Many businesses have turned to layoffs, restructuring, and cost-saving measures to stay alive during these economic times.
The Colville Tribal Enterprise Corp.the business arm of the Confederated Tribes of the Colville Reservationis no different. It took such steps and more to rebound from an $8.1 million loss and talks of bankruptcy in 2009.
A year and a half later, however, the tribal business picture looks far healthier, so much so that tribal leaders now plan to develop a $30 million casino-hotel complex, called Omak Resort, in Omak, Wash.
Construction of the resort, envisioned to include a 65,000-square-foot casino, a 75-room hotel, and an events center, could start later this year, says Joe Pakootas, the corporation's CEO.
Tribal business leaders also plan to develop two convenience stores with gas stationsone near Kettle Falls and another near Lake Chelan. The gas stations are planned for two highly traveled sections of the reservation, which covers 1.4 million acres in North Central Washington and is home to some 6,000 members of 12 Native American bands.
The tribal corporation headquarters are located in Coulee Dam, Wash., about 90 miles northwest of Spokane. From there, it manages more than a dozen enterprises, including gaming, recreation and tourism, retail, construction, and wood products. Collectively, the business ventures employ about 500 people.
Going from mulling bankruptcy in 2009 to being $2.3 million in the black by the third quarter of 2010, under a newly formed sister corporation, meant making hefty cuts to some operations and investments in profitable ones. Tribal leaders also found ways to reduce insurance premiums, restructure debt, and cut personnel.
Just prior to Pakootas becoming CEO in January 2010, a new slate of corporation board members followed legal advice to create a sister organization called the Colville Tribal Federal Corp. in order to protect more profitable businesses. Here, tribal leaders placed its casinos, retail stores, and a construction company.
Struggling divisions in wood products and recreation stayed under the tribes' original enterprise corporation. Pakootas is CEO of both tribal corporations.
Mainly, though, the Colvilles focused their attention on renovations at three casinos.
"We focused on the highest earning revenue generators we have," says Pakootas. "The No. 1 focus was on the gaming and casinos."
By April 2010, tribal leaders completed a $9 million replacement structure of 30,000 square feet for the Mill Bay Casino, located at Lake Chelan, between the towns of Chelan and Manson. Other work included about $250,000 worth of upgrades last year to two smaller casinos, the Okanogan Bingo Casino and the Coulee Dam Casino, Pakootas says.
The tribes' casinos employ about 400 people. With the recent investments, Pakootas says gaming revenue grew about 20 percent between 2009 and 2011.
Another growth divisionretailgot a boost from a new $3.6 million convenience store in Omak that opened in March.
"That money (to develop the store) was borrowed from the Colville Tribes," says Pakootas. "We're looking more to the tribes for financing rather than going to outside sources," such as banks. "We make monthly payments. There's similar interest, but it benefits the tribes."
Pakootas says the new store, as well as the tribes' other stores and two separate smoke shops, all do well. "The tribe receives a percentage of the taxes from the gasoline and cigarette sales."
Hit hard by the slumping building industry, the tribes shut down two tribal lumber mills in Omak in 2009. A plywood mill that employed about 160 closed that July, and a saw mill with about 120 employees stopped production that December.
"They were shut down because of the economy; there was no market," Pakootas says.
The mill produced ponderosa pine and Douglas fir lumber and sold it to such chains as Home Depot Inc., and Lowe's Cos. It also made plywood and veneer products, which went to customers such as Boise Cascade Corp.
Under the 2010 reorganization, Pakootas says tribal leaders decided to lay off about 25 managers from the mill operations who stayed on the payroll for months after the mills shut down.
"In the past, when times were good, our workforce got built up," Pakootas says, and then industry demand dropped. "That's one of the reasons we got $8.1 million in the red. We kept spending without revenue coming in."
Regarding the cuts, he says, "This was done by necessity. It was either that or not survive any longer."
Now, tribal leaders are working on deals to lease the mills to outside companies that would start operating them again, under the proviso that laid-off tribal employees would be re-hired, Pakootas says.
"We're very close on one of them," he says. "That will really benefit us because of the unemployment rate."
The unemployment rate on the reservation remains between 55 and 60 percent, he says.
Within the construction division, tribal leaders also laid off about 15 employees, Pakootas says. They cut other expenses in office supplies, equipment, and vehicles, trimming $400,000 in overhead in all, he says.
The tribes also closed a Lake Roosevelt houseboat operation about a year ago. Another tourism spot, the Rainbow Beach Resort with several cabins at its Twin Lakes, remains open.
Under the reorganization, tribal leaders worked with a bank for several months to create a refinancing package to lower payments on a debt load of about $20 million, says Pakootas, which included the Mill Bay Casino structure cost. He describes the rest as mostly "old debt," but says some stemmed from nearly $1.5 million owed to cover unemployment insurance in 2009 and 2010 for the laid-off mill workers. It also owed the tribes almost $1 million for logging on the reservation.
"We lowered our debt payments down so we could afford to pay for it with our profitable businesses," he says. "The per monthly payments (now), they're a little more than a house payment; we've paid down quite a bit of it in the past 18 months."
In other steps to trim expenses, Pakootas says tribal leaders shopped around to save costs on its property and casualty insurance. "We went from $1.2 million in premiums a year to $600,000 a year by changing insurance carriers."
Additionally, he says tribal leaders have learned from the reorganization how to operate more efficiently and vow they won't let expenses climb again, even as revenue builds.
While working to get the lumber mills back in operation, tribal leaders also are talking to new businesses in an effort to attract them to the reservation and help diversify its economy, he says.
"There are opportunities to bring in manufacturing onto the reservation," he says. "There are different tax credits and tax opportunities that we can offer these businesses. We're a sovereign government, and we can give them the same opportunities they could get offshore."
Pakootas served on the tribes' business council for 16 years, serving five of those years as tribal chairman. He says the corporations today remain under all Native American leadership, including himself as CEO, board members, a general counsel, a director of finance and staff.
Subscribe today to our free E-Newsletters!SUBSCRIBE