Bringing Indigenous manufacturing ambitions to life

Published: June 20, 2019

Updated: June 20, 2019

Case study

The central Canadian manufacturing landscape is shifting, opening up opportunities for new and emerging business development. Indigenous businesses in particular have been increasingly active in this space.

To gain a better understanding of this shift for Indigenous manufacturers, Alfred Lea, Founder of Native Canadian Chip Corporation that produces the Tomahawk Chips brand, shared his journey with BDO in expanding his business. Alfred is a firm believer in his principles; taking considerable pride in the company being 100% Canadian and Indigenous owned, and even more so that it began and continues to operate without any financial assistance.

About Native Canadian Chip Corporation

Prior to starting his company, Alfred consulted manufacturers with existing equipment on how to best use their industrial machinery. He would help them develop plans and strategies that leveraged existing resources, bringing products to life that made the most business sense. For a long time, Alfred had big plans for starting his own manufacturing company,

"I've built businesses for others, so I decided it was time to build my own."

Alfred's previous experience working with beverage manufacturers led him to potato chips as his product of choice. As he states, “Drinks are heavy, cumbersome, and puncture easily. Chips, on the other hand, are lightweight, easy to handle and transport; they don't freeze, and they can withstand heat.”

With all operational considerations in line, the choice was obvious. The Tomahawk Chips brand was launched in 2015 under the Native Canadian Chip Corporation, since expanding across Canada and into the U.S. The company operates in Manitoba, with four flavours of potato chips in the product line. They also have plans to expand into different areas of distribution.

Initial challenges

The biggest business challenge Tomahawk Chips was facing was distribution. The distance to transport products across Canada created a barrier for managing time and cost efficiency. Alfred decided the best way to combat this was to use others' strengths to combat their weaknesses. So, they teamed up with a distribution company that helped move goods, rent space for storage and warehousing, and manage inventory. “It's important to have business partners that are compatible with you,” Alfred notes, “You want partners that can grow with you and offer support in areas where you lack.”

BDO was introduced to Tomahawk Chips by Gerald Peterson, a retired BDO partner. The client relationship was reignited in 2016 after illustrating how our services could help support Alfred's vision. Initially, they were experiencing issues such as:

getting records together
having a backlog of information with missing pieces
handling payroll inconsistently

BDO's approach

BDO helped this Indigenous manufacturing company build their business, offered support and oversight wherever possible, and helped fuel growth. When BDO became more actively involved in 2016, they expressed an interest in expanding into the U.S., in addition to broadening BDO's consulting and outsourcing work with the company. As Alfred describes, “BDO always had very thorough knowledge of the direction to take with taxes and developing operational strategies that align with tax planning, international trade, and commerce.”

Tomahawk Chips' BDO engagement partner, Chris Kauenhofen, echoes the appreciation for the client relationship, “Alfred insisted in undertaking his business with private equity. He cash-flowed the business himself without government assistance and has maintained a successful track record of growth. Despite the access to capital markets not being necessary, Alfred was very forthright with his business needs and asked for our assistance wherever it was needed.”

How BDO supports Native Canadian Chip Corporation

The scope of services BDO provides this manufacturing client includes the following:

Bookkeeping, including outsourcing opportunities for record keeping and payroll issues, and cloud-based accounting
Tax preparation services, including corporate tax and GST issues, tax consulting and planning services on Canadian and U.S. tax issues
Business planning and advisory services on company expansion into new markets
Advising on start-up related opportunities and challenges
Cash flow and business planning through financial advisory services
EDI system integration (electronic data interchange for large retailers)
Consulting/IT Solutions

Further, the company plans to take advantage of the Jay Treaty for their U.S. expansion efforts. This is a Canada-U.S. tax treaty that opens up the borders for Indigenous trusts to pursue business activities. Leveraging this treaty may require some reorganization; such as rolling out into an LP under two companies.

Looking to the future

After living out his own success, Alfred's advice is sound for other manufacturing businesses out there:

"Work together with other businesses to bring everyone's talents to the table. Use each other's strengths and leverage each other's networks to build something great."

Looking forward, the company unquestionably plans to involve BDO in their international expansion when the time comes. Moreover, there has been a push towards further financial modelling, production planning, delivery forecasting, and even branching into the trucking industry to help with distribution efforts. “Alfred has a real vision for growth,” says Chris, “He sees the bigger picture and has interest from many external markets for additional collaboration and product development.”

For all manufacturing businesses, Indigenous or otherwise, our team is happy to discuss opportunities for evolving and expanding your operations at any point in the business cycle.

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