Ontario’s building contractors see improvement but not entirely convinced of turnaround

Ontario’s industrial, commercial and institutional building contractors expect a somewhat improved business year in 2011, but their optimism is guarded and their confidence is tentative after the last recession. “The sector is anticipating a better year, but there are still some concerns about how much growth will actually occur,” says Sean Strickland, CEO of the Ontario Construction Secretariat.

The OCS conducts an annual survey of contractors in the province, and this year’s results paint a picture of an industry that is hopeful, yet not entirely convinced, that better times have returned. For example:

  • While 55 per cent of survey respondents express optimism about the economy, this number is soft in that it is largely made up of those who say the economy is only ‘somewhat good’ rather than ‘very good’.
  • Similarly, while more than half of the contractors agree that the private sector is now able to lead growth, only nine per cent ‘strongly’ agree with that sentiment.

Some 44 per cent of contractors expect they’ll be conducting more work, and 34 per cent think they’ll be adding jobs, this year. These figures are not dramatically different than 2010, but are up significantly from 2009.

Firms located in the GTA are the most optimistic about increased work and employment in 2011. Contractors in Southwestern Ontario, particularly those in the Windsor-Sarnia region hit by the slowdown in the auto and petrochemical industries, are the most negative.

The commercial sector leads in expected increased construction opportunities his year followed by the industrial sector. The percentage of contractors expecting to conduct more work in the institutional sector is down, consistent with the perception that the budget constraints of government will slow institutional projects.

The availability of skilled labour is a top concern:

  • Contractors say it is the number-one barrier to business growth.
  • Only 18 per cent of the survey respondents expect the availability of skilled construction workers to increase in 2011 (down from 23 per cent last year and 47 per cent in 2009).

This points to the need for further awareness of career opportunities in the skilled trades and improved employment opportunities for apprentices with construction firms. Yet the survey indicates that the opposite may be taking place.

  • The number of firms employing apprentices has declined to 43 per cent from 47 per cent a year ago (and 57 per cent in 2009).
  • Among those firms that employ apprentices, only about one-quarter (23 per cent) indicate that their investment in apprenticeship training is increasing, while most (71 per cent) indicate that it is ‘staying the same’.

Unionized contractors continue to be strong supporters of apprenticeship – 68 per cent of union respondents indicate that they employ apprentices compared to 32 per cent of non-union contractors. The survey also reveals that unionized contractors are more likely to employ significantly more apprentices than their non-union counterparts (8.2 apprentices vs. 3.5 apprentices).

Contractors expect some inflation this year, with the majority citing transportation (in line with steadily increasing gasoline prices) and construction materials as the items most likely to increase in cost. Given these pressures, it is not surprising that 43 per cent of contractors also expect to raise their prices in 2011 (up from 39 per cent in 2010 and 21 per cent in 2009).

The survey of 1,000 non-residential ICI contractors in Ontario was conducted by Ipsos Reid between November 21 and December 16, 2010. The margin of error is +/- 3.1 per cent, nineteen times out of twenty (95 per cent confidence interval).

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