SpiritWood: Building a Bridge in Indian Country

A column by Tina Hagedorn about Native American tribal-forest business, SpiritWood.

This is the second in a three-part series that explores export opportunities for tribal forest products. Read part one here.

SpiritWood is an alliance among producers of tribal forest products marketing to retail chain distributors and other potential purchasers in order to improve economic and socioeconomic conditions on reservations. SpiritWood is one of several generic brands under consideration by the Intertribal Timber Council (ITC), a nation-wide association of Indian tribes and Alaska Native Corporations (ANC). The ITC is dedicated to improving natural resource management on tribal and ANC lands and is working to help distinguish tribal forest products in the marketplace.

Export Expansion

The SpiritWood marketing alliance is expanding its vision to include global market opportunities. Chinese wood imports have increased rapidly in recent years, rising from $5.7 billion in 2005 to an estimated $15 billion in 2011 while imports from the US increased from $450 million in 2005 to $2.1 billion in 2010. The United States Forest Service reports that for the first three quarters of 2011, entire West Coast log exports reached 1.5 billion board feet up from 1.4 billion board feet in all of 2010. Recent concerns about illegally harvested timber have led to the implementation of legality legislation in the US and Europe. It is expected that legality legislation will further increase the demand for wood products harvested from Indian lands, not only in China but other countries exporting finished wood products to the US including Vietnam, Thailand and Indonesia and Malaysia. Twelve tribes are participating in a study to identify the potential benefits of collectively participating in log export markets in addition to domestic markets. Tribes and the timber industry as a whole are thinking globally to diversify market opportunities.

Currently, Asian customers are paying higher prices for some logs compared to domestic markets, taking into account differences in transportation costs. In addition, exporting raw logs instead of finished forest products reduces the need and risk to develop and maintain costly infrastructure. An additional potential benefit is the opportunity to establish market presence for tribal forest products that could eventually command a price premium for the SpiritWood brand. An effective branding and marketing program that highlights unique values and qualities reflected by tribal approaches to resource stewardship could potentially command a premium in overseas markets. An example of price premium for native products is evidenced by the Intertribal Agricultural Council (IAC) efforts overseas. The IAC brought in an additional $25 million due to the premium over domestic markets that overseas customers are willing to pay. Overseas products with the IAC trademark get a premium status at international food shows.

Chief challenges to cooperative tribal participation in the export market stem from the geographic locations of reservations with large timber holdings and the specialized expertise needed to access foreign markets. The distance from reservations to markets is a major consideration for many Native American enterprises. Transportation cost to ports will provide different costs and net revenue among tribes that participate in an export cooperative. The SpiritWood marketing alliance provides tribes with the expertise to address the challenges of the export opportunity. Doing business in the export market requires knowledge and experience with customs, traditions, and terms of purchase of foreign customers, transportation logistics, and phytosanitation. The Department of Commerce is funding a joint project with the Center for International Trade in Forest Products and the ITC to develop tribal expertise to participate in forest products export markets. Also a proposal for support to evaluate costs and benefits of collective log exports has been submitted to the Bureau of Indian Affairs for consideration.

Domestic Market

There are twitches of revitalization in the American economy. However opportunities to get new timber initiatives up and running are limited. SpiritWood marketing alliance negotiations with domestic retailers continue to advance. In response to part one of this series, a vice president at one of our nation’s largest retail chains wrote “large companies like Lowe’s and Home Depot would jump at the ability to partner through SpiritWood as major corporations generally have a Diversity Vendor/Supplier goal for revenue generation”. Major corporations that we have approached confirm a need to fill diversity vendor/supplier product portfolios. A compelling element of the SpiritWood marketing strategy is that tribes are the only minority group in America that can sell substantial sustained volumes of forest products from permanent land bases under long-term stewardship.

The domestic market for timber will remain depressed as long as housing and construction remain in a slump. Due to lack of demand, non-tribal manufacturing infrastructure has largely disappeared in parts of the country and many tribal mills, which are often the last to close, are finding it increasingly difficult to maintain operations. Modern infrastructure, mills, jobs and forest health have declined. To meet the challenges of the future, the ITC is undertaking a field study to evaluate the condition of the management, harvesting, transportation and processing infrastructure for forest products in the vicinity of reservations. The study will help identify investments needed to provide income necessary to maintain the health of forests on tribal and neighboring lands over the long term.

There is vast opportunity in Indian Country. Native American reservations encompass a total of approximately 56 million acres of tribal trust land and 44 million acres of Alaska native lands. Tribes have a wide diversity of cultures, and care for their natural resources through the application of generational knowledge and stewardship practices learned through living on the land for thousands of years coupled with modern western science. Domestic and international businesses are looking to tap into these unique native resources and products. The ITC marketing alliance is bridging the gap between tribal, national and international business.

It is just as important for business people to have knowledge of tribal people, governments, laws, cultures and histories when doing business in Indian Country as it is when doing business overseas. When doing business in Indian country you must not let preconceptions prejudice or handicap your ability to spot opportunity. There is no magic solution to the economic problems that exist in Indian Country. SpiritWood is a bridge on the road to opportunity and economic revitalization for some of the poorest communities in the United States.

Tina Hagedorn has worked extensively throughout the United States for Native American tribes at Wesley Rickard, Incorporated where she provides strategy, management, policy and economics consulting. Clients include Indian Tribes, Native Corporations, public agencies, profit companies, nonprofit companies, government and public entities, associations, individuals and other private groups located throughout the United States and in Canada.