Hawai‘i Island Business Report 2023

Photo: Aaron Yoshino

Aloha and welcome from the Hawai‘i Island Chamber of Commerce

. . .

As our island community continues to slowly rebound from the challenges brought on by the pandemic, local businesses, community leaders, social service organizations, educational institutions, and government agencies are collaborating to find immediate and long-term solutions which will cultivate opportunities for growth and sustainability for this and the next generation.

With an active, but lately quiet Kīlauea volcano up the hill, a world-class astronomy center on Maunakea, fertile agricultural land, usable space for new technologies in energy, all surrounded by the blue Pacific, we have the resources we need to develop and expand technologies to maintain our island’s role in scientific research. The ultimate beneficiaries of this are our keiki, who will be equipped with STEAM (Science, Technology, Engineering, Arts and Math) and other life skills necessary to compete on the world stage.

We have the hearts and minds to make it happen. Our membership reflects the diversity of our community and includes people from a variety of business sectors and professionals who advocate responsible business practices and economic development on our island.

We continue to cultivate opportunities for growth for the next generation of business leaders through our chamber’s Young Professionals Program. These energetic young adults participate in networking and educational opportunities, which help to make them more valued employees who are able to learn new skills, expand their professional network, and develop important connections with others in the business world.

Founded in 1898, the Hawai‘i Island Chamber of Commerce has been a part of our island community for more than 125 years and includes over 325 businesses, non-profit organizations, government agencies, and professionals who support the chamber’s mission.

We applaud Hawaii Business Magazine for once again showcasing our beautiful island. We hope you enjoy this Hawai‘i Island Business Report and learn how our community works together to make our island home special.

– Miles Yoshioka,
Executive Officer,
Hawai‘i Island Chamber of Commerce

Aloha and welcome!

. . .

Working to enhance the quality of life for our community, the Kona-Kohala Chamber of Commerce provides leadership and advocacy for a successful business environment on the west side of Hawai‘i Island.

For 2023, we are pushing for more housing projects at all inventory levels in West Hawai‘i. This includes the development of infrastructure to support more housing along with an emphasis on improvements in permitting processes. We also advocate for fresh water resource development and encourage streamlining government regulation to provide predictability for development. We continue our strong support for the astronomy industry on Maunakea noting significant scientific discovery, educational outreach and economic impact.

To everyone’s delight, we are back to our full complement of in-person events including luncheons, expos, networking activities and the annual golf tournament. As a member organization, we appreciate these opportunities to enjoy one another’s company, build relationships and work together for West Hawai‘i.

Mahalo to Hawaii Business Magazine for this special section on Hawai‘i Island!

– Wendy J. Laros,
President and CEO,
Kona-Kohala Chamber of Commerce

In recent months, it’s almost as if the natural forces of Hawai‘i Island has been staging a dramatic show for returning tourists. There’s been heavy snowfall on Maunakea and Mauna Loa, and lava flowing from Mauna Loa, coming dramatically close to the Daniel K. Inouye Hwy., the main connector between Hilo and Kona.

With the return of mainland visitors, business owners are breathing a little easier these days, and anticipating the return of international tourists.

Tourism Rebounds

The number of mainland visitors to Hawai‘i Island is slightly down from previous, pre-pandemic years, however the good news is that spending per person is up a significant amount.

“Tourism is definitely back,” says Wendy Laros, President and CEO of the Kona-Kohala Chamber of Commerce. “If we can have less visitors, with less impact, and more money spent, that helps the overall economy.”

The return of more international tourists is also something the business community is looking forward to.

“We have seen some interline cargo freight, but we look forward to when the Japanese tourism really kicks in,” says Aloha Air Cargo vice president and general manager Kyle Nishitomi.

Toby Taniguchi, president and chief operating officer of KTA Superstores agrees.

“Sales have lifted now that tourism is picking up again, yet it’s challenging with the (lack of) Japanese tourists right now.”

Although some items might still be hit or miss on store shelves, cargo shipments have also rebounded in line with the ripple effect return of tourism.

“As Hawai‘i’s economy returns to pre-pandemic levels, Pasha Hawaii, together with our supply chain partners, remain consistent in meeting the needs of our customers, both on the Big Island and Hawai‘i as a whole,” says George Pasha, IV, President and CEO, Pasha Hawaii.

The return of visitors to Hawai’i Island has huge and positive indirect impacts on other businesses as well.

“While visitors won’t necessarily shop at HPM, we benefit from increased purchases by organizations servicing the visitor industry and by the residents they employ,” says Jason Fujimo to, president and CEO, HPM Building Supply.

Pasha Hawaii

Since 2005, Pasha Hawaii has provided bi-weekly direct service to Hawai‘i Island from the Mainland. The company’s Island roots date back to World War II, and for the 400-plus locally-based employees, serving Hawai‘i is a privilege. “Our kuleana is to the residents and businesses who rely on us to bring in the goods they need every day,” said Reggie Maldonado, General Manager, Pasha Hawaii. “This sense of responsibility drives us in everything we do, from our customer service and account managers to our team members working at our ports. Our values reflect those of our owners; excellence, honesty and integrity, innovation and teamwork.”

Maldonado, who joined this third-generation, family-owned company in 2005, spearheads the company’s employee community action team program called Hui Hulilima (Helping Hands). Throughout the year, employees volunteer their time to various nonprofits. Pasha Hawaii also donates thousands of dollars in cash donations and in-kind shipping. In 2021, Maldonado joined the Boys & Girls Club of the Big Island’s Board of Directors, marking the first time an individual not residing on Hawai‘i Island was appointed (Maldonado was born and raised on O‘ahu). “It’s an honor supporting BGCBI and the wonderful work they do, taking care of our keiki and their ‘ohana.”

Pasha Hawaii’s Jean Anne | Photo: courtesy of Pasha Hawaii

Labor

Like just about everywhere else, businesses on Hawai‘i Island are still struggling to find employees. In addition to the high cost of living and lack of affordable housing, there are lingering effects of the pandemic.

“Labor is the biggest issue that we hear from our members, and it’s nationwide,” Laros says. “Each and every Chamber of Commerce is really focusing on workforce development.”

Part of the issue is with kama‘āina moving to the mainland for a better opportunity, and part of it is also the opportunities the gig economy has provided, when people can work from home, says Taniguchi.

“Nobody works from home at KTA. Childcare and transportation are issues for our employees. It’s challenging. We’re receiving a few applications but it’s not at the levels we like to have.”

And then there is an aging workforce. Many employees at KTA have put in 50 or more years with the company and are getting close to retirement.

“There’s a lot of institutional knowledge and seasoned experience there. We try to train new employees on things like meat cutting, but it just takes years of experience,” Taniguchi says.

Because they are currently understaffed, KTA stores have been closing an hour or two earlier than usual, which also cuts into revenue.

“We don’t want to burn our people out. They’re tired. I get it, and our local community is great at supporting our workers, who are like first responders showing up to work and providing a service during the pandemic.”

Aloha Air Cargo has gotten creative to accomodate employees, adding more part-time and supplemental positions in order to help those who need that extra job to help meet the economic needs of their families. They have also added certain apprentice work in the company’s various departments, Nishitomi says.

HPM has increased their minimum starting pay, added benefits and continues to offer a $1,000 signing bonus, and their Employee Stock Ownership Plan. They have also opened the option for some new positions that, prior to the pandemic would have been based on Hawai‘i Island, to work remotely from any Hawaiian island.

HPM is also seeing many employees choose to work beyond the typical retirement age. “When employees decide to retire, they often give plenty of notice so that we and they can plan a smooth transition,” Fujimoto says.

The company is also exploring artificial intelligence solutions that can support administrative functions.

“These investments into AI do not replace employees, but rather free up the team to focus on more impactful work,” says Fujimoto.

As an example, HPM now uses a robot to count both out on the shelves and misplaced products after the stores close for the night, and are building robotic process automation (RPA) to complete routine and repetitive administrative tasks.

Infrastructure, Supply Chain

The level of delivery of goods to Hawai‘i Island is not quite back to pre-pandemic levels, but is trending in the right direction.

“Although space is limited at our neighbor island ports, Pasha Hawaii, along with our partners and other port users collaborate with one another to ensure the flow of goods to Hawai‘i Island remains intact and is delivered on a timely basis,” Pasha said.

KTA buys most its fish direct from fishermen, and much produce from local farmers. Taniguchis says the supply chain has increased somewhat, and deliveries are pretty consistent, “But we still have outages. We try to substitute some items. We don’t like selling air (empty shelves).”

Contributing to the issue is a truck driver shortage on the mainland, and challenges nationwide to find pilots and mechanics. And while facilities at the Hilo Airport were upgraded about six years ago, the Kona Airport is in need of some new structures, and that’s up to the State, says Nishitomi.

“The buildings are old. I think the new governor has great vision, and as our business to and from the mainland grows it would be beneficial, and nicer, to have a better structural facility.”

With some of the fastest growing areas in the state, Hawai‘i County continues to face infrastructure challenges amid the growing demand for new construction, both residential and commercial.

Photo: Aaron Yoshino

In addition, and specific to new home or residential construction, the permitting process can present delays to project timelines that may impact project budgets and affordability, Fujimoto says.

“These challenges are widely known, and like other businesses on Hawai‘i Island, we are actively partnering with our local government agencies to collaborate, find solutions and address any barriers to safe, effective construction,” he says.

At HPM, the supply chain has returned to normal for the majority of building products, however, there are still some key products critical to construction and are in very short supply or are nearly unavailable, such as subfloor adhesives, electrical circuit breakers, and some plumbing and paint items.

“We expect these products to continue to be in short supply until late 2023 or early 2024,” Fujimoto says.

To gain more direct management of their inbound supply chain, HPM opened a West Coast Consolidation Facility in Washington State last year, enabling them to track more of their own inventory and shipping. Says Fujimoto, “We know what we have inbound 2–3 weeks earlier than when we work through a third-party consolidator… and can better serve our customers.”