While facing and dealing with “significant immediate problems” influenced by the events of September 11 and times since, the head of Alexander & Baldwin, Inc. remains excited about what the future holds for what on paper appears to be the
While facing and dealing with “significant immediate problems” influenced by the events of September 11 and times since, the head of Alexander & Baldwin, Inc. remains excited about what the future holds for what on paper appears to be the strongest of the remaining “Big Five” Hawai’i megabusinesses.
W. Allen Doane, president and chief executive officer of A&B, expanded on his message of hope presented recently to the Contractors Association of Kaua’i at its annual meeting, saying he is “very much” upbeat about A&B’s future, on and off Kaua’i.
While acknowledging specifically the current financial problems facing the company’s ocean transportation subsidiary, Matson Navigation Company, as well as its real estate holdings, Doane remained upbeat about the parent company’s future in general and on Kaua’i in specific.
“The message is short-term pain, long-term gain,” he said with a laugh. “We’ve been around for 130-plus years, so I don’t think we’re going to give anybody that headline in the future,” Doane said when asked if the company may go the way of Enron.
“Gee, don’t even say that word.
“We know that we’ve got economic problems right now. It doesn’t take a lot of insight to figure out,” said Doane. “But at the same time, we’re more optimistic than ever, and we’re not doing it with our words, we’re doing it with our company’s money.
“And we’re continuing to make major investments in Hawai’i.”
Doane finds the company’s Port Allen commercial complex development, which broke ground earlier this year, especially “exciting, because what we’re doing is we’re taking an area that has a wonderful personality but is a bit old and very industrial, and we’re following the real significant trend there that’s occurred since the change of the boating operations from Hanalei down to the south end of the island.
“It’s a retail-oriented facility that’s going to also house a number of the boaters,” said Doane. “We think that this is going to be the first step at Port Allen in a real significant but very nice development in that area.”
He divided proposed and ongoing Kaua’i developments into the underway and “longer-term consideration” categories, with a marina at Kukui’ula and a planned Kalaheo mauka commercial subdivision put on the back burners for now.
Ongoing operations include Kaua’i Commercial Company, a trucking and delivery business; the Kukui’ula master-planned resort community part of A&B Properties; Kaua’i Coffee Company; and Matson Navigation Company at Nawiliwili Harbor.
Kaua’i Coffee recently completed its 2001 harvest, bringing in more coffee than the year before. After years of losing money and being told it essentially has to fly on its own or perish, this year will mark back-to-back years of profitability for the country’s largest coffee plantation (3,400 acres), he said.
Much of the Kaua’i Coffee Company acreage is formerly McBryde Sugar, which A&B closed in 1998. “We decided a couple years ago after putting huge amounts of money into the business for many years, that we had to do two things: We had to reduce our investment to a small amount that was consistent with the potential of the project. We put $40 million into it and it incurred all kinds of losses,” he said.
“So that the investment at best was going to be moderate; but it didn’t mean no investment. But, also, we are in business, we have to be in business to achieve a profit, a profitable result, and if we can’t convince ourselves that that’s going to happen, then we have a responsibility,” Doane added.
“So we have a responsibility to the community, but we also have a responsibility to the business, and we’ve really been fortunate that we’ve been able to take that business that had been losing a lot of money” and gotten it to the point that it is above break-even.
“We’re not doing great, but we’re doing well enough that it’s not losing money. The first thing you do is you don’t lose money. The second thing you do is you try to make money,” said Doane, who had high praise for the management team and dedicated employees of Kaua’i Coffee.
“We very much want it to work. Even with today’s coffee prices, which are unprecedentedly low, we’ve been fortunate enough in the last few years that we’ve established enough of a brand name and a reputation for the coffee that most of our coffee is sold at prices way above that world price, which is in the 40-45-cent range (per pound),” he said.
“We couldn’t survive on anything close to that kind of price.”
Kukui’ula, the 1,000-acre resort along the island’s south shore, continues to undergo what Doane refers to as a “refining process,” aimed at “deciding exactly how to develop the property (in a way) that will make it attractive both for people who want to live there and for the community in general. And we’re getting much closer to that,” he said.
The new year will see the company moving forward with some sort of development plan regarding Kukui’ula, with A&B exploring many options including taking on a partner to help guide development there, Doane continued.
The company has no inventory left to sell at its Koloa Estates subdivision, and is about to secure regulatory approvals for a second subdivision with around 90 lots. “All our units are sold, so we really wish we had homes that we could sell right now, but we don’t,” he explained.
Kaua’i Commercial continues to do well, and despite news reports that smaller trucking companies will go the way of the dinosaurs because of the Internet and large delivery services, Doane simply points our, “You can’t ship packages over the Internet.”
Kaua’i Commercial has grown, both in size and reputation, and is expected to continue to be an integral part of A&B’s Kaua’i operations despite being a small business. “We’ve very proud of Kaua’i Commercial.”
Matson remains a key part of the company, and offers shipping from the West Coast to any of the major islands for the same rate even though neighbor island freight has to be re-handled in Honolulu before being forwarded to the other islands.
Doane has been at the helm of A&B since 1998, joining the company in 1991 as executive vice president and chief operating officer.
A&B is one of the remaining economic giants in Hawai’i, part of what was once called the Big Five of C. Brewer, Amfac, TheoDavies, A&B and Castle & Cooke. It owns nearly 22,000 acres on Kaua’i, making it the third largest private landowner on the island, behind Robinson Family Partners and Steve Case.
Business Editor Paul C. Curtis can be reached at mailto:pcurtis@pulitzer.net or 245-3681 (ext. 224).
