The construction sector is operating at full throttle in most parts of the country, a recent Statistics Canada report on industrial capacity utilization rates has shown, with a rating of 92.4 per cent, continuing a trend of growth and marking the highest capacity score since 1990.
The rate is a measure of monthly construction GDP in each sector compared against an index of capital stock in each industry that in construction includes physical and capital assets and labour capacity.
There are 92 categories of assets in total.
Construction stakeholders said the number reflects what is being felt in the marketplace and while the news is generally good, problems such as acute labour shortages in certain regions, delays in construction schedules and rising costs are examples of pains being felt.
“It’s great news,” said Clive Thurston, president of the Ontario General Contractors Association (OGCA). “Absolutely we are extremely busy.”
“If you look at the country as a whole, it has a ring of truth,” said Bob Blakely, Canadian Operating Officer with Canada’s Building Trades Unions.
“In the GTA, they can’t find enough people to do the work and they are at their wit’s end. In the Lower Mainland in B.C. they can’t find enough people…and in Quebec, there is an enormous amount of work and we need people.”
The timeframe for construction is being pushed out in some cases because they cannot find the labour
— Bill Ferreira
BuildForce Canada executive director Bill Ferreira noted the unemployment rate as of May in the Ontario construction sector is 4.2 per cent and in B.C. it is four per cent, significantly lower than historic norms of eight to 10 per cent.
“In those areas they are really struggling to find tradespeople,” said Ferreira. “We hear this from developers, the timeframe for construction is being pushed out in some cases because they cannot find the labour they need.”
Ferreira and Blakely reported high workloads as well in Manitoba, the Atlantic provinces, except New Brunswick, southwestern and eastern Ontario, the non-residential sector in B.C. and even the resource sector of northern Alberta, where Blakely said project shutdowns are giving lots of work to welders, boilermakers, scaffold workers and pipefitters.
The trades shortage is most dire for drywallers, drywall finishers, bricklayers and acoustic tile and flooring installers in the Toronto region, Blakely said.
Compounding the labour problem in Vancouver and Toronto, particularly the latter, said Blakely, is the high cost of living.
“Our problem with the GTA is this, unemployed people in Atlantic Canada or the west probably would love to go to work but in Toronto but it’s the most expensive place to live in the country,” he said.
The report was released June 10. Construction had the fifth-highest capacity utilization rate of 32 industrial sectors.
The busy sector in Ontario plays into the hand of contractors who for years have had to deal with unreasonable project owners, said Thurston. General contractors have been at the mercy of public owners who refuse to use standard contracts, pay late, reject adjudication of disputes and refuse to be flexible in dealing with project change requests or allotting staff to expedite requests, he charged.
“It allows us to pick and choose who we work for,” Thurston said.
But it doesn’t necessarily mean taxpayers will take a hit, with fewer bidders meaning higher bids, he said.
“It’s supply and demand, costs go up,” Thurston explained. “But what you can avoid is excessive increases for taxpayers caused by poor procurement practices. If you fix that and work on collaborating with the industry and make it as efficient as possible, you will get good pricing.”
The OGCA president said he recently met with representatives of Infrastructure Ontario and Metrolinx to discuss how Ontario constructors could deal with larger and smaller projects in their pipeline of work.
“There is tremendous value to collaboration, meeting ahead of time, discussing the work, discussing the pipeline,” said Thurston. “I got a look at their pipeline of projects, and it is wow.”
OGCA members are reporting project costs are going up, he also said.
“We advise owners to be prepared to alter prices,” Thurston said.
Blakely said the current crunch highlights the need for more effective recruiting, especially of women, First Nations, new Canadians and millennials, and to improve apprenticeship strategies.
Despite efforts by groups such as the Canadian Council of Directors of Apprenticeship to harmonize apprenticeship systems across the country and enable apprentice mobility, there is still a patchwork of systems, he said, requiring “workarounds” to get training recognized across the country.
National skills transferability among journeypersons, on the other hand, is in good shape thanks to the national Red Seal program, Blakely said.
Blakely said labour mobility needs to be encouraged, and made more affordable, through reform of EI. Large firms needing to import workers for projects may be able to subsidize travel and accommodation, he said, but “mom and pop” drywalling firms in Ontario who desperately need workers can’t afford that.
Similarly, large firms can afford the $7,000 to $10,000 it costs to recruit under the Temporary Foreign Worker Program but small firms cannot, said Blakely.