DENNIS ODA / DODA@STARBULLETIN.COM
In a new survey, half of the construction companies said they had growth in after-tax profits. Above, new condominium towers are changing the face of Kakaako.
construction to keep
booming, survey says
But the broader Hawaii economy is
expected to plateau in the next year
Hawaii construction firms have enjoyed substantial growth in revenue and before-tax profits and are optimistic the boom will continue for at least two years, according to a survey released yesterday.
In the Business Banking Council's latest semiannual economic indicator study, 82 percent of 102 construction-related firms reported revenue increases in the past year, with 42 percent reporting revenue increases of more than 5 percent and 21 percent reporting about 5 percent revenue growth.
Furthermore, 50 percent of the construction firms reported growth in before-tax profits, up from 41 percent in August 2003, the last time the Business Banking Council focused a survey on the construction industry.
Looking ahead two years, 45 percent of construction firms expect the value of private-sector work to increase and 33 percent expect the value of government projects to increase.
"We think for the next three years (the outlook for the construction industry) remains very strong," said Karen Nakamura, president of the Building Industry Association of Hawaii, who participated in a panel discussion following the report's release yesterday.
Nakamura said the association is taking steps to avoid the sort of construction dip that occurred in the 1990s.
"If it doesn't continue to grow, it will plateau and we'll have consistency," she said.
The news from the construction sector offered exuberance in a survey that generally was more muted in its optimism. Respondents to the survey across all industries generally suggest an economy that is strong but stabilizing.
The report's overall "optimism index" that gauges the general outlook for the next year was 129, the lowest in two years. However, the optimism in the construction-only index was far higher at 139, compared with 127 in 2003 and 114 in 2001.
The overall performance index, based on changes in employment, gross revenue and profit before taxes in the last year, was 121, the same as a year ago and down from a peak of 128 in January 2004. The construction-only index outperformed with a 133, outpacing the 118 in 2003 and 111 in 2001.
"Our (overall) survey respondents seem to indicate that we may have hit the peak, or more likely a plateau, but that plateau is at a pretty high level," said Constance Lau, president and chief executive of American Savings Bank, which sponsored the survey.
The survey, conducted by QMark Research & Polling, was based on 412 interviews with Hawaii businesses conducted from June 21 to July 8. The data were weighted to reflect the size of each respondent company based on its number of employees. The survey has an error margin of plus or minus 5 percent.
Although the survey suggests the Hawaii economy may be flattening, the construction sector appears strong for the next several years.
Bert Kobayashi, president of the development company Kobayashi Group, agreed that the market seems strong for the foreseeable future, particularly for the "resort-residential" properties that his firm develops.
"I see a continued and strengthening robust and deep market," said Kobayashi, who also was a panelist.
Contributing to the optimism is a deep backlog of projects. Of construction firm respondents, 48 percent reported an increase in project backlogs, up sharply from 26 percent in 2003.
QMark President Barbara Ankersmit said 97.5 percent of the construction firms' projects are based in Hawaii and 78.2 percent of work is private.
"So the firms are not having to go elsewhere," she said. "It's really on the upswing in the construction industry."