Published in Economic Development

Michigan’s tribes add $288.8 million to state economy via non-gaming businesses

BY Wednesday, July 08, 2020 04:46am

As they’ve taken steps to diversify their revenues away from casinos in recent years, Michigan-based Native American tribes have built growing business ventures that in 2019 contributed nearly $288.8 million to the state economy. 

That’s according to the results of a new economic study that looked into the business ventures started by nine of Michigan’s 12 federally recognized tribes. 

Deidra Mitchell president and CEO of Waséyabek Development Co COURTESY PHOTO

The double blind study, which was underwritten by the Michigan Economic Development Corp., measured the economic effects the 38 tribal business entities created for the state’s economy.

“The study shows that these tribal business entities are relevant, they are good business partners, and they do produce good-paying jobs for the communities in which they operate,” said Deidra Mitchell, the coordinator of the study and president and CEO of Grand Rapids-based Waséyabek Development Co., the non-gaming investment arm of the Nottawaseppi Huron Band of the Potawatomi

As well, the companies resulted in the creation of 1,847 jobs at other businesses across the state, including suppliers and vendors to the tribal entities. According to the study, the spin-off jobs pay an average salary of $45,664, “well above the average wage in Michigan,” Mitchell said. 

The 38 tribally owned businesses, which had a combined asset value of more than $343.5 million, generated in excess of $228.4 million in revenues for 2019, according to the study. The firms also span 11 different industry sectors, ranging from manufacturing, real estate, construction, professional services and utilities, to retail, finance and insurance, administrative support, waste management, arts and entertainment, and hospitality. 

The study took a narrow approach to protect the “data sovereignty” of each tribe and looks outward at how the tribal businesses affect the state through spin off jobs and economic activity created because of the tribal entities, said Eric Trevan, Ph.D., a faculty member of The Evergreen State College in Olympia, Wash. and a member of the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, referred to as the Gun Lake Tribe. 

“These are tribally owned businesses and they’re part of the Michigan economy as well,” Trevan told MiBiz. “A job on the reservation is a job for the region.”

Trevan said the study represents an “at least” figure for the economic contributions of tribal non-gaming businesses in Michigan because three Michigan-based tribes did not participate in the study. Likewise, it did not incorporate Michigan-based businesses owned by Alaska Native Corporations, he added. 

While the tribally owned entities generally do not pay state and federal taxes, the economic activity generated by them doing business with suppliers and vendors and the workforce at those firms created $7.6 million in state taxes and $16.6 million in federal taxes, according to the study.  

“It’s important to calculate what tax revenue was created because these entities are in operation,” Trevan said, calling the figures “conservative estimates.”

Additionally, the report broke down the “total economic impact” by geography within the MEDC’s Prosperity Zones, using locations where tribally owned businesses operate. 

They found the most economic activity generated because of tribally owned businesses occurred in the seven-county Southwest Michigan area. The presence of tribal entities resulted in more than $163.1 million in economic activity at other firms, $32.9 million in salary and wages and 643 jobs. 

The 13-county West Michigan region, which encompasses Grand Rapids, Holland, Grand Haven and Muskegon, was second with nearly $51.5 million in economic activity created because of the tribal entities, nearly $27.3 million in salary and wages and 636 jobs. 

By comparison, the three-county region encompassing metro Detroit had only $1.3 million in economic activity, about $298,500 in wages, and eight jobs at other companies because of economic activity created by the tribal entities, according to the study. 

Mitchell couldn’t say why the economic activity was clustered mostly in the western half of the state, but noted that Waséyabek, for example, prefers to own companies within 150 miles of its headquarters. 

“It may just have to do with the focus of the different tribal (economic development) entities and what they want to invest in and where the concentration of those businesses are,” she said. 

Tribes participating in the study were: Hannahville Indian Community, Lac Vieux Desert Band of Lake Superior Chippewa Indians, Little River Band of Ottawa Indians, Little Traverse Bay Bands of Odawa Indians, the Gun Lake Tribe, Nottawaseppi Huron Band of the Potawatomi Indians, Pokagon Band of Potawatomi Indians, Saginaw Chippewa Indian Tribe and the Sault Ste. Marie Tribe of Chippewa Indians.

Mitchell said the report grew out of quarterly discussions she was having with other tribal economic development leaders across Michigan.

“We talk about challenges and best practices and things we’re going through. We know that we’re doing good work for the state of Michigan and for our tribes with these non-gaming entities, but there was really nothing collectively saying that that we could point to,” Mitchell said. “The point (of the study) was to quantify, provide empirical data that was gathered by an impartial third party that we could point to and say this is the impact that we’re having. 

“Tribes really are essential contributors to the economy in Michigan.”

Although tribes’ non-gaming economic development and investment arms are making progress in diversifying their revenue streams and employing more people across the state, casinos remain the economic driver for Indian Country in Michigan and nationwide. According to the American Gaming Association, the 24 tribally owned casinos in Michigan contribute $3.37 billion to the state economy and employ more than 21,500 people. 

However, during the COVID-19 pandemic, all tribal casinos in Michigan voluntarily shut down, costing them millions in lost revenues and proving the need for further diversification, according to sources contacted for this report. 

“Diversification is a cornerstone of all business,” said Jon Panamaroff, a co-author of the study and chief compliance officer and senior vice president of business integration at Koniag Government Services, an Alaska Native-owned enterprise that also includes three Michigan portfolio companies, Professional Computing Resources Inc. and Open Systems Technologies in Grand Rapids and XMCO Inc. in Warren. “As we think about seven generations out, business diversification is key to the sustainability of these tribes and their communities.”

Read 3257 times Last modified on Wednesday, 08 July 2020 07:43
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