By Morgan Legel
Luckily, Guam’s construction industry has not been hugely impacted by the COVID-19 pandemic. Yes, there is struggle finding skilled workers and adjusting to new safety protocols, but there is also plenty of work to be had, according to some of the leading companies of the contracting community.
Amorient Engineering, Black Construction Corp., GHD Inc., Smithbridge Guam Inc., Pacific Rim Constructors Inc. and Core Tech International Corp. are at the crest of an industry that through the years has seen good times and bad.
Below is a round-up of answers to some very important questions.
Is your company busy? Do you expect that to continue for the foreseeable future?
Hernan Bonsembiante, president of Amorient Engineering: “We are experiencing the same increase in activity as the rest of the construction and engineering industry; we expect to continue at this level for the next two to three years based on signed contracts and submitted proposal.”
Leonard K. Kaae, senior vice president and general manager of Black Construction Corp.: “Black Construction Corp. is currently busy with military realignment projects and private sector work,” says. “During this time, we took special measures to ensure the health and safety of our most critical asset, our employees. We undertook significant efforts to contain the virus and mitigate & prevent the risk of future infection. Despite the current public health restrictions, Black envisions an increase in future opportunities.”
Albert J. Smith, president of Smithbridge Guam Inc.: “Smithbridge Guam has been consistently busy for the last 18 to 24 months. In fact, our workforce has more than doubled in size over the last two years.”
Conchita D. Bathan, CEO for Core Tech International Corp.: “Aside from performing on current construction projects, we are also responding to the Request for Proposals issued by [Naval Facitilities Engineering and Systems Command] for military projects as well as stand-alone bids ‘outside the fence.’ Core Tech is a member of CHK LLC, a joint venture with HDCC Guam LLC and Kajima Pacific LLC. CHK is one of the awardees of the MILCON and Mamizu MACC five- year program for the U.S. military construction projects in Guam and other areas under NAVFAC Pacific. We will be responding to the RFPs under both programs.”
Aaron Sutton, Guam office manager and civil engineer, GHD Inc.: “Yes, we expect to get even busier for the remainder of the year.”
Keith J. Stewart, president of Pacific Rim Constructors Inc. “On Guam, we are busy, but are still bidding and seeking work. In the Northern Mariana Islands, we are unfortunately not very busy. We see the Guam market remaining strong and the NMI market improving later this year.”
Please share the most prominent projects you are working on at present.
Bonsembiante: “We are providing special inspection services to most of the ongoing military construction projects.
“In addition, we are providing mechanical, civil and electrical engineering design services for the remodeling of the Fiesta hotels in Tumon and Saipan as well as the Kanoa in Saipan.”
Black’s Construction’s current projects include those in Guam and Diego Garcia. Black Construction is working on three projects on Diego Garcia for $27 million, $29 million and $30 million.
Among Guam work is a contractor-owned operated cold, chill and climate controlled warehouse for $26 million; a marine aviation logistics squadron facility for $36 million, a housing project for $178 million and a corrosion control hangar for $46 million, all on Andersen Air Force Base; two U.S. Navy projects for an explosive ordnance disposal facility and the live-fire range, $47 million and $78 million, respectively; the A.B. Won Pat International Airport, Guam’s upgrade to the structure and concourses for $97 million; and a wastewater treatment plant upgrade for $120 million.
Sutton: “The Guam Waterworks Authority northern district construction management for $122 million in construction and the GWA pressure zone realignment, for $30 million in construction.”
Smith: “The projects we are working on as subcontractors include the SASA Valley and Echo Delta port fuel facilities upgrade, the Andersen Air Force Base fuel facilities upgrade, the urban warfare training center [at Andersen South], and an AAFB hangar and residential housing project.”
Stewart: “Our largest current project is the construction of Camp Blaz’s commercial and vehicular gates, which is valued at approximately $36 million.”
“We are also finishing an $18 million housing project in Guam and a $17 million casino project on the island of Tinian.”
Bathan: “We have several on-going projects and the most prominent is the urban combat training facility, which is a $150 million project.”
What is your biggest challenge at the moment?
Bonsembiante: “Providing competitive proposals that incorporate the unavoidable upcoming increases in cost, while remaining competitive.”
Kaae: “Black’s greatest challenge is dealing with the local, national and international COVID restrictions and our peripheral operations. Travel restrictions hindered Black’s specialty subcontractors from travelling to Guam on schedule to meet project completion deadlines.
“In addition, COVID caused delays in procurement of materials and led to increases in transportation and standby costs. In spite of those challenges, Black continued construction operations throughout 2020, keeping our staff and craft personnel gainfully employed. Like many others, the company had to regroup and learn how to continue business without the necessary tools and expertise to complete the mission.”
Sutton: “Finding and hiring qualified staff.”
Stewart: “Personnel — we are seeking strong personnel at virtually every level in the business.”
Has the pandemic meant that shipment of supplies or equipment has become more difficult because it takes longer, or supplies are unavailable? Has it become more expensive to do business?
Kaae: “Black Construction has developed relationships with a global network of partners, allies, agents and many other consultants. For the last 63 years, Black has maintained its mission and reliance on Guam’s economy and construction skilled workforce industry.”
“Despite the barriers and obstacles during 2020, our vast expertise, business relationships and influence with the global construction industry, construction suppliers and shipping logistical teams, made the challenges it encountered a learning experience, just like many others during the pandemic.”
Stewart: “Yes, the pandemic has slowed the delivery of supplies and equipment, but so far we have found solutions to each of the issues we have encountered to keep projects moving forward.”
“Our company has developed the reputation of taking on challenging projects and creating solutions. The challenges with COVID have offered many similar challenges that we have worked to solve. The delays have impacted our projects in a variety of ways depending on where the materials were originally sourced. We certainly see future risk due to economic uncertainty, the likelihood of interest rates increasing and other factors that are a result of the federal government’s decision to print so much cash. The cost of doing business has become more expensive due to the pandemic. Cost impacts have been both direct, where labor shortages are difficult to overcome due to lack of traveling, projects have slowed or stopped, the uncertainty in the market has created inflation, and additional staff are needed to support and resolve the challenges created.”
Bathan: “We experienced some delays of shipment from shippers sharing container yards at the U.S. depot. The shipper is experiencing congestion of containers at the yard due to limited personnel working at the yard.
“Some materials such as PVC pipes show a 300% increase in cost as compared to pre-COVID. Steel products are also showing an increase in cost due to a shortage of raw materials, due to the pandemic. What used to be a 30-day offer validity, is now reduced to three days, especially for pipes and steel. Vendors are not able hold their prices too long due to price fluctuations. Factories have closed down or have limited workers due to COVID.
“In addition, inclement weather conditions such as flooding and snow were experienced during the past months. For these reasons, the vendors’ response in providing proposals takes longer because of delayed response from the factories.”
What are the challenges facing your business due to the current COVID climate?
Bonsembiante: “Having our personnel travel to other islands and bringing in off-island consultants. The quarantine period adds an enormous extra cost to the project, making it in many cases infeasible.”
Kaae: “The COVID-19 cases on Guam are declining, with vaccinations currently in progress.
“Black was fortunate to continue operations despite the challenges. With changes in immigration policies and labor laws, we hope to work with our government counterparts to make Guam prosperous while practicing all precautionary measures to maintain a healthy and safe working environment for our personnel, subcontractors, vendors and, most importantly, our clients.”
Sutton: “The inefficiencies of working from home to limit contact in the office.”
Smith: “The major challenge associated with COVID is restrictions around international travel.”
Stewart: “While we are hoping that the markets where we are working will remain strong and insulated from COVID, we have been focusing on the safety of our personnel.
“COVID has created a number of challenges that we have had to work through. For example, this past year when we needed H-2 workers, the Philippines consulate was closed due to COVID. This one impact prevented us from finishing projects earlier, by negatively impacting our ability to source foreign labor.
“There are numerous other impacts from additional costs, reduced productivity, material delays, government restrictions, labor cost escalation, labor shortages, etc.”
Bathan: “The volatility of the prices of construction materials mentioned above as well as potential delays in deployment of temporary construction workers. As we all know, Guam needs to bring in skilled workers for the projects, mostly coming from the Philippines under the H-2B visa program. Unless the COVID situation in the Philippines improves, we anticipate delays in bringing in workers from the Philippines.”
Is the majority of your work in military construction, or government, or private work, or a mixture?
Bonsembiante: “We have a healthy balance between all sectors: we have service contracts with all major construction companies working on the buildup, a contract with GWA, private developments and off-island work like in Saipan and the Federated States of Micronesia.”
Kaae: “Historically, the majority of Black’s work has been with the military. Although, we’re currently working on a few private sector and government projects.”
Sutton: “It’s a mixture of military and government.”
Stewart: “Pacific Rim is completing a variety of military and private construction projects. We anticipate significant revenues being generated in government work in the coming years.”
Bathan: “We do have a mixture of construction work but majority of the work is military construction.”
According to our files, the Guam Department of Labor expects our numbers to increase in the short term – by this summer from about 1,600 to 3,000, with most of the labor coming from the Philippines. According to estimates, Guam will need 4,000 to 6,000 skilled workers by 2023. How do you speculate we will achieve that, and where would these workers come from?
Bonsembiante: “I think that eventually more workers from the mainland will arrive to Guam for specialized work.”
Kaae: “Black Construction employs over 600 H-2Bs and intends to recruit additional labor from the Philippines as our demand requires, by working with the government and the United States Citizenship & Immigration Services to obtain approvals.
“Additionally, Black fully supports and promotes its local workforce. We remain committed to training the next generation of local, talented, skilled labor by supporting workforce development initiatives like the boot camps at Guam Community College.”
Sutton: “There is a future need with the amount of design projects already in progress and about to begin; we don’t know where they will come from.
“It will be difficult to get skilled laborers. The fight for the few skilled laborers is already causing increases in construction costs and project delays.”
Smith: “Smithbridge strategies to deal with the labor shortage include increased focus on training the readily available local workforce; sourcing H-2 labor from Australia, New Zealand, Taiwan and Philippines; and increasing wages and benefits to make Guam a more attractive employment opportunity location.”
Stewart: “We anticipate a small percentage of skilled and supervisory labor coming from the US, with the majority of the craft skill being sourced from the Philippines.
“Considering the reduced amount of construction work going on in the world, we do not anticipate there being a challenge with getting the workers, as long as the government supports the recruitment and issuance of foreign workforce visas.”
Bathan: “The country of origin where workers are from is less important than where to house them on Guam. There are only a handful contractors who has the barracks that can accommodate workers.”
Is the H-2 labor shortage affecting your company, or have you found other ways to attain and retain the workforce that you need?
Kaae: “Over the past five years, there’s been a shortage of skilled labor on Guam. To address this shortage, Black committed substantial resources to help promote job opportunities in the construction industry. Over the past year, we collaborated with the Guam Community College in its construction and truck driving boot camps. The boot camps educate unskilled workers to eventually become skilled craftsmen. These opportunities offer a career in construction learning new skills and earning a decent salary. Black’s objective is to help increase and invest in Guam’s future skilled workforce industry.”
Smith: “The H-2 issue and the travel restriction issue have created a need to bring high-cost manpower from the U.S. mainland. This is a cost issue rather than a logistics issue.”
Stewart: “It most certainly has negatively impacted our company.
“We have been working to recruit and retain our local workforce while supplementing it with H-2 visa holders, but with the amount of work currently underway on Guam the labor shortages are impacting our ability to grow.”
Following Public Law 36-2 which fast tracks building of barracks due to the pandemic, are you constructing barracks for H-2 workers, and if so where, and for how many? Or do you already have barracks and if so, where and for how many?
Kaae: “Black has prepared for the increased demand for skilled labor by working with our local leaders to address this issue. Unfortunately, the COVID-19 pandemic unexpectedly put a halt to the government permitting process to build additional workforce housing facilities.
“We are grateful to the governor, the legislature and the Tamuning Municipality Planning Council for recognizing the urgent need for temporary workforce housing facilities and for enacting legislation, Public Law 36-2 to help move the permitting process forward. Black believes in working collaboratively with our community partners and is committed to working within the regulatory framework established by the government to build additional workforce housing as the need arises.”
Smith: “Smithbridge is not constructing barracks accommodation for employees. “Smithbridge is of the view that the current dormitory style barracks accommodation is inappropriate for 2021 in an environment where the industry is committed to be an equal opportunity employer and where we are obligated to minimize COVID-19 transmission risk.
“All Smithbridge off-island recruited employees will be accommodated in apartments and houses.”
Stewart: “We are currently renting barracks for our H-2 workers. We do recognize the need to build our own barracks in order to mitigate the risk of there not being sufficient housing for our workers, while providing them with the best facilities possible.”
Bathan: We already have a 2,000 bed capacity barracks for the H-2 workers in Ukudu. It’s equipped with a mess hall, kitchen facility, minimart, laundry, recreation facility and a basketball court.
“We also have a separate housing facility for the professional staff who will be coming to Guam from off-island.”