Amfac Inc. cuts Hawaiian sugar losses by branching out
Honolulu — These days, demonstrations in support of or protesting against various causes are hardly unusual. Still, one held not long ago at Waipahu District Park here had nothing to do with nuclear weapons, abortion, school integration, or rent ceilings. It was instead billed as a ''Save Our Sugar'' rally.
Such local personalities as ''Aunty'' Genoa Keawe, the Nuuanu Brothers, and Kathy Connolly entertained. Huli huli chicken and rice were served as speakers discussed the growing threat to Hawaii's traditional sugar industry.
As every Hawaiian knows -- and no one better than Amfac Inc., the state's biggest company -- sugar prices have plummeted. Beet and cane sugar from Europe and the Far East pour onto the United States market. When protected from such unrestricted foreign imports, American sugarmakers got as much as 64 cents a pound for their products, much of it grown here in Hawaii.
After Congress let protective legislation lapse, however, foreign imports flooded the market and pushed prices down to where they're around 17 cents a pound now. That drop hit all Hawaii's sugar producers.
Last year Amfac lost $30 million on its sugar operations. In January, it said it will close its Puna Sugar Company on the Big Island of Hawaii -- the first time in 37 years that such a closure was necessary. This year, the red ink from sugar operations will continue, perhaps to the tune of $20 million to $25 million.
''That's a sustainable loss now,'' says Henry A. Walker Jr., Amfac's chairman and chief executive officer. ''But 20 years ago we wouldn't have survived.'' Thanks to a major move into other fields, many of them outside Hawaii, the 133 -year-old Amfac is no longer tied too heavily to land and agriculture.
Despite the sugar losses, the company last year logged more then $2.1 billion in revenues and had profits of $44.2 million. For 1982, Mr. Walker expects to see revenues hit $2.4 billion. Of those, about 80 percent will be generated from operations outside Hawaii.
Amfac now does business in all US states except a dozen in the East and Northeast and has expanded to Australia and Guam.
The biggest of its six operating groups is distribution, which came in last year with better than $1 billion in revenues and pretax earnings of nearly $51 million, up 20 percent from the year before. Those results are more than the entire corporation reported not too long ago.
The group is something of a direct descendant of Amfac's first business, which involved operation of a general store that supplied the needs of not only local sugar plantations and processing plants but the local communities aorund them. Now distribution supplies contractors, industry, and municipalities with a thick catalog of goods ranging from pneumatic equipment, heating and air conditioning equipment, plumbing supplies, and electrical products to specialty drugs.
Amfac's food group supplies America's fast-food industry with frozen potatoes from Portland, Ore.; markets a cheese made in Wapakoneta, Ohio; and sells white mushrooms from Watsonville, Calif. Under the retail group comes the Liberty House chain of 20 department stores and 42 resort and specialty stores in Hawaii and northern California.
The newest of Amfac's ventures are in the horiculture group. Its companies are into nursery operations, the mail order seed business, and tropical fruit products. The latter already includes the world's largest grower of papaya and is now turning out papaya puree used in juices, nectars, and yogurts.
The glamour girl within the corporation, however, remains the hotels and resorts group. With 24 hotels and some 10,500 rooms, the group came in with $211 million in revenues last year, and the expansion continues.
''We're not just in the tourist business,'' Walker says. ''We're going after the commercial traveler.'' That decision has brought Amfac to the Dallas/Fort Worth Airport, where it manages a 1,450-room hotel. It also now manages the 70 -year-old Adolphus Hotel in downtown Dallas, after a $45 million reconstruction.
Planned, too, for opening late next year is the $60 million Amfac Hotel at the Minneapolis City Center. The 32-story structure will have 600 rooms and two floors of retail shops. Amfac will have a 20 percent equity and manage the property, which is being developed with a division of Oxford Development Corporation, of Edmonton, Alberta.
''We also have our eyes on San Diego, Washington, D.C., Atlanta, and Chicago, '' Walker says. ''We'd like to open one or two properties a year.''
If current plans work out, however, Walker will not be attending dedication ceremonies as Amfac's top man. He expects to remain on as chairman, but the Amfac board is expected to pick a new president and chief operating officer by year's end and announce the name at the 1983 annual meeting.
Upon taking over, the new person will be based in San Francisco and not in Honolulu. Already, Amfac has its Western region office in San Francisco, with five of the six group chairmen based there; Walker himself spends half of each month on average on the mainland.
As for the future, he says, ''The company will continue to do new things. But I don't expect we'll change too much. The six things we now do, we do well.''