move forward in this direction,” he said.

The ultimate goal is to be profitable within three years – without depending on 7(i) payments. Those come from a pool of all regional Native corporations’ resource earnings.

Read details of Sealaska’s business operations in its annual report.

Sealaska’s business decisions and leadership are roundly criticized by some of its 21,000 shareholders.

Mick Beasley is one of 10 independent candidates challenging four incumbents for seats on the corporation’s board of directors. He’s among those frustrated with the corporation.

“So we sacrificed how many year for the last direction. Same leaders, different story now. I kind of think we’re still waiting for our stimulus,” Beasley said.

Beasley has authored resolutions calling for board term limits and an end to board-directed discretionary voting. He’s also run for the board before.

He said he’s frustrated Sealaska hasn’t moved faster on minerals development and other resource-extraction operations.

“Let’s just get new people in there. Let’s get some rotation; let’s get some change. It’s almost like if you just look at our operations, we could have anybody in there. If we didn’t have 7(i) right now, we’d be in a world of hurt,” he said.

Sealaska’s annual report for 2012 shows it made almost $312 million in gross revenues. That’s a 20 percent increase over 2011.

Net revenues, or profits, were $11.3 million during the same period. That’s 40 percent more than the previous year, but less than during 2010 and 2009.

 

Governor Sean Parnell on Tuesday signed the oil tax overhaul bill into law, now called “MAPA,” or the “More Alaska Production Act.”

The act reduces taxes on oil companies operating in Alaska. Supporters believe it will increase oil company investment in Alaska.

Parnell introduced the legislation three years ago and it finally passed at the end of this session, after redistricting gave Republicans enough Senate seats to take control of the state Senate, which had blocked the bill.

Critics fear the plan gives away too much to oil companies with no guaranteed return. Protesters gathered outside the Anchorage venue where Parnell spoke and signed the bill in Anchorage.

Only two Southeast Alaska lawmakers voted for Senate Bill 21, and the opponents say they will sign a citizens’ petition that is circulating the state to repeal the new law. Organizers hope to get the question before voters next year.

Matt Lichtenstein discussed the issue with most of Southeast Alaska’s legislators as well as the Lieutenant Governor when they visited Petersburg last weekend for the Little Norway Festival.

The annual celebration of Norwegian heritage is Petersburg’s biggest event of the year, so it usually draws several lawmakers from out of town.

The biggest issue was Senate Bill 21. That measure cut taxes on oil production by billions of dollars.

Juneau Representative Cathy Munoz initially voted against the bill because she thought it needed some changes. But when it came up for reconsideration, she voted to pass it along with the rest of the Republican majority in the House.

“Just in my five years in the legislature the production has gone down about 25 percent and that represents billions of dollars in revenue to the state of Alaska,” Munoz explained. “So, my strong feeling is that the state needs to do something. That there are problem in the current tax policy, in ACES, that need to be refined and made to be more competitive as it relates to other taxing jurisdictions in the western hemisphere.”

ACES stands for Alaska’s Clear and Equitable Share. That was the oil tax regime instituted in 2007 under then-governor Sara Palin. It included a windfall profits tax that increased with the price of oil, reaping billions more for the state. SB 21 eliminated that provision, which is often called progressivity.

According to Munoz, Alaska needs to incentive-ize more production not only at existing oil developments called legacy fields, but at new sites as well.

Republican representative Peggy Wilson of Wrangell also voted for the bill.

Southeast’s other four lawmakers are against it.

Sitka Democrat Johnathan Kreiss-Tomkins questions the need for more incentives. He points out that under ACES, Conoco-Phillips made more than a half billion dollars profit in Alaska just for the first quarter of this year.

“I can’t be persuaded that 500 million dollars in profit in three months needs to be incentivized,” Kreiss-Tomkins said. “I mean, I just don’t think people can accept that.”

Which is one of the reasons why Kreiss-Tomkins and other critics think there’s a good chance the public will vote to repeal SB 21.

According to the Alaska Department of Revenue, the tax cut will cost the state at least $4.5 billion in revenue over the next six years. That’s the forecast. Had the changes been in place in 2012, it would have cost the state $1.7 billion for just one year.

Sitka Senator Bert Stedman thinks SB 21 gives away too much.

“The production that was done in 2012 is already economic, under ACES, by virtually any measure – rate of return, cash margins,” Stedman said. “So, when you see $1.7 billion moving, red flags should go up. Something’s wrong.”

Stedman thinks the progressivity under ACES should have been toned-down, but not eliminated. He was one of only two Republican Senators who joined Democrats to oppose SB 21.

“We’re a political sovereign and we should be treated like one and we should act like one. And we should not act or put up with being treated like a third world country where someone says we’ll take your resources and we’ll give you some jobs,” he said. “My response is, ‘We’ll sell you our resources and well get the jobs to get the resources out to market.’ But we’re not going to trade you the resource for the jobs. That’s just ridiculous.”

Stedman says he’ll sign the petition to get the referendum on the ballot and campaign for repeal.

Lt. Governor Mead Treadwell certified the petition drive application as part of his job. But Treadwell says he would have voted in favor of SB 21 had he been in the legislature.

“Talking about this as a giveaway or not as a giveaway – we have to really begin thinking about attracting investment,” Treadwell said. “Now, is it a risk? There’s always a risk. You set up a tax system. You hope you’re going to raise your revenues by raising production.”

Opponents, such as Representative Beth Kerttula, a Juneau Democrat, point out that the elimination of progressivity means a tax break for oil companies whether or not they step up production.

“We changed this tax without one guarantee. Not even a memorandum of understanding,” Kerttula said. “Not even one company saying we’re going to put new production into the pipeline, which is what we’re so desperately after. What kind of a negotiation is that?”

Kerttula and fellow Juneau Democrat, Senator Dennis Egan, say Alaska’s budget outlook from funding for education to capital project spending is much worse under SB 21.

“I hope it works but I just have real reservations about it,” Egan said. “We’ve tried crazy stuff like this before and it doesn’t work. We could have tweaked the current legislation and done a much better job for the people. You think capital projects were down this year, just wait.”

Supporters of the referendum petition have until July 13th to gather signatures. If they succeed, it will be up for a public vote during Alaska’s primary election in August 2014.

Ten Sealaska shareholders are challenging four incumbents for the regional Native corporation’s board of directors. That’s the largest number of independent candidates in five years, although some earlier ballots came close.

Proxy statements, which include ballots, were sent to Sealaska shareholders May 10th. Voting runs through June 20th, just before the corporation’s annual meeting, which is June 22th, in Hoonah.

They can be mailed, faxed or dropped off in person. Ballots can also be cast at the annual meeting.

Corporate Secretary Nicole Hallingstad said online voting has become increasingly popular.

“The first year of online voting, about 11 percent of our shareholders voted online. The second year that rose just a little bit to 13 percent,” she said. “We’re early in the proxy process, so it’s impossible at this point to say where that final percentage will fall. But higher levels than that have already come in through online voting for this year’s proxy season.”

This year’s online voting is done through a new shareholder-information system called “My Sealaska.” The secure site also includes stock information and dividend payment history.

No resolutions are on this year’s ballot. Prior years’ measures addressed term limits, discretionary voting and stock for shareholder descendants. (Hear a report on last year’s issues.)

Tribal members can vote a specific number of shares for up to four candidates they support. Or they can vote “discretionary,” turning their ballots over to the board, which supports its own members.

Most of this year’s 14 board candidates are in their 50s, 60s or 70s. But three are between 30 and 40.

Hallingstad, also vice president of communications, says that includes Ralph Wolfe. He was last year’s appointed youth representative on the Sealaska board.

“This year’s slate does include some of our younger shareholders and it’s great to see that successive generations of shareholders for Sealaska are seeing this as a mechanism to serve the Native community,” Hallingstad said.

Sealaska added several thousand younger shareholder descendants after a 2007 vote.

The regional Native corporation is headquartered in Juneau and has more than 21,000 shareholders. Most are of Tlingit, Haida or Tsimshian descent. Close to half live in Southeast.

Read the proxy and annual meeting notice, which includes candidate statements and biographical information starting on page 10.

This year’s independent candidates are:

• Mick Beasley, Myrna Gardner and Ernestine Hayes of Juneau.
• Frank Jack III of Angoon.
• Angela Michaud of Anchorage.
• Ralph Wolfe of Yakutat.
• Will Micklin of Alpine, California.
• Edward Sarabia Jr. of South Glastonbury, Connecticut.
• Richard “Jack” Strong of Bonney Lake, Washington.
• And Bonnie Jo Borchick of Tucson, Arizona.

This year’s board incumbents are:

• Patrick Anderson of Anchorage
• Jodi Mitchell of Juneau.
• Jackie Johnson Pata of Fairfax, Virginia.
• And Richard Rinehart Jr. of Bellevue, Washington.

Board members serve three-year terms.

 

Alaska continues to add jobs to its seasonal economy.

The preliminary statewide unemployment rate for April is 6 percent, the lowest since mid-2007.  It dropped a full percentage point from April 2012.

Nationally, unemployment last month was 7.5 percent.

Once again, Juneau and the North Slope Borough boast the lowest rate in Alaska, at 4-point-4 percent.

But it’s the actual numbers that tell the story, and in Southeast this time of year, jobs are being added in the seafood, construction, and tourism industries.

Caroline Schultz is an economist for the state labor department.

“Juneau added about 100 jobs in accommodation and food services and 400 in all of leisure and hospitality from March to April, so that’s pretty good growth over the month in leisure and hospitality, about 15 percent growth,” Schultz says.   “And it will keep growing until it peaks in the mid-summer.”

She says 300 construction jobs were added between March and April, a 20 percent increase for that industry.  And the Southeast seafood industry also grew by 300 jobs for the month.

The seasonal employment throughout the state may help lessen the blow of a statewide loss of federal jobs.

The federal jobs are tracked over the year rather than monthly.  The loss in Southeast Alaska is slower than the rest of the state, according to Schultz.

She says Interior Alaska lost 500 federal jobs over the year.

“Fairbanks has the bases and there are also a lot of natural resource-oriented federal jobs up there too, like Park Service and Denali, those kinds of jobs,” she says.  “But definitely the military bases are probably the biggest driver.”

Schultz says it’s still too early in the tourism season to know the extent of job loss of federal jobs in Alaska’s national parks and preserves.

 

 

 

First quarter earnings reports were just issued by Juneau’s largest gold and silver miners.

Coeur d’Alene Mines, operator of the Kensington Mine north of Juneau, announced that silver production declined about 22-percent from the same quarter last year. Total production was 3.8 million ounces.
But gold production was up about 30-percent from the same quarter last year at nearly 57,000 ounces for the first quarter of 2013.

Cash operating costs for gold at Kensington declined $10 from the fourth quarter of 2012 to $1055 an ounce.

Adjusted earnings were down with $6.8 million or 8 cents a share compared to $41.5 million or 46 cents a share for the same quarter last year.

Net income was $12.3 million or 14 cents a share compared to $4 million dollars or 4 cents a share for the first quarter last year.

A change in upper management was also reported by Coeur d’Alene Mines with Peter C. Mitchell, formerly of Vancouver-based Taseko Mines Limited, named as the new Senior Vice president and Chief Financial Officer.

Meanwhile, Hecla Mining reports first quarter income at $11 million or 4 cents a share. And earnings after adjustments of $3.4 million or one cent a share. First quarter 2013 sales for the company were $76.5 million.

The owner of the Greens Creek Mine on Admiralty Island says silver production is up for the first quarter of 2013.

Hecla Mining Company says Greens Creek produced 1.8 million ounces in the first quarter of this year. That’s up 34-percent from 1.3 million ounces for the first quarter of 2012. Total production company wide was 1.9 million ounces.

Net income was reported at $11 million or 4 cents a share.

The cash cost of silver increased from $2.24 per ounce in the first quarter last year to $5.02 per ounce in the first quarter of this year.

Company officials reported that suspension related costs for the Lucky Friday mine declined to $1.5 million compared to $6.2 million for the same period last year. The Lucky Friday resumed limited operation in February with a return to full production levels expected in the middle of 2013.

Hecla also announced the acquisition of Canadian miner Aurizon Mines Limited. It’s biggest assest is the Cara Berardi gold mine in Quebec which has an estimated gold preduction of 125,000 ounces.

Icicle Seafoods closed its plant in Adak last month, but fisheries business on the island didn’t grind to a halt — fish buyers are moving in to fill the void left by the processor.

Pete Hartman is in charge of purchasing for Hart Sales, a fish broker based out of Victoria, B.C. He says a group of small-boat fishermen approached him in February looking for someone to buy their halibut, sablefish and rockfish this summer.

“Our first shipment in Adak was the 26, I believe, of March. And we’ve got a commitment that we’ll stay with them throughout the entire season.”

Hartman is leasing space from the Aleut Corporation for his production line.

“We offload at the dock, the fish is brailed over, we grade the fish out — we’re packing the fish out for fresh — and the fish is delivered up to the airport, and flow out from there to our markets.”

Hartman’s not the only one who’s noticed Adak. In March, Washington-based Premier Harvest shipped 12,000 pounds of live golden king crab off the island, and city manager Layton Lockett says there’s been interest from other buyers as well.

“It’s exciting, and it’s definitely leveraging the assets that the Navy left behind that we’ve kept going, and the fish that are out here.”

Lockett says while the small operations aren’t making up for everything that was lost with the plant closure, they’re certainly helping out.

“You know, from the city as a tax base, to the people who… there’s some people employed now, to the boats that can still come in and deliver, to Alaska Airlines that carries this stuff out. Everybody’s making a little something off of this, versus having absolutely nothing.”

That doesn’t mean Adak is going to stop looking for someone to fill the processing plant. Lockett says he’s optimistic that there will be a new company in there by next January. But he also sees room for the smaller operations to continue — especially those dealing with specialized markets like fresh and live fish.