On our own

Come strikes, terrorist attacks
or hurricanes, Hawaii is getting
better at taking care of itself

By Dave Segal

Over the past 10 years, Hawaii's economy has been threatened by labor strikes, slowed by Sept. 11 and battered by Hurricane Iniki.


Strike: Local 5 hotel union members prepared picket signs last week. Attack: Honolulu Airport was deserted in the aftermath of Sept. 11. Strike: West Coast dockworkers rallied last month after their contract expired. Visitors: Waikiki beaches were less populated after Sept. 11 as tourism plummeted. Leveled: Hurricane Iniki devastated Kapaa, Kauai, on Sept. 11, 1992.

Despite its geographical isolation, local experts agree the common thread to emerge from all these disruptions is Hawaii isn't as vulnerable to outside influences as it used to be.

Paul Brewbaker, chief economist for Bank of Hawaii, last week referred to the state's resiliency in describing how the economy in just a year bounced back from the terrorist attacks. Hawaii residents have learned to filter out the "noise" created by outside influences, he said, especially when there's advance warning, like there was for the hurricane and the potential labor strikes.

It all comes down to being better prepared, said Chuck Gee, dean emeritus of the School of Travel Industry Management at University of Hawaii.

"We are not the ill-prepared destination that we once were," Gee said. "I think over the past 25 years we have learned a lot in coping with emergencies of this type. We know our vulnerabilities in being so remote and we are more vulnerable than any other state. But a lot of companies have contingency plans for prolonged disruptions whereas they might not have had 25 years earlier."

While Sept. 11 was unpredictable and Hurricane Iniki unstoppable, it's the potential for dock and hotel work stoppages that strike at the heart of Hawaii's economy.

The reasons are obvious: Hawaii gets 90 percent of its goods through ocean shipping and the state's No. 1 industry is tourism.

While local experts agree that both dock and hotel labor stoppages would be detrimental to the economy, they said it's the duration of the potential strikes that would create the most damage.

"Nobody gets here by motor vehicle, so when anything happens with the airlines or dock strikes, it's a potential for disaster," said Carol Pregill, president of Retail Merchants of Hawaii. "We don't have a large exporting community so the biggest impact is getting merchandise for the retailers, merchants and consumers into the state. Part of our retail merchants is our Made in Hawaii committee, representing the garment manufacturers. And fabric comes via ocean freight. Manufacturers wouldn't be able to get the raw material for the fabric."

Of course, there's the food aspect, too.

State economist Pearl Imada Iboshi said $10 billion worth of products are imported into the state each year, including a little more than $1 billion in food. Sixty-five percent of the food that Hawaiian residents consume annually is imported, she said.

A hotel strike would have different types of ramifications but likewise would hit Hawaii residents and businesses in the pocketbook. Hotel workers last took to the picket line in 1990 for 22 days.

"The most immediate impact is on the businesses and the employees and, the longer it spreads out, the public relations aspect," said Murray Towill, president of the Hawaii Hotel Association. "What's the message being received outside the state in various markets? And how concerned will future customers become in an activity like that? (The impact) is directly proportional to the size of the interruption."

The local experts generally agree that a dockworkers' strike would impact the state the most since it essentially affects everyone.

"If I had to rate those one or two, the dockworkers' strike would have a greater impact on the population, but the hotel workers' strike is a very close second," Pregill said. "I'm almost tempted to put them neck to neck only because so much of the economy of the state relies on the visitor industry -- from employment to the ancillary services.

"A hotel strike would have an impact on the retailers, too, if we don't have people in the hotels. There's a large portion of retail revenue coming in. Extrapolating from that, retail revenue goes down, general excise tax goes down, tax collection for the state goes down."

Pregill said that the impact on Hawaii immediately after Sept. 11 provides an example of how a slowdown can reverberate throughout the economy. She said retailers were experiencing an 80 percent decline in sales and that businesses that ordinarily wouldn't be thought of as being affected by a slowdown were nevertheless feeling the pain.

"Somebody made me aware that dentists on the leeward side were suffering," she said. "They did not have any business. People were concerned about jobs. People had reduced employment hours and they were subsequently not going to the dentist. You cut out some of those services you can do without that are not life-threatening."

The last time Hawaii residents were sent scrambling by a dockworkers' strike was in 1971 when a 100-day West Coast stoppage curtailed nearly all shipping to the state. The last strike at Hawaii docks was in 1949 when the International Longshore and Warehouse Union walked out for five months.

"In 1949 I was a little child but cognizant about what was going on, particularly on Maui where I grew up," Pregill recalled. "It was a disaster. There was actual panic. I can remember people taking rolls of toilet paper from restaurants and stores. In those days, ocean cargo was the primary means of bringing goods to the islands. The airplanes carried passengers, but it was not a cost-effective way like it is today of getting consumer goods to the state."

Gee, who also remembers the dock strikes, said people tend not to panic as much today.

"The longer (the previous strikes) went on, the more bitter they became," Gee said. "It was a huge inconvenience where a roll of paper was worth its weight, maybe not in gold, but certainly in copper. People went to the mainland and came back with suitcases of toilet paper. But now people take it in stride. People have been stocking up and hotels have done no less."

Workers at Hotel Employees and Restaurant Employees Local 5 made sure they were prepared last week for a strike.

Matson Navigation Co., one of the two shipping lines to serve Hawaii from the West Coast, reported in its latest earnings that container volume shipping was up 7 percent in the second quarter from a year ago. It attributed part of the increase to the original July 1 expiration of the contract between the shippers and the union.

"With the current labor negotiation environment, shippers had plenty of time to prepare for a possible disruption in service and have increased inventories as a precautionary measure, particularly with dry goods that are not perishable," Matson spokesman Jeff Hull said.

Hull noted Hawaii still remains relatively vulnerable to any outside influences or disruptions that could interfere with the steady flow of cargo needed to support the state's economy. Yet, he said the situation has never reached a critical stage.

"Matson has been serving the islands continuously since 1882," he said. "In that time, there have been two world wars, dock strikes and a number of natural disasters. While these events have resulted in temporary disruptions, there has never been a time when Hawaii's residents were left stranded without essential goods."

But the events of Sept. 11 have changed the way Hawaii residents think about certain issues.

"People feel a lot more vulnerable and are a lot more willing to enter into negotiations and not allow everything to stay at prolonged hostility levels," Gee said. "It doesn't benefit unions or management to let the business go under and people who are at the bargaining table understand that."

Jim Tollefson, president and chief executive officer of the Chamber of Commerce of Hawaii, said technology has helped narrow the physical gap between Hawaii and the mainland.

"Obviously, distance would be a factor in vulnerability but, in today's world, we're so much connected technologywise and communicationwise than a few years ago. We're connected through communication links. I think that helps stave off some of our vulnerability.

"I feel now that we may be even less vulnerable after 9/11. The business community really pulled together to find solutions and worked together to alleviate the situation as much as possible without waiting for outside assistance."

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