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Winnebago Tribe lead business diversification away from casinos


By Anna Jo Bratton -- Associated Press

WINNEBAGO, Neb. - Rising from the bluffs of eastern Nebraska, on the sparsely populated, historically poor Winnebago Indian reservation, stands a glass-paneled office building.

The out-of-place structure is home to Ho-Chunk Inc., a $100 million business with more than 500 employees in six states, Mexico, Iraq and Afghanistan.

Ho-Chunk, the economic development arm of the Winnebago Tribe, is similarly remarkable in the world of American Indian business, because its success has little to do with gaming - besides getting seed money from casino revenue.

Employees of one of the company's 16 subsidiaries pose as civilians on faux battlefields in Indiana so U.S. soldiers can hone their combat instincts.

A Ho-Chunk subsidiary in Mexico provides technical support for a new DNA laboratory used in criminal cases. And since 2005, Ho-Chunk subsidiary All Native Systems has had a multimillion-dollar contract with the U.S. State Department to provide support for rebuilding Iraq's governmental infrastructure.

Ho-Chunk, derived from a Winnebago term that translates to ''The People,'' is trying to end the cycle of poverty that has plagued many reservations for hundreds of years. In Winnebago, the median household income is around $20,000 and more than 40 percent of people don't make enough to live above the federal poverty line.

''It's not like we're a rich tribe,'' said Ho-Chunk CEO Lance Morgan. ''We're just one of the best of the poor tribes.''

Ho-Chunk is part of a growing trend of diversification by American Indian tribes.

Casino revenue is inherently unstable in many states. Contracts must be renegotiated with each new governor, legal fights over casino issues drain income from tribal budgets and legalized gaming in some states brings new competition.

''Tribes are finding that gaming, while it's been successful for many, it's not the only answer,'' said Kip Ritchie, a vice president of the economic development arm of the Forest County Potawatomi Community in Wisconsin and touts a portfolio of investments and assets of more than $26 million.

Ho-Chunk and the Winnebagos are ahead of the game when it comes to sustaining a diversified economy, said professor Joseph Kalt, co-director of the Harvard Project on American Indian Economic Development.

''All these tribes are very much like emerging democracies and developing countries around the world,'' he said.

Tribes across the country are at different stages of success in diversification, said Peter Homer, president of the National Indian Business Association.

''We are changing a culture that is a very giving culture into a hard-knocking, business-thinking [culture],'' Homer said. ''We were horse traders. We never were used to making money and sticking it in our pocket.''

U.S. tribes now have more than $22 billion in annual revenues from gaming, according to government figures. But casino profits deflated for the Winnebago Tribe after a 1994 Iowa law allowed casinos to be built just across the river from Omaha, an hour-and-a-half drive from the Winnebago reservation.

Fortunately, tribal members took $8 million in casino money in 1994 and 1995 and put it toward a new venture.

Ho-Chunk started out with what Morgan calls ''stereotypical Indian business'' - tobacco and gasoline. It started companies to serve primarily tribal members and then branched out once they were established. The company learned how to obtain federal grants and low-interest loans by taking advantage of its tribal status, setting a model for other tribes to follow.

Ho-Chuck posted revenues of $111.3 million in 2005, up from $22.9 million in 2000, and assets have grown to $39.8 million from $8 million. It recorded nearly $691,000 in net profits in 2005.

Ho-Chunk's board of directors acts independently of the tribal council, which keeps short-term political ups and downs from stopping Ho-Chunk's progress, said John Blackhawk, who serves on the tribal council.

Balancing distance with helping people is a problem for some tribes, Kalt said. American Indians in poor communities see for the first time a chance at income - and it's hard to convince them that money generated must be reinvested.

To help maintain the balance, Ho-Chunk helped start the Ho-Chunk Community Development Corp., a nonprofit group that has raised $11 million since it was founded in 2000 to help improve the Winnebago reservation.

The group's biggest project has been Ho-Chunk Village, a development northeast of town.

A homey village square surrounds a sculpture garden filled with 12 statues representing the original clans of the Winnebago Tribe. A hair salon, art studio, Dollar General store and gift store are mixed with the headquarters of several of Ho-Chunk's businesses. Walking trails lead through the village and connect the houses.

Ho-Chunk wants to keep luring tribal members with a college education and disposable income to Winnebago. But those people, while unlikely to qualify for welfare assistance, still don't have the savings to buy a house.

So the homes are sold at low interest rates with down payment assistance for tribal members, some of whom have never before owned a home.

The key to pulling Winnebago out of poverty is to keep young people from fleeing the reservation, Ho-Chunk leaders say - young people such as 25-year-old Victoria Kitcheyan, a former intern for the company who now works at Ho-Chunk administrating government contracts. She spent her early childhood on the reservation, moved to Connecticut with her family, then moved back to Winnebago her senior year of high school.

Kitcheyan went to Haskell Indian Nations University in Lawrence, Kan., and then returned to Winnebago for Ho-Chunk's internship program in the summers of 2004 and 2005.

When Kitcheyan graduated in May 2006 she already had a job with Ho-Chunk lined up, but if not for the company, she wouldn't be living near family in Winnebago now.

Fifteen years ago, there weren't jobs in business administration in the town.

Giving Kitcheyan and her peers a reason to come back is the beginning of securing Ho-Chunk's future, the leaders said.

''It's not like we've topped out,'' Morgan said. ''We're just getting good.''

A look at the holdings of Ho-Chunk Inc.

Companies owned by Ho-Chunk Inc., the economic development arm of the Winnebago Tribe of Nebraska:

*All Native Systems, a telecommunications, computer and networking firm with a mix of government and private contracts; based in Winnebago, Neb., with offices in Bellevue, Neb., and Washington, D.C.

*HCI Distribution Co., based in Winnebago, which blends and sells gasoline and sells American Indian tobacco products. A division, HCI Logistics, is a transportation services provider.

*, an online American Indian catalog gift shop.

*AllNative Office Products, a firm that markets office products and office furniture.

*All Native Solutions, which markets computer hardware, software and other products throughout the United States.

*, an American Indian news and information site on the Internet that gets about 9 million hits per month.

*Dynamic Homes, Detroit Lakes, Minn., a prefabricated housing manufacturer.

*HCI Construction Co., a general contracting firm, based in Winnebago with offices in South Sioux City, Neb.

*Ho-Chunk Builders, an electrical services and construction management company with offices in Winnebago and Bellevue.

*AllNative Resources, which operates a variety of business services including interior design services, warehousing, marketing and public relations

*Native Plains Pharmacy, a national distributor of pharmaceuticals based in Winnebago.

*Blue Earth Marketing, a marketing and advertising agency.

*Rez Cars, a car dealer with locations in Winnebago and South Sioux City.

*WinnaVegas Inn, located near the tribe's WinnaVegas Casino.

*Seven gasoline and convenience stores in Nebraska and Iowa, including two in Winnebago and one each in Walthill; South Sioux City; Lincoln; Emerson; Wayne; Sioux City, Iowa; and Sloan, Iowa.

*Ho-Chunk also has investments in more than 50 hotels and 5,000 apartments in more than a dozen states.

Source: The Associated Press