The owner of Domino Sugar, a Baltimore landmark since 1922 whose neon sign has become synonymous with the Inner Harbor skyline, is close to a deal to sell the company.
For the past nine months, Domino has lost money on every pound of sugar it processes because it is buying raw cane sugar and selling the finished product for about the same price, a company official said. Throw in the costs associated with manufacturing - payroll, energy and the like - and it adds up to big negatives.
"It's a very, very serious situation," said Margaret Blamberg, director of government relations for Domino's parent company, Tate & Lyle PLC of London. "We are losing a lot of money every month because of the fact that we have no margin, and we're not the only refiner in this situation."
Federal price supports are making sugar beet production extremely attractive and have prompted farmers to grow more crops than the marketplace demands, Blamberg said. That drives down the price of refined beet sugar, and Domino must in turn lower the prices on its type of sugar too.
Officials at Tate & Lyle declined to say exactly how much money Domino is losing but noted that the United States' largest sugar producer, Imperial Sugar Co. of Sugar Land, Texas, filed for bankruptcy protection in January because of similar problems.
The market "makes normal commercial planning and operations very difficult," said Clive Rutherford, president of Tate & Lyle North American Sugars Inc. "We had a particularly bad time over the last 18 months, with the surplus of sugar in the market, and we believe consolidation of the industry in the U.S. is probably both essential and inevitable, so we decided to sell the business."
About 500 people work at Domino's Locust Point facility on Key Highway, and most are represented by the United Food and Commercial Workers. The plant produces about 1 million tons of sugar a year.
Local union officials did not return calls yesterday.
Several workers at the Key Highway plant said they were not aware of the expected sale. "We don't know anything about it," said Karen Herold, who works in Domino's traffic department. "There hasn't been any announcement."
The pending transaction was disclosed earlier this month when Tate & Lyle released its year-end financial results and noted in the report that it was in "advanced negotiations" on the sale of Domino.
Although he declined to comment on what might happen to the Baltimore plant after the sale, Rutherford said the facility would be sold as a "going concern."
"There is really no reason operations here [in Baltimore] should change much after the sale," he said.
Officials at Tate also declined to give a timeframe for the deal or disclose the identity of the buyer, although Florida news outlets have identified the party as Florida Crystals Corp. of Palm Beach. Calls to that company yesterday were not returned.
The American Sugar Refining Co. (Amstar) opened the Baltimore plant May 17, 1922, and employed 1,000 people. On the plant's one-year anniversary, the president wrote an open letter in The Sun thanking the community and business leaders for their support.
"In the year, 65 ships laden with raw sugar from the tropics have docked at the refinery," Earl D. Babst wrote. "One fourth of the refined sugar has been packed as Domino Package Sugars - in full weight sturdy cartons and strong cotton bags - showing the quick response of the Housewives of Maryland to our satisfying slogan, 'Sweeten it with Domino.'"(Not all of those women were receptive to the product, though: The next day the paper ran an article about a planned picket of the Domino plant by the Housewives' League and the group's organization of Sugarless Day in protest of high sugar prices.)
Amstar Corp. was sold to investment banking firm Kohlberg, Kravis, Roberts and Co. for $428 million in 1984. The firm sold it two years later to Merrill Lynch Capital Partners Inc. Tate & Lyle purchased the Domino business in 1988 for $305 million.
"The key thing now is that we get on and try to do as good a job as possible," Rutherford said. "That gives us a better chance of security in the future."
Staff writer Jennifer Dorroh contributed to this article.