KAUMAKANI, Kauai - Kauai sugar producer Gay & Robinson Inc., one of only two sugar growers remaining in Hawaii, announced Wednesday that it is getting out of the business after 119 years because of increasing costs.
The company said it plans to lease land and other assets to Pacific West Energy LLC, which intends to grow even more sugar than Gay & Robinson for production of ethanol and electricity.
Last year, Gay & Robinson had said it planned to invest $80 million to build an ethanol plant that could open as early as this year. The venture would have had the company partnering with Pacific West Energy. Gay & Robinson didn't mention the proposed plant in Wednesday's announcement.
''It is our hope and belief that Gay & Robinson is doing everything it can to ensure all workers continue to be employed throughout this transition and will eventually be working for Pacific West Energy growing sugar cane for ethanol production,'' Kauai Mayor Bill ''Kaipo'' Asing said.
Gay & Robinson said some of its other land will be leased to various agricultural entities to be identified later.
G&R said it will honor its obligations to employees, as well as retirees, and planned to meet with their union, International Longshore and Warehouse Union Local 142, to discuss the transition.
G&R, which was founded in 1889, said it also intends to expand its hydroelectric power production to supply more energy to Kauai's power grid.
''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 company President and General Manager E. Alan Kennett.
The departure of G&R will leave Hawaiian Commercial & Sugar Co. on Maui the only producer of sugar for consumption in Hawaii.
"It makes us the sole survivor, which is not a comfortable place to be," said HC&S General Manager Frank Kiger.
He said there will be an 18-month delay before HC&S and parent Alexander & Baldwin feel the effects since Gay & Robinson will harvest and process the cane it still has in the fields.
"They're producing 40 to 45 tons a year. The way it will affect us directly is in the long run, in a year and a half from now, when they will harvest the cane they have in the ground," Kiger said.
Until then, Gay & Robinson will participate in supporting the sugar research program at the Hawaii Agriculture and Research Center and share in the costs of shipping raw sugar to West Coast refineries for processing into white sugar.
"Those are two things we do on a shared cost basis," Kiger said.
A&B shut down its sugar operations on Kauai when it converted its McBryde Sugar Co. lands to the Kauai Coffee Co. in 1995.
At best, though, Gay & Robinson was a minor partner in the remains of the Hawaii sugar industry, with about 7,200 acres in production in 2007. By comparison, HC&S has 37,000 acres on Maui in cane.
Kiger said HC&S has no plans to pursue ethanol production with cane on Maui or with its farming operations on Kauai.
"If we were going to pursue ethanol production, it would be on Maui," he said.
But the plantation is looking at increasing its sugar production on Maui, he said. He said HC&S is reviewing lands formerly leased to Maui Pineapple Co. as well as lands that have been allowed to remain fallow.
Gov. Linda Lingle issued a statement saying that she was encouraged that Gay & Robinson will continue to be a part of Kauai's economic future.
''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,'' Lingle said.
The governor said the state would assist the transition by expediting the permits and approvals necessary to transform Gay & Robinson.