Hilo: Economy

Major Industries and Commercial Activity

Hilo has a diversified economy that includes agriculture, tourism, aquaculture, livestock, trade, education, and government.

The Big Island was a world center for the production of raw sugar from 1876 to 1994, when the last plantation closed. Today, the tremendous rainfall produces a genuine paradise of flowers, from exotic anthuriums and orchids to tropical blooms of all sorts. The city, which is the center for the world's largest tropical flower industry, exports fresh cut flowers, sprays, and potted plants from various farmer cooperatives and flower farms. About 1 million acres of the island's total 1.8 million acres are devoted to agriculture, a $500 million per-year industry.

Livestock is an economic mainstay, with sales of beef, hogs, dairy and poultry products, and honey totaling more than $25 million annually. Cattle ranches, including Parker Ranch, said to be the largest privately-owned ranch in the world, produce 70 percent of livestock marketed in the state of Hawaii. Nearly 115,000 cattle are raised on the Big Island and most are shipped to the U.S. mainland and Canada for processing. The Big Island is Hawaii's largest producer of honey, with its honey and queen bee industries producing more than 1 million pounds annually.

Aquaculture, another important industry on the island, has been a mainstay of economic life since the first Polynesian settlers came to the Big Island. Abalone, carp, catfish, clams, flounder, milkfish, moi, mullet, ornamental fish, oyster, prawns, sea cucumber, seaweed, shrimp, snails, sturgeon, tilapia, and rainbow trout are among the fish and seafood harvested. Several types of microalgae are also being cultivated for pharmaceutical and nutritional products. Aquafarms on the Big Island, totaling more than 170 acres, produce 11 million pounds of aquaproducts annually.

Despite serious agricultural problems ranging from drought to harmful bacteria, the Big Island produces more than four-fifths of the state's production of fruit (other than pineapples), including bananas, guavas, oranges, tangerines, and avocados; the bulk of the state's macadamia nuts and papaya; the vast majority of its coffee; crops such as ginger, Chinese cabbage, leaf lettuce, greenhouse tomatoes, and cucumbers; and orchids, anthuriums, and other nursery products for domestic and foreign markets. A recent problem for Hilo's agricultural industry has been the infestation of the coqui frog. The increasing population of this amphibian has threatened the island's ecosystem.

The tourism industry has all but bypassed the town of Hilo due to its lack of a decent beach and the 134 inches of rainfall annually. Since Hilo has never been a tourist destination, the town has retained its historic character and has not suffered from the infrastructure problems associated with high-rises and big-city development. However, it just may be that historic character that is attracting new visitors to the city. Leisure and hospitality services comprised the largest of the major industrial sectors in the area in 2003. According to Hawaii Business Magazine, "In 2003, the town received 219,262 cruise ship passengers from 116 foreign ship calls. By 2007, the city expects to receive 418,600 visitors from 219 domestic and foreign ship calls." Recent marketing efforts have focused on drawing Japanese visitors.

Hilo's Foreign Trade Zone (FTZ) is ideally situated adjacent to Hilo Harbor and the Hilo International Airport, less than a mile from downtown Hilo. This 31-acre site is the first such zone designated by the State of Hawaii to attract manufacturers to Hawaii. The FTZ allows companies locating there to import parts for assembly and export the finished product without paying import duties. It was given a boost when NIC Americas, Inc., became its first tenant. NIC Americas manufactures a device that uses electrical arcing to destroy used needles from health care facilities. The company represented Hilo's first significant new manufacturing facility in recent times; if successful it could lead to other FTZ tenants.

Television, film and commercial production also contributes to Hilo's economy. The County of Hawaii hosted 129 film productions from ten countries in 2003-2004, an increase from the prior year. Revenues were stable however, due to an increase in small films and a decrease in large revenue productions.

Items and goods produced: flowers, fruit, cattle, fish, macadamia nuts, coffee

Incentive Programs—New and Existing Companies

Local programs

Hawaii's Small Business Development Center Network is a partnership of the University of Hawaii at Hilo and the U.S. Small Business Administration. With the aim of helping small business become established or expand, the Network offers one-on-one counseling, seminars, workshops and conferences.

State programs

Most business incentives are offered at the state level. These include direct financial incentives such as Industrial Development Bonds, a Capital Loan Program, customized industrial training, and investment of public funds in return for equity or ownership positions in private businesses. Tax incentives are also offered along with Hawaii Urban Enterprise Zones Program. Other tax incentives for businesses on the Big Island include no personal property taxes; no taxes on inventory, equipment, furniture and machinery; no tax on goods manufactured for export; no unincorporated business tax; and banks and financial institutions pay only one business tax. High technology businesses can also take advantage of unparalleled tax breaks through legislative initiatives (ACT 221, SLH 2001) and the State Foreign Trade Zone program and Enterprise Zone Partnership.

Job training programs

The Workforce Development Division of Hawaii's Department of Labor and Industrial Relations oversees One-Stop Workforce Assistance Centers, a job placement and training system to help people find work and employers find suitable workers, and the Employment & Training Fund (ETF), a job skills upgrade program for current workers. Employers can receive customized training grants for their workplace or they can nominate a current worker for an established training course.

Job Training Information: Workforce Development Division, Hawaii Department of Labor and Industrial Relations, Kaikoo Mall, 777 Kilauea Ave., #121, Hilo, HI 96720; telephone (808)974-4126; fax (808)974-4125

Development Projects

Since the fall of the Big Island's sugar plantations in the mid-1990s, "Hilo has transformed itself from a plantation town to a university town," according to Richard West, executive director of the Hawaii Island Economic Development Board in a 2004 article in Hawaii Business Magazine. Hilo has seen the addition of several new science and technology developments in the early 2000s. One of the largest new projects is the Mauna Kea Astronomy Education Center (MKAEC), a $28 million facility showcasing the astronomy research conducted on the summit of the Mauna Kea volcano. Located in the University of Hawaii at Hilo's University Park of Science and Technology, the center is expected to attract 200,000 visitors annually when it opens in July 2005. The U.S. Department of Agriculture's Agricultural Research Service broke ground on a $60 million research lab in Fall 2004. In 5 stages, the Pacific Basin Agricultural Research Center (PBARC) will eventually encompass 120,000 square feet of laboratories, an administration building, greenhouse facilities, and insect rearing facilities. Additional research dollars will come to Hilo with the opening of the U.S. Forest Service Institute of Pacific Islands Forestry, a $12 million forest research laboratory.

Economic Development Information: County of Hawaii Department of Research and Development, 25 Aupuni Street, Hilo, HI 96720; telephone (808)961-8366. Hawaii Department of Labor and Industrial Relations, telephone (808)586-8842. Hilo Hamakua Community Development Corporation, County of Hawaii, 25 Aupuni Street, Hilo, HI 96720.

Commercial Shipping

Hilo Harbor has an entrance depth of 35 feet, and the harbor basin has a length of 2,300 feet and a width of 1,400 feet. There are 2,787 linear feet of piers, and storage area totals 122,000 square feet of shedded and 492,000 square feet of open space. Plans on the drawing board for the harbor include the separation of the commercial shipping and cruise ship activities to accommodate the increasing demand of cruise lines which would like to dock there.

Labor Force and Employment Outlook

Hilo's job outlook has been improving slowly and steadily. The city's economic recovery has mirrored the state's reviving economy. The County of Hawaii's unemployment rate has improved from 9.5 percent in 1995 to 5.1 percent in the last quarter of 2004. This is compared to 3 percent for the entire state. According to the FDIC, every major industry in the State of Hawaii posted employment gains in 2004, with the tourism sector benefiting the most. The leisure and hospitality sector and the retail trade sector together accounted for 40 percent of the job growth in the state. Solid job gains were also seen in the health services sector. The FDIC also reported at a 2004 Business Outlook Forum that "economists were upbeat about the state's economic future and respondents surveyed by the Bank of Hawaii expressed near record-high business confidence."

The following is a summary of data regarding the city of Hilo labor force as of 2000.

Size of civilian labor force: 19,902

Number of workers employed in. . .

construction: 1,151

manufacturing: 418

retail trade: 2,224

transportation, warehousing, and utilities: 1,159

finance, insurance, real estate, rental and leasing: 818

arts, entertainment, recreation, accommodation and food services: 1,895

public administration: 1,565

educational, health and social services: 4,505

other services: 880

Average hourly earnings of workers employed in manufacturing: $13.13 (2003)

Unemployment rate: 3% (Hawaii, January 2005)

Largest employers	Number of employees
State of Hawaii	7,450
County of Hawaii	2,250
C. Brewer & Co. (holding company)	1,987
Hilton Waikoloa Village	1,200
U.S. Government	850
Mauna Lani Resort Inc.	800
KTA Superstores	776
Mauna Lani Bay Hotel	650

Cost of Living

Median single family home resale price in Hawaii County in 2002 was $194,500. The following is a summary of data regarding key cost of living factors for the Hilo area.

2004 (3rd Quarter) ACCRA Average House Price: Not reported

2004 (3rd Quarter) ACCRA Cost of Living Index: Not reported

State income tax rate: Ranges from 1.4% to 8.25%

State sales tax rate: 4.0%

Local income tax rate: None

Local sales tax rate: None

Property tax rate: $9.10 per $1,000 assessed valuation for improved land and buildings; $5.55 per $1,000 valuation for owner-occupied residences

Economic Information: County of Hawaii, Department of Economic Development and Tourism, 25 Aupuni Street Room 219, Hilo, HI 96720; telephone (808)961-8366; fax (808)935-1205. Hawaii Island Chamber of Commerce, 106 Kamehameha Ave, Hilo, HI 96720; telephone (808)935-7178; fax (808)961-4435; email hicc@interpac.net