FHQ Developments: Building A First Nation Economy

As part of Saskatchewan Economic Development Week 2017, the Saskatchewan First Nations Economic Development Network interviewed leaders in the First Nation business and economic development community. Below, SFNEDN Board member Heather Exner-Pirot talks to File Hills Qu’Appelle Tribal Chief Edmund Bellegarde about FHQ Developments, good governance, and establishing the right partnerships.

 Exner-Pirot: How long has FHQ Developments been around?

Bellegarde: We are near seven years. FHQ Developments Limited Partnership agreement was executed in June 2010. It was led by the File Hills Qu’Appelle Tribal Council and our 11 member First Nations. There are twelve partners.

Exner-Pirot: What was the impetus at the time?

Bellegarde: After about 2.5 years of community consultations on economic development, we revealed some of the history of economic development activities with First Nations and the former Tribal Council, and some of the former businesses that at one time were successful, but ultimately had to be wound up because of solvency or viability.

We looked at moving forward some of the opportunities that were available, looked at the economy in terms of provincial, national and international opportunities that may be there. Knowing that Canada and Saskatchewan in particular is a resource centric economy, we looked at some of the issues that arise from that, some of the First Nation positions and rights and as relates to lands and resources, the assertions of rights into IBAs [Impact and Benefit Agreements], and how those rights translated into economic rights. And then translating those rights into economic activities and participating.

We looked at partnerships in building capacity because we recognized we don’t have all the capacity we need to be successful in many of these sectors; we just don’t have the experience.  So we needed to draw on that capacity elsewhere. We looked at a number of things for a few years, and a Limited Partnership structure as a legal structure that protected and advanced the economic interests of a collective purpose was the best way.

Exner-Pirot: What sectors are you involved in, and are you moving into, that you think present the best opportunities for First Nations and for FHQ?

Bellegarde: Currently we’re involved in industrial construction and looking to expand into commercial construction opportunities. We’re involved in industrial contracting, and looking to expand that in some  major projects.

We’re looking to expand our market reach as well.  We’re involved with a drilling rig operation and a Limited Partnership there with a high capacity drilling rig operator [Trinidad drilling, in Southeast Saskatchewan, drilling for Crescent Point Energy.] It’s a very successful rig in light of the market downturn and the slowdown in the overall drilling activity in the Bakken area and Western Canada. Our drilling rig has remained productive for the past couple years despite the downturn.

So those are some very successful stories for us, but they’ve not been without their financial risk or environmental footprint.

We’re involved in the hospitality area as a joint owner with a hotel partner – Home Inn & Suites hotel in Swift Current behind our Living Sky casino.  We’ve got other partnerships that have been engaged, for example a cooperation agreement with Infinity Development Corporation on the Métis side. Other groups we’re bidding on in terms of catering opportunities, integrated facilities management, both hard and soft. We’re looking at the renewable energy sector, looking at opportunities both with industry and with SaskPower and FNPA [First Nation Power Authority]. A number of clean tech opportunities are coming forward. Light manufacturing gives us access to jobs. Some labour market services – connecting industry with a labour pool, and developing that as a business model moving forward.  One of the big needs out there that all these major projects face is access to a skilled labour pool. We’re doing some great work in making headway in building a business model and commercialize some of that activity instead of just organizing and coordinating training and recruitment.

We’re looking at an electronic commerce initiative that, if we’re successful, will have a global footprint and put us into global markets.

Exner-Pirot: What are the pros and cons of being a First Nation-run business?

Bellegarde: Maybe I’ll start with the challenges.  We look at business and economic development in a different context; we look at it from a livelihood perspective. How do we advance some of our rights and turn them into commercial activities?  We look at it from a collective perspective instead of a pure capitalism or transactional perspective.  It’s about building wealth for our First Nations and First Nation governments.

A lot of the shortfalls or deficits in community infrastructure – education, primary health care, housing, clean water, water and sewer infrastructure, roads and maintenance – there’s so much underserved need. We need positive revenue streams and capacity to generate returns and cash flows that assist First Nation governments to address these other areas.

Access to capital is probably the number one challenge. With some of the resource development going on, some of the procurement practices in industry is changing, getting more progressive, improving First Nation participation and value in bids and RFPs [Request for Proposals] and the whole procurement chain is now more relevant. It’s allowing for greater participation of First Nations. When we assess partners, we look at long term partnerships that creates value for the industry partner but also for us. We need to be included and involved in these transactions. We have access to the skilled labour, or the support programs to develop soft skills, help in some of the health areas or the addictions challenges that need to be faced. A lot of these areas we can bring value.

We can bring value in some of our lands and resource rights, and traditional territory. If we can work together on some of the development activities, and mitigate the negative environmental impacts, that’s what we’re trying to accomplish in building economies. We look for partners with strong balance sheets, and an open mind and a respectful relationship.  They need to respect that First Nations have different ideologies, histories, cultural context, different roles in terms of being stewards of the land and taking that role very seriously. We look at those things in selecting partners, as a way of overcoming our other challenges. We negotiate LPs and equity agreements, and transfer of management know how agreements up front, so there’s certainty on all sides of the table.

Our challenges occur on the governance side. First Nation communities and entities and structures are unique in the sense that public structures and business structures don’t always work, or First Nations governing structures aren’t always in total alignment with municipal, provincial, or federal structures or industry sector structures. Understanding that is a lot of work; it can be a challenge that impacts progress or may impact a relationship with external partners. We try to address those issues up front, in a proactive way, so we can develop templates and models that other First Nations and entities can utilize and address their own interests.

On the plus side, we have traditional territory, land rights, access to labour, access to initiatives to train more labour, access to post-secondary institutions to build the knowledge capacity. And the collective purpose is different. We will bring approaches that don’t only impact individuals, but will start to build economies for our First Nations collectively.

Exner-Pirot: That’s something that’s more recent I think – where First Nations are in the position to be choosey about who they will partner with.

Bellegarde: Some of that evolution is from the advocacy that First Nations have done for years, even decades, in the sense that we’ve not always been able to participate in these procurement processes because there was no weighting in the evaluation of bid submissions or project details. No emphasis was placed on First Nations content or participation or labour.

Economic development activities over the past decades from government programming, whether it was federal or provincial, always focused on jobs and training. We’ve elevated our scope of what we want to achieve by being equity owners and having seats around boardroom tables, so that we could influence some of these decisions where decisions are made. By having equity in projects, or companies, or partnerships, that really lends our capacities, our ideology, our way of doing things into a business relationship that didn’t exist before in terms of respect or a participation model or inclusion model.

We believe whole heartedly that we add value to business structures and content.

Exner-Pirot: What is your vision for FHQ developments in the next 10 years?

Bellegarde: We enjoy the privilege of having a successful start. We started with zero capital 7 years ago. We’ve now built a multi-million dollar balance sheet with some positive returns. We’ve also worked hard at our corporate governance, of having a balanced skill set around the boardroom table. That reputation has been recognized and helped given us access to opportunities. That reputation has traveled by word of mouth; when companies are looking to expand business operations in our traditional territory, we’re top of mind in terms of confidence in our governance, our abilities, capacities, stability, and confidence in our approach to doing business with partners. We’re now looking at longer term strategies at how we can bring the collective interests and rights of our 11 First Nations together and building out strategies that are long term in nature that really put us in the centre of the economic transactions that are land based or around natural resource rights.

We’re looking at building our own investment funds and access to capital model for First Nation projects. Where there is currently a middle man, or an industry around First Nations for government and services – we’re looking to replace those non-First Nation industry players and deliver those services ourselves.  If there’s commercial value in that, if there are profits and revenue streams, we will tap in to that. We’ll start to build capacity in these technical areas and professional areas. It really builds the capacity to assert self-determination.

Exner-PIrot: What do you know now that you wish you knew then, so to speak, in the context of First Nations business development?

Bellegarde: Getting all the players around the table and having a constructive dialogue, instead of playing into some of these regulatory tables, confrontational issues, whether federal or by extension the provincial Crown in terms of natural resources and regulatory permitting processes in lands and natural resource projects. Industry and governments, and various agencies, have not always been at the table with a collective interest. There have been splintered interests. And it takes longer to have issues addressed. In the meantime all the economic activities and economic benefits have continued to go to government and industry players and we’ve been on the outside looking in, in many cases forced to use legal processes to insert ourselves into these conversations. We would rather do it in a collaborative manner, up front, co-developing these projects and economic strategies at the table rather than having to force our way to these tables.