Rough Construction 2019

SKILLED TRADES; TRYING TO TURN SHORTAGE INTO SURPLUS CONSTRUCTION 2019: A SNAPSHOT

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Meet the

Contributors

Editorial Director Castle Building Centres Group Ltd. Jennifer Mercieca Publisher - Espress Labs Inc. Dan Alexander Managing Editor Teresa Christine Art Director Aïcha Niazy Contributors Teresa Christine Danila Di Croce Lawrence Cummer

Advertising Inquiries Jennifer Mercieca Director of Communications Castle Building Centres Group Ltd. 905-564-3307 jmercieca@castle.ca

DANILA DI CROCE

LAWRENCE CUMMER

Danila Di Croce is a Toronto-based writer with over 10 years of experience in the fields of media and education, including a Masters in Media Production from Ryerson University. Throughout her experience, Danila has worked in the areas of public relations, marketing, radio and television broadcast, and has contributed to various national publications on a wide range of topics including entrepreneurship, building construction, workplace health and safety and hospitality.

Lawrence (“Law”) Cummer is a freelance writer and editor and has been a frequent contributor to Contractor Advantage, Ideas and Rough Construction for nearly a decade. Over his more than 20-year career, Law has written about contracting and construction, general business, information technology, health and safety, personal finance and almost every topic in between. He has a passion for storytelling and sharing how people can work better, easier — and “smarter” — from contractors to technologists to business executives.

Material Contact Maryam Bashir Marketing Coordinator Castle Building Centres Group Ltd. 905-564-3307 mbashir@castle.ca Published and designed exclusively for Castle Building Centres Group Ltd.

by Espress Labs Inc. ROUGH CONSTRUCTION 2019 3

Editor’s Note

contents

08 Construction 2019: A Snapshot

The Strength of an Industry Built on Skill The Canadian construction industry has and always will be an important economic indicator; intrinsically connected to the state and strength of the national economy.

Over the past decade residential and commercial construction industries have experienced tremendous growth, aiding Canada’s current level of economic stability. Today, although industry watchers are confident in the construction and skilled trades sectors, there are still several impending challenges that can potentially compromise the growth and progress made to date.

In this issue of Rough Construction, we bring you some of the best residential construction products available at your local Castle Building Centres and share insights from a variety of experts who lend their opinion on the current trends and challenges.

Our feature, Construction 2019: A snapshot, is an opportunity to learn more about some of the measures organizations, associations and government agencies have in place to ensure we can collectively work to build industry resiliency and prosperity. Connectedly, for a candid account on the national situation facing trades, turn to the pages of Skilled Trades; Turning Shortage into Surplus.

We hope you enjoy this edition of Rough Construction!

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22 Skilled Trades; Trying to turn Shortage into Surplus

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Construction 2019: A Snapshot Written by Lawrence Cummer

Although industry watchers are optimistic about the Canadian construction sector in 2019, looming factors point to a year that will not be completely worry-free.

According to FMI, a management consulting and investment banking firm focused on the built environment, the total put-in-place construction spending in Canada is forecasted to grow modestly in 2019; a continuation of a long-term inflation matching pattern. While still a drop from construction sector growth in the early to mid-2000s, Jay Bowman, Managing Director of Research at FMI Corp., suggests in the firm’s 2019 FMI Overview that the expected 3% compound annual growth rate (CAGR) seems welcome news given potential economic disruptors such as higher interest rates, the sinking price of oil and trade uncertainty.

LINK TO THE NATIONAL ECONOMY

Of course, the Canadian construction industry is inherently tied to the state and strength of the Canadian economy and vice versa.

“The construction industry has and always will be an important economic driver of Canada’s national economy,” notes Mary Van Buren, President of the Canadian Construction Association (CCA).

“Construction employs almost 1.5 million Canadians and accounts for $119 billion in economic activity.”

She says that the industry is being impacted by several issues, and four sit as top priorities for the CCA: restoring investor confidence, creating a solid and long-term plan for infrastructure spending, addressing the labour shortage by attracting a skilled and diverse, and devising a strategy to keep pace with advances in productivity, technology and innovation.

As the year began, Statistics Canada suggested construction sector growth is outpacing Canada’s GDP, growing 1.9% over 0.3%, pointing to what Van Buren calls “the important link between construction and the strength of the Canadian economy.” Still, she says there are issues that require addressing that could prevent continued industry growth.

ROUGH CONSTRUCTION 2019 9

Construction 2019: A Snapshot Job Safety First: On and Off the Jobsite

“Things like delays to the expansion of the Trans Mountain pipeline, the imposition of federal carbon pricing program, the proposed changes to environmental legislation are eroding investor confidence in Canada,” she says.

ONGOING SKILLS SHORTAGE

Despite coming out of a year of near-record employment and a strong economy, the construction industry still faces worker scarcity and heightened competition around talent. According to a recent Business Development Bank of Canada (BDC) survey, construction is, along with manufacturing and retail trade, one of the sectors being hit hardest by labour shortages.

It is also a sector already stretched to nearly its limits around capacity. Canada’s capacity utilization rate, the measurement of actual to potential output, reached a high of 87.3% in mid-2018, but the construction industry hit 93% in the same period — the highest it has seen since 1990 when it peaked at 98.6%.

The BDC doesn’t expect the challenge in finding workers to improve for at least a decade, and its chief economist Pierre Cleroux calls it a “new norm” to which Canadian small and mid-sized businesses must adapt. The federal Crown corporation’s survey also suggests a direct connection to company growth, finding that firms affected by labour shortages are 65% more likely to generate low sales.

Worker scarcity, it finds, is most acute in mid-sized organizations.

An oncoming rush of retirements is expected to exacerbate the problem, as the supply of young workers struggles to keep pace with older outgoing ones. According to BuildForce Canada (formerly the Construction Sector Council), the construction industry will need to recruit, retain and hire an estimated 300,000 new workers over the next 10 years, as more than 260,000 leave the workforce. Common misconceptions around skilled trade careers only add to the dilemma.

“The construction industry is facing a serious workforce shortage.

Labour market research indicates that the sector is expecting about

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Construction 2019: A Snapshot

21% of its workers to retire over the next decade,” Van Buren says.

“We are also challenged by the stigma around skilled trades as a career option, when in fact, the skilled trades present a tremendous opportunity to earn a very good income, constantly learn on the job and advance your career.”

To counteract this, she says the country needs a national strategy “aimed at recruiting, retaining and re-training a diverse, skilled and tech-savvy workforce to keep the construction sector healthy and competitive.”

“Research is needed into perceptions of what a career in construction means for youth, Indigenous groups, women, new Canadians and other under-represented groups. A national strategy to re-position the image of the industry as an inclusive sector with opportunities for career growth is essential to address the workforce shortage.”

It is an opinion mirrored somewhat by BDC’s Cleroux, who last fall suggested entrepreneurs facing worker shortages consider hiring from under-represented segments of the population, including younger or less-qualified workers, retirees and newcomers to Canada.

2019 AND BEYOND

Over the coming decade, while some provinces, like B.C. and Ontario, continue to grapple with recruitment challenges to meet the demands of major projects, others are expected to see construction levels plateau or possibly recede, according to BuildForce Canada.

The organization, which tracks labour market information for the construction industry, says that construction employment in Canada will strengthen modestly through 2020, as demands driven by major energy, public transportation, and other infrastructure projects rise to a near-term peak, which it says will offset continued softening in housing starts due to slower population growth. It does expect employment demand to ebb after 2021, once many construction

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ROUGH CONSTRUCTION 2019

Construction 2019: A Snapshot

projects are complete, after almost two decades of uninterrupted growth. As housing starts decline, BuildForce predicts an increase in renovation and maintenance needs.

In the coming years, FMI forecasts great gains in construction spending to occur in Quebec, where it expects to see a 7% CAGR — more than double the long-term rate of inflation. It attributes this to the strong labour market and increased public spending. The firm points to infrastructure building in B.C. related to the liquid natural gas (LNG) industry to help fuel a 5% CAGR over the next five years, while Ontario’s economy — projected to neither grow nor contract much this year — will also see a long-term growth of close to 5% CAGR over the next five years. Alberta, despite challenges related to oil and gas, will be expanding in the next 18 to 24 months, predicts its 2019 outlook report, but the impact of the recent downturn should spill into 2019 and result in a CAGR of just over 3% through 2023.

Construction related to power and water supply are expected to lead construction growth over the next five years, according to FMI. Water supply-related construction while much smaller than power — at roughly one-fifth the spend — is expected to see 10% CAGR during this period, it forecasts, thanks to several multi-hundred million-dollar projects planned across Canada.

The report notes as many positive indicators as questions around the Canadian construction sector outlook, but also suggests that as several challenges are worked out over 2019 all will become clearer.

“For now,” it suggests, “it’s time to take advantage of the opportunities that exist, assess your future options and build resiliency in your organization when the demands are not so acute.” —

ROUGH CONSTRUCTION 2019 13

Construction 2019: A Snapshot

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Skilled Trades; Trying to turn Shortage into Surplus Written by Danila Di Croce

Skilled trades as an industry has seen its share of prosperity and hardship. In previous decades, the influx of opportunity to help build various landscapes and infrastructure around the country was a driving force for many to relocate or move to this country. Today, it appears that this generation is looking to other industries, leaving the trades with a possible shortage of hundreds and thousand of jobs to fill over the next 20 years.

According to a 2018 assessment by BuildForce Canada, a research organization which provides industry forecasts, over 260,000 industry veterans are expected to retire over the next decade, while the industry projects only 221,300 new recruits. What's more, there is an expected four per cent increase in labour demands, which translates into roughly 44,100 new positions, leaving the construction industry and closely-linked maintenance industry with the task of attracting a vast number of new recruits in order to meet demand.

This is not a job to be taken lightly, nor is it one to sleep on. By 2028, the average Canadian construction worker will be 42-years-old, while 22% of the current workforce will be retired. Since training of new recruits is often a years-long process, the industry needs to act sooner rather than later.

This urging is being felt across Canada, particularly for British Columbia. While residential housing is on the decline, construction employment is projected to be sustained by the growing demands in the non-residential sector. According to BuildForce Canada between 2019-2021, “British Columbia will remain one of the fastest-growing construction markets in the country, driven by the start of several public transportation projects, pipelines, and LNG project and related pipeline infrastructure.� These changes result in a projected 13,000 jobs in the non-residential employment over the three years.

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Skilled Trades; Trying to turn Shortage into Surplus

Ontario is following closely behind the west coast, with a projected need of 14,200 workers over the next three years, also in the non-residential sector. Although other provinces such as Prince Edward Island and Quebec don't have quite as much demand, they still face a similar need for workers, in order to meet the challenges faced in their growing industries.

While there is work available, it appears that the desire seems to be lacking. Individuals are not as prone to inter-provincial mobility for work as they once were. Furthermore, in today’s changing landscape where technology is at the forefront, youth are not necessarily looking to traditional trade jobs as their prime career choice.

According to Workopolis, a website specializing in job searching, one of the key factors in “hireability,” is to master digital and tech literacy. As such, with trends focusing on the digital landscape, younger generations may think twice about entering the trades, or may do so in an untraditional manner.

Along with these challenges, there is also the “shift in migration patterns” that the industry is facing. According to BuildForce, “historically, a key source of immigrants were from countries that had a higher propensity to choose the construction industry.”

With challenges such as a lack of desire towards inter-provincial mobility, and the trades as a secondary career choice, the skilled trades sector is being forced to be creative when developing their recruitment tactics.

Consequently, Canada's Building Trades Unions (CBTU) recently commended the Federal Government for their efforts in helping boost the trades industry. The CBTU had made various suggestions for the federal budget in regards to meeting the needs of the half a million skilled trades workers and their families across Canada, and many were incorporated in the federal plan. Canada's Building Trades Unions Director, Arlene Dunn explained the benefits of the government's initiatives as she stated, “With the support of the Federal Government, through a campaign to put skilled trades as

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Skilled Trades; Trying to turn Shortage into Surplus

a career option front and centre to young Canadians, it will fill a much-needed gap in awareness.”

The highlights from the federal budget include: a new “Canada Training Benefit,” which will supply $4.6 billion over five years to support workers who need to pay for training, get income support and potentially get job protection while upgrading skills; a two-year campaign, with $6 million to promote a career in the skilled trades; $35 million over five years to address skills development of workers affected by the closing of coal plants; $150 million for priority projects in affected communities; $30.5 million over five years to respond to the Opioid crisis ; and a National Pharmacare Program.

While the hope is that these projected plans will attract individuals to the construction industry, especially those underrepresented groups such as women and Indigenous Canadians, who only make up 13% and 4.9% of the construction labour force respectively, recruitment is not the only thing industries and companies should take note of. Instead the focus should also be on retaining the workers one has. Debbie Burkett, a master's degree candidate in human resources and researcher in recruitment, retention and strategic human-resource management warns in her article, Viewpoint: Recruiting Efforts Alone Won't Solve the Skilled Trade Shortage, “when recruiting is carried out in a shotgun approach, it might fill you employee roster quickly but will result in long-term, artificially elevated salaries, lack of metrics for accountability, higher turnover rates and lower overall employee engagement.” Instead she stresses that the focus should be on ensuring that employees are engaged and committed to their organization and work.

While the mission of securing the skilled trades sector is not easy, it does seems attainable; with focus and efforts on retention, as well as recruitment, there is hope that the massive demand over the next years will be fulfilled. —

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