Automation and layoffs to save MLP $1.5M a year

Maui Land & Pine is laying off 6 percent of its work force

When David Cole took over at Maui Land & Pineapple Co. nearly three years ago, he realized that the company needed to become more efficient and focus more on fresh pineapple than processed fruit if it was going to make that portion of its business profitable.

The result was a new $17.5 million fresh-fruit packing facility that opened in July in Kahului.

There was a price to pay, though, with the modernization and the strategy shift. That was announced yesterday when MLP said it was laying off 75 employees, or 6 percent of its work force, in connection with the new facility.

Cole, speaking yesterday from Washington, D.C., said the company will save $1.5 million annually by automating and integrating the fresh and processed fruit grading and packing operations. The cost savings will result partially from reducing the number of employees needed to operate the facility and the company's pineapple cannery, which is now being scheduled for improvements.

"The overwhelming bulk of our (pineapple) business is fresh fruit now," said Cole, the company's chairman, president and chief executive. "It's where the market is and where you're able to achieve premium pricing."

The new facility will help the company focus on a niche market for premium fresh pineapple, and on government and institutional markets for processed pineapple.

"You'll see continuous improvement in operations as a result of these investments," Cole said. "We still have the impact of accelerated depreciation of some of the assets that are no longer used. That's continuing to hit our financials, as are some of the costs associated with downsizing the work force."

The company said the work-force reduction consists of 50 voluntary layoffs and 25 involuntary layoffs. MLP said it reached an agreement last week regarding termination benefits with the International Longshore & Warehouse Union. The layoffs will leave the company with 606 employees in its pineapple unit and about 1,200 overall.

"We've been working with the union over the last two years trying to explain our modernization program, and it's been very constructive," he said. "We've seen attrition over the last year of well over 100 people. These layoffs are in addition to that."

MLP said the final day of employment for voluntarily laid-off employees was yesterday, with the last day for involuntarily laid-off employees to be around next Friday. Seven nonunion supervisory employees included in the layoffs also had their final day of work yesterday.

MLP said it will incur about $1.8 million in costs associated with the layoffs, consisting of $1.7 million in contractual termination benefits, and $70,000 in special termination benefits due to the temporary continuation of medical insurance benefits. In addition, MLP said it has agreed to extend up to three years of additional credited service for the purpose of claiming retiree medical benefits to affected employees eligible for retirement.