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)

By ANNE D'INNOCENZIO AP Business Writer

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.

Hamptons, ocean view: Sold, $103M

Cost of new home not included in record buy
By Noelle Knox
USA TODAY

Ron Baron, founder of the Baron Funds investment company, has paid a record $103 million for a residential property in East Hampton, N.Y. And get this: That price doesn't even include the cost of the house he wants to build.

The price — equal to what Texas plans to spend on border security this year — tops a record set in 2004, when Revlon Chairman Ronald Perelman sold his estate in Palm Beach, Fla., for $70 million to Dwight Schar of builder NVR.

But Baron's bragging rights might not last long. Three homes — well, estates — for sale are asking even dizzier prices.

In December, real estate baron (with a small b) Tim Blixseth boasted that he'd start building the world's most expensive house. His $155 million asking price tops the high of $149 million for Updown Court in Windlesham, England, still on the market.

"It's amazing how much growth there is in the very high end of the market in terms of wealth," says Rick Goodwin, publisher of Ultimate Homes magazine.

Overall in the USA, home sales slid 8.4% last year, in part because prices in many areas had climbed out of reach for the middle class. But for residences priced at $5 million or more, sales soared 18% for 2006 and 31% in the first quarter of this year — both record highs, according to DataQuick.

"Properties over $10 million are becoming very commonplace," says Jonathan Miller of Miller Samuel, a Manhattan appraiser. "When you compare it to the national median, which is hovering around $215,000, there's a lot of disparity."

Blixseth envisions his project, called The Pinnacle at Yellowstone Club, in Big Sky, Mont., as a 32,000-square-foot home on 160 acres. He says it will include an 8,000-bottle wine cellar, a 26-seat cinema, a hair and nail salon, a private gondola to ski lifts, a fleet of Suburban SUVs for the underground garage, and a helipad with pilot's quarters.

As for Baron, his 40 acres of oceanfront property are vacant. He bought the land from Adelaide de Menil, heiress to the Schlumberger oil fortune, and her husband, Ted Carpenter.

Four antique houses had stood on the property. But the sellers donated them to the town, which moved the buildings and plans to use them as a new town hall.

Baron declined to comment on the deal, which was hush-hush and sold without a broker, says Judi Desiderio of Town & Country Real Estate in East Hampton, who confirmed the sale and price.

Profit slides as Gap reinvents itself (San Francisco Cronicle)

S.F. retail chain sees same-store sales decline, reveals new strategies for two largest brands

Pia Sarkar, Chronicle Staff Writer

Gap Inc.'s profit slid 26 percent in its fiscal first quarter as the company struggled to define itself to customers who have lost interest in its products.

The San Francisco retailer reported a profit of $178 million in the first quarter (22 cents per share), down from $242 million (28 cents) in the same period last year. The numbers include a $45 million loss from the planned closure of Forth & Towne, a brand created for women 35 and older that flopped after just 18 months.

Excluding Forth & Towne costs, Gap would have earned 25 cents per share -- a penny above the average estimate among analysts surveyed by Thomson Financial.

Revenue grew to $3.56 billion in the first quarter, a 3 percent increase from $3.44 billion last year. But same-store sales -- sales at stores open at least a year, considered an accurate barometer of a company's health -- fell by 4 percent, after a 9 percent decrease in the same period a year ago.

Same-store sales at the namesake Gap brand dropped by 4 percent, after an 8 percent decline last year. Same-store sales at Old Navy dropped by 5 percent, compared with an 11 percent decline last year. And same-store sales at Banana Republic, which up until recently had been posting gains, fell by 2 percent, after a 5 percent decline last year.

Online sales continued to be the bright spot for the company, growing to $195 million in the first quarter, compared with $159 million the year before.

Bob Fisher, interim chief executive officer for the company founded by his parents, said Gap is sticking to plans set out earlier this year calling for a simplified hierarchy among management as well as a focus on lowering expenses. It is in the middle of a search for a permanent CEO.

"There's more work to be done, but I feel good about the progress we're making," Fisher said during a conference call on Thursday.

As he has in the past, Fisher acknowledged that the Gap brand -- the company's oldest and second-largest division behind Old Navy -- has had a hard time defining itself to customers. It has been aiming at a broad range of people 18 to 34 years old. On Thursday, Fisher said the brand will stop chasing 18-to-23 year olds, a demographic that is aggressively courted by competitors. Instead, Gap will focus on 24-to-34 year olds, reducing its merchandise selection by 30 percent.

Old Navy president Dawn Robertson, who has held the position for six months, outlined for the first time strategies for the brand, which include getting merchandise into stores much faster than in the past. She also said Old Navy will try to strike more of a balance between value and fashion with its offerings.

Both Old Navy and Gap stores at key locations will be extensively remodeled throughout the year -- something the company has fallen behind on, according to Gap's chief financial officer, Byron Pollitt.

Richard Jaffe, an analyst for Stifel Nicolaus, said that while Old Navy can benefit from a more-efficient sourcing structure to keep it competitive, its bigger problem is the merchandise, which also ails Gap.

"Fixing the product is more important," he said.

As for plans to narrow the Gap brand's audience, Jaffe questioned the logic. "It's not clear to me how fewer choices will make a difference," he said. "It's about better choices."

Gap stock closed at $18.20 at the end of trading Thursday, off 8 cents for the day, with 6,258,603 shares traded.

Best Buy sued over Web price quotes

Connecticut goes to court; retailer denies misleading customers at in-store kiosks
BY GITA SITARAMIAH (Pioneer Press)

Electronics giant Best Buy Co. is being sued by the Connecticut attorney general after consumers complained they'd been quoted higher prices in stores for merchandise advertised at lower prices online.

The lawsuit alleges that since 2005, the company's stores have pledged to match any lower online price, including from its own Internet site. But customers tapping into in-store kiosks to check prices were misled by salespeople into believing they were tapping into the retailer's online Web site Bestbuy.com when they were actually connected to an internal company site, the suit contends.

When the kiosks displayed a higher price, the salespeople allegedly suggested that consumers had previously misread the lower online price or that the online price had expired.

"We intend to vigorously defend ourselves," Best Buy spokeswoman Susan Busch said in a statement. "The future of our company depends on our ability to build trusted relationships with our customers."

However, the Richfield-based company acknowledged that a small percentage of customers didn't receive the best price when they should have. It said once the issue was brought to the company's attention, it provided employee training to ensure that customers receive the best price and more changes are being made to eliminate further confusion.

The lawsuit filed in Connecticut Superior Court seeks civil penalties and restitution for "customers who purchased products at a higher price because they were deceived by Best Buy's misrepresentations."
George Rosenbaum, chairman of Chicago-based consumer research firm Leo J. Shapiro Associates, said he believes Best Buy made an operational error and isn't intentionally pricing the same products differently online versus in stores.

The company is probably moving fast to fix the problem because a good online presence is critical for drawing customers into stores with high-ticket items, Rosenbaum said.

"They're highly dependent on their Web site for traffic generation," Rosenbaum said. "This kind of an error, and I call it an error instead of a deliberate strategy, can badly hurt their customer relations if it isn't corrected."

Rosenbaum also believes the company still can do crisis control to avert damage to its image.

Best Buy has maintained its dominant position as the largest electronics retailer in the country while others have faltered recently. Chief rival Circuit City has closed stores, cut 3,400 workers and hired replacements at cheaper pay. Another rival, Comp USA, also is closing many stores nationally, including all of its Twin Cities locations.

Meanwhile, Best Buy posted a 22 percent increase in profit in its most recent quarter and saw the biggest improvement among retailers in the latest University of Michigan American Customer Satisfaction Index.

Connecticut Attorney General Richard Blumenthal said his office received at least 20 complaints after the Hartford Courant newspaper in February reported the experience of one frustrated Connecticut shopper.

The man found a laptop computer advertised for $729.99 on BestBuy.com, then went to a Best Buy store where an employee who seemed to check the same Web site told him the price was actually $879.99. (The shopper eventually did purchase the laptop at the discount after bringing in a copy of the online sale price to another store that had them in stock.)

Within days of the newspaper report, Blumenthal announced the investigation. On March 8, an open letter was posted at the retailer's Web site by Best Buy Chief Operating Officer Brian Dunn to "clear the air" regarding the investigation. Dunn wrote that the kiosks weren't to be used by employees to check Web prices, but that this process had not been followed consistently. He offered a toll-free number so the company could address customer concerns.

In a separate case, the Florida attorney general has done a three-year investigation into Best Buy for allegations including sale of used merchandise as new and restocking fees assessed on the price of merchandise returned including the taxes charged. Best Buy didn't offer comment Thursday on those allegations.

Best Buy operates more than 820 stores in 49 states, as well as stores in Canada and China. On Wall Street, Best Buy stock closed at $46.67, down 86 cents.