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The Honolulu Advertiser
Posted on: Saturday, November 18, 2006

Del Monte shuts down; 551 will lose jobs

StoryChat: Comment on this story

By Greg Wiles
Advertiser Staff Writer

Children ride around the Del Monte New Camp housing area. Del Monte announced that it was shutting down its operations earlier than it originally said it would. Dole Food Co. remains O'ahu's only pineapple grower but could be joined by Maui Land & Pineapple.

JOAQUIN SIOPACK | The Honolulu Advertiser

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BY THE NUMBERS

104

Number of years Del Monte grew pineapple in Hawai'i

9,400

Number of acres under production in 2003

3,400

Number of acres under production in 2005

Source: Advertiser research

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DEL MONTE'S HISTORY IN HAWAI'I STRETCHES BACK 104 YEARS

1886: Del Monte coffee is packaged for the Hotel Del Monte in Monterey, Calif., the first use of the Del Monte name on a food product.

1902: Del Monte's presence in the Islands began when its predecessor, California Packing Corp. (CalPak), began growing pineapples in Wahiawa.

1909: Del Monte's shield makes its first appearance on a can label.

1920: CalPak establishes quality specifications for its premium brand, Del Monte. Early ads assure customers, "Not a label, but a guarantee."

1929: With prices plummeting and overflowing warehouses, CalPak is forced to tighten its belt.

1955: Del Monte Pineapple Grapefruit drink is introduced.

1967: Long known for its favorite brand, CalPak changes its name to Del Monte Corp.

1973: Del Monte Corp. becomes the first major food processor in the United States to include nutrition labels on its products.

1979: Del Monte Corp. shareholders agree to a merger with R.J. Reynolds Industries.

1983: Del Monte ends its pineapple canning operation in Hawai'i, which means the eventual loss of about 3,000 acres of pineapple land on Moloka'i.

1989: Del Monte Corp. divides into two separate entities: Del Monte Tropical Fruit based in Coral Gables, Fla., and Del Monte Foods, based in San Francisco.

1993: A new owner of Del Monte Tropical Fruit changes its name to Fresh Del Monte Produce.

1996: Current owners acquire Fresh Del Monte Produce and introduced the first new pineapple variety in more than 15 years, the Del Monte Gold Extra Sweet pineapple.

1997: Fresh Del Monte Produce Inc. goes public on the NYSE, trading as (FDP).

2001: Del Monte Hawaii Gold, a premium pineapple, is introduced in 11 western states, western Canada and Japan.

2003: Del Monte Fresh Produce, the Hawai'i unit of Fresh Del Monte Produce, says it will stop growing pineapple on about 2,000 acres in Wahiawa by the middle of 2004, leaving the company with about 4,000 acres of pineapple on O'ahu.

Feb. 1: Del Monte Fresh Produce says it will cease operations in Hawai'i in late 2008.

Oct. 31: Fresh Del Monte Produce reports a third-quarter net loss of $83.6 million and blames it in part on costs associated with the scheduled closure of the Kunia pineapple operations.

Yesterday: Del Monte Fresh Produce says it will shut down its Hawai'i operations immediately, almost two years earlier than previously announced, and lay off 551 workers in January.

Sources: Del Monte Fresh Produce Inc. and Advertiser archives

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Del Monte Fresh Produce abruptly ended its century-old pineapple operations in Hawai'i yesterday, two years earlier than originally planned.

The decision threw 551 employees out of work and left Dole Food Co. as the only major pineapple grower on O'ahu. The workers will remain on the payroll until they are officially laid off in January.

With the closure of Del Monte, it's clear Hawai'i's once famous pineapple export industry which brought waves of immigrant workers and contributed to the state's multicultural heritage is struggling to compete with overseas producers.

Growing pine-apple for export on expensive Hawai'i real estate with relatively high paid workers makes less sense when the fruit can be grown at a much lower cost in the Philippines, Thailand and Costa Rica.

Still Del Monte's surprise announcement caught employees and state officials unprepared since the company had said just nine months ago that it would continue production until the end of 2008.

"The extreme drop in production volume, coupled with depressed pineapple pricing resulting from the increase of supply in the overall pineapple market has had a negative financial impact on the company," Del Monte said in a statement yesterday.

"As a result, the company regretfully will not be able to sustain a financially viable operation in Hawai'i as originally planned through 2008."

The disclosure sent shockwaves through Hawai'i's agricultural industry and prompted responses from a number of elected and government officials, including U.S. Sen. Daniel K. Inouye, who said he was certain the closure would have a negative effect on employees. Maui Land & Pineapple Co. said it was willing to step in to salvage the existing crop and look into other crop uses for the more than 5,000 acres Del Monte farmed.

UNION CRITICAL OF MOVE

The ILWU Local 142, which represents most of the affected workers, criticized the move, saying the company had made repeated assurances that it would continue the operations until 2008.

"This company has been less than honest with us from the start," noted ILWU Local 142 President Fred Galdones in a news release.

The ILWU said Del Monte had sought concessions from workers two years ago while saying it expected to remain in business in for the long haul.

Workers were given the news in two separate meetings at a gym on the plantation yesterday morning and afternoon, said ILWU representative Brandon Bajo-Daniel, who worked at the operation for 20 years before joining the union.

"Everybody was shocked," he said. "Everybody was just thinking, 'Wow, what a Christmas and New Years' present.' "

He said some people cried, while others expressed disappointment and frustration. Others said they were happy and were looking forward to pursuing other jobs, Bajo-Daniel said.

Workers will be paid through Jan. 22 and may be called into work during that time, he said. A severance package of about nine days' pay for each year worked will be available to the employees, he said.

Del Monte in February said it was planting its last pineapple crop and would cease its operations at the end of 2008. At that time, Del Monte, whose predecessor companies began business in Hawai'i in 1902, employed more than 700 workers on O'ahu.

Galdones noted there had been some indications the timetable might be accelerated given that general manager Edward Littleton left Hawai'i in late September with management of the operations being turned over to the plantation's human resources manager, Stacie Sasagawa.

"With little experience running a huge pineapple plantation, no one could have expected Ms. Sasagawa to keep the plantation going into 2008," a statement released by the ILWU said. It criticized Del Monte for fleeing the state with agricultural knowledge gained here and said it would be a "travesty of justice" to allow the company to walk away without paying something for what it said was damage to the state's economy.

Bajo-Daniel said by his count only four supervisors were running the operation, down from 10 or more when it was in full production.

"I know it was neglected," he said. "A lot of the supervisors were gone."

COMPANY LOSSES

Local Del Monte officials did not respond to multiple messages left for them. Their written statement indicated the company was losing money and said that production volume had been lower than the company's original estimates.

The operation was a unit of Fresh Del Monte Produce Inc., a Coral Gables, Fla., company whose business is spread across the globe. Last month Fresh Del Monte reported a loss in the three months ended Sept. 29 of $83.6 million, in part because of $40.8 million of expenses it was taking as it worked on closing its Hawai'i operations and a withdrawal in Kenya.

At that time, Mohammed Abu-Ghazaleh, Fresh Del Monte's chairman and chief executive officer, remarked that the company's loss was disappointing and that "tough times, however, require tough measures, as well as the courage, confidence, and leadership to implement them."

The closing prompted Inouye and U.S. Sen. Daniel Akaka to release a statement that they were "saddened and disappointed" by the action.

"I can assure you that the Hawai'i Congressional Delegation will do whatever is necessary to alleviate the pain resulting from this closure," Inouye said.

Said Akaka, "This is truly a disappointment that Del Monte has elected to close its doors early."

The state Department of Labor and Industrial Relations said it will join with the City and County of Honolulu to send a team of people to assess what needs to be done to help the affected workers. More than half of the 551 are employed as laborers.

James Hardway, assistant to state Labor Director Nelson Befitel, said the team will assess worker job skills, how many of the people will be retiring, how many already have jobs lined up and what job training may be needed to help people transition to new work. They will also discuss unemployment benefits with the workers.

Once an assessment is made the city will most likely request a National Emergency Grant to help with workforce development, he said. Some of the workers may find jobs at other farms that are in need of laborers.

"Hopefully, given the need for labor statewide and here on O'ahu ... a lot of these people being laid off will be retained by employers," Hardway said.

Theresia McMurdo, a spokeswoman for the Campbell Estate, which owns 5,100 acres of land Del Monte leases, said the decision was Del Monte's and that the lease for the land still runs through the end of 2008.

Dole Food Co. remains as O'ahu's only pineapple grower, but it could be joined by another grower.

Maui Land & Pineapple, the state's largest pineapple grower, expressed interest in starting an O'ahu operation to help salvage Del Monte's remaining production and look at new plantings for the future.

The Kahului-based company said it was able to keep agriculture alive for about a year after on land that Del Monte exited at Poamoho on O'ahu in 2004, providing jobs.

"We are willing to work with the landowners and the ILWU to the extent possible," said Brian Nishida, who heads Maui Land & Pineapple's pineapple operations. The company hasn't been as affected by a decline in pineapple prices worldwide because it concentrates on the premium fresh pineapple market with its Maui Gold brand.

Staff writers Lynda Arakawa and Andrew Gomes contributed to this report.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.