High-Tech Beachhead : Hawaii Tries to Create a Mini-Silicon Valley to Broaden Its Economy

Silence the ukuleles! Cap that bottle of No. 15 sun-block lotion. Blot out the image of grass-skirt dancers silhouetted against the sunset. Some people around here think that it’s time to take Hawaii seriously.

High technology and scientific research are the new icons for the future of Paradise, they say, not beach bumming and resort development. The grand vision is of diversifying Hawaii’s tourist-clogged economy with clean, utopian workshops.

These imaginative planners are taking their pitch to high-tech companies in California and Asia with promises of a strategic spot at the center of the Pacific Rim.

Never mind the lack of industrial infrastructure or the local labor shortage. Newcomers will find, instead, the “Aloha spirit’ and an untapped pool of over-educated, under-employed workers itching to abandon their hamburger-flipping jobs in the service sector.

Software developers, in particular, will receive a hero’s welcome here, though they’ll soon discover that the state’s existing high-tech output might be best described as vaporware .

But that isn’t stopping Hawaii from aiming for the stars. It has lots of big telescopes on haze-free volcano summits. And for the benefit of those who want a small satellite launched into equatorial orbit, the state bureaucracy has its own space agency. Officials envision constructing a $500-million commercial launch pad atop a sacred lava bed on the Big Island.

As American dominion over the islands approaches its second century, Hawaii is suffering from an identity crisis. The 50th state is searching for a new economic niche, and trying to persuade the world that its tradition of anti-growth no longer means anti-business.

The irony is that Hawaii is doing pretty well as it is, enjoying one of the highest growth rates and the lowest unemployment rate in the laggard U.S. economy. But its economic structure is decidedly Third World: One in every five civilian workers has a government job. The next most important employer is the hotel industry.

Hawaii is not unlike a wealthy little banana republic, staking its shallow prosperity on tourism, an industry with capricious cycles.

The eggs-in-one-basket dilemma is mitigated only by a shriveling sugar cane industry and a bloated defense establishment. The antidote to these feet of clay is the high-tech dream, which is prominently etched into the State Plan and lauded in political rhetoric.

At the cutting edge of Hawaii’s high-tech development effort is . . . Silicon Maui?

Here, on an island perhaps better known for whale-watching and sweet Maui onions, authorities are backing an ambitious plan by local investors to build a state-of-the-art high-tech industrial park. Amenities will include fiber-optic telecommunication cables and, thanks to a $19.5-million Pentagon grant, one of the world’s fastest supercomputers.

After a decade of symposiums, planning sessions and false starts by financially distressed developers, the 330-acre Maui Research and High Technology Park recently hung out its shingle. All it needs are a few good companies to settle on this former cow pasture.

Phase I has been a hard sell. The park has one privately developed office building and only one high-tech tenant: Rockwell Power Systems, a subsidiary of El Segundo-based Rockwell International. The company has a five-year contract with the Air Force to operate telescopes on Mt. Haleakala, elevation 10,012 feet, and do a little Star Wars research on the side.

Truth is, Rockwell would have been on Maui anyway, tending the “Science City” military observatory atop the dormant volcano. But Rockwell managers say they like their suite in the park’s Premier Place, a black-glass hulk they’ve nicknamed the “Stealth Building.”

And they do enjoy the ocean view. So do the other tenants, low-tech businesses whose ranks include an accountant and a psychologist.

Another structure on the wind-swept site houses a $10-million “high-tech incubator,” a state-financed facility opened in May where preemie business ventures are nurtured with low rent and office support services. The coddling lasts until Club Tech patrons are robust enough to go out on their own and offer high-paying jobs to Hawaiians.

“Boosting the value added per man-hour is the only way to have economic growth without population growth,” said Michael Boughton, vice president of the Maui Economic Development Board, a not-for-profit corporation that manages the park for investors, and runs the incubation facility under contract with the state.

Boughton, who heads the marketing campaign to fill the park, recently launched a volunteer group called “Friends of Maui” in Orange County to stimulate interest. Knowledge-intensive, small-scale businesses are his prey, and Maui’s congenial climate is his bait.

“If it doesn’t matter a whole lot where you are, because you’re out of place wherever you may go,” Boughton reasoned, “then it’s a lot better to be out of place on Maui.”

Maui is not alone in the Hawaiian quest for techno-entrepreneurs. On the main island of Oahu, the state’s Department of Business, Economic Development and Tourism converted an old telephone switching barn into a small incubator. A larger facility is under construction on the edge of the University of Hawaii’s Manoa campus, in an attempt to emulate the academic-entrepreneurial synergy that spawned techno-growth around Stanford and MIT.

But skeptics note that despite the state’s considerable efforts at industrial policy, it hasn’t produced much of a techno-payroll. Nor has the effort stemmed the “brain drain” of educated young Hawaiians migrating to the mainland to escape high housing costs and poor job prospects at home.

“There’s a lot of hope, and there’s a lot of hype,” said Richard Baker, an international relations analyst at Honolulu’s East-West Center. “The hype says, ‘We’re right here in the middle of the Pacific.’ But the reality is that business passes us by.”

Other critics point out that the high-tech campaign is doing little to resolve pressing economic problems among disadvantaged ethnic Hawaiians. People of Hawaiian ancestry number about 139,000, 13% of the state’s 1.1-million population.

“I don’t think high technology is going to offer much to Hawaiians until some of our most severe problems are addressed,” said Dana Naone Hall, leader of Hui Alanui O Makena, a community group on Maui that advocates native Hawaiian rights. “Hawaiians don’t have the skills for high-technology jobs.”

It was the whaling industry--and the missionary business--that brought adventurous haole (whites) to Hawaii in the early 1800s. By the end of the century, sugar cane plantations were the mainstay of the economy.

Military spending became a major prop of the economy after Honolulu became home port for the Pacific Fleet. But sugar remained king until Hawaii was granted statehood in 1959 and the advent of commercial jet travel in the 1960s sparked a tourism bonanza.

Land ownership remains concentrated in the hands of several giant agricultural concerns, which look increasingly like mammoth real estate development companies.

One such family-owned land conglomerate, Maui Land & Pineapple, was deeply intertwined in the development of the island’s technology park. A subsidiary provided land for sale. The company’s patriarch, Colin Cameron, who drowned last month, was a major investor and a principal player from the park’s conception.

“The problem with Hawaii is that we’re essentially a post-industrial society living on a feudal land base,” said Gregory G. Y. Pai, special assistant to the governor for economic affairs.

A limited supply of land zoned for urban use has combined with 1980s speculation and an increasingly popular anti-development bias to give Hawaii some of the priciest real estate on--or off--the Pacific Rim.

The median sale price of a single-family home on Oahu was $342,000 during the first quarter of this year, triple the national median, according to the National Assn. of Realtors.

“It’s creating a situation where one day only the rich and the poor will live here,” said Pai, a former bank economist. “If you have a degree in electrical engineering and want a job, forget it, unless you open a TV repair shop.”

Meanwhile, the state is pressing on with its various economic diversification schemes. Nurturing local film and television production is one of the priorities, and Hawaii has an agency that’s building a $10-million sound stage to woo Hollywood players.

Regional diplomacy is another arena where Hawaii is looking for respect.

The East-West Center draws Asia-Pacific scholars of all stripes to its plush think tank. Honolulu hosts frequent conferences on the plethora of little island nations in the South Pacific, a ragtag community to which Hawaii serves as a kind of Polynesian big brother.

Even Washington and Tokyo periodically find a comfortable halfway venue for talks here. Diplomats are reputed to be fond of changing into Aloha shirts, as is the local custom, before getting down to tough negotiations.

That should mean something, said Adam Smyser, a local journalist who has written detailed reports for the East-West Center on Hawaii’s future role in the region.

“We need to work on our image as the Geneva of the Pacific,” said Smyser, contributing editor for the Honolulu Star-Bulletin. “No one should have to apologize for attending a legitimate meeting in Hawaii. And people shouldn’t be allowed to kid you about coming to playland to do serious business.”

Aloha Economics A boom in tourism and resort development gave Hawaii strong economic growth during the 1980s. But now the state is worried about overdependence on the visitor industry and wants to diversify its industrial base.

Source: Bank of Hawaii; Hawaii Department of Business, Economic Development and Tourism