President, CEO Aaron Schutt ponders Doyon’s long history and bright future
Image by Judy Patrick
Doyon Limited President, CEO Aaron Schutt.
The Alaska Business Top 49ers are ranked simply by gross revenue, just one of many indications of corporate success. According to Doyon Limited President and CEO Aaron Schutt, Doyon has annual goals that relate to two measures of success: income and shareholder employment. “We also have longer term goals that are usually project driven, or we want to do an acquisition in the next eighteen months, or something like that. But the two annualized goals that get passed down are our income and shareholder employment.”
Schutt explains that while revenue is an important metric, Doyon is focused on their bottom line, and that focus has been successful for them. “We’ve made money for thirty-one straight years and paid a dividend in all of those years,” Schutt says. Doyon’s dividends are formulaic, similar in concept to the Alaska Permanent Fund Dividend. Doyon pays 50 percent of a five-year average of net income. “This year we just announced our dividend will be $6.19 a share, and that’s up $0.20 a share from last year,” he says.
Continuing the trend of having income and increasing dividends are significant achievements, especially considering Doyon’s substantial investment in oilfield operations and the state of the oil industry in Alaska. “We are pleased,” Schutt says of Doyon’s continued success. “It's been a kind of fight-scratch-claw your way through the industry right now with the limited opportunities. It's certainly been tough to have a lot of layoffs with our field crews.”
Doyon’s wholly-owned subsidiary Doyon Drilling is well known in the industry for its oilfield services, operating eight drilling rigs on the North Slope. Doyon Drilling employs more than 250 people, which is a little less than one-third of Doyon’s workforce. “Doyon Drilling did quite well on the downturn compared to a couple of our other companies that had almost no opportunities, [such as] pipeline construction and camps. There were whole seasons that there just wasn't a significant job bid at all. You can't even lose work [to a competitor]—they don't have any opportunity to do anything,” Schutt says.
He continues, “Thankfully for us, we're a big enough company that we can weather those types of downturns, and we don't have to lay everyone off, or close the business. And I emphasize in our state there are some businesses that have had to make much more difficult decisions than we have.”
While the general consensus is that there will be a “lower for longer” price environment in the oil industry, Schutt is optimistic about the potential for a slight uptick in work this winter season. “This coming winter—winter is always the busiest when the ice road seasons are active on the North Slope—will probably be a little better than the last two winters.” He attributes this not to a rise in oil prices, but more to the nature of the industry. “When you have hundreds of wells in your portfolio like some of our clients on the North Slope, a certain amount of them need work and you can only delay that work so long. Another thing that's going to drive some level of activity is the same type of situation with leases. The primary term of state leases is seven years. If you're getting to the end of the lease, you have to make a decision: Do we just give it up? Or do we drill the well, exploration well, to keep the lease? So we're seeing some of that.”
He says some of the recent large oil discoveries, while perhaps not moving forward as quickly as they could, may have some work going on, though “it's probably less than they would do if commodity prices were high.” One important source of work for Doyon is ConocoPhillips. “ConocoPhillips has been pretty diligent and steadfast in developing CD5 and Moose's Tooth 1 and starting to move toward Moose's Tooth 2; those are very large fields that will produce for many years. [ConocoPhillips] sticking to their schedule has certainly been helpful to Doyon and helpful to the industry overall.”
Of course oil is not Doyon’s only business sector. The company has operations in engineering management, land and natural resource development, facility management, construction, IT, commercial laundry, telecommunications, and the utility industry. For example, in 2007, Doyon subsidiary Doyon Utilities was awarded three fifty-year utility privatization contracts for Fort Greely, JBER, and Fort Wainwright. In 2008, Doyon Utilities officially took over ownership, operations, and maintenance of the twelve utilities (four at each location). Schutt explains that Doyon Utilities is 50/50 jointly owned by Doyon and Corix, a company that provides cost-effective and sustainable water, wastewater, and energy utility infrastructure solutions throughout North America.
Schutt says, “[Doyon Utilities’] balance sheet is not consolidated with Doyon Limited's because it's a 50/50 ownership structure. It's almost as big of a balance sheet as our parent company’s balance sheet, it's quite a large business, and it’s very steady. It's been a great opportunity for us to invest and have local jobs. It matches our profile as a Native Corporation where we have a long-term perspective. And although we participate in a highly cyclical industry like oil and gas, having that to kind of counter-balance it is quite nice for us.”
Within the last few years Doyon has acquired two IT companies: Arctic Information Technology in 2013 (with offices in Alaska, Washington, and Virginia) and designDATA (which has offices in Maryland, Washington DC, and North Carolina) in 2015.
Jobs for Shareholders
Schutt explains that Doyon Drilling, Doyon Utilities, and their IT acquisitions provide an excellent way to meet their second annual goal of providing job opportunities to their shareholders. “Our Roustabout Program at Doyon Drilling has been the most successful shareholder employment program ever. We run at least one class a year and all of our entry-level jobs on our rigs are held by shareholders. We train them, we try to time it so they can all go to work fairly quickly after the training, and that's created career opportunities for—over the thirty-five, forty years—hundreds of people.”
Doyon recently created training opportunities within its IT companies which appeal to younger shareholders who are interested in working in the industry. “We have three people out in the DC area finishing a long training that will immediately go to work for one of our [IT] companies,” Schutt says. “Those are exciting opportunities for us because they're really career opportunities; it's not just a temporary job or a low-level job that has no progression to it, they're really technical jobs with plenty of opportunity.”
At the utility, internships are available, some of which provide more than a typical internship with on-the-job training for field positions, such as at the power plant in Wainwright or the water plant at JBER. “Those, again, are career opportunities because there's not only demand for our utility but all utilities have demand for those types of jobs. Ultimately, that's our goal: we'd love to hire shareholders ourselves, but we want them to have the tools and the background to be successful anywhere they choose to work.”
Before shareholders can find success in their careers they need to find success in school, and Doyon has initiated back to school events in Fairbanks (which is home to Doyon’s largest community of shareholders), Anchorage, and smaller communities on a rotating basis. At these events children are given backpacks that contain a few items and Doyon has an opportunity to educate them about the corporation. Also, Doyon’s shareholder services are onsite to update addresses, stock wills, dividend, and other information. “It's just a nice opportunity for people to see each other and visit. We have our companies there with the recruiters and other things, too. So they've been really successful, hundreds of people show up to those events.”
Learning from Doyon’s History
Schutt is particularly excited to share a new Doyon project: a new year-round intern who began work at Doyon this summer, a Stanford graduate, is pursuing a project for the year to document Doyon history through video interviews. Schutt says, “We realized a few years ago that many of our original leaders are still alive, luckily, and we need to get their stories down.” Many of these leaders have been lending their wisdom to Doyon since the company’s inception. “Long-term employees, board members, and others—all these tremendous stories of the battles they fought, and the challenges they overcame, especially early in the days of ANCSA when it was not at all easy.”
He says the project was inspired in part by a blue tub, one of about twelve dropped off by Georgianna Lincoln, Doyon’s longest serving director. The tubs, which contain Doyon and AFN records, were sitting in Lincoln’s garage before she handed them over to Schutt. “I personally, on early mornings and some weekends, was kind of looking through them and found tremendous stories. It was really a refresher of things I'd heard, but the stories just jump right out.” This, in part, spurred Doyon leadership to pursue the video interviews, gathering as much first-hand information on the company’s history as possible.
“We certainly have goals of making finished products that we can show, and share, and educate, because kids these days don't understand the time before computers, much less the time when rural Alaska was really rural… Several of those early records are telegrams to Georgianna when she was in Rampart—I don't even remember that kind of stuff [such as sending telegrams], and I'm thirty years older than these young people now that kind of can't deal with the time before computers. But those were some serious handicaps to ‘How do you select land?’ when you can't even communicate with the people in the villages but via telegram?” Schutt says. “And that's the credit to those early leaders. They were just tenacious and selfless and really wise. When they didn't have the business background, they made decisions based on values really, and gut instinct sometimes, and most of the time they got it right.”
Since ANCSA, Alaska Native Corporations branched out and diversified, not just into different business sectors, but into different markets in the Lower 48 and worldwide, drawing Outside money back to Alaska. Schutt says, “I personally believe this, and I know a lot of other people share it—one reason this downturn in Alaska is not as bad as the 80s is because you have Native Corporations that have diversified businesses that are headquartered here.” The foundation for those corporations, which are now a huge support system for the state’s economy both in its population centers and rural areas, was laid by early Alaska Native leadership. “We're approaching fifty years in the grand experiment of ANCSA, and we have an opportunity to talk about how successful it's been. Of all the land settlements for indigenous people across the world, there's no doubt in my mind that this is the most successful,” he says.
Today, Doyon still benefits from strong leadership that is deeply connected to its land and people. Schutt says, “My personal view of leadership is that I have to empower the people that work with me to do their jobs. I love it when I don't have to go to a meeting, and I don't have to get credit for the things that go well. That is what makes me the happiest—that means we have the right people.”
Schutt expects Doyon will experience a milestone by the end of the year of enrolling 20,000 shareholders. “We're over 19,750 and we enroll about one a day. It's just a round number, but it's exciting for us.” He continues that it’s a “testament to our board and shareholders in 1991 and again in 2006, taking a tough step to spend the money and take the tough vote to amend the articles and issue new shares, knowing it'll dilute your dividend and distract your management team... but it was the right thing to do. There's no doubt that it was the right thing to do and we see that in our company.”
Tasha Anderson is the Associate Editor for Alaska Business.