COMMENTARY
Businesses face a year of tough challenges
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Each week Editorial and Opinion Editor Jeanne Mariani-Belding hosts The Hot Seat, our opinion-page blog that brings in elected leaders and people in the news and lets you ask the questions during a live online chat.
On The Hot Seat last week was Jim Tollefson, president and CEO of the Chamber of Commerce of Hawai'i.
Here is an excerpt from that Hot Seat session. To see the full conversation, go to The Hot Seat blog at www.hotseat.honadvblogs.com.
(Names of questioners are screen names given during our online chat.)
James in Kailua: What's your forecast for the business climate here for the coming year?
Jim Tollefson: Unfortunately, I believe this upcoming year will be a challenging one. Members of the business community that I speak with indicate that the local economy will continue to experience a downturn well into 2009. Much of what we are facing in Hawai'i is beyond our control. As long as the U.S. economy is being challenged and consumer confidence remains low, our visitor industry will be impacted.
Joe M.: Why does the Chamber supports the city's rail-transit project?
Tollefson: The Chamber has recognized that the traffic congestion issue has both an economic and a quality of life impact. Consequently, the Chamber polled its members as well as its Board of Directors to determine what position we should take on this issue. Both the members and directors supported the city's rail-transit project.
Scott: We know that the housing developments have slowed down, but being in touch with the developers here in Hawai'i, how long do you think it will take before new housing projects will start up again and the ones now in the process of being built will be completed?
Tollefson: There are various factors contributing to this slow-down. One being the reluctance of potential buyers to purchase a new home. This reluctance is fueled by the current economic uncertainties and the job market, as well as the ability to obtain credit. The length of time therefore is predicated upon the duration of the current economic situation.
John: Have you seen any results from the bank bailout yet? Is credit for small businesses loosening up? What are our local banks doing to help small businesses here in Hawai'i?
Tollefson: We are fortunate here in Hawai'i to have strong local banks that have the capability and capacity to lend money. This is not necessarily true in other parts of the country. I have been assured by my banking contacts that they have credit to extend to credit-worthy businesses so I am confident that loans will be made and credit extended.
Rick: I think there is a vicious cycle going on here: People are afraid to spend and because they don't spend, businesses are hurting and they cut back. They lay off employees or go under and the cycle goes around and around. What is the Chamber doing to get people to start spending money to break this downward trend?
Tollefson: The Chamber has announced its 2009 Economic Stimulus Agenda, which focuses on the following:
The Chamber supports initiatives that address effective educational policies focused on K-12; provide funding for facilities and curriculum, such as to the 3Rs program; endorse private and public partnerships to help construct a trained workforce for the quickly altering demands of the 21st century workplace; and increase affordable workforce housing across the Islands.
Small businesses are the engine for Hawai'i's economy through the creation of jobs and the generation of economic activity. The Chamber supports legislation that lessens the regulation burden on small businesses and provides tax and economic development incentives.
The key is jobs and to keep people working. The goals are to promote an improved economy, better business environment, and a healthier workforce.
Tommy: What is the Chamber doing to get some of those federal dollars here in Hawai'i? Have you met with your counterparts in D.C.?
Tollefson: The Chamber has been very active supporting over the past two decades the Department of Defense activities here in Hawai'i. As an example, 10 years ago the Department of Defense expenditures in Hawai'i were $3.2 billion; this past year the direct expenditures were $8.2 billion. When indirect expenditures are added, the amount grows to $12.2 billion. We will continue to work with our Congressional delegation to support and grow federal dollars spent in Hawai'i.
Lisa: From a business standpoint, do you think it's a good idea for the federal government to bail out the the Big 3 automakers? If they do, does that mean other businesses would be able to request a bailout from the federal government?
Tollefson: It appears that the economic/social and consumer confidence impact of a bankruptcy of one or more of the Big 3 automakers would put greater stress on the already-challenged U.S. economy. Consequently, I believe the government will provide some type of "bailout" for the industry. Lisa, I share your concern, where does this all end?
George: What are some of the strong companies here in Hawai'i — those that are doing well regardless of the downturn? Are there any silver linings out there?
Tollefson: We are fortunate here in Hawai'i to have a strong banking system with money to lend and credit to extend. This is important because "credit" is the oxygen that allows businesses to survive and grow. This is not true in all sections of the country. This credit availability will help us through these challenging times and provide impetus for an improving economy in the future.
Another bright spot on the visitor industry front is that Hawai'i remains at the top of most lists as a desirable vacation spot. So, when the global economy improves (which it will), we will benefit from the desire of many to visit our great state. One more thought in this regard, is the recent visa waiver situation for Koreans to visit Hawai'i. This will have a very positive impact on the visitor industry when economic conditions turn around.
Kelly: How many businesses do you think will fold in the coming year, and which ones stand to get hit hardest? Can anything be done to prevent more businesses from going under?
Tollefson: I really don't know how many businesses will fold during the coming year, but I believe that those businesses that deal directly with the visitor industry will unfortunately be hit the hardest. This includes retail, restaurants and attractions. But at a time like this, we are reminding that we are all in the "visitor industry" as all of us are impacted by the downturn.
Reach Jeanne Mariani-Belding at jmbelding@honoluluadvertiser.com.
