June 16, 2008

Construction Sector Council Labour Forecast

Construction employment approaches peak in British Columbia

RICHARD GILBERT

staff writer

Construction employment in B.C. is reaching a peak, expanding more rapidly than all other provinces, while oilsands development in Alberta is becoming the most important non-residential construction activity.

The Construction Sector Council (CSC) released its fourth annual forecast of labour market trends from 2008 to 2016 for British Columbia this month.

The forecast reports that construction employment increased at an average annual rate of 8 per cent between 2002 and 2007 — faster than all other provinces.

The construction boom was spread across all sectors, with new industrial and engineering construction activity becoming a major economic driver in 2005.

The rapid employment growth is creating a shortage of skilled labour for engineering and industrial projects, as well as intense competition for these tradespeople.

“The report predicts that the demand for construction trades in B.C. is going to be there. The issue of the availability of workers is not going away and is still a primary concern,” said B.C. Construction Association president Manley McLachlan.

“This challenge is shared between Alberta and B.C.”

The CSC national report estimates that 12,294 and 6,963 new workers were hired in B.C and Alberta in 2007 to meet increased construction activity.

In order to keep pace with new projects, another 14,358 and 31,035 will be needed in B.C. and Alberta between 2008 and 2016. An additional 26,578 workers in B.C. and 21,271 workers in Alberta are required to replace retiring Baby Boomers in the same period.

This means that an estimated total of 53,230 workers in B.C. and 59,269 in Alberta will be needed to meet new construction demand and replace retired workers in the next eight years.

“The challenge is compounded by the fact we don’t have the mobility of workers to count on (that) we did five years ago,” said McLachlan.

“All provinces are working at full capacity. We must be aware of the situation in Alberta which has increased competition and accentuated the challenges of recruiting people into B.C.”

Another spokesperson for the B.C. construction industry believes it is necessary to go beyond the actual numbers in the report and understand specific trends.

“A levelling off in 2010 will not diminish the size of construction activity. This will be a flattening out, which is healthy for the industry,” said Wayne Peppard, executive director of the B.C. and Yukon Building Trades Council.

According to the CSC report, construction activity in B.C. will rise to a peak in 2009 and decline in 2010, with the end of several major projects. A drop in housing starts is expected to reduce residential work in 2008.

“Essentially, the scenario developed here suggests that the British Columbia building boom is reaching its peak,” said the CSC report.

The second forecast period, 2012-2016, begins with a gradual decline in building that bottoms out in 2014 followed by flat activity in the last two years. There will be a corresponding drop in employment with the period ending at levels very close to 2008.

“That means continuing job opportunities to keep our skilled trades workers in demand,” said Peppard.

The CSC released its Alberta labour market forecast on June 2, which said the construction of major infrastructure, industrial and engineering projects is pushing employment to record levels. In contrast to the situation in BC, “Alberta’s remarkable construction run will continue for another seven or eight years with a brief pause in residential construction in 2008, and another in 2011 and 2012 as some large energy projects wrap up, said the CSC report. “Aside from these short pauses, new and larger engineering projects are expected, raising institutional and commercial building in their wake.”

Residential construction is expected to decline between 2008 and 2010, while non-residential construction, led by oilsands development and construction of upgrader facilities, will continue to expand until 2011. Construction activity will shift from residential to non-residential jobs in this period as total construction employment rises.

During the period 2011-2013, residential building continues its decline. Non-residential activity will enter a plateau, as oilsands and other projects remain at high levels, but show no growth.

Construction employment will also stablize and remain at high levels. This is expected to be the first extended period of limited construction employment growth in more than ten years.

A major resumption of growth driven by a new phase of resource-related production and construction is forecast for the third sub-period between 2014 and 2016. New oil and gas building will lead to another round of non-residential building.

Construction employment is expected to grow rapidly until 2016, when both residential and non-residential sector employment decline.

According to the CSC report, construction activity in B.C. will rise to a peak in 2009 and decline in 2010, with the end of several major projects. A drop in housing starts is expected to reduce residential work in 2008.

“Essentially, the scenario developed here suggests that the British Columbia building boom is reaching its peak,” said the CSC report.

The second forecast period, 2012-2016, begins with a gradual decline in building that bottoms out in 2014 followed by flat activity in the last two years.

There will be a corresponding drop in employment with the period ending at levels very close to 2008.

“That means continuing job opportunities to keep our skilled trades workers in demand,” said Peppard.

The CSC released its Alberta labour market forecast on June 2, which said the construction of major infrastructure, industrial and engineering projects is pushing employment to record levels.

In contrast to the situation in BC, “Alberta’s remarkable construction run will continue for another seven or eight years with a brief pause in residential construction in 2008, and another in 2011 and 2012 as some large energy projects wrap up, said the CSC report. “Aside from these short pauses, new and larger engineering projects are expected, raising institutional and commercial building in their wake.”

Residential construction is expected to decline between 2008 and 2010, while non-residential construction, led by oilsands development and construction of upgrader facilities, will continue to expand until 2011. Construction activity will shift from residential to non-residential jobs in this period as total construction employment rises.

During the period 2011-2013, residential building continues its decline. Non-residential activity will enter a plateau, as oilsands and other projects remain at high levels, but show no growth.

Construction employment will also stablize and remain at high levels. This is expected to be the first extended period of limited construction employment growth in more than ten years.

A major resumption of growth driven by a new phase of resource-related production and construction is forecast for the third sub-period between 2014 and 2016.

New oil and gas building will lead to another round of non-residential building.

Construction employment is expected to grow rapidly until 2016, when both residential and non-residential sector employment decline.

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