Maui Pineapple wins exemption worth $2.3M

By John Duchemin
Advertiser Staff Writer

Maui Pineapple Co. has won a multimillion-dollar exemption from federal steel tariffs, but the company still faces stiff challenges to its pineapple canning business that has lost millions of dollars in the past several years.

The three-year exemption from tariffs designed to protect the American steel industry will save Maui Pineapple $2.3 million in costs, said Doug Schenk, president of the 1,000-employee company that runs the last pineapple cannery in Hawai'i. Maui Pineapple imports steel from Japan to make cans at its Kahului factory.

The company had feared the tariffs would drive its already high costs to an unacceptable level. Maui Pineapple, a subsidiary of publicly traded company Maui Land & Pineapple, has lost more than $8 million in the past two years, including $1.1 million in the first quarter of 2002.

Japan, one of the countries targeted by the broad federal tariffs passed last winter by President Bush, is the only feasible provider of the tin-coated steel rolls used by Maui Pineapple's cannery, Schenk said. Without the exemption, Maui Pineapple would have paid 30 percent more for its steel in the tariff's first year.

Despite the relief from the tariffs, Maui Pineapple is still battling the same global market forces that have driven every other Hawai'i pineapple cannery out of business.

Canned pineapple prices have been at a low ebb for several years, and low-wage canneries in Southeast Asia are putting immense pressure on Maui Pineapple's relatively high-cost operation.

"For the foreseeable future we can keep our business up and running, but it's very difficult because we continue to get pressure on the cost side of the business," Schenk said. "Our people are focused on reducing costs in whatever way we can."