nvesting in and operating construction subsidiary businesses helps Native village and regional corporations meet their dual mandate to make money to benefit shareholders and provide for their cultural, educational, and social wellbeing. The income generated from these businesses provides both immediate and long-term benefits to the corporations and their shareholders.

“There are two real key factors that go back to CIRI’s overall premise for the investments we make,” says Sophie Minich, president and CEO of CIRI. “We rely upon the cash that’s generated by our investments to pay our dividends and to continue to grow CIRI with additional investments in a variety of ways.”

And while traditional Native values and a desire to support individual regions are the driving force behind the work of every Native corporation and its subsidiaries, on a large scale they operate similarly to parent-subsidiary arrangements in the private sector.

“It’s certainly different, but it’s not all that different,” says Clayton Arterburn, senior vice president of Ukpeaġvik Iñupiat Corporation (UIC) Commercial Services.

Like any business endeavor, the singular goal of every Native corporation’s construction subsidiary is to provide income to support its overall mission. But the “how” and “why” behind the decision to form a construction subsidiary varies. For some corporations, the decision was driven by shareholder preference or is a natural expansion of work shareholders were already engaged in.

Ahtna, for example, started its first construction subsidiary shortly after ANCSA was signed based on shareholder input.

“One of the first things the corporation did [when we organized] was send out a questionnaire asking our shareholders about their interests,” says Roy Tansy Jr., COO of Ahtna Netiye’, holding company for Ahtna’s sixteen subsidiaries. “One of the things brought forth was that there was interest in starting a construction company. Many of our shareholders had experience doing construction, even before statehood; there was a lot of interest to keep that going.”

UIC Construction capitalized on its experience working in remote villages during harsh weather conditions and created a niche for itself working in these small Alaska communities.

“UIC initially started in Barrow doing work on roads, utilities, things of that nature,” Arterburn explains. “We took our skills that we developed with logistics, with working in remote locations, with dealing with the Arctic and Northern Alaska or rural Alaskan type climates, and we expanded that to other locations as we went along.”

Other corporations seized on existing opportunities. Bering Straits Native Corporation’s segue into construction, for example, was in direct response to the growing needs of its existing clients, says Senior Vice President Dan Graham.

“We didn’t do an acquisition, we didn’t buy a bunch of equipment, which is a little unique,” he explains. “We have grown a construction group organically in response to locations where we have ongoing operations and noticed that need for our customers. When our customers had needs, we were there to kind of expand our business lines.”

When a homegrown approach doesn’t work, acquisition of an existing construction company is another option. That’s the tactic CIRI took when it decided to expand its construction portfolio beyond the “dirt construction type work” it historically performed to include federal contract work, Minich says.

“When CIRI made the decision to really launch its efforts in providing construction services to the federal government and other entities, we sought to find an entity that had that experience and could have the opportunity to grow,” she says. That led to the acquisition of North Wind, a small, Northwest-based entity with experience with federal contracts and, a short time later, Weldin Construction, which CIRI rolled under the singular umbrella North Wind Group. From there, Minich says, North Wind has “grown into the behemoth that it is today” and provides a variety of services to federal government agencies beyond construction.

One constant among subsidiaries is a commitment to upholding the parent corporation’s values and mission. It’s one of the few things, Arterburn says, that sets Native-owned subsidiaries apart from those in the private sector.

“We operate pretty heavily under the core values of our Native tribe,” he says. “They’ve got core values for their people, and we kind of operate under that. I’m sure there are private corporations that have similar values, though I think all of the Native corporations, in general, operate under a more traditional set of values.”

One of the core values Native corporations share is supporting their shareholders. Like private sector corporations, Alaska Native corporations distribute dividends to their shareholders. But for Native corporations, shareholder support extends beyond just dividend distributions.

“The biggest benefit we can provide [shareholders] is the benefit of a job,” Tansy says. “That’s been a big priority, to get our people working, get them trained for opportunities.”

Construction subsidiaries help achieve those goals by creating good-paying jobs, often in remote Alaska areas with high unemployment rates, and making them available to shareholders.

“We do have a shareholder hire preference policy at UIC,” Arterburn says. “If there are two applicants that fit the skill set that we need, we’ll hire the shareholder.”

Bering Straits’ construction subsidiaries work primarily with federal clients, doing little commercial work, except for projects in its region. That’s partly by design.

“We’re very happy about being able to do that not only to support infrastructure improvements in the Bering Straits region but also because they offer a great opportunity for shareholder hire,” Graham says.

Another aspect that sets Alaska Native corporations apart from their private sector counterparts is the open lines of communication between the subsidiary and community leaders, particularly if it’s another Alaska Native village.

“When we’re operating in some of these Alaska locations where there are other Native tribes, sometimes there can be some interaction between the leadership of the tribes if there are issues, problems, or concerns,” Arterburn says. “Some of those discussions will take place amongst their leadership, almost on a Native to Native level.”

Ensuring that Native corporation values remain an essential part of the subsidiary’s culture can be challenging for projects in the Lower 48 and requires constant education to make sure those values aren’t lost.

“What’s been challenging in all of this is making sure that we don’t lose our identity on who we represent as far as an Alaska Native corporation-owned company in the Lower 48,” says North Wind Group President and CEO Chris Leichtweis. “A lot of people simply don’t know or haven’t heard about Alaska Native corporations, so that education is paramount with employees and customers.”

Construction subsidiaries have diversified portfolios, both in terms of the type of work performed and the clients served. Clients include public and private sector businesses and entities located throughout Alaska and across the country. Some construction subsidiaries act as general contractors, while others carve out a specific niche, focusing on horizontal and vertical construction, pipeline maintenance, civil construction, engineering, environmental construction, commercial buildings, or sustainment, restoration, and modernization (SRM).

“The bulk of the work that we do is SRM, and that is just really broad,” says Tim Gould, president of Ahtna Engineering Services and Ahtna Solutions. “It’s everything from building a facility or building out the exterior of a facility or changing the use of a facility. It’s a block and tackle kind of construction, real varied.”

UIC Construction operates as a general contractor and focuses on commercial-type buildings, such as schools and medical clinics, two buildings commonly found in rural villages, Arterburn says. But they’ve also done work on water tanks, water and wastewater treatment plants, and similar commercial buildings needed in rural villages.

“Volume-wise most of our work is done in Alaska, because even after all these years UIC Construction is still our marquee construction company,” he says. “For the most part, 99 percent of their work has been in the state of Alaska.”

But the realities of living and working in Alaska mean corporations often have to expand the services offered by their construction subsidiaries or expand their client base to fulfill their mission.

“Alaska’s a big state, but it’s also a small state,” Arterburn says. “There’s only so much construction going on.” UIC, for example, has other subsidiaries that focus on out-of-state government contracts, and another that focuses on 8(a) work in Alaska, which are government contracts set aside for small businesses owned by socially and economically disadvantaged entities.

CIRI’s construction subsidiaries provide a wide array of services but focus almost entirely on a single client base.

“We do about 95 percent federal business,” Leichtweis says. “We’ve expanded in the federal sector to forty different agencies and sub-agencies, so we’re a very diversified/non-diversified company. We’re not diversified because we’re all predominantly federal contractors, but we’re diversified in the federal space because we have different areas of focus.”

The interplay between parent and subsidiary varies in part based on the size of the parent corporation. Some subsidiaries, like CIRI’s, have individual boards who report to the main corporate board, Minich says, but “for all intents and purposes they are a standalone, fully functional organization.”

Smaller corporations, like UIC, have only a single board that governs parent and subsidiary operations or have shared services with the parent corporation’s human resources or IT departments, like Ahtna. All subsidiaries use the parent corporation’s bonding capacity when applying for contracts or, for those who are federal contractors, their status as an Alaska Native corporation to obtain 8(a) government contracts.

Construction subsidiaries are responsible for creating budgets and strategic plans, which are subject to approval by the parent corporation’s board. The parent corporation invests capital to acquire or form a new venture or may provide additional financial backing so the subsidiary can acquire equipment or fulfill some other need to help win a contract, which the subsidiary repays in the form of dividends to the corporation.

But on a day-to-day operational level, subsidiaries operate autonomously, provided their work aligns with the parent corporation’s overall values, mission, and strategy.

“We get assistance with strategies from our holding companies, but really subsidiary presidents are out there deciding what business we should be chasing,” Gould says.

And like any other business, subsidiaries must be profitable to survive.

“We’re a for-profit business, so if we’re in a business line that we can’t make money in, it’s not going to be around for long,” Arterburn says. “Each one of the operations does need to earn their keep, be profitable, be successful, and contribute to the corporation.”