 by jail on a given Thursday. And this is the military in Hawaii, you should already know that. And we're talking about diversifying Hawaii's economy. Very important subject, because as you may know, the federal government does spend a lot of money, and we want them to spend a year with local companies. So we have Alma Grucky, retired admiral, Ian Calliado, and Ian Wood, both defense contractors. Did I get it right about the admiral, or did you get to be a different rank or rate since I spoke to you last? Oh, no, that's good. Okay. So once you scope out the show for us, Alma, tell us what we're going to talk about, and tell us who these fine young gentlemen are. Okay, so Ian Calliado is the president of Calliado and Sun Services, and he's in the industry, private industry, shipyard business, ship repair business. As is Ian Wood, he's the CEO of Pacific Shipyards Industries International. And we're all here to talk about a ship repair in Hawaii and how that can be a more increased business here in Hawaii. We talked about doing COVID-19, the pandemic, we talked about how we should diversify our economy. And this is a business that has been around for a long time, perhaps in a smaller scale. But we'd like to grow that. And we have a charter to do that because there's a need, a definite national security need for the local civilian industry, shipyards, to fix surface ships here in Hawaii. And so we're here to talk about that today. Yeah, okay. Well, just some thoughts, you know, before we get into it. Is that Hawaii is more strategic now than it was because of the emerging contention with China? So we are strategically important. And of course, our Navy is strategically important. And it's largely focused here. I guess the first question I would put to you, Elma, is, you know, last time I worked, the shipyard was not as big as other shipyards. And the shipyard was not as big as to handle some of our larger ships. Is that true? And what can be done about it? And where else can they go? Well, it's true that it's not physically as large. And we don't have as many personnel as some of the big yards in Puget Sound, Burlington, Washington, or Norfolk, Virginia. That's true. And they handle all different kinds of ships, including the bigger ones like the carriers and the amphib ships. But we do have a very robust business of submarines here. And we have 17 that are home ported here. And we do all the repair, maintenance, and modernization. We also have 10 surface ships that are part of the Pacific Fleet that are essential to our national security. And the shipyard used to, at one time, do both. And as the number of submarines and their overhauls, the number came up, we had to turn the surface ships over to the private sector. A few years ago, there was a restructuring of the contracts. And so there was some scrambling about how we're going to get this done. There was talk about moving the surface ships over to a lot of people for operations or the families and crews, because when the ships home ported here, it's a big deal to move them for six to 18 months over to the West Coast. And the West Coast doesn't have a lot of ability to take on more work either. So we really do need to find a way to keep those surface ships here and their overhauls, not just financially, but also because it's socially and economically, it's better for Hawaii, and it's actually better for the fleet and for the crew of the ship. Yeah, it's a win-win-win. You're the perfect person to supervise the alliance because you've been repairing ships since you were nine, as I recall. I think it was eight. You did engineering like the rest of them at the academy? Yes. And your whole career has been involved in shipbuilding, ship repair, places like the shipyard here in Hawaii. So you're the perfect person for it. And then there's a perfect thing to do right now. And so I guess the last question I want to ask you before we go to these guys is, it wasn't always thus. In other words, a civilian contractors weren't doing this kind of ship repair work, say 20 years ago. And we got into the civilian companies relatively recently. Can you say what the track was? When we did that? It was probably about maybe 10 years ago that we started pushing more the surface ship work out to the community. And at that time, we had a contract structure such that one large company, even from the mainland, could come in and take all that business and all our local industry were subcontractors. And that's kind of the way it was for a long time. And then when this contract here got restructured for surface ships to match what they're doing on the mainland and they're doing coastwide bidding, well, we can't have coastwide bidding here. That doesn't apply. They weren't really thinking about Hawaii as being different. But when that happened, we had to ask our private industry partners to step up. They had to be able to do availabilities that the shipyard could not do and that we did not want to send those ships to the mainland. And as a last count, we have four availabilities or overhauls that we've done here that have been very, very successful. And so we're trying to grow that. Yeah, well, and we should. Absolutely. I mean, this is, I was telling you before the show that I remember back in the day, a local ship contractors who might do this work were stumped by all the regulations and the bureaucracy and they didn't want to read all the rules and they didn't make bids. And one of the pioneers of that was Pat Sullivan and Ocean, as a federal defense contractor. And you're associated with them now. So it's the perfect connection. So let's talk to Ian Caliado. Can you tell me what your defense contractor work is like? What work do you do in your company for the Navy or, well, any other defense organization? Primarily, we're a subcontractor to the larger firms out there, but we're experienced with, you know, the surface combat to work. Primarily, our backlog has been non-combatting services in the Navy. Of course, we do commercial work when that comes along. And that's in South Brothers, Young Brother. So is this your only area of business or who other business as well? Yeah, yeah. I'm a second generation business owner. My father started this company in 1990. He came up to the shipyards, the private shipyards, and I've been doing it ever since. So I almost got me beat. You know, I only started. But, yeah. How big are you? I don't, I mean, I mean, it's the company. Yeah, we're tiny. We're tiny in comparison to the other private yards, but what 40, 50, what kind of employees right now? So what kind of special skills do you have to do, have to have, have to train your staff with in order to work for the Navy on ships? You have to be able to work on, you know, all systems, mechanical systems, all kind of electrical systems on ships. So we primarily focus on the welding and preservation, painting trades, and a little bit of mechanical. We don't touch the electrical stuff. But what we call, I guess, general contractors in our industry are AVRs and MSRs. And they kind of have internal capabilities to do all trades. But for the most part, they also handle project management, resource management, you know, the overall project. Yeah. Are you busy? Are you working in the middle of the night? Do you want to? Always, always. Oh, let's go to you again, so we can, I mean, Ian number two, may I say that? We're debating which one would be number one, which one would be number two. Makes no difference. We're an equal Ian opportunity company here. So what's your company like and what does it do for the Navy? So our company is Pacific Shipyard International and we've been in business for, you know, dating back to the 40s. It's a family-owned company, a locally-owned company, local roots here in Hawaii. And much like Ian, we're doing very similar work on the waterfront fix in the Navy, surface combatant ships. And also the non-combatant ships. And then both of us in our industry also get involved with the commercial maritime and other branches of our government's military Coast Guard and military CF men and other folks. And so we're quite diverse and part of the state's industrial base, really. Okay. You know, Alma, I was in the Coast Guard. Did I tell you that last time? No, I didn't know that. Yeah. I hope you're giving fair treatment to the Coast Guard and all this. We need their ships to be up the snuff also. That's true. Absolutely. Does it come within the alliance, the Coast Guard? It's all the maritime services. Yes. Okay. So how do you organize this? The contracts, I'm just taking a guess here, the contracts are generated through your office. And you're going to be supervising the bidding process and the like and the actual work and the completion of the work. I assume you do that, but if not, tell me who does. It will actually go through the contracting department at the shipyard, Pearl Harbor Shipyard. And the hardest part of any contract, of course, is determining what work needs to be done to the detail that you know that it'll be done the way you want it to, but not so much detail that it's prohibitive for anybody bidding on it. And so we had a lot of churn, a lot of trouble figuring that part out, how to do that contracting in that detail. But like I said, we've had four major availabilities now that our private industry shipyards here in Hawaii have completed. And I have to tell you that it was a bit of a surprise because up until now they had just done very small onesies and 2Z jobs. And this time they took on the entire overhaul and they completed it on time, which was, which is always huge because then that ship gets back to the fleet on time. So it goes through the, the contracting department. And once all the requirements are out there, the work package, then other companies bid on it and including subcontractors. Of course, to be made for their personnel. And we have to verify that their training and skills are, can follow the Navy requirements. And that's one of the issues that we have to be careful about that the Navy doesn't do things the way a private industry does necessarily. Like you said, all those regulations, the folks doing the work have to follow those regulations. They have to have, if we have a specific detail about how something has to get tested or how work processes have to be done, they have to follow that. And so it's not easy and it's not open to everybody who just wants to throw their hand in. It has to be somebody who can have the right workforce that's certified in training to perform corrected. I was thinking that if I was a Navy, I would want to actually offer a lot of training. One way or the other, get the employees and the management of these repair companies trained either here or on the mainland. I think here is a good place because you have so much talent. Is that happening? How does that work? Well, the ProLibrary Shipyard, as you know, has an apprenticeship program and that's a four year long program. But after the first year, they actually start that out of the classroom training. So we're talking to the Navy about how can we use that program that's already in place and train up our local civilian workforce to be able to do it the Navy way. And that's something that they're very interested in because the bottom line is ProLibrary Shipyard does not have the resources and capacity to perform these overhauls on the surface ships, but they have to be done. So the alternative is find somebody locally that can do it and do it well or send it to the mainland. And that's really, like you said, that would be a lose for everybody all the way around. It's more costly. It's disruptive to families. And then you have to bring the ship all the way back. And so that's not what we want to do. We want to keep the ships here. And the best way to do that is to train our local workforce. So we're talking to the Navy about how we can do that and share in the apprenticeship program. Of course, it would be structured a little different for surface ships. It might be a subset of the current program that's geared for submarines, which have a lot more controls. But certainly something we're working with the Navy. And then you talked about the state being involved, because we get these, this workforce interested early on. And Ian Collieto had talked about how we can get into the schools. A lot of the schools now have a technical or an engineering college, if you will, or a program, and how we can how we can get the kids early to even be interested in this and to make sure they understand this is not just a, you know, another job. This is a national security job, just like the shipwork, chickyard tar. Before I go back to these guys, let me ask you one more question. It strikes me from what you say is Navy ships have classified here on them. Let somebody on, you know, you have to control that classified information, especially when we're talking about nuclear and so forth. So how do you handle that? Does everybody get a clearance or what? They would have to get a clearance, but there's no nuclear surface ships that we have home ported here. So the only nuclear stuff that we have to worry about is on the submarines. And yes, they would have to get a clearance, but it would be easier to obtain, not easy, but easier than the workers that work in the submarines. But yes, they would still have to go through background checks and clearance to do that, because you're right. Those plans are critical. It's how our ships work. It's all the systems, it's all the components. It's critical for really national security and safety. Okay, so the U.S. alliance is doing is trying to build a sector here. I guess, you know, this is also related to dual use. In other words, they're developing technology for the sector, talk about best practices and equipment and so forth. It would not be beyond the realm of imagination that these companies would be something and make a suggestion and suggestion box or even develop technology for you. That would qualify for dual use. Does that happen? Well, we're always looking for better ways to do things, better processes, better materials. And we recognize, we, the Navy, recognize that there's all kinds of wonderful things out there in industry. How do we innovate faster so that we can use some of these processes and these materials in the Navy repair of our ships or the modernization? Right. And that's been slow. It's been a long acquisition process, but it's recognized up in the chain of command that this is something we have to do faster. We're going to keep up with some of the other countries that are threatening our status. So how does it feel, you know, in, in number one, to be working for the federal government? You know, I remember when I was in the Coast Guard, we did Navy, or I was a lawyer there, we did Navy court models. And whenever I stood up in court, I would always say, as we all said, I would say, may it please the court, my name is Jay Fidel, and I represent the United States of America. Even now, it sends a shiver down my spine, just to say that to you guys. How does it feel to represent and to work with the United States of America? Oh, it's, it's, it's a huge, huge responsibility. And, and there is a lot of pride in our work and pride in the effort we put forth, you know, to contribute, you know, to our national security, but more so also to contribute to our local community, giving, giving local people more greater opportunities with high demand, high compensation, job opportunities, you know, that's, that's one of my biggest things. And there's a lot of history that goes, you know, and in hand with who we are as, you know, local community and our connection to the ocean, but more so our connection to, you know, seafaring, you know, from ancient Polynesians all the way up to World War II and, and the shipyards involvement, you know, USS Yorktown, Battle Midway, all big, big important stuff. Hawaii, Hawaii has done great things and I, I believe we can do more. Yeah. And how about you Ian number two, strikes me that you guys are part of a growing sector. And if the Navy and Alma have anything to do about it, it'll keep on growing. There'll be more companies like yours, more work, more contracts, more jobs, more training, more expertise, and it'll be, what do you want to call it, a sector of the economy. So when we call the show, diversifying Hawaii's economy real serious, this is a sector, a growing sector of the economy requiring special skill. How is the sector doing, Ian number two? I think we're doing well. I, I, you know, kind of echo Ian's comments about, you know, the, the pride of working on the ships, you know, we're a maritime state. And, and, and you, and you got a lot of, you know, folks that have roots in the, in the maritime sector. And you look at some of the ships we've worked on, you know, Alma mentioned that four ships have completed availabilities recently. You know, the first ship out of the gates was the USS Michael Murphy. And, you know, that's got some, some roots with Navy SEAL, you know, and we're working on the ship. And I had the opportunity to talk to his father, Dan Murphy, and it really builds a connection. And, and somebody who was here and a fallen hero for our country. You know, then you fast forward, we got the USS John Hoon, and, you know, named after a local boy from Hawaii. And then we got the USS Daniel Inouye coming up a post shakedown new construction ship coming to Hawaii. So you get a sense of tremendous pride work on these ships and in all the ship, but especially those that have no connections to the state. And you mentioned the sector and it is a, it's a growing sector. And, you know, last year when the pandemic was just starting and we were in the midst of the USS Michael Murphy. And we all became part of the critical infrastructure workforce and we all stayed working. And it really was a kind of a buoying force and keeping a lot of people in our state working at state employed. And really a bright light, you know, in the last year with the people staying working, people just, you know, having purpose and staying employed. So I think there's a lot to be said for that. Then fast forwarding, we, you know, we've got to keep getting the ships fixed, getting them, you know, back out to the fight. And then that's what we want to keep building on is, you know, we've got 10 ships, as Alma said, in Hawaii's 10 surface ships. But keep doing the work we're doing, building that confidence. And that will allow us to keep investing. And I think an important segment is you touched on it was the state's educational, you know, kind of branch or sector and getting them energized to invest into this industry to train our kids starting in the case and, you know, K through 12, get them energized in a careers pathway. I think they were trying to do those kinds of things through the Economic Alliance. Alma mentioned partnering with the Naval Shipyard and Apprentice Program and trying to help tail that into training programs for the private sectors. A lot of good things we're doing and trying to keep the sector, not just energized, but growing and doing more for the state. And one last nickel back to the Coast Guard, you know, we've private sector, we've invested in two new dry docks here in Hawaii, and both of the new dry docks, we're looking at the new national security cutters and make sure that we can maintain them. So we're not just doing today's work, we're planning for the future and make sure we can support what's out here and, you know, shout out to the Coast Guard there. Well, thank you. Thank you. I always appreciate those in the best years of my life. So, you know, E and number one, E and number two, refer to new ships. Okay, and I'll post this to you also, Alma. You don't have new ships, new practices, new physical structures, new manuals. You know, when they say new, they mean new. It's all new, new technology all around you. What are you going to do when that happens? Are you going to have the same kind of experience under a contract to repair a new ship as the ship you've been working on already? Does that create a, what do you want to call it, a challenge for the company when you have to retrain and reorient your people? I think a lot of the technology might be new, but Valsval pumps pump and, you know, the system works the same way, and there might be some little twist to it that's different or new, but the basic shop skills, the basic repair work that they have to do is going to be the same. So, we're looking forward to these new ships and new technology, because we can't stay where we were even a decade ago. We have to keep moving forward. We have to keep getting better as technology gets better, as the processes get more efficient. We have to move with that, whether it's on the government side at Pearl Harbor Shipyard or on the civilian side with our local industry, we have to keep advancing and moving forward. You know, does Ian 1 or Ian 2, does the state of Hawaii recognize how important this is? I mean, for example, you know, we have a legislature that likes to encourage industries that it feels are critical industries. Have there been any bills? Have there been any moves by the Department of Business and so forth, even, to help you out, help you develop your new sector, your industry? The Hawaii Defense Alliance, you know, you're going to, this isn't going to be the first time or the last time you're going to hear about it, but it's basically a DODB grant established in May of this year, and the Hawaii Defense Alliance brings together industry, government, educational institutions, and community resource partners to work together, to help increase local business opportunities while also identifying the challenges to the local industrial base and offering solutions for those. It's pretty exciting, and I'm actually the co-chair for the workforce development working group, and my co-chair is UH Community College Dean Keala Chah. So we've got a lot of things tabled and ready to go soon. So it's exciting to have everyone at the table, you know, both state, federal, government, education, as well as industry, and we're all not necessarily reinventing any wheels, we're actually leveraging each other's existing initiatives as well as ideas and best practices. And, you know, it's like finally, we're rolling in one direction, you know, in the state. So Ian number two, if I'm watching this show and I say, gee, that sounds so interesting to me, I would love to work on Navy ships. I would love to do what you guys do, not only, you know, for the engineering aspect of it, but for the camaraderie, to be close to the Navy, I like the Navy, and to do something for the country because it is doing something for the country. My name is Ian Wood, and I do work for the United States of America, you know me? That's good. So the question I put to you is, how can people out of school who watch this show or hear about the Alliance, how can they get involved? How can they get a job? How can they join? How can they become part of this new sector? Yeah, I think that's a good question. I think through the community college, as Ian mentioned, that they've been working with us on developing programs. We've had some outreach recently to some of the high schools, Campbell High School, Waipahu Academy, trying to encourage kids to see our industry to help us market our industry to them. Yeah, I think we've got to do more of that. I think we've traditionally over the years have not done a lot of marketing about our industry, and we've got some work to do in that area. I think through the Alliance, it's going to help us energize those efforts. You mentioned, I just go back to technology a little bit. As Alma said, a lot hasn't changed. It's a very, you know, a lot of hands-on wrench turning, you know, things don't change as far as corrosion and steel work involves. But the newer ships are definitely challenging us to continue to expand our capabilities. You know, with engineering investment, with investing in CNC, computer-eated machining and manufacturing techniques, we make an investment in that area. And I think as we diversify into those areas, we're also starting to lean out towards the university and places where these kids are coming more fresh out of school these technologies in their back pocket. Some of us have never had it in our pocket. So I think those are areas that we can naturally attract people coming out of school. So, you know, we've been trying to hire more interns to come work for us out of some of the maritime schools and through UH. And I think those are the ways that we can continue to attract people to our business. It's a tough business. It's not for the faint-hearted. It's definitely a very hands-on, a lot of grit. You've got to have to do the work we do. And the government, as you mentioned, kicking this off, there's a lot of paperwork I'll call it doing the military work. So it's got a special drive to get through all that as well. And I bet when Alba talks about turning a wrench, this is not a distant experience for you, but you're both down there turning a wrench once in a while. Absolutely. It's also a job where you can wipe your hands on your clothes and it doesn't matter. It's not in my work. It's not necessarily sitting behind a desk. So for folks who want to be out on the field, be out on the ships doing work, this is the thing to do. And a lot of it's very technical, so you have to understand that. But you don't have to be an engineer either. You just have to have a technical aptitude, really. But ultimately, you learn about a lot of engineering. Absolutely. I know why you picked these two eons. It's not just because the name was similar, but because it's based on good looks. You could have picked somebody else. We know what you did. The other thing is, it seems to me, just from this discussion, that you're building the alliances building an industry and an expertise, a skilled workforce, if you will, that can service these companies and through these companies, the Navy, and become part of them. Tell me if I'm right about this part of a hub, a strategic ship repair hub here in Hawaii, attached as civilians through the naval shipyard and so forth, and doing critical work for the United States Navy. And so that being the case, it's very important for diversification. But assuming it is, assuming I'm right about that, isn't there a value in having a ship repair person who will travel? In other words, you have ships that go elsewhere. And the Pacific could be anywhere. And sometimes they need to turn a wrench on those ships in Guam or in ports in Asia. Is this industry part of an initiative like that? Well, I would say right now it is not, but it can be. I mean, I know that we've sent contractors out for LCS in Singapore, and we've sent people to Guam for tough jobs that the Navy either didn't have the resources for or didn't have the right workforce. But so this would be, we would try to develop the workforce that can handle our surface ships here. But absolutely, if the surface ships don't really care where they break down and if they do. So it might be in Guam, it might be in Yakuza, Japan, or it might be in Singapore where we'd have to go. And if we are the best people to do that, we have the ability, we have the training, we have the credentials to do it. It might be easier, faster and better to send a contractor than it would be to manufacture orders for a Navy entity to go do that. So yes, absolutely. If we get the workforce together here that can, that has the ability to work on these ships, we can work on them anywhere. Yeah. Oh, that sounds great. That really sounds great. A hub of expertise right here, just like the Navy is a hub here and will be more in the future. So this diversified industry. Okay, we're almost out of time. So let me ask you for last comments. Ian number one, what would you like to leave, what message would you like to leave to our viewers? That workforce development is the lifeblood of our industry. That's going to make or break us, whether we'll be the best in the world it is, whether or not we'll be this technical hub in the Pacific, the strategic advantage for the Navy. And whether we can grow this to actually rival or even surpass tourism's contribution to our GDP. So it all starts with getting local people trained up and giving them those opportunities for these high skilled high pay jobs. Well put, well too. Ian number two, that is Ian Wood number two. What are your thoughts, what do you want to leave with our listeners, yours? Yeah, I think we have a real opportunity here to continue to strengthen our industry. And you mentioned the diversification of the workforce to go other places and I think there's an opportunity there to grow that. And the other thing is bringing ships here from other places. And I think back to the legislature, they recognize that you could appreciate that in this last year, with tourism down and maybe the tax base down, they recognize to continue a GET exemption for industry because they recognize that the ships can leave Hawaii. And so we're at an economic disadvantage competing with other places. But keeping that tax exemption in place allows us to draw ships to Hawaii for repair. So being a hub of repair hub in the middle of the Pacific. And we're actively looking at ships now that would traditionally maybe be overseas for maintenance work. But there's some due to COVID, there's some hot spots in Asian countries and those ships are looking to come here to Hawaii because we've got the capability. I think that's a real testament to what we can do in the state. And so it's kind of this, there's a critical mass growing. The Navy sent their demand signal that they want us to do surface ship maintenance for them. And we're responding to that. The Coast Guard wants us to do the maintenance here for and we're responding to that. So I think as we do more and more, it's going to help drive that machine with the state behind it, with the educational system behind it. Again, closing looks like it started a real opportunity here for our state and our industry. Alma, I think my heart is beating a little faster now. What about yours? What would you leave with our viewers? I would say that this is a real viable opportunity to divert, not just diversify our economy, but to keep our kids home. We talk about that a whole lot about what do we have to do to have jobs here that kids don't have to go to the mainland and then not return until they retire and can finally afford to come home. But to be able to keep our kids at home and teach them a trade and a skill. These are trades people. These are craftsmen. And they're doing something that's going to help the national security of our country and the Navy in particular. And we really need them. But this is a viable opportunity. This is something not just we're talking about. We've proven we can do it. Now we have to prove that we can do it on a larger scale. So we don't have to send our ships and our crews and their families to the West Coast. Like Ian was saying, maybe we can bring those guys over. But we really need to take this opportunity. And it's a generation upon generation of people in one family that have worked at the shipyard because it's not just pride. They're doing something for their country. But it's also a good trade skill that they know and learn and really can go anywhere. But they would like to be here. They want to be here at home. And I think that's opportunity for our kids to stay home and learn a great trade. And we've got to start them early. Like Ian was saying, starting with schools, there are some programs we're already talking to. And with the state and the government working together in private industry, I don't think we could fail. Thank you, Admiral Alma Groke. Contractor Ian Calliado. Contractor Ian Wood. Thank you all so much. This was really important, really good discussion. I learned a lot. And I wish you well in these efforts. I think this is so important for Hawaii. Aloha. Aloha, Jay. Thank you for the opportunity.