While most companies were focused on health and safety during the height of the coronavirus emergency, the vice-president of an equipment supply company said it was also important to meet customer needs.
Michael Rugeroni, vice-president of sales — road and minerals at Brandt Tractor Ltd., was one of the panellists on the Ontario Road Builders’ Association’s (ORBA) recent webinar entitled Getting Ontario’s Economy Moving – The Greater Construction Sector’s Approach, held at the end of June.
“The fundamental thing, in addition to our safety, was to show our customers that we were ready to meet their needs,” said Rugeroni, adding the majority of its customers were deemed essential and were able to work through the pandemic.
“The bottom line for our company was to get the fundamentals of safety right and then ensure we do what our customers expect, which was to support them as they were making crazy decisions at a very rapid rate.”
The company did have one COVID-19 case at a branch in Ontario. They responded quickly by closing the branch, sterilizing it and bringing in temporary employees to run it.
“We transferred our call centre in Regina to manage parts calls,” Rugeroni explained. “The pre-planning, in very short order, allowed us to remain focused on adapting quickly.”
A challenge for the company was figuring out how to manage its supply chain when the majority of the products were coming from outside Canada, namely from the U.S. and Europe.
The key is good planning, Rugeroni said.
“In that March timeframe, the Canadian dollar devalued very rapidly and when capital goods companies have order fulfillment plans in place, that can have a dramatic effect on the cost of the inbound equipment,” he noted.
“There were a couple of delayed deliveries on inbound freight from Europe but by and large we were able to rely on our order fulfillment planning process developed before COVID. That type of planning is essential.”
Rocky Coco, president of Coco Group, said pre-COVID contracts were void of language to address a pandemic and additional measures undertaken for health and safety had serious implications on profitability.
“This dynamic is a new challenge to consider for all new tenders and contracts,” he said.
“The true impacts on the industry are yet to unfold. When the majority of construction stopped, many businesses faced the challenges of negative cash flow, lack of additional capital spending and complete uncertainty for future business planning purposes. Some medium and small sized businesses faced the real possibility whether the economic challenges would result in contractor downsizing or even, in worst-case scenarios, the possibility of insolvency.”
In response to the pandemic, the Canadian government has incurred billions of dollars in additional debt, he added.
“The government must accelerate issuance of shovel-ready projects to stimulate job creation and economic development in communities,” said Rugeroni. “For the provincial government-driven projects, this means where approvals have been obtained for all shovel-ready, and shovel-worthy projects expeditiously release these project tenders for all regions.
“The challenges are not short term. This year’s advancement of the gas tax by the federal government will seriously impair the 2021 budgets for many municipalities. The federal and provincial governments need to develop an enhanced infrastructure spend encompassing 2021 and beyond.”
David Smith, national vice-president and surety leader of Intact Surety and The Guarantee Company of North America, provided the surety perspective on the impact of COVID-19. One of the silver linings, Smith said, was getting away from an antiquated system of delivering paper bonds.
“One of the early tasks was to figure out how we maintain issuance of bonding and delivery of bonds to clients,” Smith stated. “There has been an increased acceptance of E bonding.”
Another thing the surety industry had to deal with was holdback issues.
“We had to join the industry lobby efforts to resolve the holdback issue to keep money flowing here in the province of Ontario and to try to address the need for fairness and for contractual relief for both time and an additional costs that are being incurred as a result of COVID-19,” Smith said.
From a surety perspective, there has been no material increase in contractor bankruptcies and surety claims to date.
“The surety capacity in the industry to support the construction industry remains very stable and consistent,” said Smith. “We are seeing an increase in subcontractor bonding as contractors look to try to mitigate risk associated with the ongoing uncertainty throughout the industry.”
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