Construction Industry Outlook 2021
The only private industry in Hawai‘i to add jobs in 2020, the construction industry is holding its ground, but not without a new set of challenges.
A year following the COVID-19 pandemic that has impacted much of Hawai‘i’s economy, the construction industry has actually fared well. Designated an essential industry, it’s the only private sector industry that added jobs in 2020.
“Every other industry is declining – it’s declining a lot in tourism – so increasing jobs by 100, it’s a big deal,” says Dr. Eugene Tian, chief economist at the Hawai‘i State Department of Business, Economic Development & Tourism. The only other exception is government, which increased by 200 jobs to help with the 2020 Census.
Other positive news: the construction permit value increased 1.9% in 2020. “Usually it takes a half-year to one year from the time the permit is issued or approved to the start of the construction project,” says Tian. This means projects that received permits last year will start or continue construction into 2021.
There’s also going to be an increase in government construction, according to Tian. “For the fiscal year 2021, the state has budgeted $2.7 billion for state government projects. Part of that is in 2020, but another half year is in 2021.”
This is good news for the industry, considering the ongoing effects of the pandemic on all industries. “We expect that in 2021, the construction industry will be level, or the same, as 2020,” says Tian.
A Message From IBEW Local 1186
Through the pandemic, our federal workers, who work on various military bases to keep the country safe, saw an increase in work and demand. Many of our other members continued to work throughout the pandemic in 2020, as our members were deemed essential. Representing electricians, telecommunication, cable, civil service workers, motor/marine, and some private school teachers, IBEW Local 1186 members worked diligently to ensure that Hawai‘i’s critical communication infrastructure was operational and running smoothly.
Some jobs were shut down or slowed down drastically because of no revenue coming in for the projects, but in comparison to many other industries in our state, IBEW Local 1186 members were, for the most part, fortunate enough to continue working through some of the most challenging periods in Hawai‘i’s history, with just some members being out of work.
As the state slowly continues to open up under new leadership in different parts of the state, there are different issues that may pose to be a challenge throughout 2021. In 2020, shipping materials for job sites to Hawai‘i was not considered priority, some manufacturers were shut down, and even when they opened, flights were reduced and/or grounded. All of the difficulties in getting materials to Hawai‘i resulted in an overall slowdown of finished projects.
As we maneuver through 2021, we are hopeful and optimistic that herd immunity as a result of the COVID vaccines, help to slow down the new cases and spread of coronavirus throughout Hawai‘i. That, in addition to slow regrowth of our economy, will hopefully bring some normalcy back to the Islands.
While the industry as a whole has held steady during the pandemic, it doesn’t mean its many businesses haven’t incurred additional costs or delays. The past year, it’s had to address challenges and shift its operations, much like other industries, in order to fulfill its commitments to clients.
“The pandemic has definitely had far-reaching impacts on the construction industry,” says Gerry Majkut, president of Hawaiian Dredging. “This has taken place in how we do our work, as we needed to immediately implement the CDC and local guidelines. Construction was listed as essential, which enabled construction projects to continue. At Hawaiian Dredging, we responded quickly by developing a COVID-19 task force and working together to put a plan in place, and continuing to develop and monitor the plan.”
Shutdowns and travel bans have also had a widespread effect on the industry, which has caused commuting between Islands or out of state to take more time and preparation. It’s also taken longer to ship and receive supplies needed for construction.
“Two things that are challenging the construction industry right now – first, being the economy and second, getting materials here to Hawai‘i,” says Damien Kim, IBEW Local 1186 business manager and financial secretary. The IBEW Local 1186 represents electricians, telecommunication, cable, civil service workers, motor/ marine, and private school teachers. “Manufacturers were either closed for a while or with reduced staffing, flights were reduced or grounded, and shipping of essential products such as PPE and food took priority over anything else. That resulted in construction slowing down and thus creating a reduced workforce with a longer finish time.”
For SITECH Hawai‘i, a provider of construction technology solutions, travel bans have made it more challenging to reach clients. “Just like a lot of companies, we have taken precautions and a lot of preventative measures,” says the SITECH Team. “A handful of things that have caused strain during the pandemic that’s unique to us is that, since our territory covers a huge portion of the Pacific Ocean and our customers are based on different Islands, the only way to reach those customers is through air travel, which demanded more than the usual planning and coordinating with our customers.” Due to manufacturers operating at a lower capacity, fulfilling orders has also been a struggle for them, which in turn affects clients’ businesses.
A Message From SITECH
SITECH, the leader in construction technology solutions, delivers an outstanding portfolio of easy-to-use and reliable construction technology systems. From the Trimble® Site Positioning System to real-time equipment management software, we provide comprehensive technology solutions for heavy civil construction customers throughout Hawai‘i and the Pacific Region.
Our experienced team of technology experts can help you stay competitive in a business environment where you need both high productivity and a high return on your investment. With our unparalleled support, technical expertise, and proven experience, SITECH Hawai‘i can help you increase productivity and maximize returns through advanced worksite solutions.
Additionally, the pandemic created unique impacts to transportation construction and planning. With the shutdown and as more employers choose the work-from-home model, the lack of commuter traffic has changed the way transportation planners operate. It’s accelerated roadway construction, but it has also fixed some traffic problems.
“By some estimates, current traffic reductions have improved our roadways to a degree equivalent to adding more than one lane of travel through the most congested corridors such as the H-1 through Waipahu-Pearl City, from pre- COVID conditions.” says Matt Nakamoto, vice president and chief transportation engineer of Austin, Tsutsumi & Associates, Inc.
“There will also be impacts to the rail system,” adds Terrance Arashiro, president of Austin, Tsutsumi & Associates, Inc. “Given work-from-home trends, ridership in a few years may be interesting to observe, and HART is probably revising their estimates as we speak. Rail is still a critical component to O‘ahu’s smart-growth, but its current and future funding are still an issue. Overall, the state and counties have rallied to keep projects progressing, especially those that have participating federal funds attached to it.”
A Message From Austin, Tsutsumi & Associates, Inc.
Established in 1934, Austin, Tsutsumi & Associates, Inc. is an early pioneer of the engineering industry, and is recognized by Hawaii Business Magazine as a Best Place to Work and a Top 250 Company in the State. ATA’s primary business is consulting in the areas of civil engineering, environmental engineering and land surveying, and has the largest local traffic engineering group in Hawai‘i. “As a kama‘āina company, we have deep roots in the Islands and have worked tremendously hard to be a thoughtful and trustworthy partner,” says Terrance Arashiro, president.
“2020 was a tough year for all and the struggle has given us a deeper resolve to lift and strengthen our communities and industry. Relationships have been a touchstone of our practice throughout the years, and we will continue.” ATA looks forward to serving Hawai‘i in 2021 as we collectively recover.
In the wake of the current health crisis, the construction industry has been able to use the time to catch up on some of its renovation and road repair work, and it has made some strides in the area of innovation.
“Some state and county departments are embracing innovation and looking to harnessing technology to improve their facilities, becoming a revenue driver versus a gatekeeper,” says Arashiro. “Having government develop, rather than just maintain infrastructure, will help private industry and boost the economy, increase the tax base and potentially lower the cost of housing, transportation and education.”
At SITECH Hawai‘i, its team has created a new initiative to help construction projects that may be struggling. “This year, our team has stepped up and taken initiative on more classes to better turn around equipment that was turned in for repair,” says the SITECH Team. “We have signed up for drone classes, model building, SPS repairs, and Mesh networking diagnostics to better support what we are selling. We have hired new personnel to expand our support effort in hopes of reaching as many as possible.”
A Message From Hawaiian Dredging Construction Company, Inc.
With a legacy dating back to 1902, Hawaiian Dredging Construction Company, Inc. (Hawaiian Dredging) has played an integral role in building the face of Hawai‘i. Our beginnings include dredging Pearl Harbor’s main channel and, subsequently, constructing the Ala Wai Canal to enable the development of world renowned Waikīkī.
Today, we are the most diversified and largest general contractor in Hawai‘i with over 800 employees and annual revenues well exceeding $500M. Our experience and resources accumulated over the years are reflected through our company’s five divisions – Building, Commercial, Heavy (Civil), Waterfront & Foundation, and Power & Industrial, spanning the gamut of major construction in Hawai‘i. With a portfolio that includes many of Hawai‘i’s most iconic buildings and infrastructure projects, Hawaiian Dredging performs across the spectrum of hospitality, retail/entertainment, commercial, residential, healthcare, educational, and infrastructure projects.
The industry has made some steps in a positive direction while increasing jobs during a challenging time, but all eyes are still on the pandemic in determining what the future may hold.
“The future economy as we go into the post COVID-19 period will be key to our industry,” says Majkut. “The current stimulus packages address a lot of immediate needs, so it will be important to have a strong recovery. The continued development of the future workforce in construction is very important. We always need to be looking towards the future.