Among the Ranks

Four Successful Companies for the first time rank in the Top 250

August, 2001

The executives at Commercial Data Systems Inc. can walk with more ease these days. Not because they added 6,300 square feet to the company’s cramped headquarters in the Kukui Plaza last June. Rather, the confidence stems from Commercial Data Systems’ strong performance last year: $44 million in revenues, or a quadruple increase over 1999 revenues.

Rapid growth wasn’t always the case for the Internet-support company, whose products and services 15 years ago were deemed too radical by Hawaii’s business community. When Commercial Data Systems first introduced Unix and the World Wide Web to local companies in 1986, the response was negative. Applying for a loan at local financial institutions also was difficult. “They didn’t think we had the potential to grow,” says Mark Wong, president and chief executive officer for Commercial Data Systems. “I really feel that we were held back by our banks, because we were too small. We thought we would never get the money to grow.” The financial institution that finally approved a loan was Hawaii National Bank. “At that exact moment, business started taking off,” Wong recalls.

Commercial Data Systems has offices in Alberquerque, N.M.; Colorado Springs, Colo.; and San Antonio. Services run the gamut from the sale and assembly of computer parts, to the writing of software programs and Web consulting. “Hawaii is a limited market and we don’t want to rely on our economy,” Wong says. “By having more locations, we’re less reliant on that.”Coincidentally, the Internet took off nationwide, and previously skeptical companies in Hawaii began to seek support from Commercial Data Systems. The company in 1989 formed a partnership with Sun Microsystems. Today, not only does Commercial Data Systems sell Sun Microsystems products to the federal government, but the Hawaii company is one of 60 in the world that has an Enterprise Elite Certification.

Polished Image: Aloha Hyundai Ltd. follows in its parent company’s tracks.

When South Seas Jeep Eagle abruptly closed its Nimitz Highway dealership in October 1996, Bill van den Hurk jumped at the opportunity to purchase the auto store’s assets from the now defunct Pacific International Service Corp. By April 15, 1997, he and his wife, Niki, reopened the showroom and gave it a new name, Aloha Hyundai Ltd. “It was more difficult than I had thought—I had originally planned to do a nice, used-car business,” says the vice president and general manager.

And the odds were not in his favor, either. South Korean parent company Hyundai Group had financial problems in the late 1990s. And the Hyundai name wasn’t familiar to most Hawaii consumers. To promote the brand, van den Hurk devised some sales tactics he imported from past experiences in the California auto business. He implemented a 72-hour exchange policy (no questions asked) and reorganized the parts and service department to better serve customers. “We have a great relationship with the factory,” van den Hurk says. “If we didn’t have a part, we’d go into the computer and priority ship it. The next day, it was in our office.”

The result in Hawaii: $31.9 million in revenues in 2000, with an anticipated 11 percent growth this year. “We’re now getting the customers we wanted to get before,” van den Hurk says. “Hyundai had a tough reputation, but now they’ve built great products.” The brand’s most popular models are the Elantra sedan and the Santa Fe, a mini sports utility vehicle that competes with Toyota’s RAV4.In 1999, the South Korean conglomerate purchased KIA Motors, a bankrupt South Korean automaker. Van den Hurk sold the brand in an 18,000-square-foot showroom on Kamehameha Highway. Hyundai Motor Co. also began offering a 100,000-mile warranty with each new purchase. The global-wide program, and other incentives, helped the South Korean company boost overall profits by a record 61 percent last year.

On Aug. 8, 2000, van den Hurk opened a $1 million facility, Pacific Rim Cycles, which specializes in Indian and Big Dog motorcycles. “We have to treat the customer as we want to be treated, and they’ll come back – especially on an island,” says van den Hurk, a motorcycle fanatic himself.

New Allies: University Health Alliance adds more than 8,000 new members to its program.

Growing pains accompany growth spurts. So when University Health Alliance between October 2000 and February 2001 added more than 8,000 new health-insurance subscribers to its existing roster (1,000 employer groups and 34,000 self-insured members), the small company felt the pinch. The acquisition of new members occurred as a result of the March 31, 2000, termination of Queen’s Preferred Plan and Queen’s Island Care.

In the midst of the changeover, University Health Alliance last February launched a new automated claims processing system. “We converted to the new system and grew by almost 100 percent all in the same time frame, and that stressed out our employees,” recalls Max Botticelli, chief executive officer for University Health Alliance. He and other faculty physicians from the John A. Burns School of Medicine at the University of Hawaii co-founded the health alliance 13 years ago. “We made the decision to convert before the opportunity to acquire Queen’s members came about, and we couldn’t turn that down.”

“We developed a good relationship with our physician providers, and they’ve been very supportive,” Botticelli says. “We’re smaller than our competitors, so we focused a lot of attention on serving our customers adequately.”Despite the growing pains, University Health Alliance’s revenues for the year 2000 grew 43.4 percent, from $17.5 million in 1999 to $25.1 million. That opened new doors for the health-insurance provider, which already had offered two plans: UHA 2000, an HMO-type of plan that permits coverage for non-participating providers; and Plan 600, which is a preferred-provider program. The health alliance also boasts a provider network of 2,600 health-care professionals throughout the state.

The 43.4 percent jump in revenues for the first time gave University Health Alliance a slot in Hawaii Business’ annual list of Top 250 companies. The health-insurance group prior to that had consistently ranked in the Best of the Rest – a secondary list of companies that do not meet revenue requirements, yet still are successful.

Botticelli and fellow executives at University Health Alliance this year say they will strive to keep premiums to a minimum, while providing superior service to its members. “We hope to control some of our medical costs by instituting some of the more aggressive disease-management programs, like heart disease, hypertension and diabetes.”

Blue-Vest Special: Everyday low prices generate high revenues for Wal-mart.

Wal-Mart’s signature smiley face and famous slogan, “Everyday Low Prices” translated into $348.3 million in revenues last year in Hawaii. “We’re increasing at double-digit numbers every year,” says Tim Ross, district manager for five Wal-Mart discount stores in Hawaii. Prior to joining the local team, he previously served as manager for Wal-Mart stores in the Midwest and on the East coast.

“To maintain our competitive pricing, we have to continue to work on having better stock,” he says. Competition with other discount-store promotions, such as Kmart’s resuscitated Blue Light campaign, keeps Wal-Mart’s blue-vested associates on their toes. The $191 billion global retail chain employs 1,800 in the Islands, only a fraction of the 962,000 employees nationwide. “It’s going to get more and more competitive, and people are seeing that Hawaii is a good retail market,” Ross says. “You can come to Hawaii and you can have a good sale and still make a profit. It’s a great market for retail.”

Aside from the 15 to 25 shipping containers that arrive at Wal-Mart’s five stores each day, the Hawaii division is the only non-international operation that boasts a local buying team. The 16-member staff in Mililani purchases products from local suppliers. “It’s the right thing to do by putting money into the local economy,” Ross says. “Most of the time, it’s not financially beneficial, but you could still break even.” Locally supplied products alone comprise 15 percent of Wal-Mart’s Hawaii inventory.There are ongoing plans to expand in Hawaii, but Wal-Mart executives are mum about an announcement this year to build a new Wal-Mart on Keeaumoku Street. Discussions between Wal-Mart and the landowner Wichman Family Trust ended last April, and the corner lot still remains empty.

Wal-Mart strives not only to satisfy its customers and associates, but also to contribute to the local economy. The company last year spent about $196 million on Hawaii suppliers, while another $4.3 million in taxes was paid to the state.


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