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3 Ways to Revitalize Hawaii’s Economy

The answer might be a lesson from the past

(page 1 of 2)

     David Carey, president and CEO of Outrigger Enterprises Group,
    says it’s crucial for unions and management to work together to
    grow tourism, Hawaii’s No. 1 economic engine.
    Photo: Kevin Blitz

When kamaaina think back to the old plantation days, many don’t immediately recall the poor living conditions and backbreaking work. Instead, they reminisce about a tight-knit community of people from all backgrounds pitching in and pooling resources to get things done.

Many local leaders say it’ll take that kind of collaboration to revitalize the state’s economy after two years of steep revenue declines, corporate reorganizations, mass layoffs and numerous business closures. Some leaders say the recovery starts with increased cooperation in three key areas: between private-sector unions and management; partnerships among different Hawaii sectors, like tech, agriculture and tourism; and cooperation between the different levels of government to streamline permitting.

“It’s in our historic and cultural DNA to want to help one another and I think it’s a good thing because we’ll need teamwork more than ever if we want to get through these tough times,” says Mike McCartney, president and CEO of the Hawaii Tourism Authority. Effective leadership is key to revitalizing our economy, McCartney says, but adds, “A leader is only as good as the people around him that help to make those visions a reality. And that’s why I think collaboration is important.”

But some, such as attorney Jay Fidell, president of ThinkTech Hawaii, feel there is too much collaboration – and not enough action. “That’s exactly what’s holding us back!” Fidell says fervently. “The words ‘collaboration’ and ‘partnership’ are nothing more than buzz words. It all sounds like ‘Kumbaya’ to me. Listen, you can practically hear the music in the background.”

Fidell says what’s really needed is strong leadership so Hawaii can become the model for innovation, technology, education and renewable energy. He argues that collaboration is nothing more than a euphemism for attempts to reach consensus, and although it may be a consistent culture point in Hawaii, rarely does it produce successful results.

“You could have everybody collaborating with everybody on everything and there would still be a million agendas. Hawaii needs visionaries who can put their own interests aside and who can make tough decisions that will benefit the entire state, whether or not collaboration is achieved.”

1. Unions and companies working together

Hawaii’s unions have long advocated strongly for workers’ rights, pay and benefits, dating back to 1937, when the International Longshore and Warehouse Union was first chartered in the Islands. But the relationship between private-sector unions and management has drastically changed since the days of the Big Five, and both the recession and globalization accelerated that change.

“I think we’re seeing more people negotiate in good faith,” says U.S. Rep. Mazie Hirono, a Democrat representing rural and suburban Oahu and the Neighbor Islands. “For example, the IBEW (International Brotherhood of Electrical Workers, Local 1186) decided not to take a contract increase in wages for six months and the ILWU has done similar things because of the economic circumstances. I think everybody’s looking for fair, reasonable negotiations from both sides.”

Hirono hopes Unite Here, Local 5, which represents about 7,750 unionized hotel workers in the state, will settle on a new contract and avoid disruptions that could hurt Hawaii’s top industry just as it begins to turn the corner back to profitability.

“I think Hawaii has a history of unions being cooperative and management being cooperative, but the key here is that both sides have to understand each other’s point of view,” Hirono says.

David Carey, president and CEO of Outrigger Enterprises Group, which owns both nonunion and unionized properties – the latter includes the Ala Moana Hotel – says unions often fail to recognize the costs of running a business.

“I’m probably taking the narrow management view, but our union friends need to understand that if our costs were less and revenues were more, there would be more opportunity for employment, and union members and everybody wins.”

Of course, conflict and tension arise because employers carefully guard their costs while unions try to get the most pay and benefits for their members. Carey says one possible solution is to offer compensation tied to the business’s profitability. For instance, many companies offer employees stock if the company does well. That way unions and management are both focused on growing the business instead of who gets the biggest share of a static pie.

Since many hotels and large companies are owned and managed by global corporations, you don’t always have the same type of dialogue and community engagement that once existed, says state Sen. Carol Fukunaga, a Democrat representing the Punchbowl to McCully area on Oahu. In the past, strikes and demonstrations have hurt all hotel bookings, including union and nonunion properties.

“When you have the threat of a major labor action or strike, it’s the everyday line workers that get hurt,” Carey says. “So, if we have a strike and we lose market share and visitors say they’re not going to come to Hawaii for a while, everybody loses.”

Representatives from Unite Here Local 5 and the ILWU did not return calls for comment. But off-the-record conversations with union members and leaders make it clear that one reason they are leery of collaboration is that they feel it often leads to less for them, oversized salaries and benefits to some top executives, and bigger profits to offshore owners.

The HTA’s McCartney brings an interesting perspective to this tension. He has had many roles in Hawaii: executive director of the Hawaii State Teachers Association, state senator and nonprofit manager. First, he states the obvious: To negotiate a settlement takes communication, common understanding and trust. But then he turns the notion around: “The challenge in negotiations isn’t necessarily about getting the other side of the table to see where you’re coming from; a lot of times, it’s getting your own side to agree.”

As the single most important thing in negotiations, he adds, “Let’s not forget about our customers as we go through the process.” With fewer customers, both union members and management lose.

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