Del Monte workers met on November 22 at the Kunia Gym to get information to help them deal with the sudden loss of their jobs.
Fresh Del Monte Produce announced that it would shut down its Kunia, Oahu operations two years earlier than expected. Notice was given to workers by letter on November 17, 2006, that all production, operations, and shipments out of Hawaii would cease immediately with layoffs of all employees to take place around January 22, 2007. The shutdown will affect 551 remaining Fresh Del Monte Produce employees in Hawaii, of whom 516 are ILWU members.
The notice gives workers 66 days notice, a little more than the 60 days minimum advance notice required by the US Worker Adjustment and Retraining Notification Act (WARN). WARN requires 60-days notice before any actual “employment loss” such as a termination of employment, layoff of more than six months, or a cut in hours of more than 50 percent for six months.
The intention of giving advance notice is to provide workers and their families some transition time to adjust to the loss of employment, to seek and obtain another job and, if necessary, to enter skill training or retraining that will allow these workers to successfully compete in the job market. WARN also provides notice to the State dislocated worker units so that worker assistance can be promptly provided.
Pineapple left to rot
Fresh Del Monte’s earlier shutdown means the company has chosen to abandon thousands of acres of pineapple worth an estimated $23 million. This figure is based on the current price of $600 per ton for fresh pineapple, a yield of 7.5 tons per acre, and an estimated 5,000 acres of pineapple in the field. [Del Monte has 8,000 acres.]
The decision to abandon the pineapple crop is surprising, as final harvests are almost always profitable. In a final harvest, there is no replanting and no cultivation or maintenance of the replanted fields which greatly reduces the cost of operation.
It appears that Fresh Del Monte executives made the decision to abandon Hawaii in mid-October. On October 11, 2006, the company announced a cash dividend of 5 cents a share. On October 31, 2006, the company canceled the cash dividend and reported a loss of $84 million for the third quarter of 2006. Included in that loss was $23.1 million for the “impairment of deferred growing crops in Hawaii” and $1.5 million for severance and shut-down expenses in Hawaii.
Business has not been that bad for Fresh Del Monte. Sales were down slightly and costs were higher due to oil prices. There was some bad weather in California and Europe which cut into some sales. Bananas and pineapple did okay. There was an unusual recall of $16 million worth of pineapple jam produced by Fresh Del Monte Kenya, because the product contained too much iron content.
What is really spooking Del Monte is a steep drop in their stock price, which has been in a free-fall since the end of 2005 when it traded for over $30 a share to less than $15 a share on November 22, 2006. This represents a paper loss of $446 million for Mohammad AbuGhazaleh and nine members of the Abu-Ghazaleh family who own 51.2% or 29,692,861 shares of Fresh Del Monte stock.
In a statement released on October 31, 2006, Fresh Del Monte’s Chairman and Chief Executive Officer Mohammad Abu-Ghazaleh announced that the company was responding to tough times with tough measures. “We have initiated a major turnaround effort at Fresh Del Monte Produce, which involves reorganizing at every level, in every geography, and in every business of our global enterprise.” ◆
MORE DELMONTE PHOTOS INSIDE ON PAGE 7
