Kinden Pacific, Guam Military Buildup Subcontractor, Readies to Tap Mother Company Workforce to Skirt Labor Crunch as It Awaits Word on Dozens of Bids

Written by FRANK WHITMAN

Friday, July 08, 2011

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GUAM - Kinden Pacific Corp., an electrical and mechanical engineering contractor that has seen its Guam revenue rise by 30 percent with military work, is ready to skirt potential island labor shortages and almost triple its workforce by tapping the international network of its mother company.

Kinden Pacific, the Guam affiliate of Japan's Kinden Corp., says its workforce will have to rise sharply from the current level of 70 workers at the peak of its subcontracting work on the $158 million replacement of Naval Hospital Guam, even without considering other major subcontracting work.

"We're anticipating 150 to 200 employees at one time at the height of the project," Scott McKee, Kinden Pacific's business manager, said in an interview with GuamBuildupNews.com. "We can pull from different subsidiaries or hire locally. We have many options to beef up at the last minute."

Japan's Kinden Corp., the mother company of Kinden Pacific, has more than 7,000 employees in 12 domestic affiliates in Japan and nine overseas affiliates in Hawaii, Hong Kong, Indonesia, Vietnam, Thailand, the Philippines, Malaysia and Guam.

Kinden Pacific opened its doors on Guam 30 years ago, but initially worked primarily on private commercial projects, including some of the island's largest hotels. Business increased by about 30 percent five years ago when it moved into federal contracting, a branch that is set to grow sharply as the military ramps up the Guam military buildup.

The Department of Defense's plan to transfer at least 8,600 Marines and their dependants and support staff to Guam from Okinawa in coming years will cost at least $17.4 billion. When expenses for all branches of the military are taken into account, the cost will exceed $23.9 billion over the next 10 years for the island's overall military expansion.

Local contractors expect the construction and other work from the hundreds of contracts and task orders will require as many as 10,000 workers on the island, exhausting the ready labor of the island of 180,000 inhabitants and forcing many companies to turn to the Philippines and elsewhere for imported labor.

Recent shifts to align the planned construction pace for a more realistic timeline, however, may help ease the need for a massive labor import for some companies. Japan and the U.S. last month agreed to lifting the former 2014 deadline so that the buildup does not overwhelm the island and is not pressed to a hard completion date but rather held to tangible progress towards accomplishing the Marine transfer "as soon as possible after 2014."

Mr. Mckee said the company's decision to shift toward federal construction on Guam has helped boost its revenue by 30 percent in the past five years. The company's recent subcontracting work history reads like a directory of major military construction projects on the island.

"It's only recent that we've moved into the federal side," Mr. McKee said. "Within the last five years we've gotten more and more projects that have been Navy and Andersen [Air Force Base] based. Our other subsidiaries have been doing federal work a lot longer than the Guam location."

Kinden has 18 ongoing projects for its 70 workers, Mr. McKee said. About 80 percent of the company's work is electrical — "feeder lines, [Guam Power Authority] lines, underground or just adding an outlet to a circuit, we do it all," he said. The remainder is mechanical.

The company's largest ongoing project is as a subcontractor under the Watts Webcor Obayashi Joint Venture on the Naval Hospital Guam, which was awarded Sept. 16, 2010 and started Jan. 14. Kinden's work on the project will require a significant boost in its workforce although exact number of workers needed depends on how the work is finally scheduled.

Kinden is also a subcontractor on the $86 million upgrade of Uniform and Tango wharves at Apra Harbor on Naval Base Guam, also awarded in September under the $4 billion Guam multiple award construction contract to Guam MACC Builders JV. The joint venture includes Watts Constructors, Webcor, Obayashi and Healy Tibbitts Builders Inc. A groundbreaking ceremony was held May 6 for the wharves upgrade.

It is also a subcontractor under Reliable Builders Inc. on the $3.66 million Postal Service Center on Andersen. And it was a subcontractor under Hensel Phelps and Lockheed Martin on the recently completed Joint Region Marianas Regional Operations Center at Nimitz Hill.

Kinden was a subcontractor to Watts Constructors on the $30.7 million base exchange shopping center on Andersen awarded in January 2007 to CDM/Cape Joint Venture.

Mr. McKee said a wide range of projects are still to come available, although the pace is often hard for contractors to predict. About a fifth of the company is related to bidding, a laborious process that needs to be carefully dealt with to keep abreast of ongoing, upcoming and temporarily shelved opportunities.

"Bidding is probably 20 percent of the company,' Mr. Mckee said. "We have bid a tremendous amount of projects. There are probably 50 or 60 projects out there just waiting to be handed out. It's an impact for almost every contractor because they take the time - they have the personnel quote these projects. Some of these projects are over a year old that they've quoted on and they've not released any information on when they're going to release."

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