Laney: Kaua‘i economy strong

PO‘IPU — According to First Hawaiian Bank economics consultant Dr. Leroy Laney, Kaua‘i County’s strong economy is leading the state in job growth in 2003.

“Overall job growth statewide was 2.5 percent in the first half of this year. Those areas that depend more on Japanese tourism, such as Waikiki, are the only remaining pockets of weakness.

“In the same period, Kaua‘i non-farm jobs surged a very strong 4.0 percent with broad growth across almost all sectors of the Garden Island economy. Kaua‘i’s jobless rate has been falling steadily, from 11.3 percent in 1997 to only 4.5 percent in the first half of this year.”

Laney, who is also a professor of economics and finance at Hawai‘i Pacific University, was the keynote speaker on Monday evening at the annual First Hawaiian Bank Economic Outlook Forum.

At the forum, held at the Sheraton Kaua‘i Resort here, Laney said Kaua‘i is benefiting from low interest rates which have fueled a surge in construction and real estate sales, a successful summer in tourism thanks to additional flights, and a strong time-share market

“United, American and Aloha added Mainland flights. Separate surveys have chosen Po‘ipu Beach as the best beach in the U.S., and Travel and Leisure magazine chose Kalalau Valley as one of the most beautiful places in America,” Laney said.

“In uncertain times, Kaua‘i benefits from being exotic, but still on U.S. soil.”

The consultant also discussed various other issues relating to Kaua‘i’s economy.

Among the topics was the time-share industry.

Laney said, “In 2001, Kaua‘i had 37 percent of operated time-share units in the state, a remarkable percentage for a small island.

“Time-share visitors are a major reason Kaua‘i was less affected after 9/11. Having already paid for their time, time-share owners did not cancel as much.”

He also said developing more educational options will be one key to diversifying Kaua‘i’s economy.

“As more younger, well-educated professionals come to live and work, they will demand quality education for their children, perhaps by expanding private if not public education,” Laney said. “Leaders in tourism, agriculture, high-tech, government, and other areas all cite a need for better technically trained graduates.”

Kaua‘i’s construction industry

“Construction on Kaua‘i, boosted by record low interest rates, is booming now, and for the near future.

“Grove Farm recently expanded its Puakea Golf Course to 18 holes, and is undertaking a major renovation of Kukui Grove Center,” he said. “A new Home Depot is opening adjacent to the mall. A number of new residential lots are being made available adjacent to the Puakea area.

“Alexander and Baldwin and its partner, DMB Associates, will add as many as 1,500 upscale single-family, multi-family and resort units as they develop Kukui‘Ula on the South Shore,” he continued.

Laney said the number of sales on Kaua‘i this year will be nearly triple the rate of 1997, and the median price of a single-family home is running over $350,000 this year.

“In an environment of accelerated development, many people on Kaua‘i are concerned that infrastructure (roads, airports, harbors) is not keeping up due to strained public-sector budgets. Another worry is that the residential housing being built is mostly aimed at upscale buyers, causing anxiety that local buyers of more modest means are being crowded out of the market.”

High tech on Kaua‘i

“High-tech jobs are growing on Kaua‘i, led by the Pacific Missile Range Facility and its subcontractors,” said Laney. “Such diversification, especially into higher-income jobs, is welcome for a tourism-dependent economy.

“Each time the missile range hosts an exercise, there are over 300 visitors, (bringing) an estimated direct injection into the economy of $3 million per exercise.”

The consultant noted that the four-year-old first phase of the West Kaua‘i Technology & Visitors Center is now fully occupied, a second phase was completed earlier this year, and Solypsis Corporation now occupies 21,000 square feet in a third phase in Kukui Grove Center.

Agriculture

“Gay and Robinson (G&R), one of only two remaining viable sugar plantations in the state, is expanding,” said Laney. “This year, G&R expects its largest crop ever — 57,120 tons of sugar.

“G&R plans to lease and cultivate 4,000 more acres of state land previously leased by Amfac’s Kekaha Sugar.”

In addition to the construction, high-tech and agricultural industries, Laney delved into Kaua‘i’s economic forecast.

“Next year might not be so strong as 2003,” he said. “Interest rates will go up. Mortgage rates might be up some. So those two factors could put a damper on the real-estate market.

“However, I don’t think that you would want to see heated growth continue for any long period of time. As long as you have a fairly healthy job base and job creation, you should be okay. I don’t see anything on the horizon that is going to be a big damper on the economy in 2004.”

Business Editor Barry Graham may be reached at 245-3681 (ext. 251) or mailto:bgraham@pulitzer.net.