A NUMBER of companies have already pulled out or are beginning to scale down operations on Guam, because of the continuing delay in the military buildup.
Horizon Lines is the much publicized pullout so far, but Island Stir has learned that a number of companies who have set up operations on Guam in anticipation of the buildup have already sent their employees back home.
Realtors who snagged lucrative contracts for company-sponsored housing are now facing a wave of cancelations as contractors pull out their executives and scale down their workforce.
And this includes not just run-of-the-mill firms, but bigtime companies that had wanted to participate in the $4 billion Guam MACC – the biggest multiple-award construction contract of the Guam buildup.
Do these companies packing up know something that we don’t?
When the Guam buildup was first announced in 2006, contractors not only here but all over the world salivated over the multi-billion dollar construction projects the buildup would require.
Many of these businesses felt that the Guam buildup was a sure thing and they sent teams of representatives to set up shop here and establish a beachhead.
Unfortunately, some companies were too optimistic about the buildup and invested sizable amounts of money for equipment and employees to work on buildup projects that had yet to materialize.
Their strategy was that by mobilizing early, they would have a better chance of snagging major chunks of the buildup pie.
But who could have imagined that five years later, the Guam buildup would be delayed indefinitely or probably even scrapped altogether?
At first, the delays in the buildup were thought to be negligible, just caused by the prolonged economic recession in the mainland and the political climate in Japan.
Many companies thought this delay was tolerable and were prepared to stay put and either take on minor construction projects temporarily or simply wait for the buildup to proceed full blast.
But now it is certain the buildup will be stretched out far longer than originally thought, and some companies may think this is too long a time to wait.
The U.S. and Japanese governments have already said the original 2014 buildup schedule was not feasible. The current estimate now calls for a 2020 timetable, which is almost 10 years away.
In addition, the Pågat lawsuit, which is set to have its initial hearing in Hawaii this December, is sure to delay the timetable further and probably entangle it into all sorts of legal snags.
A study which the Navy plans to undertake on the environmental effects of its planned aircraft carrier berth can also take years before it is completed.
Assistant Secretary of the Navy Jackalyne Pfannenstiel has confirmed this in a letter to buildup committee chairwoman Sen. Judi Guthertz, saying the Navy study will most likely take “several years.”
In Japan, while national officials assure the U.S. government that they continue to support the relocation of Marines to Guam, Okinawa leaders whose support is needed to move the relocation forward continue to be intransigent.
These Okinawan leaders were voted into office precisely because they oppose the plan to relocate Futenma to another part of Okinawa so they are not likely to change their position anytime soon. And, as everyone knows, the Futenma thing has to happen first before the plan to relocate the 8,000 Marines to Guam can proceed.
In the U.S., the cost-cutting mood of Congress continues, threatening the funding for the Guam buildup. And in just a few weeks, the Congressional Super Committee is set to submit its austerity proposals, which may very well cut funding for the Guam buildup.
All of these have put a cloud of uncertainty over the buildup, and for many companies, the risk emanating from the prolonged wait may not be worth taking.
Time is the main enemy of contractors who cannot afford to have equipment and manpower sitting by idly without any projects to work on.
If we don’t see any sign of progress on the buildup, we may see more contractors pull out of Guam, at least until the buildup fully comes back on track.