The Gringo Company

On paper there is no fruit so appealing to raise as the richest relative of the lily family, the banana. It grows so fast that it goes from bulb to cash crop in twelve months. It is the biggest moneymaker per acre of any crop grown anywhere, and is so popular that U.S. housewives buy more pounds of bananas each year than any other produce item. Yet under its golden peel there are a host of troubles, and in recent years United Fruit Co.--the world's largest banana grower and marketer--has had them all.

Until five years ago. with postwar banana sales rocketing. United Fruit was reaping profits by merely filling orders in the eleven American and European nations where it has sales offices. Then its plantations in Panama and Honduras were all but wiped out by a combination of wind, floods and the Panama disease, which by infecting the soil puts banana land out of cultivation almost indefinitely. Small Ecuadorian growers jumped in to capture 25% of the world banana market. Meantime, United Fruit's own share of the world market, which in 1948 stood at over 40% skidded to below 30%--though it managed to hang on to its 60% of U.S. banana sales.

This would still have been a profitable slice if United Fruit had not been saddled with costs that its competitors did not have to contend with. Since its founding in 1899. United Fruit had built a welfare system for its Latin American workers that included 188 schools and 16 hospitals, cost $4,000,000 a year to run. Unlike its latter-day competitors, who buy their bananas from independent producers. United Fruit also had vast fixed investments in banana lands, workers' housing and rail lines to haul the fruit. Between 1957 and 1960, as the company's sales dropped from $342 million to $304 million, these pressures shrank its per-share earnings from $3.59 to 25-c-.

Reaching Out. As United Fruit's fortunes darkened, the company's directors, led by their newly elected chairman, Boston Investment Banker George Peabody Gardner Jr., 44, desperately reached outside the banana business to find a president who would remake the company. Their choice: Thomas Elbert Sunderland, 54, previously vice president and general counsel of Standard Oil of Indiana.

Sunderland found himself at the head of an empire which, besides banana lands in eight tropical American countries, included cattle ranches, thousands of acres in sugar cane, cacao and oil palm, 1,380 miles of railroads, 55 ships, a sugar refinery and a communications network (Tropical Radio Telegraph Co.). He also found himself saddled with a chaotic organization in which three men might be working on the same project without being aware of each other's existence. The company also suffered from memories of the freewheeling days when it was run by the late Sam ("The Banana Man") Zemurray and in the eyes of nationalistic Latin Americans was a symbol of everything they hated about "Yanqui imperialism."

Looking for Partners. Sunderland hired a team of energetic young executives and concentrated in Boston management functions that had previously been divided among New York, Boston and New Orleans. To win back more of the banana market, he setup a marketing division that is developing protective boxes to ship bananas from the fields without their heavy stems, is pushing the Chiquita Banana brand name to give United Fruit bananas identity with customers, and soon hopes to start sending bananas to supermarkets in labeled plastic bags. Sunderland has also begun diversifying into other grocery products--notably freeze-dry shrimp, chicken and beef.

Sunderland's top-priority objective, however, is to get rid of United Fruit's Latin American land holdings. By the end of last year, he had sold 37,440 acres of banana lands to bring the total company banana land holdings down to 368,001 acres. His method: selling or leasing United Fruit lands to nationals (called "associate producers"), whom he helps with financing and know-how, and whom United Fruit (for a fee) supplies with such services as daily spraying against banana diseases. Last week in Colombia, Sunderland carried the plan further and arranged a fifty-fifty split of the final profit with associate producers. "They are going to feel literal partners in the whole enterprise," says Sunderland.

The Image Problem. By disposing of United Fruit's banana acreage, Sunderland hopes to end a serious cost drain on United Fruit and at the same time satisfy Latin Americans' nationalistic determination to be masters in their own lands. Gradually some Latin Americans are beginning to concede that United Fruit, whatever its past faults, has contributed to the economic development of their countries and is now trying to become a progressive force as well. Yet today the company is being blasted as never before by Castroite labor leaders who take to the radio to air such grievances as the company's failure to repair someone's screen door. One sympathetic Panamanian recently spelled out just how hard it will be for United Fruit to change its image. Said he: "If it were not a gringo company, there would be no problem."

Though United Fruit may never completely overcome Latin America's hard-dying suspicion of gringo companies, its own version of land reform should make it a smaller target for future agitators. On the balance sheet, Sunderland's policies have already paid off handsomely. Last week the company announced that its per-share earnings for the first quarter of 1962 had hit 54-c-, v. 4-c- last year. "My feeling," says Tom Sunderland, "is that the tide is inning to run our way."

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