Pineapple all pau on Valley isle


POSTED: Wednesday, November 04, 2009

Hawaii's once-rich agricultural industry, renowned throughout the 1900s for its pineapple and sugar crops, has suffered another devastating blow.

With the last remaining sugar company hanging on by a thread, Maui Land & Pineapple Co. said yesterday it would stop planting pineapple immediately, cease all pineapple operations by the end of the year, and lay off more than 45 percent of its work force amid a companywide restructuring that repositions subsidiary Kapalua Land Co.

The company, which employs 624 people, said up to 133 employees will be offered jobs at partner companies while up to 285 employees will be laid off, primarily at subsidiary Maui Pineapple Co.

MLP's decision to end pineapple operations after 97 years on Maui leaves Dole as the state's last large pineapple producer. And Dole, which harvests 2,700 acres of pineapple land in Wahiawa, is only a shadow of its former self after years of paring back its operations. Small farmers scattered throughout the state make up the remainder of the pineapple producers.

“;This is very sad news for our community, especially for the employees and their families who will be affected,”; Maui Mayor Charmaine Tavares said. “;Agricultural fields are part of our heritage and have been a foundation of our island's history. For nearly a hundred years, the company's pineapple operations have made our community's character unique.”;

MLP, which has lost more than $172 million since the start of 2008, has long since struggled with its pineapple operations. The company, which through the years reduced its pineapple land to 2,500 acres at today's level, built a new $20 million fresh-fruit packing facility that opened in 2006 and shut down the state's remaining cannery in 2007 to focus on fresh-fruit pineapple.

But the pineapple operations continued to struggle and the company, which last Friday posted a $25.5 million overall loss, said its agricultural operations — consisting predominantly of pineapple — lost $4.1 million in the third quarter and through the first nine months of this year had lost $12.6 million.

“;It's a real blow to agriculture as we have known it in the past for the two giants, sugar and pineapple,”; said William Kennison, Maui Division director of the International Longshore and Warehouse Union Local 142.

Kennison, who said 193 of 208 union employees would be losing their jobs, also represents about 150 workers at Kauai-based Gay & Robinson, which last Friday unloaded its last load of sugar cane. That leaves only money-losing Hawaiian Commercial & Sugar Co. on Maui as the state's last sugar grower. And Alexander & Baldwin Inc., which owns HC&S, said it expects to make a decision around the end of the year whether it will remain in the sugar business.

“;Unfortunately, despite our exhaustive efforts to revitalize the pineapple business over the last few years and efforts to keep agriculture jobs on Maui, market conditions have not improved and pineapple operations at MPC are not financially sustainable,”; said Warren Haruki, chairman and interim chief executive officer of MLP.

Haruki said Initiatives to save the pineapple business included significant investment in the plant and equipment, and focusing on higher-margin hybrid fruit and improved operational efficiencies.

“;Since 2002, MPC has lost $115 million in this agriculture business, while investing $20 million in capital expenditures for a new fresh packing facility,”; Haruki said. “;Realizing that these losses could no longer continue, we spent the last year exploring options to keep pineapple operations going on Maui. Despite our efforts, it became clear that there were no other financially viable options. The painful decision to close pineapple operations at MPC after 97 years was incredibly difficult to make, but absolutely necessary. We realize this ends a significant chapter in Maui's history — an important part of many lives, over many generations.”;

Dole, for its part, “;is committed to keeping our pineapple operation there”; on Oahu, company spokesman Marty Ordman said.

Kennison said employees had held out hope that the pineapple operations could be saved after a group of former MLP executives approached the company about forming a spinoff operation. But those talks fell through and the fate of the pineapple operations, which once employed more than 1,000 people, was sealed.

For Maui Pineapple Co. employee Harold Gouveia, who turns 62 this month, it's like ripping apart his family.

“;It's been my whole life,”; he said. “;My dad worked there for 45 years and I've been there for 36 years. We could see this thing happening the last couple of years the way the plantation was handled by the management side, such as selling off assets and then buying the property for themselves, like (former CEO) David Cole did.”;

Gouveia said he feels worse for the younger employees, “;people 55 and below who have 20-something and 30-something years in the company who 60 days from now will be without a job.”;

“;You just look at these guys working in the rain all the time trying to keep the company alive, and the top executives make all these mistakes.”;

Kennison also was directly affected, and in a big way. Thirteen of his family members, including his wife and her sisters, brothers, cousins and nephews, were laid off.

“;It's devastating and will have a big impact on the families financially because they have kids going to school, and mortgages to pay,”; Kennison said. “;When you lay off people in the agriculture industry, a lot of them have first, second and third generations, and those generations also have families. When you combine the families, the aggregate is huge.”;

Although pineapple is one of the state's largest commodities, the Statistics of Hawaii Agriculture no longer lists the fruit among its rankings due to proprietary reasons since only two companies remained in the business following the pullout of Del Monte in 2006. The last time pineapple was included in the rankings — in 2006 — it ranked second in value of production (out the gate) at $73.7 million behind seed crops at $103 millioin and ahead of sugarcane at $50.2 million.

As part of its restructuring, MLP said it will make strategic changes to Kapalua Land Co. to improve Kapalua's efficiency and strongly position it for future success.

To achieve this, MLP said Kapalua Land Co. will partner with the “;best in class”; operators in their respective fields who can manage select assets of the resort more effectively than MLP. Partners are being selected on their ability to reinforce Kapalua Resort's reputation for “;exemplary service.”; New partnership arrangements, which will be finalized on or before Dec. 31, include:

» Appointing a leading hotel/condominium management company to manage the 206-unit Kapalua Villas.

» Finalizing an agreement to lease equipment and to license operations of Kapalua Adventures to a well-respected zipline activity company.

» Selecting an operator to provide resort shuttle services and resort security services, both of which are currently provided by Kapalua Land Co., and transition management to the Kapalua Resort Association.

» Seeking a new operator at Kapalua Farms to continue organic farming and to lease its equipment and operations.

Just in the last two years — and prior to yesterday's announcement — MLP had laid off hundreds of workers, replaced its top management, saw two chief executive officers resign, sold its Plantation Golf Course in Kapalua for $50 million and then leased it back, cut employee wages 10 percent and halted canned-pineapple operations to focus on the fresh fruit.

U.S. Sen. Daniel Inouye, who expressed his sympathy for the affected workers, said he will provide whatever federal assistance the law allows.

“;Our sputtering economy continues to hurt longtime Hawaii institutions, and the loss of Maui Pine impacts the lives and families of 285 workers,”; he said. “;Since the company went public in 1969, it has served as a vital cog in our local economy through its agriculture, resort and real estate operations.”;






        Highlights from Maui Pineapple Co.'s 97-year history:

        First pineapple planted in West Maui by Honolua Ranch.


        Kahului Cannery is built by California Packing Corp., with its first day of operation on June 22.


        Maui Pineapple Co. purchases Kahului Cannery from California Packing Corp.


        Baldwin Packers Ltd. and Maui Pineapple Co. merge with Haleakala Pineapple Co. on Aug. 31, with HPC the surviving corporation; Haleakala Pineapple Co. changes its name to Maui Pineapple Co. on Dec. 12. As a result of the merger, Alexander & Baldwin Inc. becomes the parent company of Maui Pineapple.


        Cameron family buys Alexander & Baldwin's 54 percent interest in Maui Pineapple Co. and changes the name to Maui Land & Pineapple Co.


        Dole Food Co. closes its pineapple cannery on Oahu. Maui Pineapple Co. is now the only canner of 100 percent Hawaiian pineapple.


        Laid off from Kahului Cannery are 149 employees. Some are transferred to the plantation; Maui Gold extra-sweet pineapple is introduced.


        A new $20 million, fresh-fruit packing facility opens in Kahului; 75 workers are laid off.


        Maui Pineapple closes cannery and eliminates 126 jobs; Calavo Growers Inc. of California assumes sales, marketing and distribution of Maui Gold throughout the mainland and Canada.


        Maui Land & Pineapple's work force is reduced by about 274 through reductions, attrition and retirement.


        Employees' salaries cut 10 percent; Robert Webber replaces David Cole on Jan. 1 as chief executive officer; MLP cuts 100 positions at Kapalua Resort and Kahului corporate offices; MLP sells Plantation Golf Course to TY Management Corp. and leases it back; Webber resigns as CEO in May and is replaced as interim CEO by Chairman Warren Haruki.