Bridging the Gap at ASRC
New management team strengthens corporation
Arctic Slope Regional Corp. is a force in Alaska business. It is the largest Alaskan-owned company, employing more than 10,000 people worldwide with revenues of more than $2.3 billion in fiscal year 2010.
It has prospered over the past 40 years, despite economic, governmental and regulatory challenges, led by the insight of former chief executive officers such as Oliver Leavitt and Jacob Adams.
One of its recent goals is to double its already formidable economic influence, and ready to face the challenge is an executive management team in which almost every seat has changed hands in the past two years.
In some corporations, so much change at the top would be called a corporate shakeup. At ASRC, it’s indicative of the strength and growth of its officers and a sign of the climate of training and cooperation within ASRC.
“While it probably seems externally there seems to have been a monumental role change,” said Tara Sweeney, senior vice president of external affairs, “internally it’s more like shifting chairs and putting people into positions where they can drive the most value.”
FROM ANCHORAGE TO BARROW
The Barrow-based corporation, with administrative offices in Anchorage, is preparing to enter its 40th year, young enough for today’s leaders to have learned first-hand from its founders what it takes to build a successful business. In a way, they’ve grown up with Arctic Slope.
“Collectively, all of us, we’ve mentored underneath the senior leadership team, which are basically the people who brought the corporation up from its very beginning,” said Richard Glenn, executive vice president in charge of lands and natural resources.
Geri Storer, chief of operations, went through an ASRC management-training program and worked closely with former CEOs Adams and Leavitt. She also spent time working at Exxon and Shell Oil, which gives her a broad perspective of the industries and issues ASRC must deal with.
“We’re still operating with the same value system, the same discipline with regards to investments and financial management of our assets,” Storer said. “We’re largely a people-based business. We spend a lot of time communicating with our shareholders.”
Arctic Slope Regional Corp. was created by the 1971 Alaska Native Claims Settlement Act. Under ANCSA, Alaska’s indigenous peoples received title to 44 million acres of land and $962.5 million, which was divided between 12 regional and more than 200 village corporations to settle aboriginal land claims.
Arctic Slope, which has its land base on the oil-rich North Slope, has been one of the most successful Alaska Native regional corporations. Its diverse portfolio of companies operates in four major business segments: petroleum refining and marketing; government services; energy services; and construction. It also has a resource development segment. In 2000, it reached the $1 billion in revenue. In 2011, it recorded $2.3 billion.
At the core are its shareholders and the thousands of years of Inupiat culture that enabled them to survive, and thrive, in one of the world’s harshest environments.
Glenn said Arctic Slope has made it a mission to transmit its Inupiat values to younger generations, from the perspective of those with direct knowledge of what ANCSA cost Alaska Natives. “Most of the people remember the Native Claims Settlement Act,” he said. “We’re the first generation of people who worked for the people who were there, who fought the fight.”
TEAMWORK A MUST
The tone is set by President and CEO Rex Rock Sr. Rock was the longtime chairman of the ASRC board of directors before being named CEO. He served as the president of the Point Hope village corporation and is also a whaling captain and a longtime basketball coach.
“ASRC has become so big, even to the village corporations on the North Slope,” said Storer. “Rex brings a lot of credibility to our company. He still lives in Point Hope and he grounds our team really well. He sets the tone from the top.”
Rock looks at the management team as a group of individuals with specific and diverse strengths that complement the overall mission of the corporation.
“I can tell you what I value,” he said. “I place high value and expectations on my team to perform with integrity. I believe in this team.”
The concept of teamwork is embraced by the others.
“Within our team, it’s been easy for all of us to embrace that concept of teamwork,” said Butch Lincoln, chief financial officer. “We are very complementary on what we all bring to the table. But I find that we rely on each other. We lean on each other. We can laugh with each other. We don’t worry about who gets the credit.”
During a recent conference call with Rock and six others from ASRC’s top management, their camaraderie was evident. They chatted about making soup, a mutual friend’s grandchild, the weak early winter ice conditions around Barrow, and joked about one co-worker’s problems with overly juicy oranges at a conference in Greenland.
But when the talk turned to ASRC’s role on the North Slope and in Alaska as a whole, the conversation quickly turned serious.
The management team is tasked with continuing to build the company and to provide dividends for its growing ranks of shareholders. The company faces three major challenges, Rock said: the lack of an investment climate and investment leadership from the Alaska Legislature; federal overreach with respect to climate change; and providing sustainable dividends to shareholders.
GROWTH FOR SHAREHOLDERS
Tara Sweeney’s job is to oversee federal and State legislative activities. She said regulations at the federal level in regard to the Endangered Species Act have tangible impacts on the North Slope region and its people.
“It hampers our ability to grow and provide jobs to our shareholders,” she said. Part of the problem is that many people in the federal government lack an understanding of the federal government’s unique relationship with Native corporations. “That’s a constant educational effort on our part,” she said.
Changing regulations, as well as a wildly fluctuating marketplace, pose more challenges. Three of Arctic Slope’s largest subsidiaries are in the petroleum sector: PetroStar, ASRC Energy Services and ASRC Construction. Arctic Slope is keeping a close eye on petroleum markets and working to be as responsive as possible to changes, said Storer, chief of operations.
“We are watching very carefully our businesses today and making sure we’re protecting the value of those businesses,” she said.
Glenn said the people of the North Slope depend on the environment and resource development in their everyday lives.
“The villages are real-world nitty gritty that we’ve built over 30 years at great expense,” he said. “What kind of communities will our grandchildren have? What kind of economy will we have? We depend on the environment, but we also depend on the development.”
ASRC is also looking for business opportunities outside Alaska as a way to diversify its holdings, Butch Lincoln said.
“Every day, every member of this team is looking inside and outside the state for opportunities,” said Denali Kemppel, general counsel.
Those opportunities need to translate into real dollars and cents for shareholders living on the North Slope, added Crawford Patkotak, senior vice president for shareholder community programs. Patkotak said one of the corporation’s biggest challenges is the depressed economy within the villages.
“There’s a lack of jobs,” he said. “There’s really no economy. It’s been our challenge to really invest in our people.”
Sweeney said that outside environmental groups are placing so much pressure on resource development efforts that they are threatening business on the North Slope.
“The questions we face every day are ‘How are our people going to put milk on the table and clothes on their children?’” Sweeney said. “These are realities the NGOs (nongovernmental organizations) fail to recognize or don’t care to recognize. They use Native groups as mouthpieces, they move on and our people are still in our communities, struggling.”
ASRC looks to find a balance between economic development, resource development and passing on the traditional way of life and culture of the North Slope. Forty years ago, the North Slope region voted against ANCSA, calling it fundamentally unfair to Alaska Natives.
Among its many criticisms was the fact that only people alive at the time the bill was signed in 1971 were allowed to become shareholders. As soon as it was possible under the legislation, Arctic Slope Regional Corp. passed a resolution to enroll shareholders born after 1971. Today, nearly 70 percent of the 11,000 ASRC shareholders were born after 1971.
In fact, being a shareholder in ASRC may be one of the only links some in the younger generations have to their Inupiat heritage, Patkotak said. Finding ways to bridge the heritage gap hasn’t been easy, but it’s part of a mandate the management team embraces.
“The challenges are not new to ASRC and I think that what’s been passed on from early leadership is to embrace the challenges,” Patkotak said “We continue to grow in the number of shareholders and that drives us to steadily grow the company, to be profitable and be able to distribute reasonably sized dividends.”