Gay & Robinson to quit sugar

Transition looms for plantation, layoffs for workers

STORY SUMMARY »

It's the end of an era for one of Hawaii's last remaining sugar plantations, which is ending production after 119 years in business.

Gay & Robinson Inc. said it has incurred significant losses due to the rising costs of sugar operations - including fuel and fertilizer - and is working toward diversifying the business to include the production of ethanol.

The company said it will "continue to honor its contractual obligations" to its retirees and 225 workers, including 180 members of International Longshore and Warehouse Union Local 142, some of whom will be laid off gradually until the last crop is harvested by August 2010.

The family-owned business, founded in 1889, is the second major agriculture company in two months to exit or reduce its exposure to a crop that has been a long-standing staple in the islands.

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Gay & Robinson Inc. plans to end production at one of two remaining sugar plantations in Hawaii after 119 years in business.

BITTERSWEET ENDING Gay & Robinson Inc. is changing directions after 119 years in the sugar industry. Year founded: 1889 Total employees: 225 Union employees: 180 New focus: Producing ethanol for energy Last sugar crop: August 2010

The family-owned company, founded in 1889, has incurred significant losses due to the rising costs of sugar operations - including fuel and fertilizer - and is working toward diversifying the business to include the production of ethanol.

The company said it will "continue to honor its contractual obligations" to its retirees and 225 workers, including 180 members of International Longshore and Warehouse Union Local 142, some of whom will be laid off gradually until the last crop is harvested by August 2010, said Clayton Dela Cruz, Kauai division director for ILWU Local 142.

"They'll lay off the people who plant first, and, depending on the situation ... irrigation, harvesting and milling people will be the last to go," Dela Cruz said, adding that the company did not provide exact layoff numbers. "We're concerned about a lot of employees who live in plantation housing, so down the road those areas all need to be addressed."

This is the second time in the past two months that a major agriculture company is exiting or reducing its exposure to a crop that has been a long-standing staple in the islands.

Maui Line & Pineapple Co. announced in July that it is shifting its agricultural focus from conventional pineapple farming to forestry and energy crops in the wake of its largest-ever round of layoffs, totaling 274 jobs.

Gay & Robinson plans to lease its sugar mill, terminal and other assets to Pacific West Energy LLC, which intends to expand sugar production to produce ethanol and energy in Kaumakani. It also plans to lease some of its lands to other agriculture producers, though the company did not specify names.

"We are now moving forward and intend to be at the forefront of a new era as a renewable energy producer helping to reduce Kauai's imports of fossil fuels for our energy needs," said E. Alan Kennett, company president and general manager.

The sugar producer announced last year an $80 million investment to help it develop the first plant with Pacific West Energy to create renewable power and ethanol fuel from sugar cane.

In addition, the company plans to install a new hydroelectric power unit that will increase capacity by five to 10 megawatts and provide renewable energy to the island's power grid.

Gay & Robinson operates Kauai's last sugar plantation on about 7,500 acres on the island's West side, averaging about 45,000 tons annually. The move will make Hawaiian Commercial & Sugar Co., a division of Alexander & Baldwin Inc., the state's only producer of raw sugar. With 790 employees, it currently is the larger of the two, producing about 200,000 tons of sugar on 35,000 acres on Maui.

"It's a tough business ... we deal with a lot of variables that are ever-changing, typically the weather and rising costs," said Frank Kiger, general manager of Hawaiian Commercial & Sugar. "It has a major impact on all of us."

The two sugar companies produced about 213,000 tons of raw sugar valued at $74.8 million - not including the value of molasses or fiber used for fuel - in 2006, the last available data according to the National Agricultural Statistics Service.

"Everything related to your fuel costs have gone up, and the price of sugar has remained the same all of these years - that's not very hard math to do," Dela Cruz said, adding that there is a possibility, though no guarantee, that the new firm will hire some of the workers. "It's not that easy to make a go with sugar."

Hawaii's first sugar cane plantation started in 1835 in Koloa on Kauai, with its first harvest producing two tons of raw sugar, which sold for $200 two years later, according to the Hawaii Agriculture Research Center. Plantations were started later on the Big Island, Maui and Oahu, and agriculture was the state's main economic engine for nearly a century, providing a major source of employment, tax revenues and capital through exports of raw sugar and other commodities.

Sugar is still ranked the second-largest single crop grown in value and records the largest acreage, the research center said, though the role of agriculture has diminished in the local economy.

Hawaii immigrant Eliza Sinclair; her daughters, Jane Gay and Helen Robinson; and their sons, Francis Gay and Aubrey Robinson, formed Gay & Robinson in the 19th century to grow sugar on their family's lands in West Kauai.

"The company's transition from sugar to renewable energy signals a new chapter for Kauai and will help position the island for a more secure, clean energy future that is less dependent on imported oil," Gov. Linda Lingle said in a statement.