By Andrew Gomes
Advertiser Staff Writer

Despite a general prognosis for continued recovery in the state’s construction industry this year, many Hawai‘i contractors are hesitant to celebrate.

Construction spending is projected to rise from $2.4 billion last year to $2.8 billion this year, according to the Pacific Resource Partnership, an association between unionized building contractors and the carpenters’ union.

Last year, the industry grew by adding 2,000 jobs and $300 million in spending. This year’s growth is expected to be facilitated by continued strength in tourism, home sales, increased government spending and job growth.

But local construction industry executives say tougher competition, few significant construction projects, a tight pool of skilled labor, and rising insurance rates are going to keep pressure on the industry.

"I’m not yet personally jumping up and down with joy," said Audrey Hidano, secretary and treasurer of residential/commercial firm Hidano Construction.

Hidano, who has seen indications of industry improvement in the last six months such as increased architectural activity, said she thinks "there’s light at the end of the tunnel" but "some of us have taken the 10-year hit, and it’s really hard to come around."

Glen Kaneshige, president of large commercial contractor Nordic Construction Ltd., is also cautious. "We’re definitely not out of the woods," he said. "I hate to sound like a pessimist, but that’s the way it is. I don’t really see much improvement within our industry."

Kaneshige expects Nordic business to be about the same this year as last year mostly because fewer contractors are competing for bigger shares of business. "It is still an owners’ market where any owner can get discounted prices for a new building," he said.

Still, industry observers and economists see several industry sectors geared for growth this year, including public school renovations, Neighbor Island residential work and tourism infrastructure projects.

Paul Brewbaker, Pacific Century Financial Corp.’s chief economist, projects that a 15 percent increase in construction activity this year - far more than tourism’s 3 percent growth forecast - will make the building industry the "primary engine of (local )growth" in 2001.

Gov. Ben Cayetano’s proposed budget calls for $706 million in construction spending this fiscal year, which is an 18 percent decrease from $861 million in spending during the previous fiscal year.

U.S. military construction in Hawai‘i is also expected to be a strong sector, especially under President Bush, who supports increased military spending.

Some local contractors, including Nordic and Dick Pacific, have already shifted from mostly private commercial work to largely military projects as a way to avoid the recent downturn in business - a move from which they expect increased dividends with Bush as commander in chief. And Mayor Jeremy Harris wants to add $89 million to this year’s $299 million construction budget, which was higher than the $268 million in construction appropriations of the previous fiscal year.

"I think we’re in for a good year," said Bruce Coppa, Pacific Resource Partnership executive director. "Contractors aren’t the most optimistic people. Construction is a volatile business even during good times."

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