Tesoro Hawai'i laying off 35
By Frank Cho
Advertiser Staff Writer
With its parent company heavily in debt and its local operations losing money, Tesoro Hawai'i yesterday said it will lay off 5 percent of its Hawai'i work force in a move to reduce expenses and regain profitability.
Tesoro said it will eliminate 35 of its roughly 700 positions in Honolulu as part of a $500 million debt reduction program announced in June by the company's parent corporation.
The first 10 Hawai'i workers are being laid off today and the remaining 25 jobs will be cut between now and January, the company said. About 125 employees are expected to be laid off companywide.
"Basically, the reason is the company overall is not doing well. Industrywide, marketing and refining conditions have not been favorable and naturally Tesoro has been affected," said Nathan Hokama, a spokesman for Tesoro Hawai'i.
Hokama said the Hawai'i company, which operates 35 retail gas stations as well as a 95,000-barrel-a-day refinery near Kapolei, is losing money and the parent company has already lost more than $75 million in the first half of 2002.
To reduce debt and raise cash, Tesoro has been selling assets around the country during the past few months to raise about $200 million.
The company last month announced the sale of its North Dakota-based pipeline and terminals for $110 million in cash and plans to use the proceeds to pay down its debt. The transaction requires regulatory approval and is expected to close in mid-October.
Hokama said there are no plans right now to sell the Hawai'i assets.
"From Tesoro's perspective, we're concerned about the business climate in Hawai'i," Hokama said. "The fact that we are already losing money, we have hesitated to make any additional capital investments into this market."
The state sued Tesoro and several other oil companies in 1998, alleging the companies conspired to fix Hawai'i's retail gasoline prices — the highest in the nation at the time. Tesoro paid $3 million in 1999 to settle its part in the antitrust lawsuit. Earlier this year, the state Legislature passed a law to cap the price of gasoline in Hawai'i starting in the summer of 2004.
Tesoro Petroleum Corp. is an independent refiner and marketer of petroleum products and marine services. The company operates six refineries in the western United States with a combined capacity of nearly 560,000 barrels per day. Tesoro has more than 750 branded retail stations, of which approximately 250 are company owned and operated under the Tesoro or Mirastar brands.
This is the second time Tesoro has laid off employees in its Hawai'i operations since acquiring the business from BHP Hawaii in 1998.
In 2000, Tesoro laid off about 11 workers as part of a cost-cutting measure. In the latest round of layoffs, Hokama said about a third of the employees slated to lose their jobs will be offered positions at the company's offices in San Antonio. Those who are laid off will receive severance packages from the company.
Reach Frank Cho at 525-8088, or at fcho@honoluluadvertiser.com.
