III.

Economic Activities

Hawaii’s economic structure has undergone a succession of changes since the last years of the 18th century. At that time the native Hawaiians had a comparatively primitive but self-sufficient, ecologically sustainable economy based on farming and fishing. Subsequently, increased contact with the outside world brought a variety of new crops to the islands and spurred the development of trade. But there was no dominant economic development in Hawaii until the second half of the 19th century. Between the 1860s and 1930s, Hawaii’s economy was dominated by large plantation cultivation and the exporting of sugar and, beginning around 1900, pineapples. In the 1930s the U.S. government accelerated development of military installations in Hawaii. Federal expenditures in Hawaii before and during World War II (1939-1945) rapidly became a major source of income and employment.

Although economic activity declined after the war, it recovered in the 1950s as efforts were made to reduce Hawaii’s economic reliance on a few sources of income. During the 1950s and 1960s, manufacturing was diversified and expanded, a large-scale tourist industry was developed, and trade with the mainland and foreign countries was increased.

Expenditures by the federal government, for both military and nonmilitary purposes, are a principal source of income for residents of Hawaii. Tourism is the most important driver of economic activity. Second in importance is manufacturing, followed by agriculture, which is dominated by sugar. In recent years, plantation production of both sugarcane and pineapple has declined significantly. For more than a century tariffs and advanced agricultural technology kept cultivation of these crops economically viable. Recently, the relatively high labor costs in Hawaii have weakened the commercial competitiveness of sugarcane and pineapple. The large number of people engaged in trade reflects the importance of commerce to Hawaii, which must import many items.

Hawaii had a work force of 643,000 in 2006. Of those, 41 percent were employed in the services, doing such jobs as working in hospitals or serving in restaurants. Another 18 percent percent worked in federal, state, or local government, including those in the military; 20 percent in wholesale or retail trade; 35 percent in finance, insurance, or real estate; 8 percent in transportation or public utilities; 6 percent in construction; 4 percent in farming (including agricultural services), forestry, or fishing; and 3 percent in manufacturing. In 2005, 26 percent of Hawaii’s workers belonged to a labor union. Hawaii, along with New York, had the highest rate of unionization in the country.

A.

Economic Role of the Armed Forces

Compared with other states, Hawaii is unique in the great importance of military installations and military expenditures to the state’s economy. Camp Smith, on the island of Oahu, is headquarters for Marine Forces Pacific, the unified U.S. military command for the entire Pacific. Other principal military installations in the state are the naval base at Pearl Harbor, Hickam Air Force Base, Wheeler Air Force Base, Lualualei Naval Magazine, Marine Corps Base Kaneohe Bay, and the Schofield Barracks and Fort Shafter military reservations, all on Oahu; and Barking Sands Missile Range on Kauai. Military expenditures for construction, maintenance, and payrolls are an integral part of business life in Hawaii. In addition, an important factor in the economy of Hawaii is the purchasing power of the military personnel stationed there and their dependents.

B.

Agriculture

In 2005 there were 5,500 farms in Hawaii. Farmland occupied 526,091 hectares (1,300,000 acres), of which 20 percent was cropland. The rest was mostly pasture. Some 33 percent of the cropland was irrigated.

For years sugarcane was Hawaii’s most important crop, and pineapple was the second most important farm product. Now the two are of roughly equal value to the farm economy. Most of Hawaii’s sugarcane, pineapples, and livestock are raised on a few very large plantations and ranches. Although small farms are numerous, especially on Oahu, they occupy only a very small area of cropland. The only significant commercial crop produced for export on the small farms is coffee, which is grown in the Kona district in the western part of the island of Hawaii and on plantations on Kauai. Vegetables, fruit, and taro are cultivated mainly for local use.

B.1.

Pineapples

Pineapples were Hawaii’s leading crop by value in 1997, surpassing for the first time the income produced by sugarcane. While the production of pineapple decreased steadily during the 1990s, an increase in farm prices for pineapple made it Hawaii’s most valuable crop. The Hawaiian Islands once produced more than 40 percent of the world’s supply of canned pineapple and more than 70 percent of its pineapple juice. Production began to decline in the 1960s as companies closed their operations in Hawaii and developed new and more profitable ones in Asia. Pineapple acreage, which was 29,900 hectares (73,800 acres) in 1961, dropped to 8,100 hectares (19,900 acres) in the late 1990s. Pineapple is grown mostly on large plantations on Oahu, Maui, and Kauai. Although the fruit is picked by hand, machines do much of the planting and processing.

Much of the pineapple crop is grown on hilly land. Pineapples can be grown on relatively thin soils, but pineapple crops require more irrigation than sugarcane, and fertilizers usually have to be used.

B.2.

Sugarcane

The production of sugarcane, long the leading agricultural product of Hawaii, decreased dramatically during the 1990s. In 1997 it remained, however, the second most valuable crop to the state’s economy. Sugarcane is grown mainly on the islands of Hawaii, Kauai, Maui, and Oahu, primarily on the more arid, leeward side of the islands in irrigated fields. The sugarcane harvest varies from year to year, leaving the industry in a state of flux much of the time. The sugar plantations are nearly all large and highly mechanized. The sugarcane harvests are from April to September but utilize the available labor force on a year-round rather than a seasonal basis. Each field of cane is allowed to mature for 22 to 24 months, compared with the 12-month growing period elsewhere in the United States. The longer growing period results in a high concentration of sugar in the cane.

B.3.

Other Crops

Hawaii has made a strong effort to diversify its agriculture, which used to depend exclusively on sugarcane and pineapples. Coffee, grown primarily along the western coast of Hawaii Island, is a major export crop. Coffee production declined considerably in the 1960s and 1970s but began to recover in the mid-1980s. By the late 1990s the land area devoted to coffee cultivation had nearly tripled. In the same period, flowers, especially orchids, and macadamia nuts increased in importance as exports.

Papayas, bananas, and a wide variety of vegetables are grown on small farms on Oahu, primarily for local consumption. Guavas and passion fruit, although also consumed locally, are becoming increasingly important as exports.

B.4.

Livestock and Animal Products

Beef cattle are raised on large ranches that are located primarily on the islands of Hawaii and Maui. The famous Parker Ranch, the largest in the state, covers 85,000 hectares (210,000 acres) on the island of Hawaii. Privately owned Niihau is devoted primarily to livestock raising. Although large areas of the state’s grazing lands are semiarid environments, there are also well-watered pastures on the windward slopes.

Most of Hawaii’s dairy cattle are raised on Oahu to help meet the food needs of Honolulu and other cities. Because available pastureland is severely limited, most of the dairy cattle are kept on feed lots. Dairy farmers use their few acres of arable land to grow high-yield forage crops. Hogs and chickens are also raised.

C.

Fisheries

Fish has long been a staple food. Although some tuna is packed for export, most of the commercial catch is consumed locally. Tuna accounts for about one-third of the volume of the annual commercial catch, which in 2004 was worth $57 million. Other major food fishes include bigeyed scad, Japanese mackerel, pink and red snapper, and marlin. Sport fishing along the coasts and in offshore areas is popular with tourists.

D.

Forestry

Hawaii’s resources of sandalwood and another commercially valuable trees were so depleted during the first half of the 19th century that Hawaii no longer has large-scale lumbering activities. However, the state and some private landowners are seeking to restore the native koa tree and develop other species. Forests cover 43 percent of the state, and about half of the total forest land is considered commercial forest. The most valuable woods cut are hardwoods. However, except for the exploitative early 19th century harvesting of native Hawaiian sandalwood trees, the timber industry in Hawaii has not been a very productive sector of the economy.

E.

Mining

Hawaii lacks major mineral resources, and mining is limited to the production of materials for construction and road-building purposes. Crushed stone and cement are the two most important mineral products. Sand and gravel, pumice, lime, and coral are also produced. Hawaii has fairly extensive deposits of bauxite and titanium that have not been exploited.

F.

Manufacturing

The processing of agricultural products has been the leading industry in Hawaii since the large-scale development of sugarcane and pineapple plantations. Although there has been considerable diversification since the 1940s, raw sugar, pineapples, beef, and other foodstuffs still account for one-third of the income generated by industry. Manufacturing was formerly confined mostly to the Honolulu area, but has now been extended to other islands.

Sugarcane is refined at sugar mills on the plantations to produce raw sugar and molasses, most of which is then shipped to the mainland for final refining and packaging. Bagasse, a sugarcane by-product, has been used in making wallboard and paper and as fuel to generate electricity. Most of the state’s pineapple crop has been canned, frozen, or made into juice or juice concentrate for sale on the mainland. Tropical fruits, especially guava, passion fruit, and papaya, are processed for marketing in the form of canned fruit, juices, jams, and jellies.

Heavy industry in Hawaii is limited mainly to oil refining and the manufacture of steel products, chemicals, and cement. These activities are based mostly on imported raw materials. Besides cement, Hawaii has produced such items for the construction industry as laminated wood beams and bathroom fixtures.

The state’s textile and clothing industry, which supplies both the export and tourist trade, is based on the manufacture of such typical Hawaiian fashions as the brightly colored aloha shirt and the muumuu dress. Other economic activities include printing and publishing and the manufacture of plastic items, furniture, mattresses, perfume, and other consumer goods. Jewelry made from Hawaii’s black, pink, and gold coral is popular with tourists.

G.

Electricity

Almost all of Hawaii’s electricity is produced by steam- or diesel-driven generating plants that use oil as a fuel. In addition, some power plants on the sugar plantations burn dried bagasse, the fibrous residue of refined sugarcane. A little hydroelectricity is generated on Kauai and Hawaii. The state is studying the feasibility of various alternate energy sources, including solar energy.

H.

Tourist Industry

The tourist industry is the leading source of income for Hawaii. Oahu is by far the most heavily visited island, but construction and promotion of tourist facilities have helped to popularize the other islands. More than one-half of the visitors are from the mainland, with most of the rest coming from Canada and Japan. The numbers of people coming from the U.S. mainland has decreased in recent years, although a sharp rise in visitors from other countries—particularly Japan—has offset the decline. Tourist expenditures totaled $12.5 billion in 2002.

I.

Transportation

Hawaii is dependent on sea and air transportation facilities for its economic growth, based on trade and tourism. Hawaii also relies on air and sea links between its component islands.

I.1.

Airports

Most visitors arrive in Hawaii by air. The flight of 3,900 km (2,400 mi) from San Francisco to Honolulu takes less than five hours by commercial airliner. The state has a total of 10 airports. Nearly all of Hawaii’s interisland passenger travel is by airplane, and the state has 5 of the 100 busiest airports in the country, including Honolulu, 23rd busiest in the nation.

I.2.

Shipping and Ports

Oceangoing vessels carry most of Hawaii’s imports and exports. Tugs and barges transport such bulky products as sugar, pineapples, and oil between the islands and along the coasts. Most of this local traffic is made up of farm goods shipped to Honolulu for processing and export and goods from overseas transshipped at Honolulu for the other islands.

Honolulu is by far the leading port of the islands. Other important ports include Barbers Point on Oahu, Kahului on Maui, Hilo on Hawaii, and Nawiliwili Harbor on Kauai.

I.3.

Railroads and Highways

A few short railroads were built before World War II, primarily to carry sugar and pineapples and to move military supplies. Only one tourist line, on Maui, still remains.

Highways provide the basic means of land transportation. In 2004 there were 6,949 km (4,318 mi) of public roads, mostly along the coasts, including 89 km (55 mi) of federal freeways. Access by road to the mountainous areas inland is limited.

J.

Trade

In spite of its location in the central part of the Pacific Ocean, Hawaii has traded almost exclusively with the U.S. mainland for the past century. Among Hawaii’s great variety of imports are crude oil and oil products, machinery, motor vehicles, foodstuffs, fertilizers, and numerous consumer goods. Many automobiles and other products are now imported from Japan and other industrialized areas of Asia. The state’s leading exports are raw sugar, molasses, and processed pineapples. Other exports include coffee, macadamia nuts, and other foodstuffs; clothing; flowers, especially orchids; cement; and oil products. Honolulu is the state’s entrepôt (an intermediary center) for wholesale and retail trade. Japan is Hawaii’s leading foreign trade partner. Others of importance are Australia, Canada, and the Philippines.