British Columbia’s Construction Development Cautious Amid Economic Pressures and Legislative Delays: Report

Recent statistics indicate that the construction industry urgently requires legislative reform to alleviate its challenges.

Photo credit: Life of Pix

Statistics reported in the Fall 2023 BC Construction Association (BCCA) Industry Stat Pack, along with findings from an economic and policy report recently published by the organization, have revealed an industry in need of relief in the form of immediate legislative reform.

The statistics noted that demand for construction remains high in British Columbia, with major projects currently underway at an estimated value of $157B. This represents an increase of 16 per cent over 2022, and 109 per cent over the past five years.

The findings estimated, however, that the value of proposed major projects has dipped to $174B in comparison to $220B last year. This signals possible future decrease in robustness as well as growing insecurity with regard to economic prospects.

According to the statistics, real investment in B.C.’s industrial, commercial, and institutional (ICI) construction sectors has been essentially flat through the first half of 2023. It remains over 10 per cent below its pre-pandemic level in real terms, with institutional and government construction being the singular growth segment in the interim.

Additionally, recent improvements in the availability of construction inputs have resulted in a slowing of price increases to non-residential building in the past year, registering at 7 per cent in comparison to 13 per cent between 2021 and 2022.

Image source: British Columbia Construction Association (BCCA)

According to the findings, labour costs and the non-residential building price index sit at around 18.4 per cent and 28.6 per cent above pre-pandemic levels.

“Construction has never been busier, yet the pressures to meet this demand are equally high. Interest rates, rising wages and the high cost of materials all factor into the equation. It is clear that these pressures are causing layoffs,” said Chris Atchison, BCCA president.

“We’ve seen indications that construction workers, both skilled and unskilled, are moving out of the province as a direct result of B.C.’s high cost of living, housing shortage, and the perception of better opportunities elsewhere. Our workforce is invaluable, and we cannot afford to lose a single tradesperson or journeyperson. B.C. needs an effective affordable multi-unit housing strategy aimed at keeping workers like those in the construction sector within the province.”

The report noted that the Ontario government continues to fail to deliver a solution which would provide relief to a struggling construction sector: prompt payment legislation.

Due to B.C. contractors waiting months for payment, they may experience financial risk as well as take on the increased cost of debt, which can put them at risk of bankruptcy.

“Government seems to be under the illusion that contractors all have the deep pockets needed to essentially fund large scale projects. Not so. About 90 per cent of B.C. contractors are small companies, and they are often paid three or six months after the last nail has been pounded, or the last coat of paint has dried. No other industry has to endure that,” said Atchison.

“Last Spring, we were encouraged to hear that the Attorney General would be convening a large table working group on this issue. We’re still waiting. The time to talk has passed. The time to act is now. The situation is dire. Unlocking cash flow is an economic necessity and in the best interests of every community in British Columbia.”

Image source: British Columbia Construction Association (BCCA)

Regardless of an 8 per cent growth in the number of ICI construction companies in B.C. over the last five years, the number of tradespeople in the industry dropped 8 per cent over three years, and 9 per cent since 2019, according to the report. The average company size has contracted by 10 per cent over the previous three years to an average of 6.24 workers.

B.C.’s construction employment base also diminished by 14,500 workers from the first quarter of 2023 to the second, representing a decline approaching 6 per cent. This also represents the worst performance of any Canadian province in both absolute and percentage terms, according to the statistics.

“We need to get enough people skilled up to replace the tens of thousands who are retiring in the next few years in British Columbia. One way to do that is to be more diverse about who we hire and train” said Atchison. “Everyone, including members of traditionally underrepresented groups, should feel welcome within the construction industry. There is absolutely no lack of employment opportunities for anyone interested in exploring a career in construction.”

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