Nordic/PCL construction company is building a senior citizens complex in Kahala near the H-1 Freeway. The $100 million project is contributing to a state construction- industry boom that could eclipse the $5 billion mark this year. Construction has been a key force in Hawai'i's economy during the past several years.

Jim Bauckham, project engineer and scheduler with general contractor Nordic/PCL, says the Kahala Nui senior citizens complex his company is building has used 40,000 construction man hours since Feb. 1. Photos by Deborah Booker • The Honolulu Advertiser

Then there are the other 6,800 dirt-hauling trips made from the Kahala Nui senior living construction site to places around the island by truck drivers working for Pineridge Farms, Stone's Towing and other companies.

The $100 million Kahala Nui project is one of the largest construction jobs started this year, boosting an industry that has expanded in the past three years and been a key driver of the local economy.

This year, industry revenue could eclipse the $5 billion mark, possibly getting to within $200 million of the $5.5 billion record set in 1991 during the height of the Japanese investment boom, according to a prediction by Bank of Hawaii chief economist Paul Brewbaker.

Brewbaker in April projected 10 percent industry growth, up from a 6 percent projection made in January, but he said more recent construction permits suggest the increase could be 25 percent.

"I'm seeing some very solid growth," Brewbaker said. "I think this will be the year we sit down and say, 'How good was this?' "

A 25 percent increase in construction revenue would mean $5.34 billion in business, compared with $4.27 billion last year, according to state Tax Department figures.

Not everyone in the industry is quite so bullish, as contracting is known for volatile swings in activity. But generally everyone agrees 2003 should be an exceptional year.

The Council on Revenues, a seven-member economic forecast panel, in March projected 2003 construction industry growth at 8.2 percent, up from a 6.5 percent projection made last August.

Bruce Coppa, an industry advocate who tracks private building permits for more than $50,000 and public contract bid awards, said local construction is on pace for roughly

26 percent growth, though he is concerned there could be construction-cooling interest-rate increases later this year.

Low interest rates and residential construction in recent years have primarily driven the industry, which lately has benefitted from significant nonresidential projects.

Local government work, unlike in previous years, accounted for relatively little — 15 percent or so — of Hawai'i construction last year and isn't expected to change much as weak state and county finances force deferment of improvement projects.

But in the next few years, planned military housing replacement projects are expected to keep the industry healthy even if private home building should be unexpectedly slow.

"That definitely will hold our industry for the future," said Coppa, managing director of Pacific Resource Partnership, an alliance between contractors and Carpenters Union Local 745.

This year it is projects such as Kahala Nui, nearly 1,000 new homes, improvements to about 3,000 homes and commercial building construction leading the industry to one of its best years.

In the first five months of the year on O'ahu, the city issued $166 million in new-home building permits, plus another $101 million in permits to improve homes.

Wal-Mart/Sam's Club took out a $58 million permit last month relating to its Ke'eaumoku project, while Hermes Paris and Louis Vuitton obtained permits valued at $700,000 and $750,000, respectively.

Hotels provided significant construction work, including $12.2 million in permits issued to Hilton for mold repair in Kalia tower. Kyo-ya Co., which owns Sheraton hotels in Waikiki, took out a $3 million permit.

Also in the first five months of this year, the University of Hawai'i received a $2.2 million permit for work on Hale Aloha cafeteria on the Manoa campus, and $29.5 million in permits for medical school complex construction in Kaka'ako.

Other sizable permits included $1 million for work at Iolani School, $23 million for work on a Honolulu Advertiser printing plant in Kapolei, $3 million for work on a new Tesoro Hawai'i administration building at Campbell Industrial Park and $1 million in construction for Paradise Beverages.

To handle new projects, the industry work force has grown by about 2,000 jobs, to 27,400 jobs in May, up from 25,350 in May 2002. The May construction job count is up 1,100 jobs from 26,300 in January.

All the work has created a tight supply of trained laborers, especially on the Neighbor Islands, where the value of residential building permits has exceeded those issued on O'ahu since 1998.

"We probably will all see a shortage of labor here over the next two or three years," said Ralph Valentino, president of Hawaii Pacific Steel Framing Alliance Inc.

At Kahala Nui, James Bauckham, project engineer and scheduler with general contractor Nordic/PCL, said he has had some trouble finding masons.

In anticipation of coming labor demand, the carpenters' union, the largest of the state's 18 building trade unions, is planning a TV and radio advertising campaign to attract more apprentices.

Ron Taketa, union financial secretary, said the campaign also will try to bring back journeyman who left the industry during slow economic times in the 1990s.

"The demand for skilled people will come at such a steep rate, we'll have to bring back people with experience," he said. "Our bench is pretty low right now."

Although there have been roughly 5,600 carpenters' union members for the last three years or so, including 800 to 900 apprentices in a 4-year work/study program, there have at times been a large percentage of members unemployed or working few hours.

Recently, more and more members have had plenty of work, and Taketa predicts lots of jobs to go around for at least the next two or three years because of the upcoming military contracts and other large projects, such as Waikiki apartment high-rise Lanikea and the luxury condo tower Hokua in Kaka'ako.

"For a long time our industry has gotten the knock: 'If you want a steady paycheck, construction is not the place to be,' " he said.

Richard Antonio, a crane operator on the Kahala Nui project, said he has been fortunate to have had steady employment over the past 41 years in the industry, part of which he's spent on the Mainland.

"It's pretty good to me," he said, adding that he typically spends a week to a month between jobs. At Kahala Nui, he's been working since March and the crane won't come down until February, providing 11 straight months of work.

Amina, the truck driver, said the Kahala project, which for him involves removing earth for a three story-underground parking structure that will be covered by a soccer field for Star of the Sea Schools, has been his busiest job since mid-2002. "Now I can build up my savings," he said.

Bauckham, Nordic/PCL's scheduler for Kahala Nui, said the job, which broke ground Feb. 1, has used 40,000 construction manhours to date. On a typical day, about 100 construction workers are on site, and that will increase to 250 to 300 at peak building periods. Most of the project will be complete in November 2004.

"We've seen that we're on the upward part of the (construction) cycle, and we may be on the upward part of this cycle for awhile yet," said John Mapes, economic research branch chief at the state Department of Business, Economic Development & Tourism. "It appears we're still going up."