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Hawaii needs to turn around its bad business reputation


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POSTED: Monday, June 22, 2009

Hawaii is accustomed to poor ratings as a place to conduct business, and two magazines aimed at corporate executives agree this year that its bad reputation is secure. The state is hardly in a position to improve its standing during the current recession but needs to look ahead for ways to improve its ability to lure business and broaden its economic base when the nation recovers.

The latest assessment comes from Directorship magazine, which targets what it calls “;the boardroom community”;—corporate executives, regulators, public officials and institutional shareholders. Hawaii is ranked 46th, based on eight categories of public records, including its last-place standing for the cost of living.

Contributing to Hawaii's low ranking are 40th-place finishes for the high cost of litigation, weighted at twice the score of other measures, and the low presence of Fortune 500 companies. It is rated 34th for the cost of labor, compiled by the Bureau of Labor Statistics. Hawaii's best categories are 12th place for economic performance indicated by the Bureau of Economic Analysis and the percentage of people over 25 with college degrees.

Three months ago, Chief Executive magazine's survey of 543 chief executive officers gave Hawaii a rank of 41st in reputation as a place to do business. The CEOs ranked Hawaii dead last in the quality of its workforce and next to worst for the cost of doing business, transportation and business friendliness. It was third-best in the quality of living environment and 13th in the state of its economy (before the recession began to hit the islands hard).

Texas was ranked No. 1 for the fourth year in a row. One CEO pointed out that Texas is strategically centered, has low taxes and has “;outstanding demographics.”;

At the very bottom of Chief Executive's reputations are New York and California, with Michigan third to last. The survey's respondents pointed to their high business taxes and strongly unionized labor forces. At the time of the January survey, those states had some of the nation's highest unemployment rates, while Hawaii's jobless rate was only 5.5 percent.

“;Michigan and California literally need to do a 180 if they are ever to become competitive again,”; one CEO commented to the magazine. “;California has huge advantages with its size, quality of workforce, particularly in high tech, as well as the quality of life and climate advantages of the state. However, it is an absolute regulatory and tax disaster, as is Michigan.”;

Hawaii's government should be concerned that the state could be similarly written off by companies with plans to expand or relocate.