An Overview
If you have been keeping up
with our quarterly features on Guam as well as local news providers, you’re well informed on the transfer of the U.S. Marine Corps’ Third Marine Expeditionary Force, currently located on Okinawa. You’re also aware of the following details: It will cost an estimated $10.27 billion to relocate approximately 8,000 Marines, along with 10,000 dependents by 2014. And under the agreement, Japan will spend a total of $2.8 billion on projects to develop facilities and infrastructure on Guam for the relocation of Marine personnel. Then in January, NAVFAC awarded its first Japan-funded DPRI (Defense Policy Review Initiative) contract for architect-engineer services. The recipient of the $50 million contract is AHL Setiadi Gushiken Joint Venture LLC of Honolulu, which includes Architects Hawaii Ltd., Setiadi Architects LLC in Guam and Gushiken Architectural Engineering Co., Ltd. of Okinawa, Japan. Most recently, in February, the Department of Defense announced that President Barack Obama has proposed $566 million for military construction projects on Guam as part of his fiscal 2011 defense-spending budget. Right now, updates on Guam are coming in fast and frequent. Yes, there have been a few setbacks to the military realignment. And there’s no telling what will happen between the time of publication and this issue reaching your doorstep. That said, in this report we focus purely on a special group with a major stake in these issues — the builders. These professionals from Hawaii and Guam offer advice you won’t receive anywhere else. And they bring us a new perspective on the matter. Without further adieu, let’s begin our report…
Leader of the Pack
Construction industry veteran Denny Watts remembers the exact day he considered bringing Watts Constructors to Guam. He was at a military briefing in 2004 regarding the
possibilities of realigning American forces in
the Pacific.
“At that time, we learned the value of this buildup could be more than $10 billion,” says Watts. “We included Guam in our strategic plan and opened an office there in anticipation of the opportunities that the buildup would bring. We didn’t realize at that time, how big it could be, but we recognized it as a strategic opportunity.”
Watts’ Dededo office opened in 2005 with five employees. At its peak, with two major projects on the island, the company had close to 200 employees. In only five years, Watts Constructors forged a strong presence on Guam. Perhaps it is because Denny Watts himself knows the region extremely well.
“I lived in Guam from 1989 to 1994 as senior vice president and general manager of Micronesia for Fletcher Pacific. It gave me the opportunity to learn how to do business in Guam, the eccentricities of working in a marketplace with a very limited subcontractor base. I also had the opportunity to work with H2 workers and to learn all the logistics and planning involved with an imported labor force. Also, I learned about all the logistics for handling and shipping construction materials in and out of Guam. This experience offered an overview of how to plan and to how to understand the impact of what the buildup would be like.”
Watts says to compete for the major projects, firms from Hawaii should already have an established partnership and capability in Guam.
Here is Watts’ advice to firms with zero experience on Guam: “They need to go there, spend the time, team with people that have experience in the area and build alliances that really leverage both parties’ strengths.”
Firms also need to understand the logistical challenges and costs involved, Watts says. “The weather is a big issue,
such as the impact of the
rainy season, severe weather challenges
like typhoons and earthquakes. You can’t build the same way in Guam as you do in other places,” he says.
Watts' precast concrete yard in Guam has prepared the company for the military buildup, boosted the economy on Guam and gives the island an export option that was previously unavailable.
“After working in Guam since 1989, I’ve seen many contractors go to Guam and fail or go out of business. In most cases, they did not do their due diligence, they priced the jobs as they would on the mainland or other countries, or there was poor planning and lack of knowledge.”
Watts says there is one project in particular that helped the company prepare for the military buildup. In 2006, Watts Constructors was awarded an $80 million contract to replace 204 typhoon-damaged homes at North Tipalao. It was the largest project in 30 years completed for the military in Guam.
Says Watts: “Doing a project of this size and building with the logistics and manpower required was a great opportunity for us to have more insight on what typical jobs of this size and larger will be to manage.”
Silver Jubilee
Longtime Hawaii contractor dck pacific celebrates 25 years in Guam this month. Roger Peters, executive vice president of dck pacific construction, LLC, says, “We have a well trained workforce and experienced supervisors and a management team that understand the difficulties working in such a remote and tropical climate.”
“My advice to Hawaii-based contractors who are interested in working in Guam is to team with a local contractor who understands how to do business and successfully build projects in Guam,” says Peters. “Firms need to understand the market and working conditions in Guam in order to be successful.”
What is dck doing to prepare for the buildup?
Peters says: “We submitted a proposal for the design-
build Multiple Award Construction Contract (DB MACC) late last year
in response to NAVFAC’s Request
for Proposals, which is to shortlist three to five teams to compete for $4 billion in task orders ranging in size from $15 million to $300 million over approximately a five-year period.”
He adds, “dck pacific currently has three projects for NAVFAC that are all design-build and in various stages of completion. Most of the projects with NAVFAC will utilize the design-build format, which is one of our specialties since we have successfully teamed with design firms to acquire work with NAVFAC for many years in Guam.”
As dck pacific construction, LLC awaits the military buildup, it keeps busy on projects such as the Government of Guam Employees Federal Credit Union. The facility is approximately 50 percent complete.
It Takes a Village
Chuck Parker, executive manager of business development for Actus Lend Lease, says the company’s buildup preparations are moving along well.
“We look forward to working with the Department of Defense and leaders of the U.S. territory in achieving their goals.” Parker says Actus’ experience in building military communities makes it the ideal for the buildup.
“We have more than 40,000 residential units across the U.S. in our military portfolio, many with their own set of distinct challenges such as location, extreme weather conditions, workforce or other issues that can impact a business. We are adept at creating successful military communities in challenging and varied situations and locations.”
Actus Lend Lease, like the aforementioned companies, says the key to success in Guam is collaboration.
“We realize it’s going to take several companies with proven success across several development disciplines to help the Department of Defense and the people of Guam achieve their goals. Actus has been fortunate to collaborate with organizations that share a common business ethnic, are committed to building communities for the men and women who serve our country, and value the people and communities they live and work in. These qualities are among the most important when we seek out new partners.”
Supply House
Ferguson is one of the leading wholesale distributors in Hawaii. General manager Royce “Jay” Ray, Jr. says the company currently is supplying contractors from the mainland and Hawaii that are doing work in Guam.
“We are pursuing both government as well as private work,” says Ray. “We are providing underground pipe and fittings for water and sewer infrastructure. We provide rough plumbing and mechanical as well as finish products. We also are providing fire protection (fire sprinkler) products.”
Ferguson is currently opening a new office in Guam. Ray feels the company has received a warm welcome. “My experiences in Guam have been very encouraging. I am confident that having a traditional plumbing supply house in Guam and adding the value of deliveries, inventory management, personal service and the resources of Ferguson Enterprises will be well received.”
Ray says Ferguson’s business model in Hawaii is very similar to what it will implement in Guam. Furthermore, its employees heading to Guam are handling the transition well. “Our greatest asset is our people,” he says. “We have several high quality associates that have volunteered to relocate for the opportunities in Guam.”
Ray’s advice for Hawaii builders going to Guam: “We see Guam as a long-term commitment. Our plans are to build relationships with customers and vendors to offer a value proposition that is not currently available in Guam.”
Solid BASE
Honolulu-based structural engineer Steve Baldridge, president of Baldridge & Associates Structural Engineering, Inc. (BASE), has this word of advice for companies rushing to Guam: “It’s not the ‘old rush’ that people might think it is. Because work is so slow elsewhere in the country there will be a lot of competition and low bidding. Unfortunately, some companies don’t factor in all of the costs of doing business remotely, and they are going to get hurt. If you want to do work in Guam, you have to want to be there for the long haul. We were committed to Guam long before the buildup.”
Below, the design-build storage munitions igloos complex at Andersen AFB in Guam is a project that Baldridge & Associates Structural Engineering, Inc. designed with dck pacific. Photo courtesy of dck pacific.
BASE has 10 years of experience designing and building for the U.S. military in Guam. This experience has prepared the company well for the buildup. “We know the players there and understand the market,” says Baldridge. “Doing work in Guam, as remote as it is, has many challenges. If you don’t understand them, what looks like an opportunity can be a failure.”
Does Baldridge feel a sense of aloha in Guam?
“Working in Hawaii you always hate to hear people from the mainland complain about how something is done better or faster somewhere else,” he says. “Guam is the same way they hate to hear how something might be done better or quicker in Hawaii. Some of these comments have merit but there are many that don’t; it’s just done differently there. The people I have met in Guam are wonderful. Just like Hawaii, if you treat someone with respect and listen to what they have to say, they will embrace you.”
Great Expectations
“Our contractors are very excited for this buildup as it will boost our economy over the next few years,” says James Martinez, president of the Guam Contractors’ Association (GCA).
Martinez says GCA is preparing for the buildup by training its local workforce in the construction and maintenance industries.
“With the creation of the GCA Trades Academy in 2006, local residents who have the desire to work in these industries now have the opportunity to enroll in a formal craft training program,” he says. “Our plan is to train as many local residents and residents of our neighboring islands for this military buildup, but more importantly to train for the sustainable jobs after the military buildup.”
Martinez says the local construction industry welcomes companies from Hawaii. “While the industry itself is competitive in nature, we welcome those firms from Hawaii and anywhere else on the U.S. mainland,” Martinez says. “With the huge amount of military work projected in the next few years, there’s going to be a need for specialized work on some projects that may not be readily available here. This will be an opportunity to bring this type of expertise to Guam. When the dust has settled with the military buildup and U.S.-based contractors return home, we are left behind with a higher skilled workforce in these specialized skills. Guam and Hawaii share many similarities, especially that our residents are Pacific Islanders who typically are very hospitable people. I think Guam and Hawaii builders can work well together despite the competitive nature of our business.”
Not only Hawaii builders have their eyes fixed on Guam. Companies from around the world are descending upon Guam. We asked Martinez if there is going to be enough work to go around.
Martinez’ response: “I suppose that depends on who you talk to. Some of these projects require bonding that is out of reach for most of our local contractors. There have been large companies from all over the world who have to come to Guam and many have indicated their interest in partnering or joint venturing with some of our local companies. While these companies have the financial capacity to get bonding for the larger projects, they also recognize that they will need the expertise of local companies in conducting business here on Guam. It’s the sharing of resources and capabilities that will make this buildup successful for both the local and off-island contractors. I also foresee the utilization of many subcontractors and small business entities for this buildup. There should
be enough work to go around, but first and foremost, we will advocate that our local contractors and other local businesses are given the opportunity to participate in this buildup.”
Martinez has this advice for Hawaii firms eyeing Guam: “As with most of the companies eyeing the opportunities for this military buildup, I would suggest that they first come to Guam and assess the situation in terms of labor resources, materials/supplies, transportation/shipping and local tax and licensure requirements for doing business on Guam. Further, they should talk to some of the established local contractors, both large and small and talk about their experiences and challenges of doing construction work on Guam. These networking opportunities also may foster new partnerships and the sharing of resources that benefit both the local and off-island contractor.”
Rock Steady
Hawaiian Rock Products reports it started preparing for the buildup three years ago and has invested more than $30 million in the program. “We are excited and ready,” says Thomas Young, executive vice president of the company, who has been with the firm for more than 30 years.
Hawaiian Rock Products welcomes builders from Hawaii, says Young.
“We welcome them and will support them as well as we support other contractors,” Young says. “In fact we have worked with Hawaiian Dredging, dck and Watts Constructors on many projects.”
Young’s simple advice to Hawaii contractors going to Guam: “Look for reliable subcontractors and suppliers.”
Jay Robles Sevilla of the company’s marketing and engineering department says, “Because of the buildup and the military updating their requirements, we have already made improvements to our facilities. One specific aspect is the concrete temperature requirements by the military and because of this we have installed a chilled water system to our concrete plants to meet the stricter temperature requirements.
“HRP has also increased its concrete truck fleet size over the last three years in anticipation of this buildup and we continue to prepare to meet the demands of the buildup.”
Tried & True
Bill Beery is president of Construction Management Services in Guam. Building Industry seeks his advice because of his decades of experience in the Hawaii and Guam building industries. The Iowa-born contractor came to Hawaii in 1970 and worked in construction for 30 years. When Hawaii’s construction industry slowed in 1996, he moved to Guam.
As a small businessperson, Beery is excited about the billions of dollars of work coming to the island.
BASE has 10 years experience on Guam. Pictured here is Guam High School, a design-build project for a new 477-student capacity high school building. dck pacific was the design-builder; BASE’s role was structural engineer. Photo courtesy of dck pacific.
“There’s an awful
lot of work coming,” Beery says.
He says operating a small business offers him flexibility when times are slow. “Of course, it will limit me when times get real busy,” says Beery.
As a licensed engineer and contractor in Guam, he also has the flexibility “to do a little bit of everything.”
What is the most important thing a small businessperson needs to do before the buildup? “You really want to make sure everyone knows you are here and what you do,” he says.
However, he says, marketing can sometimes be difficult. “There are a lot of outsiders coming in that don’t know you,” he explains. “That’s a challenge to make sure that everyone knows you’re out there and you’re available to help them.”
Beery says doing work in Guam is like being an Oahu-based contractor doing work on the Big Island or Maui 25 years ago. “The big difference is it’s an eight-hour flight instead of a 30-minute flight. It’s island type of construction. If you said that to an old-time contractor on Oahu, they would know exactly what I meant. Guam is a very small island. Everybody gets to know everybody.”
Beery points out another difference between building in Guam and Hawaii — “We have a lot of Korean, Chinese and Japanese contractors, which makes it a different kind of competition.”
Beery’s advice to Hawaii companies: “Primarily, they just need to get their contractors license here in Guam and make sure they are classified with the Small Business Administration and be prepared to participate,” he explains. “The government is starting to dump work out for bid, and once it comes out the door you have to move fairly quickly. They give 30 to 60 days to bid it, so if you’re not even licensed or classified with the federal government yet, you won’t be able to participate. You have to be ready to go!”
