Ontario economy on the rise this year: OCS

Ontario’s economic fortunes look better this year than last and builders — particularly in the Greater Toronto Area — are optimistic that there will be more work in 2014 than 2013.

That’s the word from the Ontario Construction Secretariat (OCS), which released its State of the Industry Outlook recently in Toronto.

The OCS sixth annual survey, done with Ipsos Reid, polled 550 general and trade contractors in non-union and unionized sectors of five regions across Ontario. ICI and highrise residential sector contractors were surveyed.

There is a “quiet confidence” among contractors polled, said the OCS’s Katherine Jacobs, director of research and operations. Forty per cent of them indicated times look brighter in 2014 than last year, while only 10 per cent saw 2014 in a bad light.

Commercial construction is expected to remain strong in the GTA this year – though that sector might be peaking in a year or two — and projects in engineering and industrial sectors give the area’s contractors confidence about this year, she told participants of the OCS conference.

As for hiring, 33 per cent of those polled across Ontario indicated they would hire staff this year. While that number is down slightly from last year, close to half of GTA respondents said they would hire in 2014. Meanwhile, only nine per cent of all polled said they would lay-off employees — the lowest number in years and a good indicator of a stable year ahead, said Jacobs.

Most contractors polled see the institutional sector as a low point — not surprising as governments tighten belts in the sector.

While 76 per cent of non-unionized contractors see labor shortages as a problem, only 64 per cent of the unionized sector saw labor scarcities ahead. BuildForce Canada — a national industry-led organization — projects the need for 95,000 more workers in Ontario by 2023. More than half of that demand will come from existing training while the remainder will be from out of province, said Jacobs. Eight of ten union contractors hire apprentices while only 50 per cent of non-unionized contractors hire apprentices.

“We need all contractors to take on apprentices and support that system.”

Eighty per cent of those surveyed expect material costs to rise while 70 per cent see labour costs swinging up.

Derek Burleton, vice-president and deputy chief economist of TD Bank Financial Group, sees moderate growth over the next two years — about 2.5 percent in Ontario. Still, that is an improvement over 2013.

“We’re seeing higher intentions in construction in the year ahead, although nothing great,” but there has been a surge in machinery and equipment acquisitions, an indicator that companies have more confidence in the future, he told the audience at the OCS conference.

Infrastructure — particularly in sectors like transportation — will continue to grow this year and early signs indicate that manufacturing will increase and could see some expansion as a result of the deflated dollar, which is projected to drop to as low as 85 per cent this year or next, he said.

Burleton said it remains to be seen what Chrysler will do after its recent decision to pull out its request for hundreds of millions of dollars from the provincial and federal governments for a $3.6 billion investment in Brampton and Windsor plants.

“You can take some good news from it in that they didn’t say they were pulling out all of their investment.”

While Ontario’s economy should benefit from improving world economies – the U.S. and Europe, for example — Burleton said some areas of the economy (commercial construction, for instance) are near their peak.

That could become a concern to unionized ICI builders because much of that group’s activity has been in the public sector and builders have been waiting for the commercial sector to come back, said Mike Yorke, president, Carpenters Local 27.

Ontario’s minister of labour Yasir Naqui told the packed room at the OCS conference that Ontario is the first province to implement mandatory health and safety awareness training for all workers and supervisors in the workplace. It will go into effect July 1, 2014.