A lively discussion at the Hawaiʻi CCIM Chapter’s general membership meeting at Cafe Julia on May 19 had a roomful of commercial realtors, business owners and general contractors thinking hard about the local building industry. 

“Hawaiʻi Construction Industry Outlook 2023: Pursuing Growth in the Face of Economic Headwinds” featured panelists from Nordic PLC President Glen Kaneshige; Albert C. Kobayashi (ACK) President and CEO Michael Young; and Swinerton’s Erin Mori, director of preconstruction and estimating. Moderating the panel was Erin Kirihara, executive vice president at Rider Levett Bucknall. 

Nordic PLC’s Kaneshige said the audience had to look beyond the ripples of the COVID-19 pandemic with fluid planning, adjusting timelines and the unpredictability of “crazy construction costs.”

While most blame the pandemic for the recent global economic slowdown, Kaneshige asked the audience to consider “the big freeze in Texas … [which caused] all of their chemical plants and factories [to] shut down.” 

According to Texas Comptroller Glenn Heggar, the Texas Freeze of 2021 caused supply chains already burdened by the pandemic to suffer a bigger blow, thanks to Winter Storm Uri. 

“This setback included Texas chemical plants, which make up nearly 75 percent of U.S. chemical production and contribute to the manufacture of ingredients necessary for disinfectants; plastic bottles, fertilizer, pesticides and packaging,” Heggar said in the online report.

“The freezing temperatures and blackouts damaged equipment in those plants, further slowing supply lines. Chemical, plastic and rubber exports — accounting for almost 17 percent of Texas exports during the three months prior to the winter storm — saw their inflation-adjusted value decrease by more than 20 percent in February 2021.”

That explains why supplies took between 50 and 80 weeks to get to Hawaiʻi, according to Young of ACK. The rowboat-slow arrival of machinery parts, fan coils, insulation, wood, cleaners and paints made it difficult to nail down prices for clients, sometimes resulting in contracts being shelved indefinitely. 

“We now want to sign a contract earlier, pay money earlier to mitigate risk, and prepare and plan lead times for materials,” Young explained to the audience. 

Swinertonʻs Mori said one thing that kept her company steadily working “was focusing on renovations in the hospitality and health sectors and doing more with less. Hotels often see a refresh every 10 years.” 

Doing more with less could mean not using the first choice in decorative tiles because they take forever to ship, deep cleaning furnishings instead of reupholstering or driving a company truck a year or two longer.

Labor shortages were also discussed by the panel, a constant in Hawaiʻi’s economy for more than 50 years. Local unions are losing membership and not gaining traction with recruiting new and younger workers to fill journeymen positions such as masons, electricians, plumbers, carpenters, roofers and painters. 

It’s a delicate dance between general contractors and the unions when it comes to new contracts, of which a big one is coming up in 2024. 

Who will blink first?