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The Honolulu Advertiser
Posted on: Sunday, September 23, 2001

The September 11th attack
Businesses fear economic free-fall

By William Cole
Advertiser Military Writer

Local troops and their families are nervously awaiting deployment orders that could mean duty in the Middle East.

Local businesses are watching nervously as well — especially merchants who cater to those troops.

The drop in tourism, coupled with the possibility of troop deployments and war, has some worried there could be a repeat of the economic free-fall that hit Windward O'ahu in 1990 and 1991, when 7,500 Marines from Kane'ohe Bay were deployed during the Gulf War.

In Kailua and Kane'ohe, service stations sold less gas, some restaurants barely hung on, and stores cut back on hours. Business losses ran as high as 70 percent.

"I think (another big deployment) would affect our business drastically," said Tony Piano, sales manager for CarQuest Auto Parts.

CarQuest has 16 stores on O'ahu and eight on the Neighbor Islands.

Piano said the Wahiawa store already has seen a slump in business from Schofield Barracks, where heightened security and preparedness have left soldiers less time to think about car repairs.

Approximately 12,000 25th Infantry Division (Light) soldiers are stationed at Schofield Barracks and Wheeler Army Airfield.

"It's a domino effect," Piano said. "They've canceled (service appointments), and of course, when they cancel, we don't sell parts."

The Kane'ohe store hasn't been affected — yet — but stores in the Pearl Harbor area and Salt Lake are seeing a loss of military customers, Piano said.

At the same time, cutbacks in hotel staffing in Waikiki also have caused deferred auto maintenance, and fewer car parts sales.

"It's all down the line, and a lot of people don't realize it until it happens, but we're trying to prepare for the worst," Piano said.

Wahiawa has about 300 businesses and more than 40 eateries — many of which rely on Schofield Barracks and tourist business.

Although the Pentagon began moving ground troops to within striking distance of Afghanistan last week, there has been no word of deployment for the 25th Division.

"It's probably something to worry about, but I don't know what we're going to do," said Libby Smithe, who's on the board of the Wahiawa Community & Business Association.

In Kailua, business had been great, in part because of increased tourist visits and regular mentions on the Travel Channel, said Pohai Ryan, executive director of the Kailua Chamber of Commerce.

Some merchants were talking just weeks ago about a 30 percent jump in sales at Kailua Shopping Center, which was renovated in the spring.

"I couldn't believe the foot traffic," Ryan said. "But now, who knows what will happen. If military families don't patronize outside the (Marine Corps) base, it will hurt us."

Most of the Kailua economy is driven by local residents, Ryan said, but a significant chunk comes from military families and visitors. The military accounts for about 20 percent and tourism another 12 to 15 percent. Some 6,800 Marines and more than 2,100 sailors are stationed at Kane'ohe Bay.

However, Ryan notes that if there is a war, "local people will be hesitant to spend, too."

Jennifer Schneider, who works at Buzz's Original Steak House in Lanikai, said the military accounts for about 15 to 18 percent of the restaurant's business.

An ongoing economic slump and a big deployment could mean double trouble.

"It will be harder than it's ever been for us," Schneider said. "It will maybe mean one-third of our business."

Reach William Cole at wcole@honoluluadvertiser.com or 525-5459.