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Finlayson addresses British Columbia’s construction leaders over breakfast

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by Brian Martin

There is at least one good thing to be said for 2009 according to Jock Finlayson.

There are, he pointed out, only about another 10 months left.

B.C. Construction Show

There is at least one good thing to be said for 2009 according to Jock Finlayson.

There are, he pointed out, only about another 10 months left.

Finlayson is executive vice-president of the Business Council of British Columbia and was speaking February 11 at the breakfast that traditionally kicks off the start of the annual B.C. Construction Show at the Vancouver Trade and Exhibition Centre.

To nobody’s surprise, he said 2009 will be a bumpy year for construction.

On the brighter side, however, he predicted that 2010 could see a pretty good snap-back.

Non-residential construction has continued to hold up better than residential construction – very much including high rise condominium construction, Finlayson pointed out.

“There has been a big drop in residential permits and that is not likely to turn around quickly,” he said.

“Non-residential permits and the non-residential construction business has been a huge source of growth for the B.C. economy. It has held up much better than the residential side, but it is certainly weaker than we were experiencing over 2005 to 2008.”

Finlayson said the economy has so far not seen price gains receding in the non-residential sector.

However, he expects to see that change.

The fundamental outlook, he said, is weakening and he expects to see some downward pressure on prices in Vancouver, Calgary and other western Canadian cities.

The audience was made up largely of contractors.

“The market has changed,” he told them.

“You are probably going to have to adjust your prices.”

On the optimistic side, Finlayson pointed out that the provincial government’s Major Projects Inventory is still in healthy shape.

The inventory tracks projects either under construction or being actively planned that are worth at least $20 million on the Lower Mainland or $15 million in the rest of the province.

“The latest report from the ministry of economic development shows about $100 billion worth of proposed major projects,” he said.

“A little over $60 billion are currently underway.”

Both numbers are appreciably higher than they were a year ago and higher still, to where they were two years ago.

Both figures, he said, indicate that although things are slowing, the construction industry will continue to make a big contribution towards keeping B.C.’s economic head above water for the next couple of years.

However, he maintained that a full recovery will depend on the primary industries, which still fuel the provincial economy.

These include forestry, mining, hydro power, coal, oil and natural gas.

Finlayson pointed out there is not much that B.C. can do to stimulate those industries, as they depend on economic recovery in major markets – primarily the U.S. and Asia.

“If you’re in construction or engineering, just be glad you are not in forestry,” he told the executives attending the breakfast. “It could be worse.”

He foresees a weaker construction industry over the next two years as B.C. plunges headlong into recession in 2009.

Non-residential construction will soften, but it will hold up better than residential construction.

He added that the push by the provincial and federal governments to accelerate infrastructure projects will be steps in the right direction.

He also shared where he believes the industry is in the cycle.

“We are closer to the bottom than to the beginning of the downtown turn,” he said.

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