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The company, celebrating 100 years
By Russ Lynch
of incorporation, keeps evolving
with the times but stays focused
on three businesses
Star-BulletinTOMORROW night, Alexander & Baldwin Inc. will host a party at the Royal Hawaiian Hotel to celebrate 100 years of incorporation.
The choice of venue is appropriate to the company's history. When the hotel first opened in 1927, it was owned by Matson Navigation Co., which was partly owned by A&B at the time. A&B did not take complete ownership of Matson until 1964 and by then Matson's four hotels -- the Moana, the Royal Hawaiian, the Princess Kaiulani and the SurfRider -- had been sold to Sheraton.
Tomorrow's party site serves not only as a reminder of the company's past but also of how much it has changed. Over the years, it shed many holdings, such as hotels, passenger ships and even an airline, to concentrate on what it is today -- ocean freight, agriculture, and real estate.
W. Allan Doane, president and chief executive officer since 1998, talked in a recent interview about the A&B of today -- 100 years after its formal incorporation and 130 years after two Maui sons of missionaries, Samuel T. Alexander and Henry P. Baldwin, formed a partnership to grow sugar.He described a conservative company, closely watching its bottom line and withstanding the temptation to overextend itself, a big reason behind the breakup of A&B's original "Big Five" corporate companions in Hawaii business.
"We have not strayed too far from who we are. The company has never reached too far. We are in as strong a financial position as we've ever been. We think we've weathered a storm we never thought would occur. We've weathered the 1990s," Doane said.
The company is still willing to try something new. For instance, A&B is spending $11 million on Maui to open a factory making wallboard out of bagasse, the fiber that is left after the last drop of sugar has been crushed from cane.
"It's a big risk," Doane said. But even so, it fits with A&B's policy of staying with what it knows, he said. "It's our way of taking an old-line business (sugar) and doing something very different with it."
The highly automated plant will employ about 20 people in a facility the size of a football field at the company's warehouse at Puunene. It will run 24 hours a day, seven days a week to make a product called Hawaiian Duragreen.
The wallboard venture is a new turn in the company's long history in sugar.Samuel Alexander and Henry Baldwin started with 11 acres of land in sugar and it was 100 percent of their business.
Today, after the demise of most Hawaii sugar due to foreign competition, A&B has about 37,000 acres in sugar.
At its peak in 1996, A&B had about 43,000 acres in sugar, but it closed McBryde Sugar Co. on Kauai that year after years of losses. A&B still has more sugar acreage than any other company, with Amfac-Hawaii's Kauai operations running a distant second at about 13,000 acres.
Yet sugar now produces only about 8 percent of A&B's operating profits.
The bulk of A&B's profits -- more than 58 percent in 1999 -- comes from its ocean transportation subsidiary Matson Navigation.
Like sugar, that business is also changing, said Doane, a former Navy officer.
"We're adapting. (Matson is) very much an Internet company," he said.
Its customer-service operation is now in one location, Phoenix. A single "800" phone line, where calls are answered in less than two seconds 98 percent of the time, provides instant information on where any piece of cargo is in 50 states, Doane said.
"We've grown the business," he said. "We've kept what we had in Hawaii," he said, but added that the islands are a mature market. "It's not going to get much bigger."
So Matson went after other related work.
Now it hauls containers across the United States on railways and roads. "So we're not just in the shipping business," Doane said.
Even on the ocean, Matson has diversified. For example, it is in a joint venture that provided cargo service to Puerto Rico.
The other big part of A&B's business, going back to its roots as a land owner, is real estate, Doane said.
Ever since it completed its own office building in 1929 at 822 Bishop St., still its corporate headquarters, A&B has owned commercial real estate in addition to its agricultural land.
Counting this week's purchase of the Judd Building in downtown Honolulu, A&B has made eight major commercial acquisitions in Hawaii in the last year, noted Doane, whose background includes years of local real estate industry experience.
A&B has made a good business out of buying, leasing, selling and managing commercial properties on the mainland. In Hawaii, its real estate business ranges from residential development to owning and leasing land for shopping centers, office buildings and other uses.
"We're the second- or third-largest real estate company in Hawaii but we're moving up," he said. "We want to be the premier real estate company."
Matson Navigation Co. is Alexander & Baldwin Inc.'s biggest money producer by far, followed by real estate, but the company still brings in money from its original business, sugar. Here's how its profit looked last year: A&B TODAY
In millions of dollars
OPERATION PROFIT PCT. OF TOTAL Ocean transportation
$83.8 58.6% $27.5 19.2% $17.4 12.2% $11.3 7.9% $2.9 2.0% Total $142.9
