The Troika

What is in store for Hawaii’s construction industry? Below are excerpts from a conversation with three leading executives

June, 2003

Gerry Majkut:
general manager, Dick Pacific Construction Co. Ltd.
Robert Griffith
president, Maryl Pacific Construction
Russell Young
president and CFO, Albert C. Kobayashi Construction

 

How does your pipeline look for 2003?

Majkut: Dick Pacific started 2003 with its strongest backlog in the past several years. We were able to secure our key targeted projects last year, including several of Hawaii’s highest profile projects, such as Wal-Mart/Sam’s Club Keeaumoku and The Honolulu Advertiser printing facility in Kapolei, among others. Additionally, we have a variety of work in Hawaii with the U.S. military, including the Wheeler Army Airfield Aviation Complex and the Kaneohe Bay Marine Corps Base Hawaii bachelor enlisted quarters and post office.

Griffith: Our backlog going into 2003 is less than the prior year, but in spite of that, we see several opportunities on the horizon that should make for a good year.

Young: We are presently very fortunate to have a good backlog of work. Most of our jobs are school projects. Besides doing work at Kamehameha Schools, Punahou School, Mid-Pacific Institute and Kapolei High School, we also have residential work on Oahu and Maui.

What was different about construction in Hawaii during 2002, compared to past years?

Majkut: 2002 started with a lot of uncertainty within the business climate, and this weak economy translated into little new construction. However, we are finding a lot of work in the areas of military and hospitality; for example, we recently completed the Ko Olina Beach Club, a new time-share property for Marriott Vacation Club International.

Griffith: The residential sector of the business is stronger than in years past. This includes the multifamily market. The time-share market is becoming a significant factor. The federal market has also been stronger, again particularly the residential component in the area of military housing.

Young: Due to the low interest rates, construction in 2002 has been mainly focused on the residential market. The home interest rates have not been this low in a long time. This means a lot of new homes are being built as well as older homes being renovated.

What are the biggest problems you see facing the industry right now?

Majkut: One of the biggest problems facing our industry today is to develop a program to attract people into the industry. With the technology markets being so attractive a few years ago, we lost a lot of the people in the basic industries.

Griffith: Bonding is harder to come by, especially for the more marginal contractors, and insurance premiums are way up. Also, high-limits coverage for some areas of the business, such as coverage attached to multifamily units is essentially not available to contractors at this time.

Young: Due to the low interest rates, construction in 2002 has been focused on the residential market. The home-interest rates have never been this low in a long time. This has caused a lot of new homes being built as well as homes being renovated.

If you could wish for five things to help your industry in the coming year, what would they be?

Majkut:

  • A strong growing economy
  • Incentives for building new facilities and renovations
  • A government that would be geared for new construction projects
  • An increase in the amount of skilled people entering into the industry
  • Technology changes that increase efficiencies

Griffith:

  • The ability for all contractors to make better profits on their work
  • Finding a solution to the high insurance premiums and restrictive coverage problem
  • The start of an industrywide program to attract young people to the industry, particularly in the building trades
  • A continuation of the strong residential market
  • Getting the revitalization of Waikiki and other run-down resort properties under way

Young:

  • The five things that would help our industry the most would all relate to improving the economy.

How has technology impacted your business?

Majkut: The way we communicate at Dick Pacific is rapidly changing with the use of the information technology systems that are now available. We can communicate with our clients, architects, designers and consultants in real time, online. For example, we are using an application called Constructware. All project participants, wherever they may be, can go to a password-protected Web site and review construction schedules and progress. This increased efficiency in communication allows us to provide our clients and associates with a system that greatly enhances the flexibility and success of the project. We continually look at ways to improve all of our processes. There have been a lot of improvements in the safety devices available in our industries that are now providing a safer workplace for our workers.

Griffith: We are utilizing various computer programs and Web-based systems for estimating, accounting and project controls, which weren’t available even a couple of years ago. We are also taking advantage of today’s communications opportunities, including cellular communications and high-speed computer links to our jobsites.

Young: Our business relies on the computer with the Internet and e-mail system as a means of documentation and communication.

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