PUKALANI – Just a half year into its existence, Hali’imaile Pineapple Co. is operating "in the black" and hiring more employees, said Doug MacCluer, part owner of the company and a member of its board of directors.
"It’s manini, but we’re showing a profit," MacCluer said Thursday evening after providing an update on the company during a meeting of the Governor’s Council of Neighbor Island Advisors for Maui at the Mayor Hannibal Tavares Community Center.
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The company is filling a void left by Maui Pineapple Co., which closed and laid off 285 employees Dec. 31, after sustaining multimillion-dollar losses. As recently as 2008, Maui Pine employed 659 workers.
"We thought we could straighten out a big mess, and it was a big mess," MacCluer said.
So far, Hali’imaile Pineapple has generated $3.2 million in revenue – before taxes and farmland rents to Maui Land & Pineapple Co.
Most of the revenue has gone to Hali’imaile Pineapple employees, who belong to the International Longshore and Warehouse Union, MacCluer said.
ILWU Maui Division Director William "Willie" Kennison said the difference is night and day between the Maui Pine executives who closed the company and the "old-timer" farmers who run the new Hali’imaile Pineapple.
The new company agreed to accept the old Maui Pine labor contract, with only a few minor modifications, Kennison said.
"These guys know what they are doing, and they’re great guys," he said. "They are real farmers and cost-effective managers.And you know what? They really love what they are doing. That translates into the Maui Gold pineapple. I think it’s sweeter than ever."
In the past six months, the company has enjoyed enough success to expand the number of employees by 30 people to 103 today.
One of the primary goals of the investors, all six of whom are Maui farmers and businessmen, is to provide well-paying jobs on Maui, MacCluer said. And the company has gotten a lot of help – and savings – from the ILWU, which put Hali’imaile Pineapple employees on the union’s health plan.
The new company has been developing business plans and finding new markets ever since, said MacCluer, who was a Maui Pine agronomist for decades. As part of the new strategy, the company has backed off its predecessor’s Mainland market focus. Now, Hali’imaile Pineapple sells 72 percent of its Maui Gold brand fresh pineapple in Hawaii, with 61 percent of sales on Maui.
However, the group’s future plans include building a flash-frozen facility to sell Maui Gold pineapple on the Internet. The owners also want to ship pineapple to Japan, where people are willing to pay premium prices for what’s become almost a boutique or niche product.
The company’s first trial shipment to Japan will leave in the next month, MacCluer said. The new company also provides feed to local cattle ranchers and some juice to Maui wine, rum and vodka makers, but the company has no plans to expand into the fresh juice market, he said.
In recent years, Maui Pine had moved pineapple cultivation to its fields in West Maui, something the new company’s officials are undoing every day now.
MacCluer said one of Maui Pine’s fatal decisions was the West Maui move, which substantially increased fuel costs considering Maui’s high diesel prices, some of the most expensive in the United States.
Maui Pine officials also had "let their pineapple fields go to hell," MacCluer said. Months before, they’d stopped fertilizing and weed control efforts and were almost out of other key supplies, he said.
Hali’imaile Pineapple is now planting on 950 acres of ML&P-leased land in Haliimaile, and it just finished planting 350 acres in Omaopio, with an option on another 220 acres nearby, he said.
It takes about 22 months from seed to ripe pineapple, and company officials would like to grow more, MacCluer said.
"We can’t plant as much as we want to because of our financial restraints at the moment," he said.
In order to save the extra $20 per ton in fuel it costs to truck pineapple from West to Central Maui, MacCluer said Hali’imaile Pineapple has centralized its operations to 59,000 square feet of office and warehouse space at Maui Pine’s old cannery next to the Hali’imaile General Store.
The building was in shambles, though, he said. Hali’imaile Pineapple invested about $500,000 into moving, repairs and gear. All the wires had been ripped out of the old building, and probably sold for copper scrap, he said.
MacCluer also said ML&P’s executives made other inexplicable arrangements, such as "mortgaging their soul" to build a $22 million Kahului cannery just a few years ago. This spring, ML&P auctioned its lightly used cannery equipment, often for just pennies on the dollar. The company sold equipment formerly valued at $25 million for only $125,000.
In modern times, Maui Pine found it couldn’t compete in the canned fruit industry. It was up against developing world competitors, who paid their employees low wages and had little-to-no regulation over what pesticides and fertilizers they used, MacCluer said.
While the new partnership is a success, so far, the company is harvesting only 717 tons of pineapple a month. Compare that to the all-time high yields of nearly 21,000 tons a month by Maui Pine, MacCluer said. ML&P also had hundreds more employees produce that output, he said.
The Hali’imaile Pineapple partners, who include Ulupalakua Ranch owner Pardee Erdman, purchased Maui Pine’s operations for $680,000 over five years. The sale price was estimated to be a third of its value at the time, according to ML&P documents. Hali’imaile Pineapple also pays $420,000 annually to ML&P to lease its fields.
MacCluer said that the state, including the Department of Agriculture, has done nothing to help the new business. In fact, budget cuts affecting state agricultural inspectors and the state’s only entomologist on Maui have hurt the business, he said.
"We need someone to find bugs who eat other bugs," he said.
Hali’imaile Pineapple uses 500,000 gallons of water per day in total from a variety of sources, including two wells, two Maui County water meters, the Wailoa Ditch and a new rainwater catchment system. ML&P pays the company’s water bills.
The recent state Commission on Water Resource Management decisions, returning 14.5 million gallons per day of surface water to East Maui streams and away from Maui County sources, will adversely impact the new company’s access to water and ability to expand in the future, MacCluer said.
Aside from MacCluer and Erdman, Hali’imaile Pineapple’s other partners are Doug Schenk, Rudy Balala, Ed Chenchin and Darren Strand, who also serves as president. All of the men are former Maui Pine managers.
MacCluer said the partners meet once a week, always looking for ways to keep making the company work and not repeat Maui Pine’s mistakes.
Hali’imaile Pineapple will stick to growing the popular Maui Gold fresh fruit variety and sell it in Hawaii first, where shipping costs are much more predictable and the market is equally as easy to judge, he said.
"People may say we’re crazy to invest in this economy and not get diddly for government support, but we’ve got a great product and great people with us," MacCluer said. "Everyone’s working hard to make this work. And we will hire more people, based on our sales and where we decide to go with the business."