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Hawaii Business Construction Industry Outlook 2011

Upswing in Sight? A “wait-and-see” year can mean tough times may linger or the corner may be turned for the construction industry

Hawaii Business Construction Industry Outlook 2011

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Pacific Pump & Power
Paul Leonard, general manager

How we see it:

We see a lot of city and military projects going out to bid for infrastructure upgrades: the new rail, millions in sewer upgrades and new construction. This makes possible more homes and businesses and therefore more jobs and investment into the state. In 2011, we will run a state-certified pump training course at statewide training centers, even if we are not involved in the benefiting projects. Our new building on our Campbell industrial site will help improve customer service and maintain our rental fleet. We plan to build on our inventory of over 100 pumps, trained personnel and supplemental equipment.

Bays Deaver Lung Rose & Holma
Harvey J. Lung, partner

How we see it:

Based on our clients’ activities, 2011 will see slight to modest growth. Bidding for and getting jobs will remain highly competitive, with relatively lean profit margins. It will be especially important to minimize construction risks to ensure a project’s profits are not lost. A major risk will be construction defect exposure, together with continued uncertainty for construction participants to obtain appropriate insurance coverage. As experts in construction law and litigation, we intend to monitor developments in the insurance industry and at the legislature to see how the industry deals with this uncertainty.

Honsador LLC
Wayne K. Lincoln, senior vice president, sales and marketing

How we see it:

The general trend we see is a flat line off 2010’s performance. Military housing will dominate Oahu’s residential construction. Neighbor Islands’ high end residential will be at a reduced level. Hotels and commercial buildings? There must be a shortage of climbing cranes because they sure aren’t visible. New state and county leadership on Maui and Oahu will stimulate repair and maintenance projects. Military spending on barracks, administrative buildings, etc. will enjoy some good activity. As Hawaii’s largest provider of building materials, we’ve added window, door, cabinetry and other millwork capabilities to complement our lumber and wood products for residential and commercial customers.

Herbert Chock & Associates
Herbert Chock, president

How we see it:

From our perspective, construction revenue in Hawaii will consist largely of government-funded projects, including capital improvements, maintenance of roads and streets, and other infrastructure (sewer, water and other essentials) and rail design and construction. The military’s construction program, both locally and in Guam, will also be a significant contributor to Hawaii’s construction industry. As full-service construction and engineering consultants based in Hawaii since 1974, we plan to continue to provide consulting and construction management services to the industry in Hawaii, Guam and the Philippines.

Hoku Corporation
Jerrod Schreck, chief strategy officer, Hoku Corporation

How we see it:

We anticipate continued growth in the commercial solar installation sector, with lowered costs, extension of federal grants, and improving solar project financing. The Hawaii Feed-in Tariff is expected to have an incrementally positive effect over time. Construction is expected to start on several multi-megawatt solar projects. Hoku Solar’s new design services and project development offering can help customers maximize a PV system investment. It provides visibility, transparency and multiple decision points for them during the entire process. Large land and property owners, who don’t know exactly how or when to take the first step, will find this solution appealing.

Pasha Hawaii
Reggie Maldonado, general manager

How we see it:

We have seen many large customers primarily focused on bidding for state and federally funded projects, such as wind power construction initiatives. Our smaller contractors are enjoying a significant increase in home remodeling, landscaping and repair jobs due to the improving real estate market and condo construction industry. The Honolulu rail project presents a major construction project and will hopefully kick-start Hawaii’s construction economy overall. In the first quarter of 2011, Pasha is introducing all types of scheduled inter-island shipping services featuring the M/V Jean Anne’s fully enclosed Roll-On/Roll-Off service that is used on the Mainland/Hawaii trade lane. 

Kiewit Building Group
Lance Wilhelm, Senior VP

How we see it:

We are less pessimistic than in 2009 and expect flat and slight uptick in construction activity. Company balance sheets are improving, but more robust job growth would help. The challenge is when capital investing will start to make sense and developers gain an appetite to do projects they are sure are viable. Hawaii is unique. With only so much land, some developers may go ahead, especially with current good interest rates, before the market rises if they have access to capital. We see developers looking to creative ways to raise capital through private equity, Mainland sources and trust funds.

Watts Constructors
Denny Watts,CEO

How we see it:

We see brightening in 2011. But understand that the industry is in a deep hole. Reasonably strong federal projects and reasonable value in local government projects will continue, but significant private sector activity is still a couple of years away. Competition remains ferocious, pricing for work is depressed, and tremendous pressure on profits continues. With Japanese partners, we are broadening our market over the next five years in Singapore, Indonesia and Thailand. As a construction company, we are hoping to change the game with technologies in renewable energy to save costs through distribution.

 

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