Klukwan, Inc. facing
declining revenues,
board recall

By Tom Morphet

All is not well at Klukwan, Inc., the village Native corporation that pumped millions of dollars into the Haines economy through shareholder dividends and disbursements in the 1980s and 1990s.

Employment is down to about 15 employees working in corporate offices and four subsidiaries, a number that will rise to about 55 when Chilkat Cruises starts summer tour and shuttle boat operations.

That compares to 600 employees in 2000, when the company posted $64 million in revenues and was ranked the 21st most successful Alaskan-owned business.

Besides providing jobs for shareholders at subsidiaries in Haines and elsewhere, the corporation also has acted as benefactor, making about $150,000 in cash donations to keep the Haines medical clinic afloat and an ambulance operating in the late 1980s and early 1990s.

Before it closed in 1998, Klukwan Heritage Foundation awarded thousands of dollars to local shareholders for cultural projects and sponsored an annual summer basketball camp for youths.

"They’ve pumped a whole lot of change into the community. If you added it all up, I bet it would be about $50 million," said shareholder and former City of Haines Mayor Dave Berry.

But beginning in 2004, the corporation fell off a ranking of the state’s top-performing companies, a distinction it held for nearly 20 years. President Tom Crandall recently declined comment on how the corporation was doing or on a shareholder effort under way to recall its board of directors.

Shareholders have enlisted sufficient support of a recall to force a vote on the question, set for a special meeting not yet scheduled. Members of the nine-person board either declined comment or didn’t return messages left in recent weeks. Johanna Hotch of Juneau is board chair.

Shareholders pushing the recall also weren’t responding to questions from the Chilkat Valley News this week.

Crandall said he’s still seeking financing to keep subsidiary plywood plant KPly open, but a Washington newspaper reported the company also is behind on its $12,000 per month lease payments to the Port of Port Angeles, and may have to pay for a cleanup of the mill site.

Chilkat Cruises has been asking for pay in advance from some of its local customers. It’s unclear whether the operation, which includes local tours and a shuttle from Skagway, has turned a profit in its 10 year-history. Crandall was quoted in 2003 saying he anticipated its first profit, but recently declined to say whether that goal had been achieved.

State Rep. Bill Thomas, R-Haines, formerly served as CEO and board member of Klukwan, Inc.

Responding to a reporter’s question during a recent presentation to the Haines Chamber of Commerce, Thomas said he was more concerned about the performance of the corporation’s general income trust than he was about the profitability of its subsidiaries.

"Like everybody else, the (stock) market has fallen so far down, there won’t be any dividends next year until the market really comes back," Thomas said. He said the trust had lost as much as $6 million. "That’s a lot of money to recover before you start paying any dividends again."

Klukwan subsidiaries keep their own accounting, separate from their parent corporation, which has operated and closed and bought and sold a number of subsidiaries during the past 20 years. They include Klukwan Forest Products, West Coast Stevedoring, Klukwan Environmental, North Pacific Expediting, South Coast, Inc., Rainier Investment Management and Atlas-Alaska, Inc.

According to president Crandall, operating subsidiaries include KPly, Chilkat Cruises and Tours, Tinaa Services, Inc., and Chilkat Services, Inc. Tinaa is based in Kalispell, Mont. and was formed to secure federal contracts. Chilkat Services is a facility management company with jobs at Sheldon Jackson College and Alaska Growth Capital, an Anchorage-based lending institution.

After making handsome profits logging in the 1980s, the corporation reported in 1991 that its permanent fund topped $80 million. In 1995, shareholders voted to restructure the fund into three trusts, including a $2 million education trust, a $5 million trust for reforesting of Long Island, and a $29 million trust for shareholder distributions.

Beginning in 1999, shareholder distributions were to be based solely on interest from the general trust.

The corporation last year paid a $12,000 disbursement from its general trust to shareholders with 100 shares. When formed, Klukwan Inc. had 253 shareholders, each holding 100 shares. The number of shareholders has since grown to about 325.

About 40 percent of shareholders live in Haines, Klukwan and Juneau.