2008: Unforgettable

It was, at best, two steps forward and two steps back for the Charleston economy in 2008, an eventful, tumultuous and unforgettable year by any measure.

Gasoline prices, which shattered the $4-a-gallon ceiling at midyear and put a serious crimp on the expense side of the accounting ledger for employers and consumer alike, finally relented and returned to more palatable levels. The long-awaited expansion of the Port of Charleston finally got under way on the old Navy base. And South Carolina continued to add to its population at an above-average clip.

But any strides the economy made over the past 12 months were offset by a gut-wrenching onslaught of twists and turns. At the national level, a long-suspected recession was officially declared, and the stock market tanked, wiping out trillions of dollars in personal net worth.

"It's not a very pretty sight," said Frank Hefner, an economics professor at the College of Charleston.

Double-digit sales declines in the region's residential real estate market were the norm in '08, a trend that affected everything from retail sales to construction employment.

The housing woes, both locally and nationally, collided with the financial sector, which sustained a staggering body blow as the fallout from the subprime mortgage crisis spread to every nook and cranny of the industry. The strain was enough to nearly take down, over the course of a single historic weekend, Wachovia Corp., the Charleston area's largest bank owner by deposit share.

Not surprisingly, amid all this turmoil, unemployment climbed in South Carolina. The jobless rate soared to a 25-year high of 8.4 percent by the time November rolled around, as builders retrenched, retailers closed and manufacturers shed payrolls.

And if that weren't enough to absorb, the Port of Charleston's biggest customer, Maersk Line, announced it would pull up stakes and ship out for good, forcing a last-minute scramble to retain the company's business.

"We're not used to having all these things happening at one time," Hefner said, who predicts the road ahead will remain bumpy at best and that businesses will be forced to rethink how they operate.

"All rules are off," Hefner said of the current recession. "You can't call this an average anything. This doesn't look like anything we've seen before. This climate is a completely new animal in economics."

But 2008 also offered up its share of bright spots, as shown by a look back at the good, the bad and the ugly in business of the past year.

Real estate realities

The Charleston real estate market started out the year with some hope and a hard hat, as the Charleston Metro Chamber of Commerce predicted a turnaround in home sales by midyear.

But the industry spirits sank after a steady battering of dismal monthly home sale reports and a string of bad economic news, which tightened lending standards and, in turn, damaged consumer confidence.

And nearing the year's end, home sales are off roughly 27 percent compared with 2007.

Prices also began to slip. As of mid-December, the median home price weighed in at $203,815, down from $209,742 the year before and $206,705 in 2006, according to the Charleston Trident Association of Realtors.

"It was definitely a strenuous year," said Wil Riley, president of the association. "It took a lot of planning and a lot of getting back to basics."

The woes in the residential market spilled over into the commercial side, boosting vacancy rates in the office and industrial sectors as builders, developers, lawyers and other businesses that rely on a robust real estate industry either scaled back their space needs or closed shop completely.

Banks also suffered as demand for mortgages and development loans went south. That much was abundantly evident in their quarterly earnings reports.

Shop drop

The only "up" for beleaguered retailers this past year came in the form of "upheaval."

From sky-high fuel prices and ghost town-like car lots to bankrupt merchants and not-so-cheery holiday sales, the industry suffered mightily through the financial angst of the past year.

Pummeled by gas prices over the summer, motorists cut out unnecessary shopping trips. By the time fuel prices started to tick down, the housing bubble burst, causing Americans to slam the brakes on spending.

As a result, garden shops withered away, boat sales sank and auto buyers vanished. Well-known national merchants — Circuit City, Linens 'n' Things, KB Toys and Tweeter, just to name a few with local stores — sought bankruptcy protection or elected to go out of business all together.

The new year could see a further shakeout as merchants who didn't earn enough through the holidays alter sales strategies or falter altogether. The only upbeat news to fuel good cheer came from falling gas prices, now at rates not seen in nearly five years.

Troubled waters

There was more unrest on the waterfront in 2008, as the Port of Charleston continued to feel the pinch from the global economic downturn and declining container volume. Despite that, the State Ports Authority is steaming ahead with expansion plans, even as its biggest customer said it will move its business elsewhere.

The SPA reported container volume drops of nearly 10 percent for the fiscal year that ended June 30 and 4 percent for the first five months of the current fiscal year.

But the agency continues to move ahead on its expansion with a new container terminal at the former Navy base in North Charleston and a joint terminal with the Georgia Ports Authority in Jasper County.

But a major new wrinkle surfaced on the waterfront just as the curtain was dropping on 2008.

Blaming the International Longshoremen's Association for not allowing a cost-saving move that would cut dozens of union jobs, Maersk Line announced this month that it would depart the Port of Charleston by the end of its contract in late 2010.

Maersk, which is the world's largest shipping line and the local port's biggest customer, has said it plans to pull out one-quarter of its business in the first months of the new year. The Danish company accounts for 20 percent of the port's container volume. It is now in talks with the ILA, the SPA and state legislators to try to remedy the situation.

Inhospitable year

The region's massive tourism and hospitality sector has normally weathered past economic downdrafts without sustaining too much damage. But the industry took its lumps in 2008 as travelers shellshocked by soaring bills for everything from fuel to food counted their pennies more closely.

Month-to-month traffic at museums, historic homes and other attractions slumped by tens of thousands of visitors compared with last year. Hotel occupancy also skidded, hitting a low in September, when hurricane threats loomed and gas prices in Charleston's drive-in market soared. The area saw 13 percent fewer bookings that month alone when compared with September 2007.

Make or break?

The local manufacturing scene began to show some serious signs of wear and tear as the economy weakened. Protected Vehicles Inc. and American LaFrance each sought bankruptcy protection, with the former eventually being bought out by the owner of the latter. Gates Corp. and Leggett & Platt were among companies that decided to mothball their local plants. The deep-seated troubles in the Detroit sector spread to Robert Bosch Corp.'s auto parts plant in Dorchester County, where all 2,100 workers were offered voluntary buyouts this month.

And it was an eight-week strike at Boeing Co. that has put hundreds out of work. The walkout, coupled with production glitches, forced a temporary ongoing shutdown at Vought Aircraft's North Charleston plant, which makes fuselage sections for Boeing's new but problem-riddled 787.

The highlight, and likely the biggest local business transaction of the year in terms of dollars, was the $472 million sale of MeadWestvaco's North Charleston paper mill to KapStone Paper and Packaging Corp. A KapStone executive, commenting on the plant's first quarter under its new owner, said in November that things were "off to a great start."

Bedtime

The region's health care industry, having carefully diagnosed the rapid residential growth of past years in the local suburbs, prescribed a collective remedy in 2008: Add more hospital beds.

One of the health care hot spots is Mount Pleasant, where East Cooper Regional Medical Center and Roper St. Francis Healthcare will be vying for patients and physician services once they open new hospitals within the next two years. Tenet Corp.-owned East Cooper Regional is replacing its existing facility near U.S. Highway 17 and Bowman Road with a $153 million, 140-bed hospital near its existing campus. Meanwhile, Roper St. Francis started work on an 85-bed, full-service hospital farther north that's estimated to cost $143 million.

Another up-and-coming medical-services mecca is Berkeley County. In September, expansion-minded Roper St. Francis announced plans for a 50-bed hospital in Goose Creek's fast-growing Carnes Crossroads area. Its announcement came on the heels of that of rival medical-care provider Trident Health System, which just weeks earlier filed paperwork for a $115 million, 50-bed hospital in Moncks Corner.

Power plays

The normally staid electric utility business was jolted by controversy as the region's two power suppliers sought to crank up capacity in far-flung parts of the state.

Moncks Corner-based Santee Cooper's plans to build a coal-fired plant in Florence County stirred up a raucous debate in the Pee Dee over the emissions the generator would pour into the air.

Meanwhile, in Fairfield County, controversy also dogged South Carolina Electric & Gas as it led the charge to expand the V.C. Summer Nuclear Station it co-owns in Jenkinsville with state-run Santee Cooper. Opponents argued that the costs are uncertain and the final reactor design has not been approved.

In both instances, the utilities said they need to build more generating capacity to meet demand.

Up in the air

Charleston International Airport didn't get the sharp boost in traffic in 2008 that it saw the previous year, when discount carrier AirTran's made its local debut. But the numbers seemed to hold up, with nearly 2.2 million arrivals and departures passing through the concourses between January and November 2008. That's roughly on par with 2007's figures.

The airport was not immune to the icy finger of the economy, which chilled at least one important capital improvement project: the planned extension next year of the shorter of the two runways. Officials decided to withdraw a request for federal money for the project, citing the lack of state matching funds.

The hope now is that the longer runway can be lengthened when it is scheduled to be closed for maintenance in 2013. Proponents say extended takeoff and landing strips would make the region more attractive to the aerospace industry and international air service.

Few recruits

The slowing economy took a toll on efforts to recruit new industry and jobs to the region.

The Charleston area landed only four competitive expansion projects valued at a collective $71.8 million dollars and the potential to bring 371 jobs. That tally pales compared to the much-celebrated previous year, which boasted record investment at $1.2 billion and 958 jobs.

It was a year that was "very different than what we were used to in the past,' said Jim Bryan, chairman of the Charleston Regional Development Alliance, which markets the area to new and expanding businesses.

Weakened consumer demand hurt manufacturing, Bryan said. As lending became more scarce, some companies found it trickier to finance expansions.

David Ginn, the alliance's chief executive officer, said one company that put its Charleston project on hold compared it to having a can of paint hit the windshield of a fast-moving vehicle.

"It didn't kill the project, but it forced the management team to re-evaluate the project timing amidst some of the challenges," Ginn said. "It doesn't mean you pull over and never drive again."

The highlights

January

--Delfin USA pays $20 million for a vacant industrial site in North Charleston, and later in the year it says it will spend $55 millions and create 160 jobs at the former Shell Oil Products terminal.

--With more than $200 million in debt, Summerville vehicle maker American LaFrance files for bankruptcy protection, saying its troubles mounted in 2007, when it severed ties with former owner Freightliner.

--Atlanta real estate developer and part-time Charleston resident John K. Dewberry pays $15 million for the L. Mendel Rivers Federal Building on Meeting St. No plans have been announced.

February

--Two months after ceasing operations, armored-truck maker Protected Vehicles Inc. seeks bankruptcy protection. Its assets would be sold for $6 million in September later to Patriarch Partners, which owns Summerville-based American LaFrance.

--The Medical University of South Carolina opens its new Ashley River Tower, where patients can be treated for cardiovascular and digestive diseases.

March

--MeadWestvaco unveils a draft master plan for its East Edisto property that calls for developing about one-quarter of the site, or 18,000 acres. The paper company says about 75 percent of the 72,000-acre tract west of Charleston would remain as open space.

--Boeing Co. buys a 50 percent stake in one of its North Charleston vendors, Global Aeronautica, in an effort "to overcome supply-chain challenges" of the delayed 787 jet program.

April

--The InterTech Group Inc.'s billionaire CEO Jerry Zucker dies after battling brain cancer.

--Montgomery, Ala.-based Raycom Media buys WCSC-Channel 5, a CBS affiliate and the longtime top-rated local news station, along with stations in North Carolina and Virginia for $583 million.

--The largest residential real estate firm in the Charleston area changes its name to Carolina One Real Estate from Prudential Carolina Real Estate.

June

--Former Charleston Southern University economist Al Parish is sentenced to 24 years in prison. He had previously pleaded guilty to an estimated $66 million investment fraud.

--Gates Corp., a maker of timing belts for the auto industry, says it will shutter its 200-worker Moncks Corner plant and move production to other North American factories.

July

--Gasoline prices crack the $4 a gallon mark in Charleston.

--South Carolina and Georgia together pay $7.6 million for more than 1,500 acres that is the site of a future bi-state container port in Jasper County.

--The InterTech Group Inc. sells Hudson's Bay Co, Canada's largest department store chain.

--American LaFrance LLC says it will shift its firetruck-making business out of its Summerville plant and transfer it to factories in Ephrata, Pa., and Hamburg, N.Y.

August

--The federal government shuts down and seizes Port Trust Federal Credit Union. Its assets were then sold to CPM Federal Credit Union.

--Technology icon Apple Inc. opens its first South Carolina retail location at 301 King St.

--Boeing Co. supplier Vought Aircraft stops making rear fuselage sections for Boeing's 787 as it adjusts to the delayed launch of the new jet.

September

--Mack Whittle, one of South Carolina's most influential bankers, says he will retire, punctuating a tumultuous year for the company he built. He had been chairman, president and chief executive officer of The South Financial Group Inc., which owns Carolina First.

--The Naval Facilities Engineering Command, a mostly civilian military unit that oversees Pentagon construction projects, completes its move from North Charleston to Jacksonville, Fla.

--The $400 million Hard Rock Park in Myrtle Beach closes and files for bankruptcy protection, just months after making its debut. A buyer is being sought.

--Terry Gunn, CEO of Trident Health Systems, resigns, citing an unspecified career change. His replacement is James R. Thomas.

--East Cooper Regional Medical Center names Janie Sinacore-Jaberg as CEO effective Oct. 15 to replace Andrea Wozniak.

--Charleston native Sallie Krawcheck, once considered a candidate for the top job at Citigroup Inc., resigned as head of the bank's wealth management division.

--High-end accessories retailer Louis Vuitton opens its first South Carolina store in Charleston Place.

October

--Real estate developer Guy E. Beatty Jr. donates $60 million to the College of Charleston, the largest single gift ever given to a public South Carolina higher education institution. The college will receive $2 million a year for 30 years.

--To preserve jobs, the Medical University of South Carolina says it is slashing costs by instituting a hiring freeze, cutting overtime and using less paper and electricity.

--Internet search titan Google Inc. marks the completion of the first phase of its $600 million data center it is building near Goose Creek.

--MeadWestvaco Corp. announces the $40 million purchase of the Parks of Berkeley, a 4,500-acre tract that is approved for more than 13,000 homes near Carnes Crossroads.

November

--Dubai-based Economic Zones World unveils details of a $600 million master plan that would turn a rural Santee sod farm into an industrial hub with more than 4 million square feet of warehouse space. Work is set to begin in late 2009.

--East Cooper Regional Medical Center makes sweeping changes in its executive suite, saying it's time to bring in new leadership as the hospital enters a new era.

--A jury awards James Island real estate investor Richard C. Davis $4 million in a breach of contract dispute with cable network A&E Television. Davis had argued that he and the network had an oral agreement to split the profits from the reality television show "Flip This House."

--James Hardie Industries NV says it is shutting down a 68-worker Summerville plant that makes siding out of cement fibers for homes and commercial buildings for an indefinite period as a result of the slowing construction market.

--Vought Aircraft inks a three-year contract with unionized employees in North Charleston. Some of the workers complained they never got a chance to see the contract before it was ratified.

--Vandals squeezed glue into the front door keyholes of 70 downtown Charleston stores ahead of "Black Friday," one of the busiest shopping days of the year.

December

--All Port of Charleston workers are required to show a federal Transportation Worker Identification Credential in orer to gain access to the public shipping terminals.

--Local bank owners First Federal Financial Holdings Inc. and Tidelands Bancshares Inc., sell stock to the federal government under the Treasury Department's $700 billion effort to straighten out the nation's financial mess. The sales generate nearly $80 million for the lenders.

--Charles River Laboratories, which uses the blood from horseshoe crabs to help drug makers test the safety of injectable medicines , says it will increase the size of its Charleston operations by 60 employees and invest $20 million over the next five years.

--Armored vehicle maker Force Protection Inc. says its work force has been cut nearly in half to 1,150 workers under a restructuring of its business. The company is retooling its business amid fewer vehicle orders from the U.S. military.

Allyson Bird, John P. McDermott, Katy Stech and Warren Wise of The Post and Courier staff contributed to this report.