The New Face of Aboriginal Business in B.C.

From Vancouver to Haida Gwaii, B.C.’s First Nations are taking the lead in ventures ranging from real estate development to forestry, inflecting sound business decisions with environmental stewardship.

Last February, delegates streamed into the sprawling Prince George Civic Centre for Aboriginal Business Match 2012. Instead of the routine economic development conference where participants nod off during a keynote speech before decamping for a wine and cheese social, it was like speed dating, with the emphasis on making deals and business contacts. And it was sold out, with more than 300 business reps in attendance from bands, government, aboriginal organizations and a diversity of corporate interests, among them Vancity, Aecon Infrastructure, Pacific Coastal Airlines and HUB International. When the three-day conference closed on February 16, there had been more than 5,000 individual delegate meetings and 1,720 person-hours of one-on-one business development time. Just a month later, 25 per cent of delegates expected to close deals worth $30,000 or more, generated at the conference.

The take-away message for conference participants like Lori Simcox, a project manager with North Vancouver’s Tsleil-Waututh Nation, is that B.C.’s almost 200 Indian bands and First Nations, representing close to 200,000 citizens, have never been more equipped and willing to do business than they are today. Enough with paternalistic handouts and make-work projects; 136 years of an Indian Act that rendered natives paupers on their own land hasn’t worked. “The people approaching us these days are realizing that we have a lot of internal capacity. We have financing and we have great relationships with all the major banks,” says Simcox, a savvy 37-year-old Tr’ondëk Hwëch’in native from the Yukon, who has an undergraduate business administration degree from SFU and a Royal Roads MBA.

If anyone represents the new face of aboriginal business, it’s people like Simcox. Young, well educated and entrepreneurial, she co-owns a retail outlet called Unity Clothing with stores in North Vancouver and Whitehorse, and works for a band that is a small but significant player in the Lower Mainland economy. The Tsleil-Waututh’s economic arm includes a multi-textured mix of businesses: Takaya Developments Ltd. (a real estate interest that builds high-end condominiums and townhouses), Takaya Tours Inc., Inlailawatash Forestry LP, SPAL General Construction Corp. (a project management joint venture with Tsawwassen First Nation), Takaya Golf Centre, Burrard General Store and, most recently, TWN Wind Power Inc., a partnership with Surrey-based Endurance Wind Power. In the past two decades, the Tsleil-Waututh have bought 325 hectares at the head of Indian Arm, adding to the nation’s roughly 260 hectares of reserve land off Dollarton Highway, home to the award-winning Raven Woods residential development.

“Twenty years ago we were at 60 per cent unemployment; today it’s less than one per cent. That’s a really important number for us,” says Chief Justin George. “The more we can be proactive in business the more healthy our economy will be and also the more healthy our people will be.”

Many credit Chief George’s father, former chief Leonard George, with sowing the seeds of entrepreneurialism among the Tsleil-Waututh. In more than one interview and speech the elder George likened his people to modern-day hunters, with the prey being business, money, financing, partnerships and joint ventures, with the overall focus of “building community.”

Simple formula it seems. However, the Tsleil-Waututh don’t say yes to everything. The nation enthusiastically supported Seaspan Marine Corp.’s successful bid for an $8-billion federal shipbuilding agreement, awarded last October. Yet the band is steadfastly opposed to Kinder Morgan’s plans to double crude-oil pipeline capacity to its Burnaby port facility; it’s a case of what Justin George calls “assuming 110 per cent of the risk with zero of the benefits.”

The Tsleil-Waututh are fortunate in many ways: their traditional territory sits in the lap of a large accessible market and a metropolis with notoriously prohibitive real estate prices. As one of the Four Host First Nations, they benefitted from unprecedented exposure during the 2010 Olympics.

Training in a workforce that has languished for too long is key if aboriginal communities are to have any hope of moving toward self-sufficiency, and mining, the talk of the resource sector these days, is one area where First Nations are starting to benefit from industry partnerships in terms of skill development. For example, New Gold Inc., which recently began underground operations on the old Afton mine site near Kamloops, is a strong supporter of the B.C. Aboriginal Mine Training Association (BCAMTA), based at Thompson Rivers University in Kamloops. The company’s hiring practices reflect this support: of New Gold’s 239 employees, 48 are aboriginal, 30 of whom graduated from the BCAMTA program. That’s a stat many other aboriginal communities in the province would like to emulate.

The Gitksan Government Commission represents the Gitanyow, Kispiox, Glen Vowell and Gitanmaax bands, whose traditional territories encompass the mineral-rich Smithers and Hazelton region, not to mention the burgeoning power grid and transmission sector in the northwest, and these bands hope to leverage that proximity into jobs and dollars. “There has really been an awakening to this dependency situation and the question of how do we wean ourselves off the feds,” says Tom Danyk, a non-native, rodeo-riding communications expert who worked in media relations with the Vancouver Canucks in the 1980s, and was hired two years ago as the Gitksan Government Commission’s capital projects manager and economic development advisor. “All four bands are exploding with economic initiatives.”

“Exploding” might be an overstatement, but economically the situation is rosier than it’s been since the forest economy of the northwest crashed in the 1980s. The Gitanmaax band, located in Hazelton at the confluence of the Skeena and Bulkley rivers, is picking the low-hanging fruit for one of its first major economic development initiatives. A study spearheaded by the Gitksan Government Commission estimates that $11 million is leaving the community every year as residents travel more than an hour to Smithers and Terrace to buy groceries. It made for a strong business case, convincing enough for the Royal Bank of Canada, Business Development Bank of Canada and the community futures corporations in both Smithers and Kamloops (two of 90 different community-based development corporations in B.C.) to help jointly finance a $6-million, 15,000-square-foot grocery store in Hazelton that will create 37 local jobs. The Gitanmaax are investing $2 million into the project and expect to break ground in 2013. Management capacity doesn’t currently exist within the community so Danyk says the band is importing experienced grocery store managers from outside the community. As an adjunct to this project, the nearby Glen Vowell band is planning to get into the greenhouse business so that, in the words of Danyk, a head of lettuce doesn’t have to “travel 2,000 kilometres to get here.”

At the same time, the Gitanyow have made a strategic investment to capitalize on the billions of dollars in economic activity related to BC Hydro’s Northwest Transmission Line project and mineral exploration. Last year, the band bought eight hectares at Meziadin Junction on Highway 37, and in May was completing last-minute legal work on a joint venture with Alberta-based Atco Ltd. to build a 200-person construction camp on the site for a wave of incoming power line construction workers. Plans are also in the works for a commercial and retail fuel station to cash in on the flow of truck traffic. Gitanyow chief councilor Mark Starlund estimates there will be 15 to 20 direct jobs at the camp for band members, and much more potential for indirect jobs. An impact-benefit agreement signed between BC Hydro and four of the Gitanyow’s eight traditional houses includes a combination of cash and direct reward contracts for clearing and road construction. And two young Gitanyow with environmental-technology backgrounds have recently formed their own consulting firm called Red Wolf Environmental. Starlund is cautious about job forecasts, but in a community crippled with chronic high unemployment, even small gains make big news.

“This is a huge opportunity for the Gitanyow. We have around 70 or 80 per cent unemployment so this is a chance to generate own-source revenues instead of watching other companies operate in our traditional territories,” Starlund says.

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Cash strapped

Cash and financing have been – and perhaps still are – the greatest obstacle facing First Nations bullish on economic development. For generations Canada’s aboriginal peoples have been de facto wards of the state, living on reserve lands that are owned by the federal government, and therefore have been unable to leverage the equity in a home for a small business loan. Similarly, band administrations and governments have traditionally been shackled to an Indian Act that prohibits them from raising funds for capital projects and infrastructure the way ordinary municipalities are able to.

“How important is it for a First Nation community to be able to access capital? It’s imperative for economic development,” says Doris Bear, a member of the Peguis First Nation in Manitoba, who now heads the six-person team of account managers at the RBC’s aboriginal banking arm in B.C.

Bear oversees tens of millions of dollars in financing annually for capital projects, such as band offices and housing, as well as economic opportunities like run-of-river and wind power projects. In 2007, RBC signed a memorandum of understanding with the Assembly of First Nations that committed the bank to building a better relationship with Canada’s First Nations through donations and grants in four respects: access to capital, procurement, employment and community support. Every year the bank reports back to the assembly with a slick, perpetually upbeat progress update called “A Chosen Journey.” However, Bear says it’s more than just feel-good language; in the most recent report RBC highlights B.C.-based aboriginal business that totalled more than $20 million in financing for schools, community, cultural centres, roads, water and infrastructure, and another $19 million in financing for property development, the acquisition of a franchise and equipment purchase among other business-related loans.

“This is a great time for business to be engaging First Nations, and there are plenty of joint-venture opportunities if the capacity doesn’t exist within the First Nation,” Bear says. “RBC sees it as both a business opportunity and a social responsibility.”

However, Bear stresses that financing and doing deals with First Nations is a two-sided equation. The courts have spoken firmly on the matter of business’s duty to meaningfully consult First Nations on resource and other major projects that impact traditional territories. Consequently, impact-benefit agreements flowing from these consultations are translating into new opportunities for both aboriginal communities and banking institutions. On the other side is First Nation administration and its often complex and murky mix of hereditary leadership and elected councils, with sometimes weak governance structures that don’t lend themselves well to partnerships, joint ventures or financing deals. “When we go into [First Nation] communities, we identify areas that need to be strengthened on the governance and financial side,” Bear says.

Stewart Anderson is manager of community investment and aboriginal banking for Vancity, which has also identified First Nation financing as both a moral responsibility and business priority. A compelling business argument for locally generated power is the reason Vancity loaned $4.1 million to Vancouver Island’s Tla-o-qui-aht First Nation toward the $13.5-million Canoe Creek hydro project. (Canoe Creek is a run-of-river operation on Highway 4 between Tofino and Port Alberni that generates enough power for 1,700 homes, and the band now has a 40-year agreement to sell power to BC Hydro.) “I think it’s a market that’s been underserved in the past because of the restrictions of the Indian Act, misunderstanding and mistrust,” Anderson says. “As a financial institution it’s incumbent on us to build capacity in aboriginal communities.”

Banks aren’t the only institutions talking about capacity-building, a term that is perhaps overused but nonetheless refers to important if not sexy work. The dry-sounding First Nations Financial Management Board, established by the federal government’s First Nations Fiscal and Statistical Management Act that came into effect in 2006, and the Aboriginal Financial Officers Association of B.C. are dedicated to strengthening governance structures in aboriginal communities and preparing them to meet bankers and CEOs from a solid platform. These efforts are paying off.

Early in 2012, the maverick Osoyoos Indian Band, along with the Songhees Nation of Esquimalt and the Fraser Valley’s Tzeatchen First Nation, became the first three bands in B.C. to acquire First Nations Financial Management Board certification, meaning they can earn a credit rating, issue debentures and borrow at competitive market rates. That puts them on a level playing field with other communities when it comes to financing pipes, roads, sewers, streets and other critical infrastructure needed to build the community and attract business investment.

“This gives the band equal footing with municipalities. We can now use own-source revenues and property taxation dollars as collateral for borrowing at below prime rates,” says Brian Titus, the Osoyoos band’s CEO and another Yukon import from the Tr’ondëk Hwëch’in band.

Titus says the band may deploy this financing tool to service its latest venture, the 45-hectare Senulkemen Business Park. Last February, the provincial government announced the park as the location for a new $200-million correctional facility, expected to generate 1,000 direct and indirect jobs during construction and 250 full-time positions once it is open.

The Osoyoos band’s success is largely a result of astute financial management and its ability to broker deals and attract partnerships with established firms like Bellstar Hotels and Resorts Ltd. and Vincor International Inc. Too often engagement between the business community and First Nations is fraught with tokenism or misunderstanding. Enbridge Inc. is talking with dozens of First Nations as it tries to sell its contentious Northern Gateway Pipeline, and the Calgary-based company thought it scored a coup when it announced a deal, last January, with the Gitxsan First Nation. But just as the triumphant press releases were being written, the Gitxsan hereditary chiefs were preparing to turf the $7-million Enbridge revenue-sharing agreement, which the public learned one of the chiefs, Elmer Derrick, had signed on the nation’s behalf.

Sometimes goodwill gestures in the form of jobs ends in ill feelings. A south Okanagan silviculture company owner contacted by BCBusiness expressed occasional frustration at some of his dealings with area First Nations. “I hire three band members and three show up for work the first week, two the next week and one the following,” he said, asking to remain anonymous.

While the Gitxsan are embroiled in internecine strife over support and opposition to Northern Gateway, the Gitanyow have deftly stickhandled through their own internal politics that involve a mix of hereditary leadership distributed among four wolf and four frog clans, and an elected band council. Chief councillor Mark Starlund admits it’s not always an easy relationship, but a necessary one if the band wants to create jobs, economic opportunity and joint ventures like the one it forged with Atco.

If the corporate world has learned one thing after decades of rocky relationships, it’s the strategic value in partnering with First Nations. Either that, or risk alienating a constituency with growing influence over what happens on the land or, even worse, end up in court. Yet it takes more than skin colour to close a deal; there needs to be business acumen as well. Marc Soulliere, president of TWN Wind Power Inc. and a former North American sales director for Endurance Power Products Inc., says the Surrey-based green-energy technology firm would never have entered into a venture with the Tsleil-Waututh had it not recognized an able business partner. In 2010, Endurance was looking for equity investors to enable further commercialization of its wind turbines. TWN was actively seeking to invest in the renewable energy industry with a local company, and after considerable due diligence took a $2-million equity stake in Endurance.

“As a distributor for the Endurance 5kW and 50kW wind turbines, we can focus on an untapped market within aboriginal communities. TWN’s business philosophies and Endurance’s matched up quite well, especially around partnerships and long-term working relationships,” Soulliere says from his office at the Tsleil-Waututh’s North Vancouver headquarters. “And TWN’s ability to open doors and work with communities was of interest to Endurance.”

TWN Wind Power has started modestly, completing its first project with the Lower Similkameen Indian Band near Keremeos for a small 5kW on-grid turbine that will offset energy consumption at the elementary school. Now the Tsleil-Waututh’s green-energy arm is prospecting opportunities for small wind power systems in native communities across Canada and the U.S.

That’s the Tsleil-Waututh way, or the modern way – forever on the hunt for new opportunities. In October 2011, after being awarded an $8-billion, eight-year federal shipbuilding contract, the band’s North Vancouver neighbour, Seaspan, was quick to give a nod to the Tsleil-Waututh and other local First Nations that supported the bid. Kelly Francis, Seaspan Marine’s communications co-ordinator, says the firm is “at the early stages of the NSPS [National Shipbuilding Procurement Strategy] and will be identifying suppliers and partners in dozens of areas over coming months and years, and working with the First Nations and our trade unions on skilled training and hiring.”

It’s not the first time that the shipbuilding and marine transportation powerhouse has engaged with First Nations; since 2005 the company has also had an agreement with the Haisla to, according to Francis, “jointly develop marine opportunities in and around Kitimat.”

For the Tsleil-Waututh, so far Seaspan’s aboriginal procurement strategy is just words. However, says Lori Simcox, TWN’s senior project manager who has met with Seaspan several times, it starts with a discussion. “Partnering with First Nations is not a handout anymore; we can bring a lot of capacity to the table,” Simcox says.