Between a Rock and a Hard Place

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Hawaii’s cement and concrete industry faces rising costs and global unrest

While concrete maintains an ever-present role in our Hawaiian Islands, current global realities are proving to be quite unsettling for the companies that rely on this material. Nations around the world are being impacted—concrete is by far the world’s most used building material—but the trials hit harder in Hawaii.

“When you live on an island, you’re already paying a bit more for everything,” says Kari Yuers, chief executive officer of Kryton International Inc. “Then you add on all these different challenges, and it becomes even more difficult.”

Here’s a look at the state of the cement and concrete industry in Hawaii:

CAUSES AND EFFECTS

Kirk Hashimoto, executive director of Cement and Concrete Products Industry of Hawaii (CCPI), says that cement and concrete products are not immune to inflation, supply chain shortages and international conflicts.

“All of these things are coming into play in this global market we are in,” he explains. “The expectation is there will be significant price increases for cement and concrete.”

While the projected cost of concrete nationwide is between $117 and $144 per cubic yard for the second half of 2022, Paul Kane III says that may be on the low end.

“I’ve been getting numbers for next year, and some of the projections are closer to $200 per cubic yard,” says Kane, owner and manager of Aloha Marketing Manufacturers Representatives LLC. “If anything, the $144 may be the cheap and simple stuff. The higher-end concrete is going to be closer to $200.”

The rising price of fuel factors heavily into the cost increases.

“Concrete gets to job sites through trucking, and raw materials get to Hawaii by ships,” Yuers says. “In some cases, we’ve seen as much as a five-fold increase in shipping costs.”

Global unrest complicates the uneasy situation even more. Russia’s invasion of Ukraine, for example, has led to both higher cement prices and logistical issues.

“Russia is a huge supplier of some of the materials used to make cement,” Hashimoto says. “Now, a lot of places aren’t getting these materials, so they’re having to go to other places. What used to be an established transportation route has changed.

“Imagine closing down the Pali. Because of that, Likelike Highway and H-3 are suddenly busy and get messed up. Now imagine that happening on a global scale.”

Adds Yuers, “There’s a real bottleneck of supply-chain challenges. We’re seeing a shortage of certain materials, such as cement and cement ash—even things we take for granted, such as silica sand. Some of these issues were happening even before the COVID-19 pandemic, but it all gets exacerbated when you have a lot of things happening at the same time.”

The bottom line for local cement and concrete companies? Tough times lie ahead.

Steven Lee, marketing specialist for Island Ready-Mix Concrete Inc., says the downturn in business has already begun.

“We’ve noticed a slight slowdown compared to peak 2020 and 2021,” Lee reports. “Early this year, the [bidding] book was very thin. Thankfully, a lot of state projects are getting funded for the summer, so the amounts of bids are now increasing.”

“We are in a little bit of a lull right now,” Hashimoto says. “There just aren’t any large projects happening at the moment. From what we’re hearing, things may start picking up in mid- to late 2023, when some military improvement projects are expected to get going.”

STRATEGIES

The number of variables that factor into the challenges facing Hawaii’s cement and concrete industry means there are no quick-fix solutions.

“Everyone’s looking for that magic bullet,” says Hashimoto. “But we’re looking at a moving target.”

Hashimoto recommends that companies plan ahead when they put project bids together.

“Factor everything in,” he warns. “There may be escalation clauses that are possible, for example. Make use of good business practices. Everybody’s going to have their own strategies on how to handle this. I have a business that I run separate from [CCPI], and I’ve seen six price increases in the past six months or so. We tried to absorb it, but at a certain point, you have to pass things on.”

Hashimoto adds that purchasing a cheaper grade of cement or concrete may bring short-term savings, but it would be a short-sighted solution.

“People might say, ‘Why don’t you just buy the cheap stuff?’” he explains. “Well, you need to use the right concrete—especially in Hawaii, where we live in a marine environment. You want the end result to be durable. If you don’t use the right cement, you might have to rebuild the project two or even three times. We’re supposed to look out for our clients and protect the market.”

Yuers points to products, such as Hard-Cem, as providing long-term benefits to the industry. Hard-Cem is an admixture that is added to concrete at the time of batching to increase its hardness and extend concrete wear life.

“People are looking for cost-effective solutions,” says Yuers. “They want solutions that take less labor and are less prone to craftsman mistakes. With products like [Hard-Cem], you eliminate the potential for application error or labor challenges.”

Kane offers an alternative to fight increasing shipping costs: “We have existing concrete that can be recycled and used again,” he says, “and I think we have to focus on shipping in less and making more locally. We should be trying to get more recycled concrete content into all the concrete we pour, especially concrete that goes in walls and forms. It doesn’t necessarily have to be terribly pretty, it just has to get hard. We got rock. We got sand. We got recycled aggregate. That’s a good start.”

BETTER TIMES AHEAD

Despite the multiple challenges currently facing Hawaii’s cement and concrete businesses, at least one industry leader expects long-term benefits.

“I love that innovation has always been a result of adversity,” Yuers says. “It forces people to think differently about building. We’ll realize, ‘Hey, we can do this differently and have much better results, with faster time frames and lower maintenance costs. At the same time, we can affect the planet in a positive way.’”

Like his industry colleagues, Island Ready-Mix’s Lee is expecting the storm to pass.

“I guess one could say that better times are ahead,” Lee says.

CAPTION: Kryton International provided concrete and cement for Honolulu Honouliuli Wastewater Treatment Plant in Ewa Beach.

Photos courtesy Kryton International Inc.

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