SELECTIVE SERVICE: Having a building materials business in the heart of Indian country means that Brian King, owner of Construction Supply in Farmington, N.M., has plenty of experiences--both good and bad--doing business with Native Americans. He has maintained ties with some tribes but stopped dealing with others.
Michael Clark / www.michaelclark.com SELECTIVE SERVICE: Having a building materials business in the heart of Indian country means that Brian King, owner of Construction Supply in Farmington, N.M., has plenty of experiences--both good and bad--doing business with Native Americans. He has maintained ties with some tribes but stopped dealing with others.

Brian King still remembers as a kid flying with his father to Window Rock, Ariz., the administrative capital of the Navajo Nation, to pick up payment for building products the King family's business, Construction Supply in Farmington, N.M., sold to the tribe's local entities.

Construction Supply has dealt with the Navajo for four generations, including most of the three decades Brian King has been its president. But in recent years, he's soured on some American Indians as customers. His company still does business with the Jicarilla Apache Nation on a project, but he closed all accounts with the Navajo in 2007 after a financial dispute led to a lawsuit that left a bitter taste in King's mouth.

Over those same 30 years, Ideal Lumber and Hardware in Toppenish, Wash., in the heart of the Yakama Nation, has had "a wonderful relationship" with the tribe there, says co-owner Carrie Story. The Yakama "are one of our biggest customers," she says, and different branches of the Nation–including Confederate Family Management, Legends Casino and Yakama Nation Housing–are in her yard frequently."It's a pleasure and an honor to serve them."

These two anecdotes illustrate the range of experiences that pro dealers say they've had selling to American Indian tribes and Native American-owned businesses. Those experiences are as varied as the personalities and traditions of the tribes themselves, and suggest that dealers looking to establish or maintain a foothold with American Indian groups need to understand, and at times tolerate, the nuances and peculiarities of tribal customs and business practices.

Looking for Improvement

NOT SO DIFFERENT: The housing projects that LBM dealers supply for Native Americans aren't all that much different than what they do off the reservation. At top: A home built for the Yavapai Apache Indian Nation in Arizona. Below: Construction under way on a house in Hooper Bay, Alaska, where 98% of the population is Native Alaskan.
Courtesy HUD Office of Native American Programs NOT SO DIFFERENT: The housing projects that LBM dealers supply for Native Americans aren't all that much different than what they do off the reservation. At top: A home built for the Yavapai Apache Indian Nation in Arizona. Below: Construction under way on a house in Hooper Bay, Alaska, where 98% of the population is Native Alaskan.

There are 3.1 million Native Americans and 565 recognized tribes in the United States, according to the federal government. About 750,000 American Indians reside on 55.7 million acres of reservations or tribal lands. Despite the revenue that tribes generate from 435 gaming and resort establishments and from the sale of mineral and oil rights on their lands, Native Americans remain among the poorest of racial groups, with 15.2% of adults unemployed and 26% of households living below the poverty level as of the second half of 2010.

Robert Aries, a former consultant who specialized in guiding companies–included pro dealers such as Foxworth-Galbraith Lumber–looking to sell to American Indian tribes, thinks the best route to success for any business is "to show how you can improve their lot in life."

A starting point for many dealers is a tribe's housing authority, which typically oversees repair, remodeling (including weatherization, which several tribes have embraced, say dealers), and in some cases residential and commercial construction. Dealers explain that tribes bid these jobs out to contractors, who then solicit bids from suppliers. Tribes automatically give preferential treatment to Indian-owned businesses, say dealers, so their bids must be at least 10% below that favored competition to have any chance.

All but one of the dealers contacted say that Native American customers shop price first, which isn't that different from most customer groups these days. But Aries observes that tribal loyalty to any supplier is virtually nil: "To them, price is 100% of the bottom line."

Lumber Ranch in Dupree, S.D., gets a "substantial" part of its business from the Cheyenne River Sioux tribe, and that dealer's biggest challenge, says owner John Hight, "is getting the price right. They shop hard and heavy, and don't pay much attention to quality."

Hight has seen Indian customers drive three hours to Rapid City for lower prices at Menards.

Aries has cautioned dealers that tribes have different priorities than businesses. "For them, it's less about making money or pleasing shareholders," he says. "They are guided by tradition, history, and teachings of ancient elders." These traditions vary from tribe to tribe, so it's imperative, says Aries, for dealers to learn about tribal cultures before they try to sell to them as customers.

Slow to No Payment

Several dealers interviewed say their relationships with tribes are relatively frictionless. "They do a real good job," says Jerry Hetherington of Sallisaw Lumber in Oklahoma, which generates about 10% of its $10 million in annual revenue from business with the Cherokee Nation. However, each tribe has its own way of working with outsiders. For example, Story of Ideal Lumber says the Yakama have "real specific" rules about signatures and purchase orders "that you have to respect."

One common thread connecting most tribes, say dealers, is that they are notoriously slow payers. "I know the good ones from the bad ones, and the bad ones I run through financial services" to be sure of getting paid, says Gary Smith, who co-owns Smith & Sons Building Center in Anadarko, Okla., a town with so many Native Americans it calls itself the Indian capital of the United States. His yard generates 50% to 60% of its business from selling to the Apaches, the Caddo, the Delawares, and the Wichitas.

Lumber Ranch has learned to live with the Sioux's somewhat arduous "policies and procedures to get their paperwork in order" before they pay bills, says Hight. But his company still has one purchase order from a tribe that's delinquent from 2007. When asked what his legal options were, Hight replies, "Not many. You could put a lien on them, but if you piss off one entity [of the tribe], you have all of them mad at you."

American Indians comprise separate, sovereign nations within the United States, so tribes can operate outside of the usual business boundaries that govern relationships between dealers and other customers. Sometimes those relationships have included graft and bribery, which Aries refers to as "the dark side" of some tribes' business practices.

Dealers' loudest lament, though, is that they can't get a fair hearing when they have a dispute with a tribe. Larry Provance, owner of Arrow Building Center in Chaddron, Neb., has sold to the Pine Ridge tribe of the Lakota Nation for decades. A few years ago, he says his company got stiffed for $15,000 of materials Arrow supplied to a government-funded project on the reservation. "The minority contactor forgot to pay its bills, and after we went after them we found out the tribe had released the bank from guaranteeing the project." Provance isn't a Native American and Arrow isn't minority-owned, so neither had legal standing with the tribe.

"Basically, we got screwed," he says.

King says Construction Supply spent a year in tribal court trying to sue the Navajo for nonpayment of $250,000 in building materials–roughly 10% of his company's assets at the time–that were provided for a 300-unit FHA-funded housing community the Navajo housing authority was supervising. One of the tribes involved went broke and the project got shut down midway through construction. King says the presiding judge "never made a ruling on anything." After spending $50,000 on legal fees, King agreed to arbitration with the Navajo, and accepted a $90,000 repayment but only after he signed a document absolving the tribe of wrongdoing.

Bruce Abel is thankful he doesn't run into these problems. His company, Don Abel Building Supply in Juneau, Alaska, operates in a state where tribes, since the early 1970s, are organized as native corporations with shareholders. He points to three local groups in particular–Sealaska, Cook Inlet Regional, and Gold Belt Corporation–as big companies that own businesses in Alaska and other states.

Abel's company generates about 10% of its annual sales from native corporations, and a lot of what he supplies goes through the Tlingit and Haida tribes' housing authorities for residential construction. "These corporations are run like standard businesses and are pretty seamless," he says.