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Saturday, March 1, 2014

A History of Sugarland Industries - Part 2

Part 1 ended last week with the incorporation of the Sugarland Inustries in 1919.  Part 2 picks up with the history of the corporation in the 1920s and its end in the late 1970s; I'm unsure of the exact date.

On September 11, 1924 Sugarland Industries spun off Imperial Sugar Company as a separate corporation.  It was valued at $3.5 million and had 100,000 shares of common stock, all owned by the Industries, which was owned by Kempner & Eldridge.  Imperial Sugar had no debt, so the company's financial standing was very good.

Records show that in 1926 the Sugarland Industries owned 21,000 acres of land in Fort Bend County, 15,000 acres in Brooks County, and 14,000 in Dimmit County.  All were part of farming and ranching operations that spanned the state of Texas.  In the same year the Industries acquired Foster Farms, a farming and ranching operation in western Fort Bend County south of Fulshear.  The Kempner family still owns the property.

In 1927 the Industries acquired the Brazos Valley Irrigation Company located in Grimes County.  Through a complicated series of transactions, the Irrigation Company owned rights to Brazos River water, which the Industries wanted for its agricultural subsidiaries and Imperial Sugar wanted for its refinery.  The water reached Sugar Land via Jones Creek and a channel which connected it to Oyster Creek.  Brazos River water fills Cleveland Lake, Brooks Lake and Oyster Creek to this day.  In the same year, the Sugarland Industries acquired W. T. Eldridge's extensive farming and ranching operation in Austin County between Eagle Lake and Wharton.  It would eventually sell this property in 1946 when the Kempner family became sole owners of Sugarland Industries and Imperial Sugar.  They purchased all the stock held by W. T. Eldridge's heirs, who inherited it at Eldridge's death in 1932.

Sugarland Industries faced a further crisis in 1932 when it was forced to pay $1.8 million to creditors after the disastrous failure of a fig-processing venture.  What seemed to be a sure-fire money maker fizzled when public tastes suddenly changed and figs were no longer popular.  The total loss was rumored to be $2 million, but whatever the amount, the Industries had to borrow $1.5 million from Imperial, which was also facing a decline in revenue and suffering losses.  Working capital became a serious problem for both companies, and the extended world-wide depression, the Great Depression, offered no immediate relief.

I. H. Kempner spent considerable time in Washington, DC negotiating a loan the Reconstruction Finance Corporation (RFC).  He was successful, but received much less than the amount he asked for.  Furthermore, he had to use Kempner family assets as collateral.  Upon receiving the loan, the Industries repaid its debt to Imperial.  Both companies tightened finances to weather the storm.  Imperial sometimes asked large customers to pay for products before delivery because working capital was so low.  All dividend payments ceased, but the Industries made every RFC loan payment.  Equally important to Sugar Land residents, no one was laid off, or evicted from his home due to overdue rent.  Shifts were reduced when necessary, but all employees continued working.

By 1941, the Industries was back on solid footing.  They paid outstanding dividends and negotiated an extension of their RFC loan.  Generally speaking, business was improving, and demand for sugar products was rising, but WWII brought restrictions and inconveniences.  The story of rationing during the war is fairly well known, but equally problematic were railroad shipping restrictions.  On the positive side, WWII brought Imperial unsurpassed brand recognition in the southwest.  This asset was a boon well past the post-war years.

In 1944 while still serving in the US Navy I. H. 'Herbert' Kempner, Jr. began planning a revitalization of the Imperial refinery which had seen little modernization in several years.  His father, I. H. Kempner, Sr., hired W. H. Louviere to oversee the mammoth project.  Louviere was a respected sugar technologist.  A key element in the plan was that the refinery must continue operation throughout the modernization project.

In 1945 Herbert Kempner began planning the future of Sugar Land and Sugarland Industries.  His plan called for an end to the company town and a phased-end to the Industries.  Sugar Land would become a chartered municipality. He called for the development of subdivisions and sales of residential lots. He proposed selling commerical establishments to private owners. He also advocated the consolidation of Sugar Land ISD with Missouri City ISD.

In 1946 the Kempner family became sole owner of Imperial Sugar and Sugarland Industries when they purchased shares owned by heirs of W. T. Eldridge, Sr.  Herbert Kempner returned to Sugar Land and took the reins of day-to-day management.

Gus Ulrich, Eldridge protege and manager of the project to build old Sugar Land before WWI, died leaving the position of general manager of Sugarland Industries to Tom James, his long-time assistant.

Belknap Realty was created as an Industries subsidiary in 1950 to handle the sale of residential property to prospective home owners.

In 1953 Herbert Kempner died of cancer, but not before he drafted a detailed plan laying out the future for Imperial, Sugarland Industries, and the community of Sugar Land as he first envisioned it near the end of WWII.  In all general respects, his plan guided the development of Sugar Land through the remainder of the 20th century.

Sugar Land became a general law city in 1959 with near unanimous support of residents.  The driving motive was keeping Sugar Land independent of encroaching cities.

In 1968 the Kempners approved the sale 1,200 acres to Jake Kamin who developed Sugar Creek.  In 1972 they okayed the sale of 7,500 acres to Gerald Hines who then developed First Colony and the Sugar Land industrial park north of Highway 90A just west of the Southwest Freeway.  Before the decade ended Sugarland Industries ceased operations and became a fading memory.