Posted on: Sunday, March 28, 2004
Boom times for builders
By Dan Nakaso
Advertiser Staff Writer
The boom is coming back.
Construction workers slowly began returning last week to job sites that had been idled during the 44-day Teamsters strike against Hawaiian Cement, and started revving up an industry that's expected to drive the state's economy for the next several years.
With continued low interest rates and pent-up demand for private and military housing, Hawai'i will enjoy a building boom that hasn't been seen in the Islands since the 1980s, when construction regularly generated $4 billion per year.
"We're definitely on the move," said Bruce Coppa, director of Pacific Resource Partnership, an advocacy group for union contractors. "When the strike first started, we were on the brink of a five- to 10-year boom in construction."
Hawai'i's construction industry generated $3.04 billion last year. Before it can run at the same speed as in the 1980s, the Teamsters will have to settle a separate strike with Ameron Hawaii, the state's biggest concrete producer, now in its eighth week.
Building industry officials hope that will happen soon so they can get back to the business of building homes, highways and high-rises.
"We've lost a lot of work because of the concrete strike — more than a month — and that will be difficult to make up," said Ron Taketa, financial secretary and business representative for the Hawaii Carpenters Union, the Islands largest trade union. "But I think we can finish the year strong."
A humming construction industry means lots of good news for the local economy, said Kenneth Choate, executive vice president of Haseko Construction Inc. For instance, the developers of $2.2 billion worth of new and renovated military home construction projects on O'ahu have pledged to hire primarily local subcontractors and local workers.
"Construction money stays in Hawai'i — it doesn't leave the state," Choate said. "The ripple effect with construction is that the guys who know they'll have work next week, next month, next year are going to buy new cars, a new house, go on interisland trips, maybe even send their kids to another school."
Hawai'i's five largest developers generated $1.25 billion in new homes last year, which will translate into property taxes that will further help government spending, Choate said.
"This boom is going to be tremendous for the city and county and state," he said. "When everybody's working, everybody's paying taxes."
Many building industry officials feared a rise in interest rates early this year would cool the pace of new home construction and remodeling. They hoped the lull would be met just in time by the military home construction projects.
But interest rates are back to near-record lows. Combine that with record home prices and pent-up demand, and Hawai'i is creating a powerful opportunity for the construction industry.
"We hope the combination of the private market and the privatized military work will take our industry to the next level," said Taketa, of the carpenters union.
Economists maintain that the financial losses suffered by developers, contractors and small businesses during the concrete strike probably will be made up over the year.
Even key environmentalists welcome the building boom — provided it's handled properly.
"There's a lot more development we can do in Hawai'i, and a lot more growth," said Mikulina, who has been nominated to the Honolulu Planning Commission. "We just have to do it in the right places. People hear 'Sierra Club' and they think we must be anti-construction. ... But a lot of construction can be energy-efficient and use lots of recycled materials."
Aging plantation communities such as Wahiawa and Waipahu "can use a lot of focused growth and redevelopment," Mikulina said. "Other areas such as downtown and Iwilei that have been really neglected can be redeveloped into attractive growth."
So he's working to ensure that the 1,129-acre Pupukea-Paumalu area that overlooks Sunset Beach and Pipeline remains undeveloped.
But like Mikulina, McElheny believes Hawai'i's construction boom can be good for the Islands if planned properly.
"The majority of the construction will occur in already urbanized areas and ... military installations," McElheny said. "The more that we concentrate growth in existing urbanized areas, it increases the likelihood that rural areas with natural resources will be protected."
Hawai'i's trade unions have stepped up recruiting efforts to meet the expected demand for 7,425 new workers over the next five years. That's the number of new construction jobs projected by Sang-Hyop Lee, a University of Hawai'i assistant professor of economics.
Hawai'i's building boom is supposed to last several years, with the peak coming in two to three years, said Gary Wiseman, president of Associated Builders and Contractors, an association of construction-related companies.
But as O'ahu's concrete strike has shown, unforeseen factors could pop up and derail the industry, Wiseman said.
"There's definitely going to be a boom time," Wiseman said. "But that's assuming nothing bad happens."
Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.
Jeff Mikulina, president of the Sierra Club Hawai'i, likes the idea of a construction industry that can drive the economy, improve deteriorating neighborhoods and still preserve open space.
Blake McElheny, a member of the North Shore Neighborhood Board, would have preferred that a beautiful 19-acre parcel near Velzyland in Sunset Beach had been turned into a park instead of a 29-home subdivision.
