WINNIPEG, MAN. – A recent auction of heavy equipment in Manitoba by Hugh Munro Construction Ltd., a mainstay in the province’s roadbuilding industry for 60 years, could be just the tip of the iceberg and a harbinger of things to come, warns Chris Lorenc, president of the Manitoba Heavy Construction Association (MHCA).
“There are companies that are longstanding that are laying off people that, typically, would work in October and into November,” he says, noting that some are also selling off equipment. “It’s due to the severe cutbacks by the province in participating in infrastructure-investment programs. That’s the sole reason.”
In August, more than 1,200 pieces of Hugh Munro equipment were sold off in Winnipeg by Ritchie Bros. It was the largest auction that Ritchie Bros. has ever held in Manitoba.
With dramatically reduced provincial spending on highway and bridge construction and repair, Hugh Munro decided to transition out of the roadbuilding sector and use the money to focus on civil projects and the quarry side of its business.
However, Lorenc says Manitobans should be concerned that companies with such a historic presence in the province are downsizing, transitioning out or laying off people because of infrastructure budget cuts.
“We shouldn’t have to wait to see companies fold or companies lay-off. The reality is that the level of investment in the program, which is not accompanied by any asset-management plan, not accompanied by any long-term strategic plan, is deliberate, conscious mismanagement of Manitoba’s bridges, highways and structures upon which our economy moves people to jobs and product to market.”
Lorenc wrote a letter to all sitting MLAs in Manitoba prior to the recent provincial election, highlighting the problem and importance of the transportation system. He suggested the province adopt a multi-year plan with guiding principles and that it should have an annual and five-year capital program.
The MHCA has now taken stock of what was promised by the Progressive Conservative government during the election campaign and, with the party re-elected to a second majority government, will be raising the issue again with MLAs.
Lorenc says roadbuilding and construction companies are unable to properly plan for the future because there has been no long-term, stable funding plan for provincial infrastructure for several years.
“Not only is there not a long-term, stable and predictable plan, but the budget has been hacked so much that there isn’t the work that can sustain the industry.
“So, quite apart from irreparable harm to the asset which is going to cost Manitobans in the long run, it’s killing the very industry upon which the public sector relies to build, maintain and rehabilitate core infrastructure.”
The industry was growing over a period heading into 2016 because budgets were firmed up at significant levels and there were long-term commitments to those levels and, as a result, roadbuilding and construction companies were able to invest in human resources, equipment and innovation, says Lorenc.
“All of a sudden in comes a new government and pulls the rug from underneath industry, with industry having made those investments. That’s like the federal government saying, ‘You know that 10-year, $2-billion agreement that we have with you to fund health care, we’re cutting it by 40 per cent, you’re on your own.’”
Lorenc argues that roads, bridges and structures form the bedrock of Manitoba’s economy, as trade generates 53 per cent of the province’s GDP and roughly 240,000 direct and indirect jobs, yet the provincial government doesn’t have a sustainable, long-term plan to deal with the infrastructure deficit.
The MHCA fully supports the premier’s push to balance the books, reduce the deficit and debt, and other initiatives, he says, but the province also must focus on taking care of transportation assets that drive the economy.
“We get all of that. What is lacking in that determined approach is, on the other side of the balance sheet, a balanced and strategic focus on investing in strategic infrastructure that has the capacity and the ability to improve productivity, to create new areas of investment and to provide a return on that investment.”
Lorenc says it’s a failure of public policy to refrain from properly managing strategic investment in the province’s trade and transportation systems as studies by the Conference Board of Canada have verified that for every $1 invested in strategic infrastructure between $1.30 and $1.60 is returned to the GDP.
With a highways and bridge investment deficit of $9 billion, and $900 million needed each year to maintain assets and begin to bridge the deficit, he maintains $350 million committed annually by the province falls short.
“This level of funding is flawed public policy from any number of perspectives. It should be accompanied by a long-term strategic plan and by a capital asset management program, which doesn’t exist.”
The MHCA believes the provincial initiative should be guided by six principles: a permanent, not ad hoc program; focused first on investments that grow the economy; embraces innovation; partners with the private sector; funded though a dedicated stream of revenues; and reviewed annually for adjustment.
“Those are simple, basic principles around which government should manage investment of the program,” says Lorenc.