2004 marked by cement
strike, milk dilemma

1. Concrete strike: There seemed to be little this year that could slow down the state's booming construction industry -- but a springtime strike by the state's two main concrete companies brought projects to halt for more than a month. Nearly 70 Teamsters at Hawaiian Cement walked off the job for more than 40 days before agreeing to a deal that improved wages and preserved retiree medical benefits. More than 140 Ameron Hawaii Teamsters picketed for 57 days before agreeing to contract that increased contributions to medical benefits but also increased wages.

The strike crippled the construction industry, halting work on residential subdivisions, new condominium high-rises and the University of Hawaii medical school.

"We basically lost two months, two good months worth of production, and that's one-sixth of a year," Haseko Construction Executive Vice President Kenneth Choate said at the time.

2. Aloha bankruptcy: Sneaking in under the wire, Aloha Airlines joined its interisland competitor, Hawaiian Airlines, and numerous mainland airlines in filing for Chapter 11 bankruptcy.

Aloha, which filed for bankruptcy yesterday, cited increasing expenses, high airplane lease costs and razor-thin margins as the causes of the bankruptcy, which comes despite record-full airplanes and rising isle tourism.

3. Strong tourism: The sun is shining brightly on the state's tourism industry, which has come out of the shadow cast by 9/11, SARS and the war with Iraq to post a record, or near record, year.

All of Hawaii's top visitor markets are posting growth from last year and optimism is that the industry is outpacing other sectors of the economy. Total visitor arrivals are expected to grow 7.6 percent for the year, with visitor expenditures rising to $10.5 billion, said Marsha Wienert, the state's tourism liaison.

"Everything is positive from the economy to the pent-up demand to Hawaii being top of mind in many markets," Wienert said. "If we continue this trend through the end of the year, we could come very close to 7 million visitor arrivals -- the most we've ever had."

4. Verizon sale: Verizon Communications took the state by surprise in February when it said talks were underway to sell subsidiary Verizon Hawaii. The buyer turned out to be the Carlyle Group, a politically connected Washington, D.C.-based private equity firm, which offered $1.65 billion.

The proposed sale, which includes more than 1 million telephone lines in Hawaii, drew criticism almost immediately from competitors and some lawmakers because of Carlyle's history of quickly selling off acquisitions. Carlyle, though, has promised to create back office jobs in Hawaii for the new company, called Hawaiian Telcom.

The state Public Utilities Commission has yet to rule on the sale.

5. Norwegian ship: Norwegian Cruise Line's expansion in the state is being touted by some as one of the most significant tourist developments to hit the islands since jet travel.

However, the ship met choppy seas from the start. First one of its ships partially sank, causing costly production delays. And when Pride of Aloha, the company's first ship, finally arrived in Hawaii to begin interisland cruising, its service and staffing problems made the wrong kind of splash.

The company was forced to issue a partial refund to consumers after a barrage of criticism. Consumer feedback improved once Norwegian ramped up employee hiring and training to stem staff turnover, which in the beginning was reportedly around 25 percent to 30 percent.

Members of the state's visitor industry hope that these improvements will be enough to create a strong cruise market for Hawaii, which would bring more first-time visitors and coveted U.S. East travelers to the islands.

6. New Wal-Mart/Sam's Club: Local reaction to the mid-October opening of the double-decker Wal-Mart and Sam's Club on Keeaumoku Street came in a mixed bag.

It was obvious by the line of people outside Wal-Mart hours before its grand opening that a segment of Hawaii looked forward to its arrival. But others criticized the project as ill-suited to an urban area and filed lawsuits.

The project was delayed when a group of Keeaumoku-area residents and a union sued last winter claiming the development would create a downtown nuisance. Last spring, a group of native Hawaiians sued after human remains were found on the site.

By opening day, the big-box retailer's arrival had already resulted in raised rents for neighboring businesses, and one immediately closed. Within a month of the big-box opening, Wal-Mart Stores Inc. announced layoffs at Sam's Club and nearby businesses were complaining that results had fallen short.

7. Real estate: If you bought or already owned a home in Hawaii at the beginning of 2004, pour yourself an extra glass of bubbly this New Year.

The last time we sang Auld Lang Syne, the price of a typical home on Oahu was in the high $300,000s. Twelve months later, we're flirting with the $500,000 barrier, a level long since past on Maui and Kauai.

Prices were squeezed higher by the most intense buying in the state's history as locals and mainlanders alike bid up values past the asking price in rush to take advantage of low interest rates and get in the door before sky-high prices slammed it shut.

Not everyone is celebrating. Record-high prices have shattered the homeownership dreams of lower-income locals, reigniting concerns about an affordable housing shortage.

And as a new year dawns, we're back asking the same question asked all year: How high can it go?

8. Foremost folds: Hawaii started 2004 with two local milk processors -- affording a measure of supply stability in the state's most important drink item. But it ends the year with just one -- Meadow Gold -- after longtime competitor Foremost folded for reasons that remain as clear as milk.

Big island dairyman Bahman Sadeghi led a group of investors that bought Foremost in January, promising to keep the decades-old company going. But by November, he had shut Foremost's plant down, citing deteriorating equipment at the plant, something disputed both by health officials and its former owner, House Foods of Japan.

The Foremost brand name will survive now that Meadow Gold has purchased it, but the risks of a production monopoly became apparent when a threatened strike at Meadow Gold raise the specter of a cut-off in locally produced milk.

9. Bank merger: After 18 months of often-hostile rhetoric, legal maneuvering and publicity campaigns, the parent companies of Central Pacific Bank and City Bank agreed this year to merge into one firm.

The merger will combine the fourth- and fifth-largest banks in the state.

Shareholders approved the plan in September, paving the way for the two banks -- both founded to serve the local Japanese community -- to begin the process of consolidation.

10. Bank CEOs leave: One has been around seemingly forever, and the other was here just a few years, but both made their marks at the helms of Hawaii's biggest banks. And in 2004, both First Hawaiian Bank Chief Executive Walter Dods and Bank of Hawaii CEO Michael O'Neill decided to move on.

Dods stepped away from 36 years at the bank and its parent, BancWest Corp., 16 of which was spent as CEO. During that time, Dods build BancWest into one of the 25 largest bank holding companies in the country, growing its assets to more than $50 billion from $5.1 billion in 1989.

O'Neill, a turnaround specialist, came to Bank of Hawaii in 2000. He immediately bought $10 million in Bankoh stock to show his faith in the company. It was also an investment that paid off handsomely over O'Neill's tenure as he pared the bank back from its far-flung growth and cleaned up its loan portfolio. The stock is now trading at $50, up from $11.25 a week before O'Neill took over.