Maui Land & Pineapple Company, Inc.

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Maui Land & Pineapple Company, Inc.

120 Kane Street
Kahului, Hawaii 96732
U.S.A.
(808) 877-3351
Fax: (808) 871-0953
Web site: http://www.mauiland.com

Public Company
Incorporated: 1969
Employees: 2,030
Sales: $143.7 million (1998)
Stock Exchanges: American
Ticker Symbol: MLP
NAIC: 311421 Fruit & Vegetable Canning; 23311 Land Subdivision & Land Development

One of Hawaii’s oldest and largest corporations, Maui Land & Pineapple Company, Inc. (Maui Pine) grows and cans pineapple and develops and operates resort and commercial property. Maui Pine conducted its business through two primary operating subsidiaries, Maui Pineapple Company, Ltd. and Kapalua Land Company, Ltd. The pineapple operations, situated on roughly 7,900 acres owned by the company, represented the company’s original business, whose roots indirectly stretched to the first appearance of pineapple in Hawaii in 1813. The real estate-related business of Maui Pine emerged during the 1960s, when the company began developing residential, commercial, and resort properties. During the late 1990s, Maui Pine developed and managed property at the Kapalua Resort, located on 1,500 acres bordering the ocean. The company also operated retail properties, including Kaahumanu Center, Napili Plaza, and other nonresort property.

Origins

The history of Maui Pine incorporated the history of the Baldwins, a family of New England Congregational missionaries who arrived on the Hawaiian Islands in 1836. Displaying considerably more prowess as land barons than as proselytizers, the Baldwins became one of the Big Five families who controlled Hawaii in the century before World War II, establishing a far-reaching business empire with holdings in agriculture, ranching, coffee, canning, and other activities. Their grasp on the Hawaiian economy was comprehensive, maintained by a labyrinthine network of businesses whose development spanned generations of Baldwins. One of these businesses spawned from the varied interests of the Baldwins was Maui Pine’s earliest direct predecessor, the Keahua Ranch Co., which was incorporated in December 1909 to control a portion of the family’s pineapple operations. In 1929 the Keahua Ranch Co. was renamed the Haleakala Pineapple Co., Ltd., three years before the pineapple operations of Haleakala and Maui Agricultural Company were consolidated to create Maui Pineapple Company, Ltd. J. Walter Cameron, a descendant of the Baldwin family, was appointed manager of the new company, presiding over its development for the next 30 years until a flurry of corporate maneuvers created the Maui Pine that existed during the 1990s. In August 1962, Alexander & Baldwin, a principal Baldwin family concern, merged three of its pineapple operations, Baldwin Packers, Ltd., Maui Pineapple Company, Ltd., and the old Haleakala Pineapple Company, to create what four months later became the Maui Pineapple Company, Ltd. J. Walter Cameron was named president of the Alexander & Baldwin subsidiary, joined by his son, Colin Campbell Cameron, who was appointed general manager.

It was the younger Cameron who exerted the greatest influence over Maui Pine during the 20th century. A Maui native, Colin Cameron earned a master’s degree in business administration at Harvard College, leaving the institution in 1953 to return to the pineapple operations on Maui. Two years after the formation of Maui Pineapple Company, Colin Cameron was promoted to general manager and executive vice-president when his father retired from day-to-day control over the company and became its chairman. Although the Camerons held prominent titles at Maui Pineapple, the fortunes of the company were not entirely under their control. Alexander & Baldwin held sway as the parent company of Maui Pineapple, having the final say in the decision-making affecting its subsidiary. It was a relationship that became strained during the 1960s and irrevocably damaged in 1967 when Alexander & Baldwin’s new president, Stanley Powell Jr., delivered an ultimatum. Powell wanted to centralize all management decisions in Honolulu, which, in Colin Cameron’s view, put him in an untenable position. Cameron believed the pineapple operations could not flourish if they were managed from afar. Further, he had tired of competing for attention with Alexander & Baldwin’s other subsidiaries, which included sugar and shipping operations that were much larger and made much more money than Maui Pineapple. In response, Colin Cameron resigned in 1967, the same year his father retired as chairman. Both remained on the company’s board of directors, however, and would return shortly to submit a proposal to Alexander & Baldwin.

1969: A New Beginning

In 1969 the Camerons made their bid for independence. They approached Alexander & Baldwin about purchasing Maui Pineapple Company and reached an agreement in July for a $20 million buyout of the enterprise. In September the Camerons changed the name of the company to Maui Land & Pineapple Company, Inc. Three months later, they took Maui Pine public. With J. Walter Cameron serving as chairman and Colin Cameron serving as president and chief executive officer, Maui Pine took its first steps unfettered by Alexander & Baldwin, beginning a new era as the 1970s began.

As the company set out on its own, it drew support from two primary business areas. One side of Maui Pine represented the most recent addition to the Cameron family’s business activities, its importance reflected by the inclusion of the word “land” in Maui Pine’s corporate title. During the 1960s, Colin Cameron had spearheaded resort planning and development activities that had operated under the control of Maui Pineapple Company. Following the Camerons’ purchase of Maui Pineapple Company, these real estate activities were organized into a new subsidiary incorporated in 1970 as Honolua Plantation Land Company, Inc. Through Honolua Plantation, which counted Colin Cameron as its president, Maui Pine began building residential housing projects, beginning with a 174-unit, lowand moderate-cost housing project called Napilihau that began construction in 1972. By the time the Napilihau units were ready for occupancy in 1974, the Camerons had formed another real estate development subsidiary named Kapalua Land Company, Ltd. Following the 1974 incorporation of Kapalua Land, the Honolua Plantation subsidiary was responsible for the management and development of nonresort lands, while Kapalua Land oversaw the duties of resort development. Kapalua Land’s resort development activities during the 1970s included the construction of an 18-hole golf course, condominium complexes, and the 196-room Kapalua Bay Hotel, which opened in 1978. The other side of Maui Pine’s business was its pineapple operations, representing the thread that connected the Cameron family-controlled company to the 1909 founding of the Keahua Ranch Co. In 1977 the pineapple operations were separated into their own subsidiary called Maui Pineapple Company, Ltd.

J. Walter Cameron’s death in 1976 left Colin Cameron as the patriarch of the family and principal leader of Maui Pine. His father’s legacy—a half century of stewarding the fortunes of the company’s pineapple operations—would stand in contrast to his own, as Colin Cameron devoted the bulk of his energies to the development of Maui Pine’s real estate activities, particularly during the late 1980s. The Kapalua Land subsidiary served as the hub of activity, presiding over the development of The Ironwoods, a 40-unit condominium project that was completed in 1980, and The Ridge, a 161-unit condominium project, also completed in 1980. The subsidiary also completed its second golf course, The Village Course, in 1980. Financial pressure, attributable to the more than $50 million of debt that weighed Maui Pine down in 1984, forced Cameron to sell what was regarded as his masterpiece, the Kapalua Bay Hotel, in 1985. Despite the divestiture, Cameron, serving as chairman and acting president of Kapalua Land after the sale of the company’s signature hotel property, pressed ahead with other real estate development projects. In 1985 the company acquired the Kaahumanu Shopping Center and broke ground the following year on the Pineapple Hill at Kapalua project, a single-family residential project. The Pineapple Hill at Kapalua development, comprising 99 lots, was completed in 1987 and was followed by the development of Kapalua Place, an eight-lot, single-family residential project, completed in 1989.

Late 1980s: Controversy and Despair

Against the backdrop of commercial and residential development projects, Cameron was busy working on what could rightly be called his dream project. At roughly the same time as Maui Pine’s formation, Cameron and his father had begun planning a large-scale hotel project that became known as the Kapalua project. They conducted an archeological survey on an area in West Maui, later deciding on a beachfront plot known as the Honokahua site. Years of planning went into the project, time spent designing the hotel, having the zoning code changed to permit the construction of the hotel, and securing the financial backing to fund the project. By 1986, the final hurdles before beginning construction had been cleared. Ritz-Carlton had agreed to serve as the hotel operator and financing had been obtained from Japanese investors. There was one nagging problem, however. The Honokahua site was discovered to be an ancient Hawaiian burial ground, the magnitude of which was not fully realized until late in the project’s development. A thorough excavation of the site had unearthed 700 burials by 1988, including a variety of artifacts that were estimated to be 3,500 years old. By 1989, construction of the $100 million, 450-room Ritz-Carlton was a year behind schedule and Cameron found himself at the center of protests and heated debate. Kapalua Land was at risk of losing the financial backing for the project and suffering the departure of its Ritz-Carlton partners.

While Cameron’s hotel project sat motionless, mired in controversy, Maui Pine could at least fall back on it pineapple operations, which had recorded consecutive years of profitability that stretched from 1977 to the end of the 1980s. The company’s Maui Pineapple Company subsidiary ranked as the largest producer of private-label pineapple in the United States, providing a steady stream of income that tempered the frustration stemming from the hobbled Kapalua hotel project. As Maui Pine exited the 1980s, however, its pineapple operations suffered a devastating setback that later resulted in the worst year ever recorded by Maui Pine or any of it predecessors. The first sign of trouble surfaced in 1989, at the same time the Kapalua project was a year behind its construction schedule. The source of the trouble was Thailand, which had begun gearing up for large-scale pineapple production in the late 1980s. As a pineapple-producing region, Thailand possessed ideal characteristics, including excellent growing conditions and laborers willing to work for low wages. The number of canning businesses in the country proliferated as a result, concurrent with increased production by Maui Pine and other U.S.-owned pineapple canning businesses. In 1989 the abundance of pineapple produced and canned led to an oversupply in global markets, resulting in Maui Pineapple Company’s $3.9 million operating loss for the year, a year after the subsidiary had registered profits totaling $7.2 million.

By 1993, the situation had become disastrous. After ordering its workers to let 20,000 tons of pineapple rot in the fields rather than try to move the fruit onto the glutted world market, Maui Pineapple Company recorded $16.2 million in operating loss. Maui Pine, unable to offset the loss with its real estate activities, registered a net loss of $11 million on revenues of $131 million.

While the company reeled from its mounting pineapple losses, the ill-fated Kapalua project regained its footing, giving Maui Pine executives at least one positive development to which they could point during the early 1990s. The site of the resort had been relocated away from the burial ground and the hotel was slated to open in 1992. Unfortunately for Cameron, the grand opening of the long-planned-for hotel was a celebration that, tragically, he missed. In June 1992 Cameron was found unconscious in the ocean near his home on Maui, having died of a heart attack while swimming. The Ritz-Carlton hotel opened four months later.

Cameron’s sudden death prematurely ushered in a new era of leadership. Mary Cameron Sanford, Colin Cameron’s sister, was appointed chairman and Maui Pineapple Company’s president, Joseph H. Hartley, was promoted to president and chief executive officer of Maui Pine. Together, the pair had to contend with the worst crisis in the company’s history. The first order of business was to arrest the financial slide experienced by the company’s pineapple business and to resolve the difficulties stemming from the market glut. Pineapple harvesting and canning were trimmed by 25 percent in response to the surfeit of pineapple available and extensive efforts to reduce costs were initiated. Capital improvement spending was cut drastically, slashed from $8.2 million to $1.5 million over the course of the next two years. Executive salaries were reduced, wages were frozen, and employees were laid off. The company ended its 20year practice of hiring offshore workers during the harvest season and a long-standing arrangement with Wailuku Agribusiness to farm 40,000 tons of pineapple for Maui Pine was abandoned. By 1995, the sweeping measures had begun to yield positive results, aided substantially by the U.S. International Trade Commission’s ruling that Thai pineapple canneries were guilty of selling their product in the United States at prices lower than the cost of production. As a result of the ruling, duties were imposed that averaged roughly 25 percent of Thai pineapple sale prices, which buoyed the market sufficiently to enable Maui Pine to raise its prices 23 percent.

A drought in 1996 inflicted another blow to Maui Pine’s pineapple business, but after the temporary setback the company recorded encouraging success with its pineapple operations during the late 1990s. Pineapple sales registered their greatest upswing at the end of the decade, when, in sharp contrast to the early 1990s, there was a worldwide shortage of pineapple. At the decade’s conclusion, a new generation of management took the helm at Maui Pine. Mary Sanford was appointed director emeritus, making room for the ascension of the next line of Camerons, Richard H. Cameron, Colin Cameron’s son, who was selected as chairman in March 1999. As Richard Cameron faced the challenge of shepherding the family business into the next century, Maui Pine’s legacy of perseverance bolstered belief in its ability to contend with the difficulties of the future.