Construction Q&A

September, 2004

Top Construction Leaders Share Their Wisdom

We polled five of the most recognized and respected construction industry leaders on topics ranging from the duration of the current upswing to ways the government can help the construction industry of Hawaii. The panel included Gerard Sakamoto, president of S&M Sakamoto Inc., Kathleen Thurston, president of Thurston-Pacific, Bruce Coppa, executive director of The Pacific Resource Partnership, Glen Kaneshige, president of Nordic Construction and Bill Wilson, president of Hawaiian Dredging Construction Co. Here’s what’s going on inside their helmeted heads.

How far along are we in the current construction upswing? And when will it start to slow down?

Kaneshige: I think we’re still at the early stages of the upswing. If I had to put a figure on it, I’d say that we’re somewhere in the first 15 percent to 20 percent of this cycle. We may be looking at a good five- to ten-year run in this boom. But another terrorist attack involving a commercial jetliner could easily send us down a different path from where we think we are heading.

Thurston: We are still at the beginning of the construction upswing. While there are many major projects that have begun or in the process of starting up, I think that the construction engine is moving from second to third gear and we are building toward a busier climate ahead. With the amount of federal dollars that are currently flowing into our state, this cycle should be healthy and last for a good three to seven years.

Coppa: We are about three years into the current upswing, but this current cycle started out slowly. We were dealing with 9/11 and SARS. But local construction has grown by about 4 percent per year since the turn of the century.

Wilson: There continues to be significant demand for construction services in several sectors. Military-related construction, bioscience development, housing and tourism all appear to be in the early stages of construction opportunities. It should continue for the foreseeable future.

What are the biggest obstacles to even faster construction growth?

Sakamoto: There are many. Inflation and rising interest rates, delays in permitting and zoning approvals, labor disputes, escalating prices for materials, shortage of labor, restrictive insurance and bonding requirements, and cutbacks in government spending all slow the industry down.

Thurston: The cost of raw materials and resources has escalated. Steel, copper, PVC pipe and many other products all cost more due to shortages caused by demand in China and other countries, as well as demand here at home in the U.S.

Kaneshige: The inadequacy of our existing infrastructure systems could further slow construction growth. Maui struggles with an adequate supply of potable water while Oahu tries to address traffic issues as well as an overloaded and aging sewer system in dire need of repair. As we saw with the recent concrete worker’s strike, labor disputes are always a potential problem as contracts expire.

Wilson: The availability of experienced staff is the principal constraint.

What can the state and county governments do to help the construction industry?

Sakamoto: Expedite the permitting process. It’s a promise made but still unfulfilled. They could release funds for needed capital-improvement projects: school repair and maintenance, and infrastructure upgrades. They can continue to pass legislation like the recent One Call Center and Construction Repair Act.

Thurston: Continue to work with the General Contractors Association to build communication. It is important to build relationships so that we can work collectively to maintain the industry standards and quality of life that we have here.

Coppa: Make sure that the infrastructure is maintained or put in place.

Wilson: Workforce development efforts could be very helpful. Addressing drug-related issues as identified by the governor and the legislature will be a positive contributor as well.

How can we tackle the labor shortage?

Sakamoto: The construction trades are ramping up their training and apprenticeship programs in a big way. We need to also encourage youngsters in middle and high schools to become interested in construction careers. Steady work with good wages and benefits should help to minimize any labor shortage.

Thurston: Get active in the intermediate and high schools to encourage and motivate our youth to look at getting into the trades, engineering and architecture. It is important to get young people exposed to the benefits of construction. I may sound a little crazy, but watching infrastructure going into the ground, or an excavator moving thousands of yards of earth, or a concrete foundation being poured, is really exciting. I don’t think enough of our kids know that. All trades pay good wages and have excellent fringe-benefit packages.

Coppa: What’s important to remember, especially in a skilled-craft industry, is quality and not quantity. So the best way to tackle any labor shortage is to make sure that the labor force is well trained and up-to-date on the latest technological changes that have come into the industry. A qualified workforce will be more productive.

Kaneshige: I think that the construction industry needs to partner with the Department of Education. I’m sure that a lot of young people were discouraged from pursuing a career in the construction industry through most of the ’90s since the job market was tight here. Today, graduating civil engineers and architects from the University of Hawaii are being recruited aggressively by many of the local companies. A more immediate solution is to attract construction people who had moved away during the ’90s from Las Vegas and the West Coast.

What is different about this boom as opposed to past construction booms?

Sakamoto: The huge federal housing projects that are about to start and last for many years, and increased spending for our military readiness, such as the recently announced Stryker Brigade.

Thurston: I think we’ve learned things from booms in the past that will serve us well this time around.

Coppa: I’m hoping that the work will be more evenly distributed over the years, instead of having a huge peak, followed by a deep decline, like how this previous one was. It looks like the boom will drag on over a longer period of time.

Wilson: Limited hotel construction and more activity on a broader range of economic development driving new construction makes this boom different.

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