2015 Canadian Construction Overview Graphic

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Since 2014, $30 billion slashed from Canadian engineering construction

0 148 Economic

by Alex Carrick

Over the past two years based on 2014 'actual' investment figures and 2016 'estimates, $30 billion in capital spending has been cut from Canadian engineering construction.
Since 2014, $30 billion slashed from Canadian engineering construction

Much of the difficulty has its origin in the steep cutbacks in work allowed to proceed on mega projects in the country's natural resource sector. In 2013, when CanaData compiled a list of all

the projects underway or planned across the nation valued at $1 billion or more each, there were approximately 100 such undertakings.

This summer, when CanaData carried out the same exercise once again, there were only 60 such projects in the listing.

Surely it can't be the case that waiting for an improvement in world trade that will lift commodity prices is the only hope for an improvement in construction prospects.

There have to be other options. It's certainly not helpful that major pipeline projects, which would make it pos-sible for land-locked Canadian oil to be shipped to new customers in Asia, Europe, Africa and elsewhere are being frozen in the approvals process.

The Energy East project, which would convert an existing pipeline from natural gas to oil over much of its length, with new construction required only in eastern Ontario, Quebec and N.B., has been brought to a standstill by aggressively disruptive pro-testers at National Energy Board hearings in Montreal.

Ottawa must play a leadership role in finding the pro-ductive and responsible means to power through such obstacles.

Our leaders must embrace the challenge to merge wisdom and sensitivity in such a manner as to establish a balance between environmental concerns, native land claim issues and the desire by all Canadians, fully recognized or not, to preserve their enviable standards of living.

Let's now set aside the foregoing gloom and reflect on how there are pockets of significant upcoming construction activity to look forward to as potential sources of excite-ment.

A kick start for engineering projects will be delivered by infrastructure spending to encourage rapid transit proj-ects in many major urban centers in Canada.

And massive electricity-generating projects are underway or planned in at least four provinces: the finalization of Muskrat Falls in Labrador; refurbishment of Darlington nuclear power in Ontario; the Keeyask station in Manitoba; and work at Site C on the Peace River in B.C.

Ontario and Quebec have two enormous (i.e., valued at more than a billion dollars each) bridge projects underway — the Champlain crossing in Montreal and the strikingly-named Gordie Howe bridge that will connect Windsor and Detroit.

And on the East Coast and along the West Coast, and in places in-between, there are plans for giant LNG projects, a number of which will also require pipeline delivery sys-tems from shale gas deposits.

Finally, residential construction has maintained a remarkably steady upward course over the past many years. Affordability is becoming more of an issue, however, and authorities in some locales have been looking into, or have already introduced, measures to curb demand.

Therefore, 'current' dollar residential construction in Canada as a whole is expected to flatten over the next two years before experiencing a slight upward turn again from 2016 to 2017.

The remainder of this Economy at a Glance is given over to four charts showing 'current'-dollar (i.e., not adjusted for inflation) capital investment spending according to 'grand total', 'residential', 'non-residential building' and 'engineering' construction.

The first three will establish new record highs by 2019. Some of that suc-cess will be hollow, however, as it will depend on a steady upward creep in the cost of construction. The dollar volume of 'engineering' construction by 2019 will still fall a little below the outstanding level it achieved in 2014.

In 'constant'-dollar terms, as set out in additional graphs at the website version of this story (http://bit.ly/2cZCFx0), only 'residential' and 'non-residential building' work will return to their previous peaks (and only barely) by 2019.

'Grand total' construction in 2019 will still fall short of its previous summit (achieved in 2014) on account of 'engi-neering' being in recovery, but having completed only about half the return journey to lift it from the floor to the previous ceiling.

For more articles by Alex Carrick on the Canadian and U.S. economies, please visit: www.constructconnect.com/blog.

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