Fewer nuts drive
cuts at Mauna Loa

Mauna Loa Macadamia Nut Corp. recently laid off about 10 percent of its Big Island workforce, or 23 of more than 200 employees, in an attempt to streamline after weather-related setbacks reduced the number of marketable nuts and raised product prices.

"We had significantly fewer nuts this year than in the past," said Darrell Askey, executive vice president for the Irvine, Calif.-headquartered company.

The number of nuts received from ML Macadamia Orchards LP was 10 percent below the company's output during the past two years, Askey said.

ML Macadamia sells its nuts exclusively to Mauna Loa under long-term purchase contracts. Mauna Loa then processes and markets the nuts under the Mauna Loa brand name.

Crop production for ML Macadamia in Keeau was down 17 percent in 2002 from the previous year as heavy rainfall reduced pollination and nut sets. Overall, macadamia nut production last year was down 7 percent to 21.4 million pounds from 23 million pounds harvested in 2001.

"Without a crop to process, we couldn't justify the number of employees," Askey said. "We're right where we need to be for the balance of the season."

Future layoffs will depend on crop output and sales, Askey said. "We want to gainfully employ as many people as we can in Hawaii, but it depends on how many nuts we receive from the growers."

The company's need to streamline is also related to its success in the North American market. After investing millions in marketing, the company is finally seeing North American sales growth outpace other regions, said Askey.

But as the demand for nuts has grown and output lessened, prices from growers have increased 30 percent to 40 percent, making it more difficult for the company to compete against Australian and Guatemalan imports, Askey said.

"We're getting a double whammy. There's more growth, but there's less supply," he said. "That's what precipitated the layoffs."

When the company realized it had to streamline, more than 20 employees were offered early retirement and declined, Askey said.

"If the folks that were offered early retirement had accepted, there would have been no need for layoffs," he said. "After they declined, we did what we had to do under the terms of the union contract."

The workers, members of ILWU Local 142, will be paid and keep their medical coverage through Jan. 5 under the terms of a collective bargaining agreement.

If the company's outlook changes and more jobs are added, the company will consider rehiring those workers, Askey said.


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