Rearview Mirror: Servco Pacific was founded on setbacks and opportunities

Servco Pacific is celebrating its 100th anniversary this year, and with $1.8 billion in annual sales, it’s one of Hawaii’s largest private companies.

The founder of Servco, Peter Hideichi Fukunaga, came to Hawaii island from Hiroshima, Japan, in 1907 when he was 17. He was injured time and again, suffering everything from broken wrists to tuberculosis to a busted leg. But he managed to turn every setback into an opportunity. It would become part of the underlying DNA of the company.

Current CEO Mark Fuku­naga told me his grand­father initially worked cutting sugar cane but then moved on to building ditches to carry water to the plantations.

“He became what they used to call the dynamite ‘powder man’ for these ditch companies, blasting tunnels and building flumes,” the CEO said.

“It was a higher-risk, higher-return job and allowed him to save some money. He was paid $20 a month, and he saved $10 to send to his family in Japan.”

It was dangerous work. Once, when he fell off a 30-foot cliff above Waipio Valley, he broke both wrists and was in the hospital for three months. It was a setback, but he had a Japanese- English dictionary and used it to improve his English language skills.

He recovered and found work at Parker Ranch as a cook, where he was known for his crusty French bread.

After five years on the Big Island, he decided to come to Honolulu and was hired as a houseboy by a family in Nuuanu.

He also enrolled in Trinity Mission School. He was 22 years old and was put into the first grade. After a month he “graduated” to second, then third, fourth and fifth grades.

A year later he enrolled in the sixth grade at ‘Iolani School.

Fukunaga also moonlighted at a job building Oahu irrigation ditches and flumes in the Koolau Mountains.

He lived frugally to send a younger brother in Japan to school and to support the widow and seven children of another brother. Years later, distant relatives said the family spent the money lavishly and believed it grew on trees in Hawaii.

In his mid-20s he contracted tuberculosis and spent a year at Leahi hospital. He lost the use of one of his lungs. During his convalescence Fukunaga improved his English skills.

Upon his release he could not find a job as a mechanics helper and offered to work without pay at the Royal Hawaiian Corp. (which had formerly provided horses and carriages to guests at the old Royal Hawaiian Hotel downtown).

Impressed with his persistence, quickness and efficiency, the boss started paying him. Several months later a car that was in reverse instead of drive pinned him to a wall, breaking his leg.

While he was recuperating in the hospital, he took a correspondence course in automotive work.

He also heard about an opportunity to buy a garage in Haleiwa for $1,600. He and a partner scraped together $25 for a down payment. He left the hospital on crutches and took over the Haleiwa Garage in 1919. Within a year he bought and was operating service stations in Waialua, Haleiwa and Waipahu under the name Waialua Garage Co.

Peter married Waialua schoolteacher Ruth Hamamura in 1923 and named their four children after our founding fathers and mothers: George, Thomas, Benjamin and Betty.

Fukunaga opened a branch in Wahiawa in 1931 because he thought it would grow with the increasing importance of Schofield Barracks and pineapple production.

“My grandfather held a $25 contest to name the Wahiawa company,” Mark Fuku­naga recalls. “Charles Lyon, a sergeant at Wheeler Field said it should be Serv­ice Motors because ‘service is the heart of any business.’ That resonated with my grandfather, who was all about serving his customers.”

The company was an early Chevrolet dealer and had a body shop, paint shop, parts department and upholstery shop. It even employed a blacksmith because it was easier to make some parts than to ship them from Detroit.

In the early 1930s Peter Fukunaga opened several companies to diversify: Waipahu Auto; Service Finance, to help finance customers’ purchases; Easy Music; and Easy Appliance, which sold the Easy Washer. The innovative thing about it was the wringer, which was mounted on the top.

“A lot of the success of the business during the Depression was because of diversification; plus, my grandfather was just a really hardworking guy.

“A couple of times when he couldn’t make payroll, he actually paid employees with stock, and some of their descendants are still on our shareholder roster today.”

The next big challenge was the Second World War. “My grandmother Ruth made tourist souvenirs to sell to soldiers, such as silk-screened napkins and tablecloths with Hawaiian themes. They also sold jewelry, dry goods and sundries. They just were really resourceful.”

In 1958 Fukunaga decided it was time to look for an import car. “He decided to go to Japan because they were just starting to make cars there. He didn’t know which manufacturer to approach, so he asked Tokyo taxi drivers, since he figured they knew cars well.

“They told him they liked Toyota because it had a better clutch, compared to Nissan. So on that basis he arranged a meeting with Toyota, and he got the distributorship for Hawaii. Servco was among the first group of foreign distributors for Toyota.”

In 1963 Servco sold only two cars, and one was to Mark Fukunaga’s mother. It was a heavy car but had no power steering and no power brakes. It had a three-speed manual transmission with a steering column shifter.

“Every year it was a family ritual to see whether we’d be able to drive mom’s new car over the Pali. Needless to say, it didn’t always make it.

“She’d start in third gear, downshift to second, then first gear, and it would be crawling up at 10 miles an hour. Other cars would be honking. Dad would tell Mom, ‘Alice, turn the car around.’”

Peter Fukunaga died in 1960 and his sons took over. Third-generation Fukunagas now run Servco Pacific.

What does the future hold? “I think there will be more change in the automotive industry in the next 10 years than in the prior hundred,” Mark Fukunaga predicts.

“How we sell and engage with customers will be more online, like retailing in general. So we’re ramping up our digital capabilities and talent on that side.

“Drive trains will shift over time from gas engines to hybrids, electric vehicles and fuel cells. Toyota is the only company so far to sell fuel cell vehicles to the public and has Hawaii’s only hydrogen gas station.

“We’re also anticipating new ownership models, such as carsharing and ridesharing.

“We used to have blacksmiths to make parts. Now we anticipate 3D-printing some of them.

“Companies can either run away from disruption or run at it. We run at it,” Fukunaga concludes. “It’s in their DNA.

“Of course, because ultimately our customers are what really matters — and that’s why we’ve stayed in business for a hundred years — we have to figure out how we can play in that new world and how we can serve customers better.”

Have a question or suggestion? Contact Bob Sigall, author of the five “The Companies We Keep” books, at Sigall@Yahoo.com.