SBE News

Capital Update 2/13/2023

How Negligence Led to Devastation in Turkey

In Turkey—a country nestled between several plate boundaries and located directly on two main fault zones, the East Anatolian and the North Anatolian—earthquakes are a fact of life. The 7.8 and 7.5 magnitude earthquakes that hit Monday, leaving at least 20,000 dead and thousands injured across Turkey and Syria, are only the latest in a string of several deadly earthquakes in recent years.  The country’s disaster agency said that more than 5,600 buildings across southeastern Turkey have collapsed so far. “These are the kinds of quakes we’d expect to see 10 or 20 years apart,” says Cüneyt Tüzün, an earthquake engineer based in Izmir, Turkey. “They happened within a few hours of each other.”

U.S. recession still likely despite resilient economic data – PIMCO

NEW YORK, Feb 8 (Reuters) – U.S. bond manager Pacific Investment Management Company (PIMCO) is sticking to its previous forecast that the U.S. economy is headed toward a recession, despite recent data indicating economic resilience. An employment report last week showed U.S. job growth accelerated sharply in January while the unemployment rate hit a more than 53-1/2-year low of 3.4%, pointing to a tight labor market that could be a headache for the Federal Reserve in its battle against inflation. Tiffany Wilding, PIMCO North American economist, said the strong economic data suggests a recession may come later than previously expected, but remains likely. “Recent data on net haven’t caused us to change our outlook for a mild U.S. recession – we’re only pushing the timing back a little bit,” she said in a note. PIMCO, which manages $1.7 trillion in assets, said last month it would focus on high-quality bonds this year due to their higher returns and the protection they offer should the global economy economic downturn be deeper than anticipated.

Autodesk trims staff by 2%

Autodesk has joined the ranks of tech companies paring their payrolls. The construction technology company laid off 250 workers, or 2% of its total workforce, although hiring for key positions is still planned. Full Story: Construction Dive (2/7) 

Dodge Momentum Index ends 10-month string of gains

After 10 straight months of gains, Dodge Construction Network’s Dodge Momentum Index turned negative in January with an 8.4% decline, led by the commercial component with a 10% drop-off, while institutional was down 4.7%. Although planning slowed during the month, “the Index remains elevated, and the volume of projects remains steady” as the gauge appears to be edging back to historical norms, says Sarah Martin, associate director of forecasting for Dodge Construction Network. Full Story: Dodge Data & Analytics (2/7) 

White House data shows positive signs on wage inflation

Data from the White House Council of Economic Advisors shows significant easing of so-called supercore wage growth. However, despite this positive sign for inflation, Federal Reserve officials are still calling for interest rates to remain high. The battle against inflation “might be a long fight, with interest rates higher for longer than some are currently expecting,” said Fed Governor Christopher Waller. Full Story: BNN Bloomberg (Canada) (2/8),  The Wall Street Journal (2/8) 

AECOM profit grows on expanding backlog from city, state projects

Citing flush “rainy day funds” among its state and local government clients, Dallas-based contractor AECOM posted increased profit in the fourth quarter. The firm reported earnings Monday of $87.9 million, or $0.63 per diluted share, up 43% from a year ago, on revenue of $3.38 billion, a 3.5% increase from the same period in 2021. On an adjusted basis — which excludes one-time charges and fees — the company had earnings of $0.86 per share in its 2023 fiscal first quarter, which ended Dec. 31. That beat analysts’ consensus estimate of $0.82 per share, while its overall revenue was in line with expectations, according to stock analysis site SeekingAlpha. The firm’s total backlog increased to $40.82 billion, up 5% from a year ago, and contracted backlog stood at $23.2 billion, an all-time high, according to the company. AECOM reiterated that it expects full year earnings in the range of $3.55 to $3.75 per share on an adjusted basis for all of fiscal 2023, which ends Sept. 30, slightly below analysts’ expectations of $3.78, according to SeekingAlpha.

Jacobs beats estimates, maintains strong 2023 outlook

Jacobs Engineering Group reported $135.6 million in profits for its first fiscal quarter Tuesday, or $1.06 per share, up from $134 million a year ago. Revenue increased to $3.8 billion, up 12.4% from $3.38 billion 12 months earlier, as the company benefited from government stimulus in key infrastructure categories. Adjusted earnings per share from continuing operations hit $1.67, up 7% year-over-year, according to a press release. The results beat analysts’ expectations of both $3.61 billion in revenue and $1.61 per share, according to Zacks Investment Research. Jacobs reiterated its fiscal 2023 earnings-per-share outlook of $7.20-$7.50, which brackets the average analyst estimate of $7.39, according to Matt Arnold, industrial analyst with financial services firm Edward Jones.

Skanska profits drop, US backlog and optimism remain high

Swedish contractor and developer Skanska reported 3 billion Swedish Krona ($284 million) in profit in Q4 2022, down 2.4% from the same time frame last year. For the full year 2022, Skanska reported 7.7 billion SEK in profit, a 6% decrease from 2021. Construction revenue was a much more positive metric in the firm’s report, which was released on Friday. In Q4, revenue from the sector hit 42.7 billion SEK, up 14% from Q4 2021. For the full year, construction revenue hit 156 billion SEK, up 17.6% year over year.  Skanska also reported a record high 229.8 billion SEK in backlog — with 29.4 billion SEK in Q4 order bookings in the U.S. — which fueled optimism for CEO Anders Danielsson. “We are in a very good position, we can continue to be selective, we can continue to keep our discipline and go for projects that we know have been successful in the future,” he said during an earnings call Friday.

USDOT is offering $662M for port infrastructure work

Planned projects to upgrade US ports are getting a lift from the federal government with $662 million in potential funding announced by the Department of Transportation’s Maritime Administration. The money, which comes under MARAD’s Port Infrastructure Development Program, will be available to port authorities, states, local governments and other eligible entities and will be awarded competitively on the basis of overall utility, sustainability and workforce development. Full Story: Department of Transportation (2/8) 

Biden aims to close “giant loophole” in Buy America

President Joe Biden will use his State of the Union speech to announce proposed guidance that the administration says would close a “giant loophole” in Buy America laws and extend their scope beyond iron and steel to a wider range of construction materials. The guidance, if implemented, would apply to “virtually all infrastructure spending supported by Federal financial assistance,” the White House said. Full Story: The White House (2/6) 

House bill would set up infrastructure bank

Infrastructure projects would have a dedicated bank under legislation introduced in the House. The new federal institution would serve state and local partners with loans and loan guarantees to advance private infrastructure investments or any project deemed to provide “a public benefit with regards to infrastructure,” says bill co-sponsor Rep. Colin Allred, D-Texas. Full Story: Construction Dive (2/7) 

Permitting talk absent from Biden’s SOTU

President Joe Biden during Tuesday evening’s State of the Union Address touted the administration’s progress on climate action and other policies that are driving job growth but made no mention of possible permitting changes. “I did think it was [a] missed opportunity because I think it’s something we all want, both parties,” said Sen. Shelley Moore Capito, R-W.Va. Full Story: E&E News (2/8) 

L.A. moves ahead with green-hydrogen power project

Green hydrogen would replace natural gas at Los Angeles’ biggest gas-fired power plant, under an $800 million plan approved Wednesday by the city council. Critics have environmental concerns and question moving ahead with technology that’s still maturing, but the city Department of Water and Power will now seek contractors to convert the Scattergood Generating Station from gas to hydrogen, produced from water using renewable electricity. Full Story: Los Angeles Times (tiered subscription model) (2/8) 

Rail transit extension advances a step in Calif.

Another step has been taken for a proposed 4.5-mile passenger rail extension from Redondo Beach, Calif., into Torrance. The Los Angeles County Metropolitan Transportation Authority is seeking public comment with its issue of a draft environmental impact study on the C Line plan, which would also add two new transfer stations for other lines. Full Story: Planetizen (2/8) 

Los Angeles’ Biggest New Construction Projects

The top 10 construction projects on tap for Los Angeles add up to nearly $1.4 billion in investment and will deliver more than 3,000 housing units, but the priciest project is purely commercial. JMB Realty is developing a Bjarke Ingels Group-designed highrise at 1950 South Avenue of the Stars in Century City — at an estimated cost of $300 million — which will serve as Creative Artists Agency’s new headquarters. Vancouver-based Onni Group is spending nearly as much — about $280 million — on a 60-story residential tower with 685 units in Downtown Los Angeles at 230 West Olympic Boulevard on the corner of Hill Street. The third-biggest project is by prolific Koreatown developer Jamison Services, which is building a $208 million mixed-use tower at 3545 West Wilshire Boulevard, with 428 apartments and 10,000 square feet of ground-floor retail and restaurant space.

San Pedro, Calif., cruise terminal proposal revived

A longstanding proposal to build a new cruise terminal in the Outer Harbor at San Pedro, Calif., is being considered again three years after being shelved due to the pandemic. The Port of Los Angeles has issued a draft request for proposals and has called for public comments to be submitted by March 3. Full Story: Daily Breeze (Torrance, Calif.) (2/6) 

20 “Best of the Best” projects honored

The Regional Connector Transit Project in Los Angeles and the Children’s Hospital Hubbard Center in Omaha, Neb., are two of the 20 projects nationwide included in Engineering News-Record’s Best of the Best Projects competition. Scott Blair reviews the selection process and lists the other winners, which will be honored in April during a gala in New York City. Full Story: Engineering News-Record (tiered subscription model) (2/6) 

L.A. area passenger rail projects nab more than $1B in state funding

A report issued yesterday by the California State Transportation Agency announces more than $1 billion in new funding for planned and under-construction passenger rail projects in Southern California – including a new people mover system in the City of Inglewood and upgrades to Metrolink’s regional rail system. “The projects funded represent critical transportation and will provide alternatives to driving with access to a modernized, public transit system,” said Governor Gavin Newsom in a news release. “California is unwavering in our commitment to our world-leading climate agenda, including record levels of investments in public transportation projects to electrify fleets, expand and improve service, and spark ridership growth.” The new round of funding, which supplements projects that have already received money from California’s Transit and Intercity Rail Capital Program, will go toward L.A. area projects including: