Call it the price of paradise, or perhaps the price of security, but in Hawai'i, just about everything costs more than it does on the Mainland.

That economic reality — one that residents, businesses and government encounter every day — nearly became a justification for recommending the closure of the state's largest industrial employer, Pearl Harbor Naval Shipyard, last week.

The shipyard dodged that bullet after a nine-member federal commission came up two votes shy of adding Pearl to a Pentagon list of military installations to be considered for closure. If the shipyard were to close, it would deliver a $1.3 billion blow to Hawai'i's $50 billion-a-year economy.

The Pearl shipyard was criticized for being less efficient — which essentially means having higher costs and longer repair times — than the Portsmouth Naval Shipyard in Maine. The Portsmouth shipyard remained on the list for possible closure after last week's vote.

Fortunately for Pearl shipyard workers, the strategic importance of having a full-service naval repair and maintenance base in the middle of the Pacific outweighed the higher operating costs.

But substandard efficiency, which has been a criticism of the shipyard in the past, remains an issue for Pearl and can be expected to surface again in future base-closure initiatives.

"If the strategic location is obvious, then that seemingly is not what's putting this facility at risk," said Paul Brewbaker, Bank of Hawaii chief economist. "What's putting this facility at risk is it's not producing in a manner that's as efficient as other locations."

It is inherently difficult to fairly compare productivity of one shipyard with others because of differences in location, mission and wages.

Pearl shipyard spokesman Jason Holm said the Navy declined to provide recent per-worker operating costs for its four shipyards, but officials with the independent Base Realignment and Closure Commission and the Navy recently noted that Pearl shipyard's operating costs are high.

UNFAIR COMPARISONS

During the recent commission hearings, Portsmouth proponents, arguing to keep its submarine maintenance facility open, said it takes that shipyard about nine months to completely overhaul a sub compared with about two years at Pearl Harbor.

Pearl representatives said the reference, to overhauls of the USS Chicago nuclear submarine, was a best-case vs. worst-case comparison that involved Pearl work done in 1991.

Representatives of the Pearl shipyard said good reasons exist why repairs and maintenance often cost more and take longer in Hawai'i, where the Navy spends more than $600 million a year on shipyard wages, goods and services.

For example, Pearl employees are paid 25 percent more than their counterparts in Portsmouth because of a cost-of-living-adjustment. Workers at Maine's Portsmouth Naval Shipyard receive an extra 18.5 percent "locality pay" above a standard base salary.

Supplies must be shipped to Hawai'i from the Mainland or other countries. Fuel and electricity cost more. Pearl also works on a greater diversity of ships compared with Portsmouth, and handles more unscheduled repair work on passing vessels that can add cost and delays to scheduled work.

"We are not inefficient," said Matt Hamilton, president of the Hawai'i Federal Employees Metal Trades Council, the bargaining agent for 15 labor organizations representing about 2,500 of Pearl's 5,075 mostly civilian shipyard workers. "We do so many more things. We can improve, (other shipyards) can improve. But I believe the people who work here are the best shipyard workers."

Holm said improving efficiency is an objective management and labor have been working toward long before the current base-closure initiative.

"We are constantly exploring avenues to leverage efficiency gains and maximize our ability to support the fleet," he said.

Holm said the Navy last year established a workforce-driven program to find and realize efficiencies that resulted in $5 million in savings this fiscal year.

Local shipyard officials have long contended with criticism over efficiency claims, often raised by other shipyards facing closure.

In 1991 during a round of base-closure hearings, an official with the Philadelphia Navy Shipyard drafted a memo that showed the Pearl shipyard was the least cost-efficient of eight Navy repair yards, costing about $560 per employee per day to operate. The Philadelphia yard, which touted that its roughly $360 man-day cost was lowest, ended up being closed.

CHALLENGES CONTINUE

In 1996, in the midst of a Navy downsizing effort, Sen. Dan Inouye, D-Hawai'i, praised Pearl workers for high-quality work but encouraged them to improve performance that ranked worst in delivery time among U.S. naval shipyards and was 23 percent over budget.

"This is an important place, strategically located, but I must sadly report to you that location alone will not suffice," he told 3,000 or so shipyard workers at the time.

That was nearly a decade ago, when Inouye said operating costs were $720 per man-day at Pearl, compared with $440 at shipyards at Puget Sound, Wash., and Norfolk, Va.

The most recent criticism over Pearl's low efficiency was raised during base-closure hearings earlier this month by Maine and New Hampshire officials trying to keep Portsmouth open.

Portsmouth representatives said its shipyard overhauls are done faster and cheaper. Several comparisons were drawn between Portsmouth and Pearl shipyards, including a suggestion that Pearl has not delivered any major submarine maintenance job within cost or on schedule in recent years.

Mike Yuen, a spokesman for Inouye, said it's unfair to compare the two shipyards because Portsmouth works exclusively on subs, whereas Pearl works on subs, cruisers, destroyers, frigates, amphibious ships and aircraft carriers.

"It's like comparing apples to oranges," he said. "Workforce efficiency has been overstated."

Adm. Robert Willard, vice chief of naval operations, made a similar statement to the base-closure commission last week, and said Pearl's strategic location and breadth of maintenance is more important to the Navy.

Hamilton, of the Metal Trades Council, said one major drain on efficiency at Pearl is a high amount of emergency or unscheduled work needed on ships passing through the region.

"If a ship comes in — boom — we have to jump on it," he said. "That takes people away from (scheduled) work."

When the sub USS San Francisco rammed an undersea mountain in January 350 miles south of Guam, a Pearl repair crew flew to Guam. Another crew is working on ship batteries in San Diego. "When the Navy calls 911, they call us," he said.

Another difference Hamilton cited is that sailors typically remain on ships overhauled at Pearl, adding time and cost. Hamilton likened the situation to remodeling a house. "At Portsmouth, people move out of the house. At Pearl, the sailors are still in the submarines. It's like the contractor comes in and has to work around the people, their furniture and the dog."

Then there's supply and labor costs. "Diet Coke cost more here than it does in Portsmouth," Hamilton said. "It doesn't matter if it's a sheet of steel or a roll of toilet paper — everything is more here."

Hamilton said Pearl shipyard workers can improve productivity just as any shipyard can, but Pearl's higher costs and diverse mission will remain. "Those things are not going to change," he said. "That's where the inefficiency comes in."

substandard work?

Still, a perception lingers that Pearl work is substandard. Base-closure commission chairman Anthony Principi said during a July 6 hearing that he heard several subs currently or previously home-ported at Pearl were overhauled at Portsmouth because of work quality and efficiency issues.

Retired Vice Adm. Al Konetzni, a former commander of the Pacific Fleet submarine force, responded to Principi that his understanding was incorrect.

Still, Principi last week at another hearing commented that work quality and efficiency at Pearl was an issue, and said: "I've talked with a lot of submarine commanders who would prefer not to have their subs overhauled in Pearl. The commissioners are going to have to deliberate on that very, very carefully before making their decision."

Gov. Linda Lingle, in a 17-page memo to Principi, said Pearl's location "does guarantee that, economically, some of its costs will be higher ... This has always been the case, but America's national security has always justified these marginal costs."

Adm. Willard, naval operations vice chief, also told the commission last week that eliminating long-term maintenance work at Pearl would require the Navy to buy more ships to make up for time lost sending Pacific-based ships to the Mainland for work.

At the critical commission vote, Pearl's strategic location and diverse ship duties — qualities that contribute to inefficiencies — outweighed efficiency considerations.

Hamilton, of the Metal Trades Council, said that despite the misleading characterizations of efficiency of the Pearl shipyard, the criticism was a reminder that improving productivity is a never-ending goal.

"It kind of made everybody look at what they could do better," he said. "In the long run, it will probably do us good."

Correction: Workers at Maine's Portsmouth Naval Shipyard receive an extra 18.5 percent "locality pay" above a standard base salary. Pearl Harbor Naval Shipyard employees receive a 25 percent cost-of-living adjustment above the base pay. A previous version of this story failed to mention the locality pay at Portsmouth.