Star-Bulletin file photo
The liquidation of Honolulu Book Shops in August
was a low point of 1998.
Business
as usual
Big bankruptcies and layoffs
By Rob Perez
stole the spotlight from
some encouraging trends
Star-Bulletin
IT dominated the news this year. It dominated the news last year. It dominated the news the year before. Hawaii's economic slump, entering its ninth year, refuses to go away.
It has hogged the headlines like no other story except perhaps the Bishop Estate controversy.
Skyrocketing bankruptcies. A steady stream of layoffs. Falling home values.
Many of the major business stories this year were in some way linked to the state's sour economy. Even the uplifting, positive ones were placed in the context of an anemic economy, seen as possible hints of an economic turnaround.
Here are the top local business stories for 1998:
1. Entering bankruptcy: Epitomizing the state of Hawaii's economy, the largest and oldest local department store chain, Liberty House, filed for Chapter 11 reorganization bankruptcy protection in March. Two separate boards of directors struggled over who controlled the retailer.
Liberty House expects to emerge from bankruptcy next year.
2.Repercussions everywhere: Fallout from Hawaii's eight-year economic slump surfaced throughout 1998. Bankruptcies once again hit a record level, as did foreclosures. Among the liquidation victims: Honolulu Book Shops. Some of Hawaii's best-known companies, such as Liberty House, Bank of Hawaii, First Hawaiian Bank and DFS, announced layoffs.
A high-profile task force tried pushing a plan to revitalize the economy but many were unimpressed with the results.
3. Mega-merger: In the largest merger ever involving a local company, First Hawaiian Inc. in November joined forces with San Francisco-based BancWest in a $1 billion-plus deal.The new parent: Honolulu-based BancWest Corp., headed by Walter A. Dods Jr., former First Hawaiian Inc. chief honcho.
4. Gas brouhaha: The state in October filed a $500 million-plus antitrust lawsuit against most of Hawaii's major gas wholesalers, accusing them of conspiring to keep prices artificially high. The companies denied the charges. Meanwhile, Hawaii motorists continue to pay the nation's highest pump prices. And the wholesalers in recent years have earned gross profit margins as much as three times the national average, the state alleged. One analyst claims Hawaii's economic recovery is hindered by excess profits the oil companies allegedly take from the state.
5. Down, down, down: Hawaii's tourism continued to falter in 1998, creating a drag on the overall economy. Through November, the statewide visitor count was off 2 percent, largely because of a big drop in Japanese tourists. Hotel occupancy was down. The average room rate declined in November for the first time in three years. But on the plus side, the state set up a tourism authority and approved dedicated funding -- around $60 million a year -- to market Hawaii.
6. Up, up, up: Retailing once again was a bright spot in the economy. Neiman Marcus, Comp-USA and Pier 1 opened stores on Oahu. Ala Moana Center in July announced a major expansion that includes a 450-room hotel, 18-screen theater complex and a major theme restaurant. Construction is supposed to start next year.
7. Finally, finally: After more than a decade of controversy and toil, the state in June opened a new $350 million convention center at the entrance to Waikiki. Officials hope it will help attract free-spending conventioneers to Hawaii, boosting the economy.
8. Changing hands: San Antonio, Texas-based Tesoro Petroleum Corp. bought BHP Hawaii's Barbers Point refinery and 32 retail gasoline stations in May for $243.5 million in cash and a promissory note for $50 million.
9. Sales galore: Sales of existing homes on Oahu increased each month this year. Through November, the total was up 22 percent from the comparable 1997 period, giving rise to optimists who believe Hawaii's economy is turning the corner. A major reason for the increased sales: falling prices.
10. Speaking of . . . : Homes weren't the only items selling for less. The federal government reported that Honolulu consumer prices in the first half of 1998 fell for the first time in at least 35 years. A key reason: the economy, of course.
