Tweaking the future of our economy

LIHUE — Kauai’s economy has room to grow and leaders are tweaking the path to competitive opportunities for the isolated jewel of the Pacific.

A decade ago, the county, with the Kauai Economic Development Board and other stakeholders, developed the Comprehensive Economic Development Strategy (CEDS) plan as an economic roadmap for diversification.

It was updated in 2010 following the economic downfall and is due for another revision by mid-2015.

Not too surprisingly, it ranks tourism as the top driver of the economy.

“The CEDS recognizes the visitor industry as Kauai’s main economic engine and encourages various initiatives to support this industry,” said County Economic Development Director George Costa.

But it lists industries outside the travel-minded. The six industry clusters that support Kauai’s economic engine, it said, are food and agriculture; health care and wellness; culture and arts; science and technology; sustainability technology and practices; and sports and recreation.

Marissa Sandblom, vice president of Grove Farm Company, said that David Kane, KEDB interim president and CEO of Trex Enterprises, is leading the work to update the CEDS.

The new version will reflect that within five years, a third of the workforce will be eligible for retirement. The island’s largest companies will be taking part in a succession planning study to replace the retiring workforce.

“Our focus is on nurturing the six key cluster areas,” Sandblom said. “The initial work is done and we are sort of tweaking it.”

This past year KEDB completed feasibility studies on a Kauai Food Production Center feasibility, a Kauai Made & Kauai Grown Retail analysis, and a Community Kitchen Business Incubator Business Plan. It also hosted farm financing workshops and developed a plan for the Kauai Creative Technologies Center to diversify the economy.

New projects and capacities include commercial kitchens, incubators and a slaughterhouse facility, she said. And engineers from the seed companies and the Pacific Missile Range Facility volunteer to assist schools with robotics clubs that encourage students to pursue math and science vocations that could keep them on the island.

Kauai Small Business Development Center Director John Latkiewicz said the damaged credit scores and desperation of entrepreneurs during the bad economy is turning around and the banks are now lending.

“I am certainly seeing entrepreneurs with good solid ideas and an ability to execute on their plan,” Latkiewicz said. “I expect them to be successful over time and expect that in the next year or two to see positive things with the folks I have worked with.”

But not all industries fit Kauai.

Kauai is less likely to see manufacturing develop because of the export costs and challenges that come from distance markets, he said.

“Occasionally we get things like specialty products,” Latkiewicz said. “Those are always possibilities but it is just kind of a reality that manufacturing will not be a major part of where we are going.”

The fashion industry has shown promise, he added.

“There are a lot of efforts out there and like so many things, there are individuals willing to drive it, to pick up the ball and go with it,” he said.

Agriculture continues to be touted, but the concern is that small growers tend to be labor-intensive side businesses, he said. Food security and concerns about relying on imports have created opportunity but there are barriers with the lack of long-term leases and the viability of a labor-intensive farms in the long term.

“For whatever reason, they are not growing up to be large businesses, and they remain almost a supplemental income,” he said.

The sustainability agriculture industry may change as a result of climate change, he said. It isn’t a tomorrow issue yet, but could be, as is occurring with alternative energy.

“That is a reality that we are all going to face, and some things are more on the order of a year or two, and others are 30 to 40 years down the road,” he said.

Meanwhile, the Kauai Grown program, in partnership with Kauai County Farm Bureau, promotes local farming and ranching along with the sunshine markets, Costa pointed out.

More research is under way on the feasibility of commercial kitchens and a business incubator to help entrepreneurs create new products.

The health and wellness industry offers opportunity for growth as aging baby boomers create more demand for services.

And the county is considering a Creative Technologies Center to boost arts and technology sectors, in which students could learn film and music production in a facility that doubles as an editing studio for major film companies.

“This is a great example of developing a new industry for Kauai residents,” Costa said.

But as long as there is tourism, it will remain the primary focus of retail, trade, food and services according to Latkiewicz.

There are also home-based entrepreneurs and the self-employed who are developing products and directing sales that may not employ others but are sustainable and bring value.

“Any and all efforts are welcome,” Latkiewicz said.

It is import for entrepreneur start-ups is to think about the long term as much as the short term, he said. People tend to think two years ahead, but not 20.

Even in a saturated market there is still room for people who know what they are doing and have a good business plan.

“Is a food truck going to be viable in 20 years?” he said. “What trends are going to change and how can I adapt to those changes?”

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