Tuesday, December 31, 2002


Nurses at St. Francis, Kuakini and Queen's hospitals have been on strike for nearly a month.

Year of conflict,

Star-Bulletin staff

Nurses pounding the pavement, grocery stores scrambling to restock their shelves and hotel personnel threatening to walk away from their guests were some of Hawaii's more vivid images of 2002 as tension between union workers and their employers threatened to cripple the state's health and livelihood.

In the aftermath of Sept. 11, labor unrest was the biggest business story of the year. It still holds center stage as Hawaii prepares to usher in 2003.


With the strike now nearly into its second month, nurses from Queen's, Kuakini and St. Francis hospitals continue to protest working conditions and benefits.

Meanwhile, West Coast dockworkers, locked out by shippers for 11 days in late September and early October following a self-imposed work slowdown, tentatively agreed to a contract in November but not before the Bush administration forced them back to work by invoking the little-used 1947 Taft-Hartley Act. The contract dispute, which was over wages, benefits and new technology that would eliminate hundreds of union jobs, was detrimental to Hawaii, which receives 90 percent of its goods through ocean freight. The lockout put a strain on the state as certain types of food and other consumer goods became in short supply. Eventually, a waiver was granted to get Hawaii's goods flowing again, with implementation of the Taft-Hartley Act following a few days later. The local chapter of the International Longshore and Warehouse Union, whose members were not part of the West Coast situation, continue to work on a new contract.

On another labor front, Local 5 hotel workers, who were at odds over wages, pensions and outsourcing, began reaching contract agreements in September with the biggest Waikiki hotels, Sheraton, Hilton and Hyatt, after several days of selective picketing. The union is still negotiating with other hotels.

Here are the other top 10 stories of the year:

The Hotel Employees and Restaurant Employees Local 5 staged sporadic pickets, once including arrests, before reaching contract agreements with Sheraton, Hilton and Hyatt hotels in Waikiki.

2. Economic recovery

Tourism, the state's top industry, continued to rebound from the terrorist attack fallout with most key economic gauges at or near pre-Sept. 11 levels. Construction and real estate, helped by 40-year-low interest rates, have boomed. But the recovery has also proven uneven, as Japanese tourism continues to lag.

3. Housing hubbub

With interest rates hovering at or around 6 percent for much of the year, 2001 turned out to be a record year for home sales. Sales of existing homes on Oahu by the end of November 2002 stood at 3,559 single-family homes and 4,919 condominiums -- already exceeding year-end totals reached in 2001, the year that set the record for the highest number of sales since 1990. Honolulu's median sales prices also advanced for both single-family homes and condominiums. Home buyers paid a median of $347,000 for a single family home and $160,000 for a condominium.

Aloha and Hawaiian airlines were expected to merge this year, but the plans were abruptly called off in mid-March.

4. Airlines un-merger

Hawaiian Airlines and Aloha Airlines, historical competitors, started 2002 trying to wrap up a $200 million deal that would merge them into one new airline. Neither airline had been profitable in the interisland business since Sept. 11 slowed air travel. By mid-March the merger was called off, but in November, they were talking again, but only under an antitrust exemption that lets them jointly adjust total interisland capacity so they no longer have half-empty flights. There are fewer seats and at year-end interisland regulars were learning the lesson the airlines wanted them to get, that the days of treating an interisland trip like a walk-on bus ride are gone.

5. General Growth grows

Ownership in Hawaii's retail business took another big shift in 2002 as General Growth Properties Inc., already the owner of the 50-acre Ala Moana Center since an $810 million deal in 1999, agreed to pay $250 million for Victoria Ward Ltd. and its 65 acres of shopping and commercial space. That lifted Chicago-based General Growth's investment in Hawaii shopping centers to well over $1 billion, including the 504,000-square-foot Prince Kuhio Plaza in Hilo.

General Growth has continued to pour millions into improvements at both centers. The ownership change let Nordstrom Inc. step away from an agreement to build a 150,000-square-foot department store at Victoria Ward, but Nordstrom says it still wants a department store in Honolulu, where it already has shoe stores. It just hasn't decided the location.

6. Hilton mold

While island hotels were recovering from a severe drop in tourism this year, Hilton Hawaiian Village got a visit from a most unwanted guest, a case of mold that may cost $40 million to fix. Waikiki's largest hotel announced this summer that nasty mold had taken hold of rooms in its $95 million, newly built Kalia Tower. All 453 guest rooms have been closed for refurbishment, and could stay closed until summer 2003.

7. Go West

Since statehood, the mainland has been the dominant source of tourists for Hawaii, but it became even more so this year because the Japanese market has been slow to recover from Sept. 11. Visitors from U.S. cities made up 69 percent of Hawaii arrivals from January through November of this year, compared with 56 percent in 1996. Since the Japanese are Hawaii's highest-spending visitors, tourism expenditures have taken a hit and are expected to fall 5.3 percent to $10.34 billion this year from $10.92 billion in 2000.

Dockworkers at ports all along the West Coast were locked out for 11 days this fall until President Bush ordered the ports reopened.

8. Oil battle

The battle between the state and the oil companies shifted back to the Legislature this year after the state dropped its $2 billion antitrust lawsuit against the firms for a $35 million settlement. Lawmakers enacted a measure to regulate Hawaii's gas prices, which have long been among the highest in the nation. The oil companies, which denied that they had conspired to keep prices high, admitted during the course of the lawsuit that they simply don't compete on price. Gov. Linda Lingle has said she will suspend the price cap, though she has yet to offer an alternative plan.

9. Acting up

Act 221 Hawaii's bid to encourage investment in its fledgling high technology industry with Act 221 engendered enthusiasm from the technology industry and its supporters but skepticism grew from critics who labeled it vague and poorly drafted. How much investment it has attracted since its passage is difficult to tell. Some estimates reached as high as $32 million. But the granting of credits to the movie "Blue Crush," which applied for millions in tax breaks under the act, prompted critics to charge that the act which is supposed to target "qualified high-technology businesses" is straying from its original purpose.

10. Kawamoto sales

Gensiro Kawamoto, once a controversial mass buyer of Oahu residential real estate, drew equally large amounts of scrutiny this year for his tenure as a landlord and seller. Early in the year, Kawamoto said he would sell 80 isle homes he bought a decade ago. The announcement drew a whirl of offers, cinching an already tight market for home rentals. But some of the homes had not been taken care of, were in poor shape, and potential sales fell through on inspection. After receiving negative publicity, Kawamoto announced he would pull the homes from the market and fix them up before selling.

Star-Bulletin reporters Lyn Danninger, Tim Ruel, Russ Lynch and Dave Segal contributed to this report.

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