The comeback continues

Hawaii’s business climate continued to show gradual improvement in 2011, supported by modest improvements in economic growth and a slowing in the pace of bankruptcies and foreclosures. However, the recovery following the 2008-2009 recession remains fragile, as evidenced by the state’s stubbornly high unemployment rate, stagnant housing prices and sluggish construction industry. Here is a look at the top five business stories of 2011.

Hawaii Medical Centers shut down

Despite years of financial troubles, the closure of the Hawaii Medical Centers still came as a shock to Hawaii’s medical community and generations of Oahu residents who depended on the hospitals for their health care needs.

Many hoped the former St. Francis Medical Centers in Liliha and Ewa would be saved when a potential buyer, an affiliate of lender Prime Healthcare Services, offered $25 million for the facilities in early December.

But that wasn’t meant to be. St. Francis objected to the sales process, essentially forcing HMC’s closure and layoffs of nearly 1,000 health workers.

Alternative energy takes hold

It was a year of milestones for Hawaii’s energy sector, along with a few setbacks.

Installations of rooftop solar energy systems on Oahu surpassed the 20-megawatt level on a cumulative basis. Oahu’s capacity, combined with more than 15 megawatts of solar power generation on the other islands, makes Hawaii second nationally in terms of installed photovoltaic capacity per capita.

The state also welcomed the first wave of plug-in electric vehicles, with Nissan, Chevrolet and Mitsubishi choosing Hawaii as one of just a handful of U.S. markets to receive the first shipments of their new EVs.

Meanwhile, state regulators ordered Hawaiian Electric Co. to seek new bids for 200 megawatts of renewable energy after a developer that planned to build a wind project on Molokai pulled out because of community opposition.

Tourism survives challenges

Considering the potential impact of the natural disasters in Japan and sluggish economic growth in many of Hawaii’s visitor markets, the state’s tourism industry fared pretty well this year.

Visitor spending through the first 10 months of the year totaled $10.3 billion and put the state in position to possibly surpass the annual record of $12.8 million spent by visitors in 2007. And Hawaii Tourism Authority officials note that the industry was able to generate strong spending numbers despite anemic gains in visitor arrivals, which will not likely meet the target of 7.4 million the state set for 2011.

Hoteliers and other industry players were able to begin pushing prices this year after spending the better part of 2009 and 2010 dropping rates to drive demand.

Hawaiian Airlines’ expansion

Even as the last of the so-called legacy carriers filed for bankruptcy this year, Hawaiian Airlines was moving full steam ahead with its expansion.

After adding service to Tokyo in 2010, Hawaiian ramped up its expansion this year by launching service to Seoul in January and Osaka in July. That will be followed next year with flights to Fukuoka in April and New York in June.

The move to phase out the airline’s fleet of Boeing 767-300ER aircraft and bring in more fuel-efficient, longer-range and larger Airbus A330-200 planes has not only resulted in new routes, but also will swell the size of Hawaiian’s work force to about 4,750 by the end of next year. While all airlines have faced skyrocketing fuel prices and lower demand in recent years, Hawaiian has been able to set itself apart by controlling its costs, analysts say.

Foreclosures stalled, for now

The number of Hawaii residents losing their homes to foreclosure declined steadily in 2011, helped by a modest improvement in economic conditions and a new state law making it more difficult for lenders to reposess homes outside the court system.

Through the first 11 months of the year, foreclosures statewide totaled 7,141, down 46 percent from 10,425 during the same period a year earlier, according to real estate research firm Reattract.

The new nonjudicial procedure forces lenders to participate in a mediation program with qualified borrowers if borrowers so choose. Local attorneys representing lenders say the law is flawed and that the new nonjudicial process won’t be used because it provides for punitive penalties for even the most minor infractions.