A Glimmer of Hope Appears For Construction Employment
In an encouraging sign for construction, the industry's jobless rate dipped in September, to 13.3%, from the August level of 13.5%, the Bureau of Labor Statistics reported. Last month's mark also was much improved from the 17.2% rate in September 2010. Moreover, construction gained 26,000 jobs last month, seasonally adjusted, according to BLS. September was the 12th-straight month in which construction's unemployment rate improved over year-earlier figures. On the down side, however, construction's unemployment rate remained the worst among U.S. industries. Further, industry officials feared the positive September results might not be sustained if federal infrastructure programs are cut further and the economy doesn't strengthen.
Bullish Wall St. Industry Analyst Urges Investors: 'Occupy E&C'
Market valuations of publicly owned construction-sector firms currently anticipate a 35% decline in future earnings, says Avram Fisher, analyst with BMO Capital Markets, New York City. However, Fisher disputes the valuation trend and the recent “extreme sell-off” of industry stocks and encourages investors to “occupy E&C.” Fisher said on Oct. 10 that while the market predicts an earnings drop similar to the 2008-09 recession— when net profit declined 25%—he discounts as “inappropriate” prognoses that average company profit margins will fall to 6% or lower in the next two years. “While margin and booking pressure [are] anticipated, it is improbable they will be that extreme,” says Fisher. He touts “companies exposed to global energy, as history suggests these stocks perform best coming out of the cycle.” Fisher adds, “Given recent stability in backlog, this [scenario]would assume that earnings stabilize at current levels with growth for companies that are seeing bookings expand.”
Deere Expands Into Brazil
Deere & Co. plans to break ground next year on two new factories in Brazil to meet the growing demand for construction equipment in South America. The $180-million investment consists of two new plants in Indaiatuba, São Paulo. Scheduled to go on line in late 2013, one plant will produce backhoe loaders and four-wheel-drive loaders, while the other will build hydraulic excavators. The excavator factory will be owned through a joint-venture partnership with Japan-based Hitachi, a longtime supplier to Moline, Ill.-based Deere. “Brazil is one of the fastest-growing markets for construction equipment,” says Sam Allen, chairman and CEO of Deere.
Fast-Track Repair for Bridge Wiped Out by Hurricane Irene
On Oct. 11, the Carolina Bridge Co., Orangeburg, S.C., completed the emergency replacement of a 662-ft-long span—wiped out by Hurricane Irene—connecting Hatteras Island to the North Carolina mainland. Starting on Sept. 7, the contractor worked around the clock to assemble the temporary new span, which rests on 82 piles, consisting of 24-in.-dia pipe piles and 14-in.-dia H-piles driven 60 ft into the sand and capped by 14 x 8.5 ft of concrete about 4 ft thick.