Succeeding in Good Times and Bad
Three Top 250 companies saw the economic downturn as an opportunity, not just a crisis
photos by Olivier Koning
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Business consultants tell you opportunities exist whether the economy is shooting skyward or tumbling down. Well-positioned firms can always exploit changes in the business cycle and gain ground on competitors.
“A lot of companies do look at a downturn as a chance to pick up market share,” says Bob Sigall, a management consultant and author of “The Companies We Keep” books that tell the backstories of local businesses.
Companies that keep economic cycles in mind and don’t over-expand during upswings can thrive as the economy contracts, without firing staff, Sigall says. “They’ve got the funds to survive and add marketing budget,” he says, or make acquisitions at fire-sale prices.
Aside from hard work, there’s no single route to flourishing during a recession. For three growing Top 250 companies – AlohaCare, Y. Hata & Co. Ltd. and ProService Hawaii – a focus on their core strategies while providing value, enhancing customer service and using technology paid off with more accounts and revenue. Each climbed higher on the Hawaii Business Top 250 (click here to read).
AlohaCare CEO John McComas
Keeping costs down
Revenue at AlohaCare, a health plan catering primarily to low-income families and seniors with Medicaid coverage, jumped almost 16 percent to $184 million last year.
Some of that can be attributed to the hardscrabble times – as people lost jobs they applied for Medicaid. But AlohaCare CEO John McComas sees the increases as aligning with the nonprofit’s strategy of boosting the quality of its programs while being the low-cost bidder on the state’s Medicaid program, known as Quest.
As the lowest-cost plan, AlohaCare is the default provider for many new Quest members who don’t choose a provider. AlohaCare’s Quest membership rose 12.6 percent to 71,902 last year, according to state data. That’s more than one-third of all Quest beneficiaries.
“Since the late ’90s, we’ve succeeded at doing that – whether it’s an up cycle or down cycle,” says McComas. “We think we’re the best at doing that.”
AlohaCare also has thousands of other members in a Medicare program that it is trying to grow.
To keep its advantage as an efficient, low-cost health plan, the company tightened its belt during last year’s downturn. Executives told employees there would be no layoffs, but also no bonuses or raises.
A cost-cutting program called Operation Oink asked staff for ways to reduce expenses and they responded with many ideas, including seeking price cuts from vendors. The program chopped roughly $650,000, or more than 3 percent, from administrative costs. “It’s been a very successful program,” McComas said.
Senior director of communications George Irion saved money with a new marketing program that increased newspaper advertising and better targeted desired consumers. Preliminary research shows increased consumer awareness of AlohaCare, Irion says. “We’ve increased our effectiveness even though we spend less.”
Top 250 Rankings
2010: 38 | 2009: 55 | 2008: 78
2009: $184.0 mil. | 2008: $159.1 mil. | 2007: $129.6 mil.
Up 42 percent from 2007 to 2009
Y. Hata & Co. president and CEO Russell Hata
Refocusing on core mission
In May 2008, Russell Hata returned as president and CEO of Y. Hata and says he found it had diversified its business and account list too broadly. Profits at the 97-year-old food-supply company had plunged for three consecutive years.
Hata was alarmed that the company needed a turnaround just as the economy fell into a recession, bankruptcies grounded Aloha and ATA airlines, and Norwegian Cruise Line pulled two ships from Hawaiian waters.
Hata says his restructuring included a return to an older core strategy: a focus on sales to local restaurant chains, schools and the military. He met with employees to discuss the company’s troubled outlook and told them revenue had increased in the previous year because of inflation, but volume had actually declined.
He froze wages and bonuses to make it through the lean times but assured the staff that, if they worked together on the strategy, they would make it out of the recession together.
Hata says he talked about concentrating on what the company did best: providing better solutions for existing customers. He also rolled out a profitability index to let employees see how their efforts contributed to company goals.
“The most important piece is the employees,” says Hata, a third-generation proprietor of the business. “If I can keep our employees happy, there’s a good chance they’ll keep our customers happy.”
Sales at the company last year jumped 5.9 percent to $117.2 million. The bonuses that were taken away in 2008 were more than made up last year, with employees receiving two and a half times what they would get in a normal year.
“2009 was our best year ever,” Hata says. Employees received a $500 bonus in addition to their regular Christmas/year-end bonus. This year, the company will give them a $1,000 bonus, he says.
Y. Hata & Co. Ltd.
Top 250 Rankings
2010: 71 | 2009: 79 | 2008: 95
2009: $117.2 mil. | 2008: $110.7 mil. | 2007: $107.3 mil.
Up 11 percent from 2007 to 2009
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