Business Up Front - November 2005

Business Up Front

Hurricane to Increase Construction Costs

Ken Simonson, chief economist for the Associated General Contractors of America (AGC) recently discussed the impact of Hurricane Katrina on construction activity, materials and labor. He believes construction material prices will rise at least 10 percent next year, instead of the 6 percent to 8 percent increase he had predicted before the storm. 

Simonson spoke at AGC’s mid-year legislative conference in Washington, D.C.

Drawing on first-hand accounts from AGC’s member companies, Simonson said contractors can expect increased diesel fuel costs for operating off-road equipment such as bulldozers, tower cranes and trucks. Fuel cost increases will also show up as freight surcharges on the thousands of deliveries to a typical construction job site.

Most of the increased costs in construction materials throughout the country will result from a reduction in oil and natural gas production, and not from higher demand for those materials for reconstruction projects in devastated areas. Simonson predicted that losses in production and imports because of the storm will result in higher prices and/or supply disruptions for PVC pipe, other construction plastics, tires for large off-road equipment, galvanized steel, gypsum products and cement.

Simonson noted that the New Orleans customs district accounted for more than 3 percent of the nation’s cement shipments during the first six months of 2005. Cement shortages are expected to worsen in several of the 32 states that were already experiencing shortages, and the problem may spread to other states. Cement prices are likely to rise even more steeply than the 12.7 percent increase that occurred between August 2004 and August 2005.

Unlicensed Software Can Prove Costly

Software piracy can be a costly mistake. Broadbent & Associates, Inc., an environmental, water resources and civil engineering firm with offices in Henderson, Reno and Phoenix, learned the hard way as it paid the Business Software Alliance (BSA), a Washington, D.C.-based industry watchdog group, nearly $228,000 for the use of unlicensed software.

In addition to making its payment, Broadbent & Associates cooperated with BSA and took immediate steps to ensure licensing compliance and strengthen its software management practices.

Most software piracy investigations begin with a call to BSA’s hotline, 1-888-NO-PIRACY, or with a report to its online reporting form at bsa.org. After BSA received the information via its online reporting form, its attorneys contacted Broadbent & Associates.

"Businesses should ensure that they have adequate licenses for all software installed on their computers," said Jenny Blank, director of enforcement for BSA. "Proper software management helps to maximize a company’s IT investment, putting its software assets to full use. Businesses should make sure the use of fully licensed software is part of their corporate responsibility checklist." An independent study conducted for BSA concluded that 21 percent of software in the U.S. is unlicensed, resulting in $6.6 billion in losses to the industry.

The software piracy settlement demonstrates the need for increased awareness and education about piracy and software asset management among businesses, according to the BSA, which says many businesses are at risk of breaking the law, jeopardizing the security of their office computer networks, and of facing similar high fines without even knowing it.

Don’t Leave Home Without It

Most people have one technological tool they cannot live without. For financial executives, it is the cell phone. Robert Half Management Resources, which provides accounting and financial professionals on a project and interim basis, conducted an independent nationwide survey of 1,400 chief financial officers (CFOs) from a random sample of U.S. companies with more than 20 employees. Cell phones topped the list as the most indispensable portable technology device, with 44 percent of the response. Laptop computers came in at a close second, cited by 39 percent of the executives polled.

Previous surveys also found the cell phone to be CFOs’ tool of choice, as 46 percent of respondents in 2002 and 51 percent in 1999 said it was their favorite electronic communication device. Laptops ranked second, with 33 percent of the response in 2002 and 26 percent in 1999.

"Reflecting the needs of today’s busy professionals, the latest cell phone technology combines the best of both worlds, including e-mail and Internet access that allow for expanded capabilities in one tool," said Paul McDonald, executive director of Robert Half Management Resources. "These multi-functional phones are fast becoming one device executives are expected to own and use."

McDonald cautions that while mobile devices increasingly have become a necessity in our lives, they can keep us connected to work around-the-clock. "Turning off a cell phone, even for brief periods, particularly on non-working weekends, allows an executive to enjoy a break from business," advised McDonald.

U.S. Hispanic Economy in Transition

As the U.S. Hispanic economy continues to solidify its growing influence in the 21st century, the ripple effects have already begun to profoundly alter the nation’s political, social, cultural and economic structures. A new report called The U.S. Hispanic Economy in Transition: Facts, Figures, and Trends provides the following data about the size of the Hispanic economy:

Hispanics now account for 13.7 percent of the total U.S. population.

Hispanics account for over 13 percent of the U.S. labor force and are expected to increase to nearly 20 percent by 2030.

Hispanic employment has grown more than 16 percent since 2000, while overall U.S. employment has grown barely 2 percent.

Hispanic purchasing power has increased at an annual growth rate of 7.5 percent, more than twice as fast as the 2.8 percent growth for the total U.S. purchasing power. Hispanic purchasing power reached $700 billion in 2004 and is poised to surge to $1 trillion by 2010.

The net worth of U.S. Hispanics surpassed $534 billion in 2000, up more than 30 percent in two years.

Last year, U.S. Hispanics owned nearly 2 million businesses, generating total revenues of $273.8 billion – figures that are expected to grow to 3.2 million and $465.6 billion, respectively, by 2010.

Hispanic youth now accounts for more than 34 percent of the total U.S. Hispanic population and more than 18 percent of the total U.S. youth population. More than 86 percent have been born in the U.S.

About 47.5 percent of Hispanics own their own home. The average household income is $44, 468.