DEAN SENSUI / DSENSUI@STARBULLETIN.COM Erwin Hudelist, president of Hagadone Printing, examines a drive guide that's just come off the company's offset Web press. The company expected a 30 percent cut in its tourism publications printing business after Sept. 11, but recovered quickly

Arising again

Business escaped the
most dire predictions

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By Lyn Danninger
ldanninger@starbulletin.com

Local businesses say much of the economic fallout from the Sept. 11 terrorist attacks either failed to materialize or was not as crippling as first feared.

Many companies almost immediately announced layoffs or reduced hours for workers, and unemployment claims skyrocketed. But for many, the initial economic trauma gave way to a trying business environment similar to Hawaii's 1990s downturn.

[ WE REMEMBER ]

Hawaii's banks, like many other local businesses, were prepared for the worst. Some, like Bank of Hawaii, set up special relief programs in anticipation of their customers' need to delay scheduled payments.

As it turned out, very few of the bank's customers used the service, said Stafford Kiguchi, spokesman for the bank.

"The impact was considerably less than we thought," he said.

Kiguchi said 47 of the bank's small business customers used the program and no large commercial customers applied. About 25 homeowners participated in the bank's mortgage payment relief program. For consumer loans, 85 individuals requested help, he said.

Kiguchi speculates the tough economic times of the 1990s prepared many small businesses and individuals to handle problems.

First Hawaiian Bank also granted credit extensions for some customers. While the bank didn't keep a tally of those who asked for relief, Senior Vice President Brandt Farias said the bank was surprised to find how many customers coped without asking for assistance.

"What impressed us was the fortitude of business and individuals," he said.

It's clear those closest to Hawaii's hard-hit travel industry felt the immediate effect of Sept. 11 the hardest.

"It was pretty bad," said Paul Kosasa, president of retailer ABC Stores.

But Kosasa said despite the downturn in business, his company retained its work force.

"We suffered for a while but we didn't have to lay off anyone," he said.

While business has not fully recovered to pre-Sept. 11 levels, Kosasa believes fewer customers to the company's stores are more a function of the downturn in the world economy, particularly Japan, than a direct result of the events of Sept. 11.

"It's not going to recover to prior to Sept. 11 (spending levels) but we are stable and there is enough business," he said.

Hagadone Printing, which anticipated a short-term 30 percent cut of the tourist publications it prints and a 40 percent drop in collateral tourist-related materials, recovered much quicker than it anticipated.

"It wasn't as bad as we all thought," said Erwin Hudelist, Hagadone's president. "There was a huge dip for a week or so, but after that it came back probably by the end of November."

Hudelist said the company was not forced to lay off any employees. But he said there were lessons learned from the experience that influence the way he conducts business today.

"We definitely want to get leaner, budgets are more short-term than before and while long-term plans are still long term, they're more flexible," he said.

DEAN SENSUI / DSENSUI@STARBULLETIN.COM Hagadone Printing President Erwin Hudelist said the fallout from the Sept. 11 attacks taught him to run a leaner, more flexible business.

Like others, Hudelist believes the resilience of Hawaii businesses, long used to hard times, had a lot to do with how well they coped with the downturn.

"In Hawaii, we are used to this. We've been swimming around in tough times for many years, so we're pretty much equipped to handle it," he said.

About two weeks after Sept. 11, Atlantis Adventures announced it would reduce its staff of 500 by 30 percent. Business has since turned around.

In the end, the company laid off about 100 employees, but was able to re-hire on a seasonal basis for the summer as business picked up.

The company operates Sea Life Park, Waimea Falls Park, Atlantis Submarines and Atlantis Cruises aboard the Navatek.

Atlantis Chief Executive Officer Ronald Williams said business from Japan continues to lag, but the company has recovered better than it anticipated, thanks to better visitor numbers from the U.S. mainland.

Williams noted the company felt a slowdown prior to Sept. 11 as the Asian economy tumbled. "We probably felt it more than Sept. 11. Unfortunately, Sept. 11 just magnified it," he said.

Williams said lessons have been learned from the experience.

"We found ourselves having to re-engineer the company and prepare to be a lean, mean fighting machine," he said.

But some firms continue to struggle with the effects of Sept. 11.

Initially, Royal Guard Security saw an uptick in business. At the time, it made sense, given the heightened anxiety about safety.

Security firms like Royal Guard got more requests for services from everywhere from military installations to office buildings and transportation companies.

But what wasn't immediately apparent was that despite increased demands for security, economic belt-tightening would eventually affect some of those wanting the service.

"Initially, it looked positive but then everyone became concerned about finances," said Clarence "Rags" Scanlan, president of Royal Guard. "A good percentage of our work was with the hotels. Naturally they cut back and we lost because they started to go with low bidders."

The company also lost money from other travel-related business clients, such as American Classic Voyages cruise ships, which ran into financial trouble and eventually declared bankruptcy, Scanlan said.

"Sept. 11 may have had a lot to do with it but in the end it's the economy that dictates what happens. When companies loose contracts they lay off and cut down services," he said.

Scanlan said the company did not lay off employees.

"Fortunately there were no layoffs. Attrition took care of that and we are still hiring," he said. "But the numbers we anticipated are not panning out so I'd say it's been mixed."