Tribes place bets outside the casino
The Chickasaw Nation, among the most prosperous tribes in the United States thanks to its 18 casinos, has a plan to expand beyond its gambling wealth: Bring the Chinese to Indian country.
The tribe recently joined American investors and China’s oldest automaker to resurrect the MG, the sporty British icon, at an abandoned military base here.
The venture shows how some Indian tribes are reaching beyond their territories to take advantage of globalization. Two months ago, Navajo Agricultural Products Industry near Farmington, N.M., signed an agreement to provide corn, wheat, apples and other food products to Cuba. Members of the Oglala Sioux tribe in South Dakota, who live on one of America’s poorest reservations, are providing back-office support for a U.S.-Chinese joint venture.
“The tribal philosophy is you can’t confine their sovereignty to the four corners of some reservation,” said Gabriel Galanda, a Native American attorney in Seattle who is helping tribes explore new business opportunities. “There is a growing interest in not only crossing reservation lines but crossing domestic borders to do business.”
Chinese firms have met resistance from U.S. politicians and labor leaders worried about job losses and a trade deficit that hit a record $805 billion in 2005. But they are finding an open door on Indian land.
Tribal leaders say cutting deals with China is inevitable -- and good business.
“I think China will be the leading power in the next 20 years,” said Brian Campbell, chief executive of Chickasaw Enterprises, a tribe-owned business group.
Thanks to century-old treaties with the U.S. government, Indian tribes are considered sovereign nations, with their own governments and lawmaking power. That means the Chinese and other entrepreneurs operating plants on tribal land are exempt from federal and state taxes, federal labor laws and local zoning rules.
The welcome mat is out in Ada, a small southern Oklahoma oil town that is the home of the Chickasaw Nation. Oklahoma officials approached tribal leaders this year when they learned that Nanjing Automobile Group Corp. was looking to build a U.S. assembly plant for its MG project. Nanjing spent between $80 million and $90 million in 2005 to purchase the rights to the brand after the sports car’s British manufacturer went bankrupt.
Several states were vying for the project, but Oklahoma officials knew that the Chickasaws could offer a better deal.
Marc Nuttle, a partner in the auto project, persuaded the Chickasaws to join the project. He sold to the tribe, for an undisclosed price, 400 of the 3,000 acres he owned in the Ardmore Industrial Airpark, a former military airfield that the state pitched as a site for the auto plant.
The tribe wants the federal government to recognize the land as tribal territory so it can offer tenants such as the MG group tax breaks and other benefits.
The Chickasaws, about 38,000 strong, do not live on a reservation. After being evicted from ancestral lands in the Mississippi Valley in the 1800s, members of the tribe settled in southern Oklahoma. In 1887, the federal government passed a law requiring the tribe to distribute its holdings to individual members. The tribe was allowed, however, to apply for trust status for land purchased within its historical borders, which encompass 7,600 square miles of prairie stretched across 13 counties.
MG North America/Europe Corp., a partnership between the Chinese automaker and a group of American investors, selected Oklahoma in July as the base for the U.S. operation, which would include the assembly plant in Ardmore, a headquarters in Oklahoma City and a research center at the University of Oklahoma in Norman.
The Chinese plan to produce the MG’s most labor-intensive parts, such as the engine, in China. By taking advantaging of the incentives offered by the Chickasaws, the venture can assemble the cars in the U.S. and hold down the price, said Duke Hale, head of the partnership.
In addition, he said, promoting the car as “made in the USA” will free the MG from any negative image that might accompany Chinese products.
The auto deal is part of the Chickasaw Nation’s efforts to reduce its reliance on gambling, which represents 90% of the tribe’s $200 million in projected revenue in 2007. The tribe already owns a successful government contracting business, a chain of long-term care facilities, a bank, several radio stations and a chocolate factory, among other businesses.
But Campbell, who heads commercial operations for the tribe, feared that it was missing out on the China boom. He had seen what happened to people who were ill-prepared to compete in a competitive global economy. His newly renovated headquarters in Ada used to house a call center that employed 500 people. They were laid off when the company moved its operation to the Philippines.
Last spring, Campbell took a group of tribal leaders to China on a scouting mission. For two weeks, he and his delegation were treated like royalty, enjoying lavish banquets and meeting with 80 senior government and business leaders.
The “respect and honor” the Chickasaws received in China reflected an understanding of Native American history that is far deeper than that usually found in the U.S., he said.
“Sovereignty is not something that was given to us,” said Campbell, who has hosted several Chinese delegations in Ada since his return. “Prior to the Europeans’ arrival, we operated as a government and as a people.”
As a result of that trip, the Chickasaws are talking with a Chinese retail group about distributing the tribe’s gourmet Bedre chocolates and have met several times with a large Asian fertilizer company that is considering setting up a business in Ardmore.
Not everyone is comfortable with this idea of a “nation within a nation.” Some organizations, are seeking to restrict tribal sovereignty rights, arguing that they give Indian businesses an unfair advantage over competitors.
Oklahoma is still engaged in legal battles with a few tribes over tobacco. But state leaders now recognize that their 38 federally recognized tribes are a potential asset, said state Treasurer Scott Meacham, who has negotiated agreements that give the state a share of the tribal revenue from gambling, tobacco and fuel.
Meacham praised the MG deal, saying it provides a model for the kind of projects the state could attract by working with the tribes.
State officials estimate that the MG venture, which is supposed to start production in Oklahoma in the summer of 2008, will create 550 jobs and raise an additional $183 million in taxes and other revenue.
The tribes “bring some things to the table that no one else can bring to the table on some of these deals,” said Meacham, who estimates that the tribes generate at least $1 billion a year in economic activity.
Officials of Nanjing Automotive declined to be interviewed for this article, referring questions to Nuttle, one of the investors in Oklahoma.
If the MG deal goes off as planned, many more foreigners will come to Indian country, Nuttle predicts.
“New York had it with Wall Street, Detroit with automobiles,” he said. “Hopefully, we’ll have it with the Chickasaw Nation.”
(BEGIN TEXT OF INFOBOX)
Territory: South-central Oklahoma
Governor: Bill Anoatubby
Other businesses: Seven convenience stores and travel plazas, seven tobacco stores, a bank, a chocolate manufacturer, a musical theater, an FM radio station, a steel fabrication facility, a commercial builder and a provider of medical and dental staffing services
Projected annual net income from businesses: $200 million
Source: Times research by Scott Wilson
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