Cherokee Nation Industries to close its construction operations
Workerscontinue construction on a new building at Tahlequah City Hospital on Feb. 23,2010 in Tahlequah, Okla. The project is one of two remaining projects to becompleted by CNI Construction Services before ending operations. (Photo byCraig Henry)
TAHLEQUAH, Okla. – Cherokee Nation Industries officials announced on Feb. 10 plans to cease the company’s Construction Services after it completes two remaining projects and that affected employees could access Cherokee Nation job placement programs.
Chief Operating Officer Bryan Collins, who runs CNI’s daily operations, said Construction Services would complete buildings for the Tahlequah City Hospital and East Central Electric Co-op in Okmulgee before ending operations, but gave no estimated completion dates.
“Both projects are going well, operating within their budgets,” he said.
Collins said between the projects, Construction Services’ five current employees would “stay busy for quite some time.” He added that two employees already displaced by the move “have access to many job placement programs provided by the Cherokee Nation.”
Overall, six of the seven employees to be affected are CN citizens.
In a Feb. 10 memo to CNI employees, Collins states the move to cease construction operations was made because “CNI management feels this is in the best fiscal interest of the company.”
Construction Services began operating in late 2005, but never generated the revenue to keep it running. It lost $1.9 million in fiscal year 2009, which ended Sept. 30. However, the business posted a $27,000 profit for the first three months of FY 2010, which began Oct. 1.
During the past year, the Tribal Council has questioned Collins and others about losses suffered by Construction Services.
Dist. 2 Tribal Councilor Jodie Fishinghawk asked Cherokee Nation Businesses CEO David Stewart about construction operations during the council’s December Executive and Finance Committee meeting since CNB oversees CNI.
“It doesn’t seem to be doing very good,” she told Stewart.
Stewart said he was “vaguely familiar” with CNI’s construction losses at that time and wished to leave the matter with Collins and the CNI board. Since then, Stewart has become CNI CEO.
“I have grave concerns about CNI failing to be straight with the council about the construction losses and efforts to deal with the losses,” Fishinghawk said. “Millions in losses appear to be not adequately explained and there appears to serious management issues.”
In December, Collins said Construction Services was still in “start up mode” and trying to build its reputation in the industry as it bids for more contracts. He said the company was bidding on more commercial projects and moving away from tribal projects.
He said because CNI had no past job performance history, CNI officials had to bid “very competitively” to establish a job performance history. That meant CNI was not making as much profit from a construction project as a more experienced construction company.
Also, some of construction losses are from operating a new business without new jobs or revenue streams coming in, Collins said.
Collins said in December he was confident Construction Services would make up for those losses in 2010 based on the number of construction contracts the company has bid for and won.
The Feb. 10 memo added that the decision to cease operations “was not reached lightly.”
The decision may be “alarming, or even disheartening to many,” but CNI employees have other successes to be proud of in early 2010, Collins writes.
“I think it’s important to point out that CNI has other divisions that are performing quite well this year. Our medical services, telecom and aerospace and defense divisions have all been profitable this first quarter. We’ve also reached an important milestone recently. Local employment for CNI now tops 500 for the first time ever. There are many positive things happening at CNI, and I’m optimistic about our future,” Collins states.