Article

Prompt Payment: Steel fabricators see payday slipping further away

2 402 Government

by Russell Hixson

Bill S-224, the Canada Prompt Payment Act, continues to make progress on Parliament Hill, with the Senate expected to debate the bill leading to possible third reading in the coming weeks. It’s a piece of legislation some industry stakeholders in Western Canada feel is long overdue.
Steel Prompt Payment 2: Crews at George Third & Son, a steel fabricator in Burnaby, B.C., shape steel. The fabricator is just one of many across the country that is often faced with the common challenge of late payment.
Steel Prompt Payment 2: Crews at George Third & Son, a steel fabricator in Burnaby, B.C., shape steel. The fabricator is just one of many across the country that is often faced with the common challenge of late payment. - Photo: RUSSELL HIXSON

Those in the steel industry, who are often one of the largest contractors on a project, rarely get paid promptly and over the years have watched as payday drifts further and further away, said Mark Sommerville, an engineer and general manager for Rampart Steel Ltd. in Edmonton.

"I spend probably half my working week calling people and encouraging them to pay me," said Sommerville.

He explained that according to standard contracts used in Alberta, his only remedy is to essentially use a lien to take a general contractor (GC) to court. Those costs add up and the process could take years before it is resolved. Not only that, but Sommerville noted that taking a GC to court sabotages your chances of doing work with them in the future.

In Alberta, Sommerville noted, late payment has been exacerbated due to poor economic conditions. With thousands of ironworkers looking for jobs and large amounts of contractors bidding on small projects, owners and GCs have little incentive to pay on time.

"Even if a project goes well, and that is a feat in itself, you are still left with carrying these costs for months," he said. "A lot of companies would rather bleed slow than not bleed at all."

Sommerville, however, did note that it's not completely fair to only beat up on GCs.

"It's always easy just to complain about the person upstream which would be the GC for my case, but I think a lot of it stems from the owners because the GC's stock answer when my accounts receivable calls them is 'we haven't been paid yet by the owner,'" he said. "But the thing is that I don't have a contract with the owner, I have a contract with you. It leaves me in the lurch because I'm sure the GC has some costs associated with running the project but it's their subs that suffer."

Rob Third, who runs steel fabricator George Third & Son in Burnaby, B.C., said that even if federal legislation passes he isn't optimistic it will have much impact initially as it would only apply to federal projects.

"I don't have that much to do with government projects," said Third. "We do them from time to time but I'm hoping if we get this in nationally that it will trickle down provincially and into the private sector."

Third said he completed a large retail space project in Richmond that opened six months ago and has yet to receive all of his payment.
He said he often find himself constantly sending emails to try and get paid.

"I don't think they are stalling but they can do it on their own time," he said.

"The golden rule is that the guys with the gold make the rule."

An eastern Canadian perspective on this issue is featured here.

2 comments

  • # 1

    Janet Burns

    It is sad that small business owners (sub-contractors) have no other option but to take on huge legal costs and still NOT get paid for the service they supplied. This should be a criminal offense just like stealing from a business...anyone else would go to jail if they did not pay for a product. Why it is so different in the construction industry!!!!
  • # 2

    Janet Burns

    t is sad that small business owners (sub-contractors) have no other option but to take on huge legal costs and still NOT get paid for the service they supplied.

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