Business climate criticized
Poor public eduction, a lack of qualified
workers and high health costs could
impede growth in the state's economy,
companies said in a new survey
Hawaii entrepreneurs and executives are dissatisfied with the state's climate for business, according to a Chamber of Commerce of Hawaii report that bemoaned a range of government hurdles and other factors impeding the local business community.
A REAL DRAG
Here are some of the "critical issues" that businesses said could deter future growth:>> Housing costs
>> Red tape
>> Declining roads and ports
Eighty-five percent of business owners and executives surveyed for the report said the state's business climate needed to be improved. Though an equal percentage were positive about Hawaii's overall economic outlook, respondents said that several "critical issues" could curb growth.
These included poor K-12 public education, a resulting lack of qualified workers and spiraling health insurance costs. The report was particularly critical of state and local governments for a perceived adversarial approach to business.
"This is a tool to improve," said Chamber of Commerce President Jim Tollefson. "But if we don't point out the problems, how can we address them?"
The survey polled 156 business leaders from last May to December as part of the chamber's Project JOBS initiative, a business retention program aimed at creating support networks for local enterprises to help them create jobs and remain in the state.
As part of the program's aim of bringing the business community together, the interviews were conducted by volunteers from within the business community.
Despite the negative tone of the report, Tollefson pointed out that 71 percent expressed optimism that the state's economy was heading for stronger growth after years in the economic doldrums.
"That's why this is a good time to look at some of these issues. Dry weather is the best time to fix a leaky roof," he said.
However, survey respondents indicated that any growth could be held back by chronic red tape, housing costs, deteriorating roads and port facilities, and the "pyramiding effect" of the general excise tax, which increases the cost of goods as they move through the local economy.
While Tollefson admitted that none of the "critical issues" were new concerns, he said the poll provides actionable data on which the business community can base future advocacy efforts.
"To my knowledge, this the first time such data from Hawaii businesses has been recorded," he said. "It gives us a baseline from which to measure progress and ultimately a basis for improving the climate."
Project JOBS is based on the view that 80 percent of new job growth is created by existing local businesses, and that meeting the needs of these businesses should take priority over efforts to lure new businesses to the state.
It surveyed business leaders in five sectors identified as having potential for growth, including construction, government contracting, agriculture, the cruise ship industry and edu-tourism, which is tourism that has an educational component.
The questioning was conducted by more than 60 volunteers from 48 companies, including many business owners.
"It's interesting to look at businesses outside your own industry," says Dean Okimoto, president of Nalo Farms Inc. "I'm a farmer and I visited a health care facility and development firm."
Some public services that impacted the business community were generally rated highly by respondents, such as airports, telecommunications, police, fire and emergency services, and public transportation.
But other public services drew harsh criticism. The survey said the poor condition of roads and highways exacerbated traffic and also hampered development since developers are often required to upgrade roads to get building permits approved.
Hawaii's public schools were also taken to task for producing unmotivated workers who lack basic skills or the ability to follow written instructions.
"It's certainly hard for us to find qualified people, particularly in technical areas," said Perry Sorenson, chief operating officer of Outrigger Hotels and Resorts. "And the cost of living makes it hard to get qualified people from the mainland. It's a vicious circle for some companies."
However, four out of five respondents said they expected revenues to grow in the year ahead.
Of the five sectors, the cruise ship industry foresaw the most job growth, with 1,700 new jobs expected.
The survey also found that 87 percent of respondents' revenues were generated inside the state and 69 percent of their supplies were locally sourced.
The survey results mark the completion of the first phase of Project JOBS. This year, the chamber plans to expand the data base by contacting another 200 firms. While the first phase included only Oahu firms, the next phase will go statewide. The complete report can be found at www.projectjobshawaii.org.
