Ontario contractors bullish on growth in 2022, survey reveals

Ontario contractors are significantly more confident in the future of the construction economy this year compared with last year, according to a newly released survey from the Ontario Construction Secretariat (OCS).

The percentage of contractors saying their business is growing almost tripled from last year. Forty-three per cent of contractors expect to hire more workers this year than last and 52 per cent expect higher revenues this year.

The positivity comes despite significant threats to growth — 77 per cent of contractors have experienced significant supply chain disruptions in the past year, and 52 per cent of contractors have had projects postponed by the owner in 2021-22. Thirty-eight per cent of contractors reported projects have been cancelled in that period.

The annual contractor confidence survey, undertaken in January, was released March 3 at the OCS’s State of the Industry and Outlook Conference, held in-person in Mississauga.

“We are starting to feel more confident that we are emerging from the pandemic, and we are seeing that reflected in the attitudes of Ontario ICI construction businesses,” said OCS CEO Bob Bronk.

Overall, 82 per cent of the 500 ICI contractors surveyed have a positive outlook on Ontario’s construction industry, with 36 per cent stating they believe they will do more business this year compared to last and 48 per cent forecasting that their business will at least stay the same.

Confidence was highest in central Ontario (39 per cent) and eastern Ontario (38 per cent) while contractors in the GTA were aligned with the provincial average of 36 per cent.

“Pretty much everyone’s in tune…anticipating a strong 2022,” stated OCS director of research Katherine Jacobs, noting no major pockets of negative sentiments. “That was an interesting observation and again it gives us further strength.”

Jacobs said it was a positive sign that for the first time since the confidence survey has been undertaken, in the category of sources of new work, new construction surpassed maintenance work, 55 per cent to 45 per cent.

“New construction is much stronger this year than it has been in the past,” she said. “That’s the highest percentage that we’ve ever achieved when we asked that question.”

Among other survey results:

• 40 per cent of contractors reported higher revenues in 2021 compared to 2020, with an increase of two per cent, on average, in revenue increase.
• In addition to the 52 per cent of contractors expecting higher revenue for 2022, 33 per cent expected revenue to remain the same. Contractors expect an average increase in revenue of 10 per cent in 2022.
• Pre-pandemic, about 60 per cent of contractors said their business was growing. As of January 2022, 34 per cent thought it would grow, compared with only 12 per cent last year, and 54 per cent thought it would remain the same, similar to the 57 per cent last year.

“We’re starting to see some improvement as we’re moving further away from the pandemic,” said Jacobs. “We’re not quite at that 60 per cent that they said pre pandemic but we’re moving in the right direction.”

• Among the 43 per cent of contractors that expected to hire more employees this year, the top three approaches to attracting or retaining workers were raising wages, promoting employees and improving benefits. The average increase in hires is expected to be eight per cent. About half of the employers expect to maintain current staffing levels.
• Of the 52 per cent of contractors that have had projects postponed in 2021/22, 66 per cent had seen projects rescheduled. “That is positive news for the industry,” said Jacobs.

The top reasons for project cancellations: 27 per cent was for materials costs, availability or delays; 19 per cent was general cost increases; 16 per cent was related to COVID; and 14 per cent was related to financing.

• Strategies to manage supply chain disruptions included seeking alternative suppliers (80 per cent), accelerating materials purchases after winning the contract (73 per cent), identifying alternative materials in the contract (67 per cent) and stockpiling materials (63 per cent).

Jacobs reported on contractors’ observations in a comments section, noting employers praised the increase in health and safety on worksites.

Another comment was, “Some of the fly-by-night companies have been weeded out of the industry.”

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