Maui packer to sell only fresh pineapple

Competition from overseas is cited for a decision that cuts about 120 jobs

Maui Land & Pineapple Co. Inc. announced the end of an era for Hawaii yesterday.

The company said it will cease operations effective June 30 at its Kahului cannery, the last pineapple canning operation in the state, as it shifts toward higher-margin production of fresh fruit.

MLP had purchased the then 5-year-old Kahului cannery in 1934, which at the time was one of the largest employers of immigrant workers on the island. From 1962 to 1992 the only fruit MLP sold was canned.

Yesterday, David C. Cole, chairman, president and CEO of MLP, said the move is needed to keep the pineapple business afloat.

MLP will eliminate about 120 jobs with the cannery's closure. Eligible workers will be offered severance packages, while others might be transferred to fresh-fruit operations.

"While we have experienced favorable customer acceptance and improved pricing power in our fresh-fruit business," said Cole, "the competitive dynamics in the processed market dictate that we not invest further in solid-pack operations."

The losses on the processed side were staggering, according to Cole, with money lost on every can sold. Margins for fresh pineapple, on the other hand, were consistently expanding due to higher prices and a more efficient packing facility that came online in July.

MLP's agricultural division lost nearly $9 million in the fourth quarter of last year.

Following the loss, the division underwent a major reorganization, cutting out its position of president and chief executive. Plans to build a new microcannery as well were put on hold.

"Today we are focused on the premium fresh-pineapple segment, where we have seen high customer satisfaction and expanding margins," said Cole. "By discontinuing operations that are no longer competitive, we are able to concentrate on the fresh-fruit segment, where we have the best chance for achieving and sustaining a niche market for Maui-grown pineapple."

Cole said he nevertheless had made the decision with a heavy heart.

"It's very difficult to make this kind of decision," Cole said. "One thing that helped somewhat, though it's hardly a justification, is the fact that unemployment rates are at historic lows. If you're going to pick a time to make necessary adjustments, it's far more difficult in a recession."

He cited competition from packers in Thailand and the Philippines as reasons for the losses in canned pineapple.

Over the past 3 1/2 years, Cole said, MLP invested about $38 million into expanding its pineapple operations, with a focus on promoting its Maui Gold and Hawaiian Gold brands.

Part of MLP's success in the fresh sector so far is due to its niche in high-quality pineapples targeting the West Coast market.

MLP, which also operates the Kapalua Resort, will continue to process pineapple juice, which amounts to about 15 percent of operations.

News of the closure comes on the heels of Del Monte Fresh Produce's sudden pullout from Kunia on Oahu last year after more than 100 years in the islands. Del Monte's exit wiped out more than a third of the state's 1,800 pineapple jobs. Oahu's best-known canning operation, Dole Cannery, was converted into a shopping and theater complex in 1991.

Mark Hudson, director of the National Agricultural Statistics Service's Hawaii field office, cited competition and higher costs, along with strict regulations, for the steady decline of processed pineapple in Hawaii since 2000.

"All producers in Hawaii face the same challenges," said Hudson, "competing against countries where costs of operating businesses is lower."