274 layoffs ‘difficult but necessary’

MLP's agriculture, resort and real estate enterprises are all suffering major losses

STORY SUMMARY »

Maui Land & Pineapple Co. announced today it will lay off 274 employees in an effort to stem losses from rising energy and operating costs.

It is the largest Maui layoff in recent memory, surpassing the 271 employees laid off in the closure of Lahaina's Kapalua Bay Hotel in 2006, said James Hardway, special assistant to the director of Labor and Industrial Relations.

Hardway said it could take a few months to know whether Maui businesses can rehire the workers.

Kahului-based MLP estimates it will save $11 million in annual operating costs.

The cuts represent a 26.2 percent decrease in MLP's 1,045-person work force. MLP's agriculture segment, Maui Pineapple Co., will be the hardest hit, losing 204 jobs, or about half its work force.

MLP's Kapalua Resort on Maui is cutting 46 jobs, and 24 positions will be lost in the corporate and community development unit.

"This is a difficult but necessary decision as we respond to higher energy-related costs in our operating units and sluggish conditions in the real estate market," David Cole, MLP's president and chief executive officer, said in the statement.

Maui Mayor Charmaine Tavares called it a sad day.

Some workers said this morning as they headed into meetings at the pineapple plant in Kahului that they felt more layoffs might be coming, in light of previous layoffs.

"We knew something like this was going to happen, considering the company's downsizing," said Jerry Javier, the lead machinist.

"But we didn't know when it was going to happen."

Rosalio Bio said he's unsure about the future.

"It's really sad," Bio said.

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Maui Land & Pineapple Co. plans to announce today it will lay off 274 employees to save $11 million in annual operating expenses. The layoffs come in the face of a weak economy and rising costs of energy, the Kahului-based company said.

WHO: Agriculture segment will lose 204 jobs; Kapalua Resort on Maui will cut 46; 24 jobs will be lost in corporate and community development. WHY: To save $11 million in annual operating expenses. Maui Land & Pineapple Co. said in May that it lost $740,000 in the first quarter of this year. WHAT'S NEXT: The state Department of Labor will send out a rapid-response team at 10 a.m. Tuesday to the Kapalua training center at 700 Village Road in Lahaina to provide information about unemployment benefits and health care to affected resort workers. A separate meeting will be held for employees falling under union rules. COMMENT: "This is a difficult but necessary decision as we respond to higher energy-related costs in our operating units and sluggish conditions in the real estate market," said David Cole, MLP's president and chief executive officer. MORE INFORMATION: See the Web site www.hawaii.gov/labor or call the Department of Labor at 586-8842.

It is the latest in a string of layoffs to hit Hawaii this year, including several thousand lost jobs with the shutdown of both Aloha and ATA airlines alone, sending Hawaii's jobless rate in June to 3.8 percent, the highest level in nearly five years.

The cuts represent a 26.2 percent decrease in MLP's 1,045-person work force. Severance costs are expected to total approximately $3 million, offsetting some of the immediate savings.

MLP's agriculture segment will lose 204 jobs, or about half its work force. The unit has seen more than $100 million in capital investments and operating losses during the past four years.

"Skyrocketing costs for fuel, fertilizer, packaging, and transportation have outstripped the company's ability to increase prices," the company said in a statement.

Maui Pineapple Co. will now concentrate on serving local markets and selected accounts on the mainland.

MLP's Kapalua Resort on Maui is cutting 46 jobs, and 24 jobs will be lost in the corporate and community development unit. Layoffs will occur across all levels, the company said. Where possible, cuts are being made through attrition or retirement, MLP said.

MLP spokeswoman Teri Freitas Gorman said employees were notified yesterday and today.

The company consolidated some marketing, sales, accounting and purchasing functions and has appointed Wes Nohara general manager for all agricultural operations.

MLP is assisting the affected employees with severance packages and federal and state work-force development programs.

"This is a difficult but necessary decision as we respond to higher energy-related costs in our operating units and sluggish conditions in the real estate market," David Cole, MLP's president and chief executive officer, said in the statement.

Cole declined to immediately comment.

James Hardway, special assistant to the director of state Labor and Industrial Relations, said he was not sure Maui businesses could absorb the additional workers.

"It is a big layoff," he said. "I guess the question is, Are they going to sell that land, or are they going to lease that land? Is someone going to take it over? Obviously they are going to need a work force."

Maui had the second-lowest unemployment rate in the state in June at 4.3 percent, just behind Honolulu's 4.2 percent.

Maui Mayor Charmaine Tavares called it "a sad day" for MLP employees and their families.

"I'm sure it was a very difficult decision for the company, whose roots in agriculture in our community go back generations," she said in a statement. "We are concerned for everyone affected, and our community's history of caring for each other during tough times will be very important. I have faith that we will pull together to support each other as we always have."

Hardway said the department will hold a meeting Tuesday offering unemployment services for workers fired from the resort. A separate meeting will be held for the other employees, he said, because they fall under union rules that allow for bargaining rights.

The company owns 24,600 acres of land on Maui. About 21 percent of the acreage is used in operations, and the remaining land is primarily in pasture or forest reserve. About 2,600 acres of leased land is used in agriculture operations under 10 leases expiring at various dates through 2018.

In 2007, MLP's agricultural operations employed 440 employees, of which half were seasonal or intermittent employees and 58 percent were covered by collective-bargaining agreements, according to the company's most recent annual regulatory filing.

Resort operations employed approximately 420 employees, of which 11 percent were part time and 22 percent were covered by collective-bargaining agreements. The community development segment employed 30 employees, and corporate services and other operations employed 110 workers.

William Kennison, Maui division director for the International Longshore & Warehouse Union, said the layoffs come at a bad time in the economy when there are fewer jobs.

"These are sad times. We see how people are getting less hours of work, getting laid off," Kennison said. "It looks like we're in it for the long haul."

Kennison said the union contract calls for severance pay for full-time employees based on the position and length of service. He said the union, which has about 400 members working for MLP, plans to sit down with the company to discuss keeping medical benefits.

The company's last layoffs occurred on June 30, 2007, when it fired 120 employees after closing its pineapple canning operation to focus on Hawaii and mainland fresh pineapple sales.

MLP said in May that the delayed ripening of fruit at its Haliimaile plantation helped contribute to a loss of $740,000 in its first-quarter earnings, compared with a year-earlier profit of $15.7 million, which was inflated by a $25 million sale in March 2007 of land underlying the Ritz-Carlton Kapalua hotel.

The company's agriculture unit, which includes primarily pineapple, had an operating loss of $5.6 million, more than double the loss of $2.4 million a year earlier; the real estate segment saw operating profit plunge 72.2 percent to $8.1 million from $29.1 million due to the year-earlier land sale; the resort division had an operating loss of $2.3 million, more than double the loss of $904,000 a year earlier.