Hawaii’s unionized carpenters are going after the booming single-family home market in a big way.
Hawaii’s union carpenters are using old-fashioned economics to position themselves for a bigger piece of a booming market. They’ve taken a direct hit on their wallets—a 30 percent cut in wages—to be more competitive for jobs in the fast-growing single-family home construction market.
The program is being run through the Pacific Resource Partnership. Here’s how it works: A journeyman carpenter working on a single-family home with a unionized contractor will now earn $30.60 an hour in wages and benefits, instead of the regular union rate of $44 an hour.
In January, the Pacific Resource Partnership, an organization that represents the private sector and Hawaii’s unionized carpenters, plans to roll out the program. At press time the key partner in this program was City Bank and the key benefit to consumers was that if they use unionized carpenters to build a single-family home, they will get a lower interest rate on their construction loan or a rebate of up to $3,000.
“We’re going to take out a pretty aggressive marketing campaign along that line because when you’ve only got 2 to 4 percent (of the single-family residential construction market), you’ve got to market yourself,” says Pacific Resource Partnership Executive Director Bruce Coppa.
Coppa values the state’s single-family residential construction market at between $400 million to $600 million a year. It is a market union carpenters, because of their generally higher wages, have been watching from the outside. For example, Coppa says union carpenters have less than 1 percent of that market on the Big Island, which was valued at $176 million in 1999.
Adds Coppa: “The reason to do this is that public construction, where unions have always been very strong, is slowing down.”
Jason Takei, City Bank’s senior vice president for mortgage banking, says the target market is strong. “Although we’re relatively smaller than the other large banks, our market share of residential lending is in the top three and we’ve been able to do that because we have innovative programs. As far as the construction market for this year, that has represented about 20 to 30 percent of our market and it has been particularly strong on the neighbor islands,” says Takei. He notes that City Bank is currently lending between $2 million and $4 million a month for single-family residential construction.
Other features of the Pacific Resource Partnership program (in the planning stages as of press time) include: a revamped Web site at www.prp-hawaii.com where consumers will be able to get a quote using an approved union contractor; television advertising reminding the consumer that union contractors build custom homes; participating contractors will get a preferred rate on the bond they must secure when bidding on work; and, a preferred materials rate for participating contractors.
City Construction President David Asato says he thinks the program will help the public realize the quality and service union contractors offer, as well as boost his bottom line. Asato says single-family residential construction is now about 80 percent of his company’s business. City Construction’s gross sales for 2000 were expected to be $5 million and Asato is projecting sales of $7 million this year. The increase, Asato believes, will be due to the Pacific Resource Partnership program.
“They’ve come out with some pretty revolutionary ideas that will benefit everybody. The bank loan proposal is unbelievable,” says Asato.
I think what we’ve identified at Pacific Resource Partnership is there’s an opportunity and if we don’t cash in on it, we could be left out in the cold,” says Coppa.