June 29, 2009

Construction Sector Council

Alberta construction labour outlook not so bright

RICHARD GILBERT

staff writer

The Construction Sector Council (CSC) predicts that after more than a decade of extraordinary growth in Alberta, construction employment is about to fall off the table.

“The recruiting challenges of the past years will be replaced by reduced hours of work, layoffs and rescheduling,” said a recently released CSC report on the Alberta labour market.

“Local labour markets will see a major drop in the available workforce, losing temporary foreign workers and tradespersons from other provinces.”

Despite the dire news, some see a need to stay the course when it comes to skills training.

“The message was loud and clear that we can’t take our focus off the medium and long-term workforce issues or we will be back in the same conundrum we had during the previous peak in economic activity,” said George Gritziotis, executive director of the CSC.

“We must continue to deal with the issues of training and non-traditional segments of the workforce.”

Ron Harry, executive director of the Building Trades of Alberta said if contractors are looking to cut costs by reducing apprentices, they should remember that every dollar invested in training results in a $1.38 return.

“What we need to focus on right now as an industry, is trying to keep apprentices in the system that are working right now,” he said.

“We are encouraging employers to continue employing apprentices and full fledged journeymen to get ready for the next upturn.”

Two main factors are behind the rapid drop in construction employment. The first is a decline in the housing cycle, which began in 2008.

The second is the cancellation and delays of major non-residential projects since late 2008 and 2009.

The oil industry is cancelling or postponing more than $200 billion in new projects.

The report predicts that employment losses will continue into 2012 and shift from the residential trades to the skilled non-residential workforce.

The down cycle between 2009 and 2012 is expected to impact a number of trades.

“While Alberta retains some trades through government infrastructure and institutional building, from 2009 to 2011 the cycle in housing and industrial construction is severe and many skilled and experienced tradespersons, supervisors and managers will leave the industry and province,” said the report.

It predicts that the recession in Alberta will bring local recruiters into competition with other provinces such as Saskatchewan, Manitoba and Quebec, where infrastructure and other projects are still proceeding.

“In the past Alberta recruited workers from across Canada,” said Gritziotis.

“Now, if commodity prices increase and there are large projects elsewhere, they may become the hunted.”

The upturn in Alberta’s economic cycle is expected to begin in 2011 when commodity prices make a recovery and big energy-related projects come back on stream in 2013.

“Transportation and related projects will also pick up in the medium term,” said Ken Gibson, executive director of the Alberta Construction Association.

“It means we have some breathing room now to plan for better times.”

Government investment is expected to increase rapidly in 2009 and 2010, as the fiscal stimulus package is spent on various public infrastructure projects such as water, sewer, roads, hospitals and schools.

Residential construction is expected to rebound in 2012.

“It’s crucial that we plan now for the economic upturn,” said Gritziotis.

“When big energy projects gear back up we have to make sure our skilled workforce is ready.”

The report predicts that employment in residential and non-residential trades will rebuild and by 2016 employment will exceed 2008 levels.

As the industry returns to recruiting, the age profile of the workers will rise and retirements will tighten markets and limit the industry’s capacity later in the outer years.

In Alberta, about 22,000 construction workers are expected to retire during the 2009-2017 period.

Apart from retirements, another 8,000 new workers would be needed to meet the expected rise in construction activity.

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