. . . Fall 1996
By
Kate
Kellogg
lthough Richard Berens had been looking forward to his Business School internship with the Sault Ste. Marie Tribe of Chippewa Indians, the MBA candidate from St. Louis was not prepared to drive up there through snow in May.
Berens soon adapted to the brisk climate but not to the remoteness of his job location near the US-Canadian border where the St. Mary’s River connects Lakes Superior and Huron. After all, a 20-something sports fan can watch only so many 1,000-foot freighters crawl through the locks. You have to enjoy solitude to live up here, he says, or just focus on your work. His summer clients, however, are quite accustomed to being alone, at least with each other. In fact, they were physically and politically isolated for more than 150 years until they won federal status as a tribal government in 1975.
The tribal members are descendants of the original Chippewa who congregated at the St. Mary’s rapids to net and spear whitefish before any European explorers had seen their territory. They called this water crossroads Baweting (Place by the Rushing Water). Eventually their resources fell into the hands of French and British fur traders, and later the US Government.
Since then, the Chippewa community has won many legal battles giving it the rights to reclaim land, build tribal housing, practice its culture, fish in treaty waters, educate its children and run its own businesses, the most profitable of which so far have been gambling casinos. The 20,000-members are now very much a part of the majority Euro-American culture around them, even as they retain their traditions.
Berens and other Business School students have been working closely with the Sault Chippewas to help them manage their businesses’ growth and diversification efforts. The students are part of the School’s Domestic MBA Corps, which addresses the needs of domestic service organizations and non-profit agencies in the United States.
The tribe is extremely business-oriented and progressive, says Marian Krzyzowski, director of the U-M Business School’s MBA Corps. They’ve taken on the challenge of operating their own government and businesses within the context of their native culture.
The tribe’s ultimate goal, says its chairman, Bernard Bouschor, is to phase out our dependence on the federal government by building a secure economic base.
Krzyzowski first approached Bouschor in 1992 about the program. Since I was sending students to the Navajo Nation in Arizona and New Mexico, I felt that we should also provide an opportunity for Native communities in Michigan, he says. He met with the tribal chairman, who was willing to launch the cooperation. Since then, U-M students have spent four summers working as consultants to the tribe’s business managers, helping the tribal members develop basic management skills such as cost accounting, marketing, employee relations.
Three years ago, Marta Diaz '94 MBA, one of the first interns with the tribe, found managers focusing only on bottom-line accounting figures without developing a strategic plan. She tried to convince her clients to do cost-benefit analyses and to "step back and look at the big picture within each enterprise."
At that time, the tribe was still reeling from the windfall of phenomenal income growth that began in 1984 with the opening of the Kewadin Casino in Sault Ste. Marie. In 1993, the state passed the Michigan Gaming Compact, which gave Native American tribes exclusive rights to license and run casinos on tribal territory. In 1994, the Sault Chippewa Tribe's casinos generated more than $201 million in revenues.
But tribal leaders are aware that the Michigan Gaming Compact assures them of continuous casino operation and expansion only as long as political winds continue to blow in their favor. "Given the Native Americans' background of poverty and social problems such as substance abuse," Diaz says, "political leaders could find reasons to oppose gaming operations in their communities. I think the tribe is doing well to invest in new businesses and community projects, rather than reinvesting everything in more casinos."
Diversifying Investments
Over the past decade, the Sault Ste. Marie Chippewas have invested casino profits in 15 new nongaming businesses, ranging from motel properties to drive shaft manufacturing. The interns had their jobs cut out for them: to help the tribe's Economic Development Commission (EDC) develop a strategic plan for diversification in areas that could never promise the returns of gaming.
It's hard for the EDC to get used to a business that doesn't generate huge profits the minute you open the door," says Michele Wellman, tribal member and general manager of NorthStar Neon Mfg., a three-year-old firm that makes customized neon signs. Nevertheless, the EDC continues to support the NorthStar in the interest of diversification.
"Wellman, who is also a professional performer of traditional dances, says NorthStar is "under the gun" to start showing higher sales. While sales figures could be higher, no one is worried about the quality of NorthStar's products. Examples of the company's work glow prominently around the shop. Flowers and other objects are brilliantly rendered as well as lettering. Most signs are custom-designed on the shop's computers by NorthStar's designers, but any employee's creations are considered. For example, one of the tube benders designed a neon medicine wheel, a Native American emblem symbolic of the four directions of life.
Despite her business background, Wellman felt overwhelmed when she had to take over the company after a consulting firm that was training her skipped out early. She turned to the Business School for help and attended the executive education seminar for new managers. For the past two years, she has worked closely first with MBA Corps intern Clark McCain and now with Berens.
New business development is so important to the tribe that the tribal EDC eventually hired Marta Diaz to work full-time as a consultant to the commission. She is one of few outsiders to earn such trust from tribal members. "I'm not a bleeding heart liberal," says Diaz, who grew up in New York City. "I'm here to assist and get paid for my service. But I value the depth and range of opportunity here. I could never do the big corporate scenario where they expect you to specialize and box you in."
The tribe's latest and most ambitious venture is a $10 million community recreation center which opened in the Sault in September. The 150,000 square-foot center includes two ice rinks, fitness center, basketball courts, and saunas, and will house the Soo Indians, a Junior A hockey club.
"The recreation center is largely the inspiration of our chairman, Bernard Bouschor," says Sally McKechnie, the tribe's administrative director of government services. "Bernard is a strong advocate of fitness and recreation for all members, especially children, and coaches youth hockey. He also envisions it as a gathering place for the entire Sault Ste. Marie community."
Relations between the community and the tribe were not always so harmonious. In the 1970s, the tribe had to sue the city just to obtain navigable roads through one of its reservations, but now tribal members and city officials sit on the same economic development boards. Perhaps the cooperation reflects the fact that with 3,000 employees, the tribe is now the biggest employer in the Upper Peninsula.
No one in the Upper Peninsula has felt the impact of casino prosperity as dramatically as the Sault Chippewas themselves. Over the past 10 years, the tribe's unemployment rate has dropped more than 80 percent. Although the federal government still subsidizes some tribal housing, government aid alone could not transform whole neighborhoods from dingy pockets of poverty to bright, well-kept suburbs in less than a decade. Even the tribe's hard-earned status as a sovereign nation in 1975 did not guarantee financial independence as surely as the sound of coins dropping in slot machines.
Chairman Bouschor's letter of introduction to the tribe's annual report folds a note of caution into an otherwise proud message of growth and progress:
"I remember fathers who could not find work, mothers who found it hard to feed their families and children who had little reason to believe their futures would be better. The poverty and hardships of the recent past push some of us to want more now, but we must take the time to build a community that can stand on its own, which requires long-term investment."
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