Maui businesses brace for economic impacts | News, Sports, Jobs

A black cloud of smoke rises above the businesses near 505 Front St. on Aug. 8 in Lahaina. A report released by the state on Wednesday said that the closure of hundreds of West Maui businesses will impact the state’s economic recovery and could lead to higher unemployment and people leaving the island. The Maui News / MATTHEW THAYER photo

When Maui came to a standstill over the shock and grief of the Aug. 8 wildfires, it felt like the early days of the pandemic again for local businesses.

“It’s eerily similar to the first couple months of COVID,” said Peter Shenkin, co-owner of Maui Powerhouse Gym. “People were worried about their jobs. People were worried about where they’re going to live and what they’re going to do. In that sense it was directly analogous.”

Shenkin, who opened the Kihei gym at 4 a.m. to give evacuating residents a place to shower and safely gather, has watched his business reflect the trend of displaced residents and disappearing tourists in the wake of the fires that destroyed thousands of homes and businesses and claimed at least 115 lives in Lahaina.

“We do significant business with short-term visitors, and obviously the slowdown has been drastic and noticeable,” Shenkin said Wednesday. “Also, we have so many local resident members that have lost their jobs, or they’re furloughed, and they don’t know exactly what to do with their time, so they’ve been coming into the gym a lot. … It’s the same exact thing that happened during the first six months of the pandemic.”

It’s a tough balance for local businesses, who are trying to stay afloat as travel to Maui declines but are also emphasizing that they’re more concerned about their friends and family in Lahaina and Kula.

Joshua and Jordan Hansen of Eskimo Candy, a crew from Ikaika Construction and a group of Maui and Mainland firefighters help unload supplies of food, paper products, drinks and ice at a hub in Napili on Aug. 17, following the Aug. 8 wildfires that displaced thousands of residents. Eskimo Candy President and CEO Jeff Hansen said that while the company has lost all of its business on the west side, “our troubles are minimal compared to what people are going through.” Photo courtesy Jeff Hansen

“Our troubles are minimal compared to what people are going through,” said Jeff Hansen, president and CEO of wholesale distributor Eskimo Candy. “We’ll get through it. We’ll survive it. We’ll take a big economic hit, but at this point, that’s not at all at the top of our list. At the top of our list is helping people.”

Eskimo Candy had to close its restaurant earlier this year because, like many other businesses, it struggled to find workers after the pandemic. However, it continued to supply places like Fleetwood’s on Front St. and Lahaina Grill with fresh fish, steaks and other seafood and meats. After the fires, it saw all of its business on the west side disappear and decline by 65 percent on the rest of the island.

“It’s just been really slow,” Hansen said Wednesday. “Obviously there are not many people on island. Some people are probably watching their budget, and I think some people are just so heartbroken, you don’t necessarily feel like going out to dinner or celebrating. For our particular situation right now, we’re probably giving away more than we’re taking in.”

The Lahaina disaster area had more than 800 businesses with about 7,000 employees, with a daily total business revenue estimated at $2.7 million a day, according to the state Department of Business, Economic Development and Tourism’s third quarter report released Wednesday.

A total of 88 trans-Pacific flights with about 23,083 seats were canceled in August, and the passenger count to the Kahului Airport after the fires decreased by more than 70 percent from 7,000 a day to 2,000 a day. DBEDT estimated the loss from business closures and visitor expenditures at $11 million a day on Maui since Aug. 9.

“We are working with local communities on an opening plan that is strategic, timely, and sensitive to the concerns of the Lahaina wildfire survivors and businesses of West Maui,” Gov. Josh Green said in a news release Wednesday. “In the meantime, all other areas of Maui and the rest of Hawai’i are safe and open to visitors, and we continue to welcome and encourage respectful travel to our beautiful state, which will support our local economy and help speed the recovery of those who have already suffered so much.”

Economic recovery across the state since the pandemic had been strong through July, DBEDT said. According to data from the U.S. Bureau of Economic Analysis, the state’s economy, as measured by real gross domestic product, recovered to 97 percent in the first quarter of 2023 compared to the same period in 2019.

Hawaii’s unemployment rate, which skyrocketed above 20 percent during the early months of the pandemic, averaged 2.9 percent during the first seven months of 2023, just 0.2 percentage points higher than the same period in 2019.

Year to date through July, visitor arrivals had recovered to 95.6 percent of the 2019 level, while visitor spending was 21.6 percent higher than the same seven months of 2019.

But since the fires, DBEDT has revised economic growth projections downward from 1.8 percent to 1.1 percent for 2023 and from 2 percent to 1.5 percent for 2024.

Visitor arrivals, which local economists had predicted would help buffer the state in a national recession, are expected to rise on Oahu but decline on Neighbor Islands, especially Maui.

And, unemployment may also climb. Initial unemployment claims jumped from an average of 130 cases per week before the wildfires to 865 cases in the first week after the fires, 4,449 cases in the second week and 2,705 cases in the third week.

“It was sad. The first week after the fire, we had so many job applications,” said Shenkin, who has a staff of about 35.

Shortly after the fires, the gym reverted back to its pandemic-era pricing scheme, deeply discounting access for residents who are now struggling financially. They sold “Love for Lahaina” T-shirts, with all net proceeds going to on-island charities.

While Shenkin’s not sure what the economic impacts will be in the long term, in the short term he’s “worried about what it’s going to be like on Maui before Christmas.” Maui Powerhouse Gym launched an advertising campaign targeting the U.S. and Canada asking people to support Maui businesses. Shenkin said it’s important to make sure businesses stay open and people keep their jobs, which will help the recovery of Lahaina in the long run.

“We need to rebuild Lahaina, right? And to do that I believe we need to stabilize our economy, and the best way to do that in the short term is to make sure people aren’t displaced, that they have their jobs, that we’re not all struggling,” Shenkin said. “It’s really hard to support your neighbor when you can’t support yourself.”

Hansen, who has about 50 staff on Maui, Oahu and Kauai, said he’s been able to retain his 20 workers on Maui and isn’t cutting anybody’s hours, but he worries about the employees at the restaurants Eskimo Candy used to supply. The pandemic was tough, he said, but all businesses were in the same boat and could apply for federal funding. Now, many are losing business with fewer people on island but may not be able to apply for economic relief because they weren’t directly impacted by the fires.

Eskimo Candy’s workers have been able to stay busy with relief efforts — sorting bags of supplies, dropping off donations of ice, paper goods and frozen fish and shrimp. Hansen said vendors have sent pallets of baby back ribs, ground beef and steak that Eskimo Candy has been able to give to the community. He estimated that they spent about $35,000 of their own money buying food, water, diapers, formula and other supplies in the first few days of the fire.

Hansen said he’s not worried about the survival of his business, which has been around for 36 1/2 years. He and his wife grew up on Maui, and their kids graduated from St. Anthony School.

“We’re just trying to do what we can at this point, and we’re not necessarily worried about our bottom line,” Hansen said.

* Managing Editor Colleen Uechi can be reached at cuechi@mauinews.com.

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