Expansion to the mainland isn’t always bad

January 16, 2008

The Star Bulletin & Sopogy

Tech View – The Star Bulletin

 

John Agsalud


As the local technology industry moves forward, several kamaaina organizations have opened offices outside of Hawaii. These events are almost always greeted with a chorus of groans from the usual suspects. Feelings of ungratefulness and abandonment abound, especially when the company in question has taken advantage of local benefits such as tax breaks. Often, however, we believe that such actions can be, and most often are, beneficial to the local community. This is especially true in cases where a company continues to maintain a Hawaii presence. Such companies usually open a mainland office for the sole purpose of improving their performance. Most times, such companies don’t abandon their local offices, and, in fact, increase their Hawaii operations in proportion to the overall expansion.The main reason cited by organizations that employ this strategy is geographical. For one, they desire to be closer to their potential markets. Clearly, we have a very limited market for just about anything here in Hawaii, given our population and remote location.

Furthermore, this strategy allows companies to be closer to sources of capital. While the local investment community is growing, it pales in comparison to what can be found elsewhere. Typically, investors like to be close to their money to keep an eye on it, and thus are reluctant to invest in an organization thousands of miles away.

Another reason for opening a mainland site is that resources are cheaper. For example, land, especially in rural locations, can be much cheaper on the mainland.

As an example consider Sopogy, a solar power company founded here in 2006. Using technology developed in Hawaii, Sopogy expanded to Idaho to work on its first utility-scale project. Sopogy continues to maintain its Hawaii presence.

Says founder Darren Kimura, “Companies with global ambitions have to expand outside of Hawaii to service key customer markets. That doesn’t mean we’re leaving the islands. On the contrary, we’d love to expand our Hawaii presence.”

Lastly, a mainland presence improves the odds of a buyout, which can result in windfalls for the local owners. History has shown that when local people come into money, they invariably put a lot of it back into the Hawaii community.

So next time you hear about a local company opening a mainland office, don’t assume it’s all bad. Upon closer inspection, it’s easy to spot the advantages for the entire community.

John Agsalud is president of ISDI Technologies Inc., a Honolulu-based IT consultancy. Call him at 944-8742 or e-mail jagsalud@isdi-hi.com

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