(Jan. 3) CINCINNATI — With about a third of its banana shipments from Panama at stake, Cincinnati-based Chiquita Brands International Inc. says it hopes it won’t have to carry out its threat to shut down its Puerto Armuelles Fruit Co. division in Puerto Armuelles, Panama.

Chiquita announced Jan. 1 that it had cut off subsidies for Armuelles, where union leaders recently turned down a Chiquita proposal to allow the division and its assets to be sold to a still-hypothetical worker-owned cooperative.

“There has been a sizable group of employees that has expressed interest in exploring that option,” Chiquita spokesman Mike Mitchell said.

Under such an arrangement, Chiquita would continue to buy fruit from the co-op on a contract basis.

Chiquita said the division — which shipped 6.5 million 40-pound boxes of bananas, or 6% of the company’s Latin American supply, in 2001 — has lost $90 million in six years.


Those kinds of losses, Mitchell said, are not compatible with Chiquita’s mission to streamline itself in the wake of last year’s Chapter 11 bankruptcy.

“When we came out of our bankruptcy, we reviewed all our operations and determined that the Armuelles division was the only one that was not cost competitive,” Mitchell said. “All of the others were.”

The company also said it could readily replace any volume lost by a closure.

“We believe that we’ll be able to satisfy our customers’ supply needs from alternative sources (across Latin America),” Mitchell said.

The decision not to subsidize the Armuelles division took effect Jan. 1. Mitchell said the company had set no deadline for its proposal but added that the division could not operate for long without financial help from Cincinnati.

Puerto Armuelles, on Panama’s Pacific coast, employs 3,200 workers. Paring the labor force was not a viable alternative to unloading the division, Mitchell said.

“We’ve been unable to do that effectively because of union work rules,” he said.


The division is the smaller of Chiquita’s two Panamanian operations. Another division, in Bocas on the Atlantic coast, shipped about 15.9 million cartons of bananas in 2001. Mitchell said the Bocas division, which employs 4,200, is profitable.

Chiquita says about 89% of Panamanian bananas are shipped under its label. Chiquita has been sourcing bananas in Panama for more than 100 years.

Costa Rica is Chiquita’s largest banana source, having shipped 27.3 million boxes in 2001. The company’s total banana volume in 2001 was 106.6 million cartons.

Chiquita said in the release that in December it approached the Panamanian government and the union, Sitrachilco, with a proposal to sell the Armuelles operation to a worker-owned co-op. The company said the government supported the idea but that the union opposed it.

He added that the proposal would protect jobs in the region and, at the same time, help Chiquita, which has been restructuring its operations since emerging from bankruptcy protection in March.

Mitchell said the company was hoping the Panamanian government might take a lead role in working out a deal.

Chiquita shares were trading at $13.47 Jan. 2. Having emerged from Chapter 11 bankruptcy protection March 20, the company reissued stock at $14.75 per share. The price peaked at $18.85 May 6 and hit a low of $10.49 Oct. 30.