Tuesday, May 29, 2007

Construction Boosts Demand for Cranes

DALLAS (AP) — It's daybreak when Michael Machovsky climbs nearly 200 feet to the cab of his tower crane for a 10-hour day of hoisting equipment and supplies across a downtown construction site.

As morning joggers shuffle by and commuter traffic backs up, Machovsky methodically swings the crane's jib and drops the hook for the morning's first lift. The same morning ritual is repeated across the Dallas skyline as the construction day rumbles to a start.

You never want your hook to sit still unless it's a break, and that's very seldom" says Tony Townley, a senior superintendent with Dallas-based Beck Group.

Booming commercial construction, an aging work force and tighter certification requirements are pushing demand for cranes and their operators nationwide.

"Every marketplace that we're in right now is saturated," said Sam Latona, preconstruction manager with Turner Construction, a Dallas-based company with offices across the country. "All the contractors are basically at 100 percent capacity and exceeding it."

Commercial building is hot in Texas, Florida, California, New York and other parts of the West Coast, Midwest and Northeast, industry officials say. Spending on nonresidential construction was up nearly 14 percent during the first three months of 2007 from last year, according to the U.S. Census Bureau.

Ken Simonson, chief economist with The Associated General Contractors of America, said much of that spending involves crane projects, such as multistory hotels and offices.

A strong economy, including favorable consumer spending and employment rates, is helping to fuel the projects, despite a slowdown in home construction. Projected power and transportation needs could also result in construction activity such as power plants, wind farms, transmission towers and highways.

"All of those will require lots of high or heavy lifting," Simonson said.

Machovsky, 46, quit his iron worker job eight years ago and started operating cranes, attracted by the pay and less strenuous labor. He started on small cranes and worked his way up, literally.

"If they see you have the ability, they'll attempt to move you up — until you get about 200 feet in the air, and that's as high as you can go," he said.

Attrition is thinning the ranks of crane operators, said Ronnie Bentley, business manager of the International Union of Operating Engineers Local 178, which covers most of North Texas. He said demand is the highest it's been during his 36 years in the industry.

"Nobody's son is getting into it anymore," Bentley said. "The average conventional operator in our area is probably in his late 50s."

The Association of Equipment Manufacturers has taken to providing high school students with information and scholarships in construction. The Milwaukee-based group estimates the construction industry will need to add a total of 1 million jobs by 2012.

The operating engineers union offers an apprenticeship program with classroom and on-the-job training, Bentley said. Payment for union members working in North Texas is about $21 an hour plus benefits, about a dollar more than a union ironworker or bricklayer, he said.

To meet the current demand for equipment, Morrow Equipment Company, of Salem, Ore., has been adding to its fleet of about 500 large-scale cranes that it leases to contractors nationwide.

"It seems right now the demand is outstripping the ability to produce these cranes on the manufacturing level, and I think that's the case with most of our competitors as well," said Gary Vosper, Morrow's advertising director.

China's building boom is pulling on the same resources needed to build cranes, he said.

"We've been told by the factory that the availability of high grade steel is becoming an issue and affecting their level of production," Vosper said. "Sometimes we'll order a crane and we may not get it for 12 months."

For now, construction firms are lining up cranes and crane operators early in the process to ensure their projects aren't delayed.

"We're already targeting them even before designers get through with their design drawings," Latona said.

TREASURIES-Bonds hold loss after two-year auction (Reuters)

NEW YORK, May 29 (Reuters) - U.S. government bond prices were steady at lower levels on Tuesday after a mixed reception to an $18 billion auction of new two-year notes.

The auction fetched a bid-to-cover ratio, a gauge of overall demand, of 2.53, below the 2.93 at April's auction but above the 2006 average of 2.41.

The indirect bids which encompass demand from foreign central banks accounted for roughly 21.7 percent of overall bids versus 42.2 percent at last month's auction and below their 2006 average of 32.8 percent.

Two-year Treasury notes were down 2/32 in price to yield 4.91 percent against 4.90 percent shortly before the auction results and 4.87 percent late Friday.

Benchmark 10-year Treasury debt was down 5/32 in price for a 4.89 yield, steady from the level right before the announcement of the auction results and 4.87 percent late Friday.

The U.S. bond market was closed on Monday for the U.S. Memorial Day holiday.

Google's DoubleClick buy faces probe

The US Federal Trade Commission is launching an inquiry into the Californian search group's $3.1 billion acquisition
Joe Bolger and agencies

Google faces a competition inquiry into its planned $3.1 billion (£1.6 billion) purchase of DoubleClick, after the US Federal Trade Commission (FTC) confirmed it would launch a review.

The Californian search group won control of DoubleClick, which places advertisements online and helps customers monitor their impact, after a fierce bidding battle against rival Microsoft.

Wall Street analysts were widely anticipating that the FTC would step in to review the deal.

The acquisition of DoubleClick would boost Google's presence in the online advertising market, which it already dominates. Microsoft had raised objection's to Google's acquisition as has Sir Martin Sorrell, chief executive of the world's biggest advertising agency WPP. Sir Martin said Google may face conflicting interests if it acts as both a seller and buyer of online advertising space.

Don Harrison, Google's senior corporate counsel, said: "Numerous independent analysts and academics have determined after looking at this acquisition that the online advertising industry is a dynamic and evolving space... and that rich competition in the industry will bring more relevant ads to consumers and more choices for advertisers and website publishers."

He said he expects the acquisition to be approved.

Electronic Privacy Information Center, a Washington-based privacy group, has previously called on the FTC to investigate the privacy implications of the deal.

Eric Schmidt, Google's chairman and chief executive, predicted earlier this month that the deal would clear all regulatory hurdles.

Google announced the agreement to buy DoubleClick last month. Rival groups have since agreed a string of deals to buy online advertising specialists. Yahoo is paying $680 million to buy Right Media, WPP has signed a $649 million agreement to buy 24/7 Real Media and Microsoft is buying aQuantive for $6 billion.

Consumer Confidence Rebounds in May (AP)


NEW YORK — Consumer confidence bounced back unexpectedly in May, helped by optimism about the job market even as shoppers' concerns about gasoline price-driven inflation increased.

The New York-based Conference Board said Tuesday its Consumer Confidence Index rose to 108.0 in May, up from a revised 106.3 in April. Analysts had expected the reading to fall to 104.5. The May reading was the highest since March when the index was at 108.2.

"The short-term outlook remains cautious and rising gasoline prices are having a negative impact on consumers' inflation expectations," said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement

Franco added, "All in all, confidence levels continue to suggest growth, albeit at a slow pace."

The Present Situation Index, which measures how shoppers feel now about economic conditions, rose to 136.1 from 133.5 in April. The Expectations Index, which measures consumers' outlook for the next six months, edged up to 89.2 from 88.2.

Economists closely monitor consumer confidence since consumer spending accounts for two-thirds of all U.S. economic activity.

The upbeat data helped push stocks higher. The Dow Jones industrial average rose 33.16, or 0.25 percent, to 13,540.44

Gary Thayer, chief economist at AG Edwards & Sons Inc., called the Conference Board report "encouraging," noting that a still healthy job picture is offsetting shoppers' worries about higher gasoline prices.

"Although people may not be happy with high gasoline prices, they are happy with the job situation," said Thayer."...People are unhappy about things but they are not changing their buying habits significantly."

The report from the Conference Board was good news for the nation's retailers, which struggled through the worst same-store sales performance on record in April. Same-store sales are sales at stores opened at least a year and are considered a key indicator of a retailer's health.

The weak performance has fueled concerns that gasoline prices and the slumping housing market are eating away at spending. For now, the cutbacks in spending seem to be contained, according to Thayer.

And while data released Tuesday gave no clear signs of an end to the housing slump, Thayer noted that he feels confident that consumers can "work through continued weakness in housing" as long as the employment situation remains healthy. Standard & Poor's housing index on Tuesday showed that U.S. home prices fell 1.4 percent in the first quarter compared to a year ago, the first time since 1991 that prices have shown a quarterly decline.

On Thursday, the Commerce Department reported that sales of new homes surged in April by the biggest amount in 14 years, but the median price of a new home fell by the largest amount on record. On Friday, The National Association of Realtors reported that sales of existing homes fell by a larger-than-expected amount in April, while the median price of a home sold fell for a ninth straight month.

Thayer and other analysts will be closely watching the Labor Department's report on employment, to be released Friday. Economists are expecting 140,000 jobs to be added in May and the unemployment rate to remain at 4.5 percent.

That follows a disappointing report, released in early May, that showed that payrolls grew by just 88,000, marking the weakest job gain in two and a half years. The jobless rate edged up to 4.5 percent.