The Brancatelli File
NEW TIMES FOR HAWAII'S OLD BIG FIVE
BY JOE BRANCATELLI
August 4, 1984 -- Hawaii has been titularly ruled by tribal chiefs, kinds, queens, presidents, territorial governors, and, for the last twenty-five years, a state legislature. But pragmatically speaking, Hawaii's "Big Five" companies owned and operated the Islands as their private preserve for most of the last century.
A combine of closely held kamaaina (local) companies, the Big Five was Hawaii's version of the mainland robber barons. The haole (white) families who controlled the Big Five companies were ruthless--and they were the unquestioned economic and political rulers of Hawaii. The Big Five did it all: they overthrew the popular native monarchy and were the chief instigators of the U.S. annexation of the Islands in 1897; they owned most of the land, including the sugar and pineapple plantations; they controlled the docks, the factories and most of the stores; they provided most of the jobs and built much of the state; they manipulated the economy and the natives for their own benefit, and appointed the territorial governors and legislatures.
Like the mainland counterparts, the Big Five companies aren't the political and economic forces they once were. The rise of Hawaii's labor movement loosened the Big Five's hold on the workers. Statehood deposited Hawaii's political power in the hands of bureaucrats and planners. The decline of Hawaii's agricultural base ended the Big Five's traditional domination of the economy. And their own expansion into mainland business ventures diluted their commitment to Hawaii.
But unlike the mainland robber barons, most of whose family names and corporate entities have been long forgotten, the Big Five companies have not totally disappeared from the Hawaiian economic scene. They still control many crucial facets of the state's economy, their buildings dot the downtown Honolulu landscape, and they still hold much of the state's real estate.
Amfac (founded in 1849), has moved most of its operations to San Francisco, is two-thirds owned by out-of-state-stockholders, and is run by a non-Hawaiian president and chief executive officer. Yet the company still owns 60,000 acres of Hawaiian land, employs 9,000 people in the state, and remains the dominant factor in Hawaii's travel, retailing and sugar industries. About $500 million of Amfac's $2.2 billion in annual sales is generated in Hawaii. Chairman Henry A. Walker Jr., a fourth-generation Hawaiian is still based in the state. "Amfac," he emphasizes, "is still a Hawaiian company."
Castle & Cooke, founded in 1851, is 80 percent owned by out-of-state investors. Its administrative headquarters are in San Francisco; the president and CEO is a mainlander. Still C&C owns 150,000 acres of Hawaiian land, including the whole island of Lanai. The state's primary pineapple grower, Castle & Cooke is also a major force in Hawaii's urban affairs. It is trying to develop a 248-acre high-technology industrial park and a major new residential community in central Oahu. "We bend over backwards to stay in Hawaii," says Vice President Warren Haight.
C. Brewer & Co., founded in 1826, is now a subsidiary of IU International, a mainland conglomerate. But Brewer remains deeply involved in the state's economy: 70 percent of its $280 million in sales and half of its 6,400 employees are Hawaii-based. The company is also a large Hawaiian landowner (97,000 acres) and a major force in the state's sugar, guava and macadamia nut agribusinesses.
Theo. H. Davies & Co., founded in 1845, is now owned by Hong Kong's Jardine, Matheson. It recently sold most of its Hawaiian real estate and divested all of its local sugar business. But most of the company's sales still come from Hawaii and it remains a major factor in many local industries. "We've been looking to expand through acquisition," says President and CEO David A. Heenan. "When the time comes, nine out of ten of the acquisitions will be related to Hawaii."
Alexander & Baldwin, founded in 1870, is still an overwhelmingly local company. It maintains headquarters in Honolulu, 95 percent of its $398 million of annual sales are generated in Hawaii, and half the stockholders are locals. A&B has a near monopoly on the state's shipping industry, is deeply involved in Hawaiian sugar and tourism, and owns 97,000 acres of real estate on the Islands. "We are looking for acquisitions in Hawaii first and elsewhere second. A&B has been stubbornly loyal to Hawaii," says R. J. Pfeiffer, the company president, chairman and CEO.
As the Big Five have diversified and their dominance over Hawaii has waned, some new homegrown companies have come to the forefront. Once the local gas company, Pacific Resources Inc. has grown into a large supplier of energy products to the Pacific Basin. With $1.5 billion in annual revenue, it is the only Hawaii-based company with a Fortune 500 ranking (No. 225). Bancorp Hawaii, the state's largest bank, now boasts $3.4 billion in assets and offices throughout the Pacific.
But the company that probably has the most impact on Hawaii's current economy is United Airlines. The Chicago-based carrier controls about half of the Islands' overseas traffic. For all intents and purposes, United is the state's main link with the rest of the union.
"If United had a long strike," says a local real estate developer, "I'm not sure the state economy would survive. All of Hawaii might sink into the Pacific."
This column originally appeared in Frequent Flyer magazine.
Copyright © 1984-2010 by Joe Brancatelli. All rights reserved.