Construction industry hits deep slump

Conditions aren't expected to increase over next few months

Vancouver Island’s construction industry has gone into a deep slump, says the CEO of the Vancouver Island Construction Association.

Greg Baynton said the number of large projects now being bid upon by construction companies has dropped “180 degrees” in the past couple of months — from 50 industrial, institutional, and multi-family housing projects every week to “less than 20 now” and well off the normal average of 35 projects weekly.

And he doesn’t expect conditions to change for at least a couple of months, if not longer.

“We’re operating at about half of normal,” Baynton said of projects that range in value from $200,000 to $100 million and higher.

The sudden slowdown also affects other industries such as the building suppliers and trucking companies, he said.

After a busy spring and summer, Baynton said the downturn comes as a shock to his 550-member companies which account for about 90 per cent of the Island’s construction and employs between 7,500 and 15,000 workers.

Baynton said uncertain international economic conditions, especially in the Europe, are having a significant negative impact on investors and the construction industry confidence expectations, causing them to cut back plans and layoff workers in the expectation of a possible global recession.

However, he said B.C. is perfectly placed to avoid most of the downside and reap huge benefits if economic conditions remain calm or expand.

“There’s lots of light at the end of the tunnel,” he said, urging contractors to show courage and confidence “despite the instabiliiy” and plan for a healthy future rather than retreat.

His optimism is the reason the construction association sponsored the Island Outlook 2012: Economic and Labour Forecast at the Union Club on Tuesday featuring two speakers who see nothing but hope for the Island construction and resource industries.

Economic forecaster specializing in the construction industry Mark Casaletto, vice president of Reed Construction Data, said the future isn’t all doom and gloom.

“There’s a lot of noise about economic changes but B.C.’s construction industry should be excited,” ;he said citing a Price Waterhouse Cooper study that predicts Canada, especially Western Canada, will become a world leader in construction in less than 10 years — moving from 10th in the world to fourth, behind the U.S., China and India.

However, most of the construction won’t be happening in downtown Vancouver or Victoria and much of it take place in suburban and rural areas, he said.

There will be less office and retail construction more building of towns and infrastructure in remote areas, said Casaletto, warning “developers and contractors have to realize we’re no in a typical construction cycle and understand the dynamic shifts of the economy.”

His views were echoed by Ryan Berlin, an Urban Futures Institute director, who waved a labour forecast crystal ball that said the future points to labour force tensions as baby boomers retire in large numbers.

This means the construction industry has to increase efforts to train new workers, capture new immigrant workers and retain older workers,” he said.

 

Baynton agreed with the assessment of both men, adding: “We can’t ignore the impact of rapid change in our industry and contractors, engineers, architects, suppliers and developers need this information to not only survive, but thrive.”

 

 

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