Posted on: Monday, September 13, 2004
LEADERSHIP CORNER
Stronger economy means bigger loads for Young Brothers CEO
Interviewed by Catherine E. Toth
Advertiser Staff Writer
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Name: Glenn Hong Age: 56 Title: President and CEO Organization: Young Brothers Ltd. and Hawaiian Tug & Barge High school: Punahou School College: Bachelor of science in accounting, University of Southern California Breakthrough job: When he was 5, Hong, out of boredom, started sweeping the long driveway in front of his parents' home. "I was proud of the job I did," he recalled. "Then I showed my mom. Once or twice she gave me 5 cents. That tied in working for some reward." Little-known fact: After graduating from college, Hong traveled for a year across Europe — on a motorcycle. "I thought, 'I'm going to do something while I had the opportunity,' " he said. "I didn't want to look back later in life and wish I did something."
Major challenge: "In economics, you learn about scarce resources (facilities, equipment and people). And the whole thing is bringing that together to provide a level of services necessary and at reasonable costs." The biggest challenge in terms of resources has been in facilities. "In Hawai'i that's always a challenge. We don't have enough harbor facilities anywhere."
• • • Q. What do you need in terms of facilities to help Young Brothers and Hawaiian Tug & Barge?
A. A lot of things. We're working with the state right now. As you have more usage, more passenger vessels, more ships coming in, it's difficult to get a balance to reach a level (of service) that would be required.
Q. Is there any particular port that needs substantial improvements or upgrades?
A. Hilo is very, very critical right now. It's the age of the facility, the lack of acreage for cargo and the competition with more users than the facility can accommodate. We're working with the state on its long-term plan to build out Pier 4.
Q. What about the Honolulu port?
A. We moved into new facilities in 1998 with the expectation that there would be enough capacity for 20 years. But we've outgrown the capacity in the year 2000 ... We've had continuous growth in the last six years since we've moved into the consolidated facilities, and the space is totally used up.
Q. Young Brother has six ocean towing tugs and 10 barges. Hawaiian Tug & Barge has six tugboats, with another one coming next week. How much cargo are you moving every year?
A. Last year, in 2003, out of Honolulu, we moved about 830 barge loads. That's up from just under 700 in 2001. We were using full capacity (of our facilities) in 2000, so the ramp-up has been really significant.
Q. To what do you attribute the increase in loads?
A. I attribute it to the strengthening of the economy in Hawai'i and growth on the Neighbor Islands and their economies. If you look at the economic forecast for the Neighbor Islands, it shows that not only have they grown faster than O'ahu, but they will continue to grow faster for the next several years.
Q. Hawai'i Superferry plans to start operating two interisland ferries in Hawai'i in 2006, with the ability to transport goods along with people at an affordable fare. How will this affect your business?
A. Some of the cargo we currently serve could be served by the superferry. But we have a lot more heavy-lift capacity ... and our freight rates are low, well below the rate of inflation. We do provide containers and chassis to move the container on both ends of the shipment. (With Hawai'i Superferry) the shipper will have to provide his own equipment, truck and driver for the duration (of the cargo's move). In addition to rates being higher, you've got other costs in order to ship (your cargo) ... We know what we do, we know our services, and we know we can do it very economically.
Q. The strike by the Inlandboatmen's Union of the Pacific against Young Brothers and Hawaiian Tug & Barge in July shut down intrastate commercial barge traffic for four days. It prompted panic and concern, especially from merchants and residents on Lana'i and Moloka'i who depend on these shipments.
A. There was a lot of negative attention. If you go back to July 1 and take a look at a lot of the (media) reports, much of that focus was on Lana'i and Moloka'i. Moloka'i got its barge on the day the strike started, so they had their (weekly) shipment. The concern was on Lana'i. We put together an in-house crew to take that tug and barge to Lana'i. It was late — instead of getting there on Thursday, it got there on Saturday — but we worked to ensure that the community got the weekly service it needed ... We tried everything we could to minimize the impact, and I think we did.
Q. Turnover rate for employees has historically been very low. Why is that?
A. We like to be where we feel like we're the employer of choice. We really don't lose people because we feel the total package, as well as work environment, are positive. We work on those issues ... The industry obviously has excellent salaries and wages and benefits, and that's for both unionized and exempt personnel.
Q. What are the long-range plans for the company?
A. We have constructed a high-tech tug boat, the most powerful in the state, to assist vessels. It cost in the range of $4 million. It has just under 5,000 horsepower with a lot of technology ... This tug is nearly twice as powerful as our original tractor tugs with a lot more capabilities ... In the next five to 10 years, we will be in the mode of significant capital reinvestment. That will be a challenge. We will be replacing a number of barges here in the next five years, then clearly much of our fleet in the next 10.
Q. What don't people realize about this industry?
A. People don't realize what our operations are until they see it. It's really an eye-opener to see how much activity there is down here and what little space we have to work in. You truly have to see it to get a full appreciation of what we do.
