Category: Economy

Key Takeaways:

• The federal government plans to top-up its Apartment Construction Loan Program with $15 billion to build at least 30,000 new apartments. They hope to build more than 131,000 in the coming decade.
• There are also plans to reform the program with extended loan terms, easier access to financing, introducing a “portfolio approach” to eligibility requirements and fast-tracking applications for proven builders.
• Trudeau says he will be launching Canada Builds. Similar to BC Builds, it will be a program that partners with provinces and territories to build more rental housing.

The Whole Story:

Canada’s upcoming budget will include billions for apartment construction, Prime Minister Justin Trudeau announced.

Trudeau says the budget will deliver a $15 billion top-up to the Apartment Construction Loan Program to build a minimum of 30,000 new apartments. With this top-up, officials say the program’s financing is on track to build over 131,000 new apartments within the next decade.

Trudeau also announced a series of new reforms to the Apartment Construction Loan Program to increase access to the program and make it easier for builders to build. These reforms include:

• Extending loan terms;
• Extending access to financing to include housing for students and seniors;
• Introducing a portfolio approach to eligibility requirements so builders can move forward on multiple sites at once;
• Providing additional flexibility on affordability, energy efficiency, and accessibility requirements; and
• Launching a new frequent builder stream to fast-track the application process for proven home builders.

“With Budget 2024, we’re making it easier, cheaper, and faster to build more homes in Canada. Today’s announcement will cut red tape, speed up development, and build more homes, so that Canadians – from teachers, to nurses, to construction workers – can afford to stay in the communities where they work. It’s making the housing market fairer for every generation,” said Trudeau.

The federal government also has been taking note of efforts in B.C. Trudeau says he will be launching Canada Builds – a program that will partner with provinces and territories to build more rental housing across the country. The federal government is leveraging its $55 billion Apartment Construction Loan Program by making it available to support partnerships with provinces and territories that launch their own ambitious housing plans, similar to the recently announced BC Builds initiative. In order to access federal financing, provinces and territories will be expected to meet the benchmarks set by BC Builds and deliver action to build even more homes. These actions include:

• Complementing federal funds with provincial or territorial investments into housing;
• Building on government, non-profit, community-owned, and vacant lands;
• Streamlining the process to cut development approval timelines to no longer than 12 to 18 months; and
• Meeting all criteria included in the Apartment Construction Loan Program, including affordability requirements.

The announcement comes just one day after officials revealed a new $6 billion Canada Housing Infrastructure Fund and a $400 million top-up to the Housing Accelerator Fund.

“Today’s announcement marks another step in our work to end Canada’s housing crisis once and for all,” said Sean Fraser, minister of housing. “ It will speed up development, make construction cheaper, get projects off the shelves, and shovels in the ground. It will mean more homes for middle-class Canadians at prices they can afford.”

Key Takeaways:

• Officials have released several key budget items ahead of the full budget release, including a new $6 billion fund to speed up home construction and upgrade critical housing infrastructure.
• The government also plans to top up the Housing Accelerator Fund with $400 million.
• However, officials noted that to access the new fund and other funds, local governments will have to agree to bold changes designed to encourage housing development.

The Whole Story:

Prime Minister Justin Trudeau travelled to Halifax this week to announce plans to launch a new $6 billion Canada Housing Infrastructure Fund to accelerate the construction and upgrade critical housing infrastructure. The news comes just weeks before Ottawa is set to release the full federal budget.

These measures include topping-up the Housing Accelerator Fund with an additional $400 million and launching the new $6 billion Canada Housing Infrastructure Fund to accelerate the construction and upgrading of critical housing infrastructure. This includes water, wastewater, stormwater, and solid waste infrastructure to support the construction of more homes.

“We need more affordable homes, and we need the infrastructure to help build these homes,” said Trudeau. “That’s why in Budget 2024, we’re building more infrastructure, building more homes, and helping more Canadians find a place to call their own. This is about fairness ‒ making sure communities have the safe, quality housing they need to get ahead.”

The new fund will include $1 billion available for municipalities to support urgent infrastructure needs that will directly create more housing and $5 billion for agreements with provinces and territories to support long-term priorities. Provinces and territories can only access this funding if they commit to key actions that increase housing supply.

These actions include:

• Broadly adopting four units as-of-right and allow more “missing middle” homes, including duplexes, triplexes, townhouses, and other multi-unit apartments.
• Implementing a three-year freeze on increasing development charges from April 2, 2024, levels for municipalities with a population greater than 300,000.
• Adopting forthcoming changes to the National Building Code to support more accessible, affordable, and climate-friendly housing options.
• Requiring as-of-right construction for the government’s upcoming Housing Design Catalogue.
• Implementing measures from the Home Buyers’ Bill of Rights and Renters’ Bill of Rights.

Provinces will have until January 1, 2025, to secure an agreement, and territories will have until April 1, 2025. If a province or territory does not secure an agreement by their respective deadline, their funding allocation will be transferred to the municipal stream. The federal government says it will work with territorial governments to ensure the actions in their agreements are suitable to their distinct needs.

Trudeau also announced that the upcoming budget will include requirements to access the federal government’s forthcoming public transit fund. This includes measures to:

• Eliminate all mandatory minimum parking requirements within 800 metres of a high-frequency transit line.
• Allow high-density housing within 800 metres of a high-frequency transit line.
• Allow high-density housing within 800 metres of post-secondary institutions.
• Complete a Housing Needs Assessment for all communities with a population greater than 30,000.

“Since we launched the Housing Accelerator Fund last year, we have cut enough red tape to build 750,000 new homes over the next decade,” said Chrystia Freeland, deputy prime minister and minister of finance. “It is working, so we are investing another $400 million to build even more homes, faster in more communities across the country. Alongside these essential zoning reforms, we are helping communities build the infrastructure needed to build more homes, by investing $6 billion through our new Canada Housing Infrastructure Fund. We are putting homeownership back within reach for every generation, and especially for Millennials and Gen Z.”

Key Takeaways:

• Canada’s construction sector is poised for growth through 2033, with differing trends between the residential and non-residential sectors driving employment projections.
• Regional variations in construction activity highlight diverse outlooks across provinces, with some experiencing growth while others face declines, particularly in the non-residential sector.
• To address labor shortages and sustain a skilled workforce, the industry emphasizes diversification and inclusion efforts, aiming to recruit from traditionally underrepresented groups such as women, Indigenous Peoples and newcomers to Canada.

The Whole Story:

BuildForce Canada has released its latest national forecast, predicting construction sector growth through 2033.

The sector experienced a slight contraction in 2023, as growth in the non-residential sector was offset by a moderate decline in activity in the residential sector. Despite this trend, the industry continues to perform at an elevated level, and is poised to grow in the coming decade.

BuildForce Canada has released its 2024–2033 Construction and Maintenance Looking Forward national forecast, finding that activity in the residential and non-residential sectors will chart different courses across the short term. The country’s residential sector, which peaked in 2021 under historically low interest-rate conditions, is expected to contract again in 2024 before experiencing an upward trend between 2025 and 2029 and then stabilize toward the end of the forecast period.

The initial period of growth is driven by a rebound in the new-housing component, which is followed in the later years by strong demand for renovation activity. These trends combine to increase employment to a peak of 6% above 2023 levels in 2028. Contractions in later years leave employment 2% above 2023 levels by 2033.

Activity in the non-residential sector is projected to remain strong across the forecast period, given the high volume of large projects planned and underway in most regions of the country. Engineering construction demands are projected to cycle lower in the short term before rebounding in middle years, in line with the schedule of planned transit projects in Ontario and B.C., as well as utility projects in New Brunswick, Nova Scotia, and B.C.

Meanwhile, investment in industrial, commercial, and institutional building projects is anticipated to see a steady upward curve through the decade. Demand is created by high levels of investment in the construction of institutional and government buildings, and by a rebound in commercial building construction as the economy returns to growth. Non-residential employment is projected to grow almost continuously across the forecast period, reaching a peak of 7% above 2023 levels by 2033.

These numbers are based on existing known demands and do not take into account public-sector initiatives to address housing affordability challenges, nor the anticipated increase in demand for construction services related to the retrofit of existing residential, industrial, commercial, and institutional buildings to accommodate the electrification of the economy. Both scenarios are addressed in separate reports to be released by BuildForce at a later date.

“Construction is a key contributor to Canada’s gross domestic product, and an employer of approximately one out of every 13 working Canadians. Employment has increased by about 80% since 2002, and now counts about 1.5 million people,” said Sean Strickland, Chair of BuildForce Canada. “With further growth projected across the forecast period, the challenge before our sector is how to manage labour force pressures.”

Although labour market conditions eased in many provinces in 2023, pressures were alleviated most in the residential sector. Non-residential market conditions remained challenging in Prince Edward Island, Nova Scotia, Ontario, Quebec, Manitoba, and B.C.

“Market pressures may be easing in the residential sectors of many provinces in the short term, but even this relief may be short lived,” said Bill Ferreira, Executive Director of BuildForce Canada. “Our outlook calls for growth to return in the residential sector in 2025 and through the middle years of the forecast in many regions. Coupled with the strong outlook for non-residential construction, labour market challenges are likely to persist throughout much of the forecast period.”

Growth forecast across most provinces into the late 2020s

Construction activity was mixed across the Atlantic provinces in 2023. Gains in the non-residential sectors in New Brunswick and Newfoundland and Labrador offset residential-sector contractions created by rising interest rates. In Prince Edward Island and Nova Scotia, however, residential contractions slightly surpassed non-residential gains.

The outlook calls for the provinces’ respective residential sectors to either contract or record very small gains in the near term, before returning to growth between 2025 and 2028. Prince Edward Island in particular is expected to report significant gains across this period. Renovation investment levels are also projected to increase.

Activity in the provinces’ respective non-residential sectors will fluctuate in line with various large-scale projects such as the refurbishment of the Mactaquac Dam in New Brunswick, a major hydrogen project and the Bay du Nord project in Newfoundland and Labrador, and a number of civil and health care projects. New Brunswick, Nova Scotia, and Newfoundland and Labrador are all expected to report employment growth across the forecast period.

Construction activity in Quebec is expected to generally decline across the forecast period, with the residential and non-residential sectors charting different courses. The former will see activity stabilize as strong growth in residential renovations offsets contractions in new housing. The non-residential sector is projected to rise to a peak in 2024 before experiencing moderate reductions to 2030 as currently known major healthcare, education, transit, manufacturing, and utilities projects are completed.

Ontario’s construction sector experienced a marginal decline in 2023 and is projected to do so again in 2024 as its residential sector recedes from recent highs. The contractions are short lived, however, as the sector returns to growth between 2025 and 2028, and remains high through 2033. The non-residential sector continues to be driven by a large inventory of major infrastructure projects and a projected recovery in commercial-building construction. These carry through until at least 2029. With employment projected to reach peak levels in the residential and non-residential sectors in 2028 and 2029, many trades and occupations could experience strained conditions.

In Manitoba, construction will be principally driven by activity in the non-residential sector. Growth will be greatest in the construction of industrial, commercial, and institutional buildings, and strong output in engineering construction in later years. Residential sector activity is projected to contract across the forecast period, with losses greatest in the new-housing component.

The outlook for Saskatchewan’s construction sector is dominated by growth in the residential sector, which is projected to strengthen between 2025 and 2028 and remain elevated to 2033. The non-residential sector, however, is projected to see little growth across most of the forecast period, and declines in later years as the current inventory of known projects is completed. A younger demographic is well positioned to replace retiring workers.

Alberta’s residential and non-residential construction sectors are both projected to record growth across the forecast period. Non-residential activity is anticipated to chart a steady trend up to the end of the decade, with growth in the oil and gas sector, as well as in engineering construction and the construction of industrial, commercial, and institutional buildings. Meanwhile, the residential sector is expected to cycle up in the short term before contracting modestly in the long run.

The outlook for B.C.’s construction sector sees varying trends. Non-residential activity is projected to experience a modest decline in the short term as several major projects reach conclusion or move past peak construction activity levels. Investment is then sustained into 2026 before work begins on a number of major engineering construction projects that carry through to 2029. Residential sector activity is expected to remain unchanged in 2024 and 2025 before the market sees a moderate up-cycle to 2029. By 2033, renovation activity is projected to surpass new-housing construction as the key driver of residential demands.

“With many provinces experiencing similar growth patterns across the forecast period, it will be challenging for employers to recruit workers from other regions or other parts of the country to fill labour gaps,” said Warren Douglas, vice-chair of BuildForce Canada. “The challenge is compounded by Canada’s aging demographic. It’s not just that more than one-quarter million workers are projected to retire from the construction sector over the forecast period. It’s also that there is a smaller pool of younger workers from which to draw their replacements. This challenge isn’t unique to construction. That means that other sectors will also be competing for the same smaller pool of new workers, thereby intensifying competition.”

Diversification will be key to addressing labour shortages

The development of skilled tradespersons in the construction industry takes years, and often requires participation in a provincial apprenticeship program. Replacing retiring workers typically requires several years of pre-planning to avoid the creation of skills gaps.

By 2033, the industry’s overall hiring requirements are expected to reach 351,800 due to the retirement of approximately 263,400 workers, or 21% of the current labour force, and growth in worker demand of more than 88,000.

Based on historical trends, Canada’s construction industry is expected to draw an estimated 266,300 first-time entrants aged 30 and younger, leaving the industry with a possible retirement-recruitment gap of 85,500 workers. According to BuildForce, an ongoing commitment to apprenticeship development in both compulsory and non-compulsory trades will be necessary to ensure there are sufficient numbers of qualified tradespeople to sustain a skilled labour force over the long term.

“The construction industry remains focused on building a more diverse and inclusive labour force,” said Strickland. “The industry has been working hard to enhance the recruitment of individuals from groups traditionally under-represented in the construction labour force, such as women, Indigenous People, and newcomers to Canada. Creating greater awareness of the tremendous career opportunities for these individuals within the construction sector will be critical to ensuring the sector is able to meet its future workforce needs.”

In 2023, there were approximately 210,800 women employed in Canada’s construction industry. Of them, 28% worked directly in on-site construction. However, as a share of the total 1.18 million tradespeople employed in the industry, women accounted for just 5% of the on-site construction workforce.

The Indigenous population is another under-represented group that presents recruitment opportunities for the construction industry. In 2021, Indigenous People accounted for 5.1% of Canada’s construction labour force, which is a slight decline from the share of 5.2% observed in 2016, but is notably higher than the share of Indigenous workers represented in the overall labour force (4.1%). As the Indigenous population is the fastest growing in Canada and Indigenous workers seem predisposed to the pursuit of careers within the sector, there may be scope to further increase the recruitment of Indigenous People into the construction workforce.

The construction industry may also leverage newcomers over the coming decade to meet anticipated labour market requirements. Based on current trends, Canada is expected to see elevated levels of immigration over the forecast period. BuildForce stated that this will make newcomers a key contributor to the industry’s labour force. In 2022, newcomers comprised about 19% of the total construction labour force. That figure is notably lower than the 27% share newcomers make up of the overall labour force.

Increasing the participation rate of women, Indigenous People, and newcomers could help Canada’s construction industry address its future labour force needs.

The report was produced with the support and input of a variety of construction and maintenance industry stakeholders, and was funded in part by the Government of Canada’s Sectoral Workforce Solutions Program.

Key Takeaways:

• Saskatchewan’s latest budget is proposing $4.4 billion to go towards capital projects.
• Much of the spending will focus on schools, roads and hospitals.
• It is part of nearly $18 billion more over the next four years that will be spent on major capital projects.

The Whole Story:

Saskatchewan plans to invest an all-time high $4.4 billion in capital projects to support schools,  healthcare, roads, power facilities and more.

This includes nearly $1.9 billion in capital projects across executive government and approximately $2.6 billion in capital projects by the province’s commercial Crown corporations.

“Saskatchewan’s economy and population are growing rapidly and with that growth comes a need for new, expanded and renewed infrastructure,” Deputy Premier and Finance Minister Donna Harpauer said. “This year’s investment of $4.4 billion, part of nearly $18 billion more over the next four years, ensures we will continue to build the classrooms, health facilities and other infrastructure to support our province’s growth for years to come.”  

The 2024-25 Budget includes the largest investment ever in health capital of more than $516.8 million, an increase of nearly $180.0 million compared to the previous year. This will support a number of ongoing major projects, including:

• $180.0 million for construction of the Prince Albert Victoria Hospital redevelopment project;  
• $55.0 million for construction of the Weyburn General Hospital replacement project;
• $27.0 million for construction of the La Ronge long-term care (LTC) project;
• $21.9 million to complete construction of the Regina General Hospital parkade project;  
• $20.0 million to support procurement and design activities on the Regina LTC specialized beds project;
• $10.0 million for construction of the Grenfell LTC project;  
• $4.0 million for procurement of Regina LTC standard beds;  
• $3.0 million to continue work on the Saskatoon Urgent Care Centre;
• $2.8 million for the St. Paul’s Front Entrance Expansion project;
• $2.5 million to advance the Estevan LTC redevelopment project;
• $1.5 million to advance the Watson LTC project;  
• $1.0 million for planning for the Yorkton Regional Health Centre replacement project; and
• $750,000 to advance planning on various projects, including St. Anthony’s Hospital in Esterhazy, Rosthern Hospital and the Battlefords District Care Centre.

The budget invests $216 million in school infrastructure, including:

• $165.9 million to support ongoing projects, including 11 new or consolidated school projects and three major renovations in Lanigan, Carlyle, La Loche, Saskatoon, Moose Jaw, Regina, Prince Albert, Balgonie and Wilcox
• $28.5 million for the Relocatable Classroom Program to support enrolment growth.  
• $8.8 million in funding to begin planning for nine new schools and two renovations.
• $12.8 million for minor capital renewal projects that allow school divisions to address structural repairs and renovations to prolong the life of schools across the province.

“This year’s Capital Budget supports classrooms, care and communities through health and education projects in dozens of communities across Saskatchewan,” SaskBuilds and Procurement Minister Joe Hargrave said. “Thanks to this year’s investment in infrastructure, we are not only on track to exceed our Growth Plan goal of investing $30 billion by 2030, but we have also now invested approximately $47.2 billion since 2008-09 to serve the growing infrastructure needs of families and communities.”

Budget 2024-25 invests $59.0 million in Saskatchewan’s post-secondary infrastructure, including:

• $24.6 million for maintenance and upgrades to help meet the needs of students and staff;
• $8.7 million for an electrical infrastructure upgrade at the University of Saskatchewan;
• $7.8 million to support new domestic health care training programs (Occupational Therapy, Speech Language Pathology and Physician Assistant programs);
• $6.3 million for cooling tower replacement at the University of Regina;
• $6.0 million for planning work for Saskatchewan Polytechnic’s new Saskatoon campus;
• $3.5 million for further expansion in health care training programs; and
• $610,000 to expand the student health care centre at the University of Regina.

The 2024-25 Budget invests $417.3 million in transportation infrastructure, providing $403.9 million to improve more than 1,100 kilometres of Saskatchewan’s provincial highway network, including continued construction and design of passing lanes and twinning projects to increase safety and improve traffic flow, as well as repairing or rebuilding 17 bridges and replacing roughly 100 culverts around the province.  

This budget provides $350.1 million in transfers to municipalities for infrastructure projects through several programs, including the Investing in Canada Infrastructure Program, Canada Community-Building Fund and the New Building Canada Fund.  

Budget 2024-25 invests $301.9 million in government services infrastructure, including:  

• $78.9 million in various water-related infrastructure projects;  
• $60.8 million for courts and correctional facilities and equipment, including continued construction of the remand expansion at the Saskatoon Correctional Centre;
• $21.7 million for the development of supportive housing spaces in Regina and Saskatoon, and to repair, maintain and replace provincially owned housing units; and
• $13.3 million for capital projects throughout the parks system to improve visitor experience, including construction of a new service centre at Nut Point Campground in Lac La Ronge Provincial Park. Improvements and upgrades will also take place at Pike Lake, Narrow Hills, Moose Mountain, Rowan’s Ravine and Crooked Lake provincial parks, as well as Cypress Hills Interprovincial Park.

Saskatchewan’s Crown corporations will spend approximately $2.6 billion on capital projects this year to support economic growth and maintain and improve utility infrastructure. This includes:

• Approximately $1.6 billion investment in SaskPower’s electricity system;
• $416.9 million through SaskEnergy for the province’s natural gas transmission and distribution system; and
• $570.8 million through SaskTel, SGI Canada Auto Fund, SaskWater, SaskGaming and Crown Investments Corporation.

Cooper Equipment Rentals Limited, a Canadian-owned and operated construction equipment rental company, has purchased 100% of the shares of Alberta-based Action Equipment Rentals Inc.

Action was formed in 1991 by Reginald Bloomfield and his father Ray Bloomfield in Sundre, Alta. to serve the central Alberta market. The company opened a second location in Red Deer about a year later. In 2015, Action consolidated operations in Red Deer, and under the leadership of general manager, Gabriel Castella-Chin, embarked on an ambitious plan to renew their rental fleet and grow their market share.

“Joining a Canadian-owned company with an excellent reputation was important in our decision to join the Cooper family. We are looking forward to continuing to serve Central Alberta with the benefits and resources that allow us to expand our presence and continually improve our already excellent service,” said Castella-Chin.

Cooper officials explained that Action’s prime location and facility in Red Deer intensifies their coverage in the important Alberta market, and Action’s strong presence in Alberta enhances Cooper’s ability to serve customers better in Western Canada.

“I was once told that ‘if you build it, they will come’. That was our charge for Action Rentals from the start, and this is the next natural step going forward. Cooper will take what we built and continue to build so they will come. And if we treat them right, they will stay,” said Reginald Bloomfield, founder, Action.

Action joins the Cooper family as the Red Deer branch and will continue to be led by Gabriel Castella-Chin, supported by Action employees.

“Action has built a fine business with a reputation for quality and integrity in the construction equipment industry, and we are proud to welcome them into the Cooper family as we continue to grow our Company across Canada,” said Doug Dougherty, CEO, Cooper.

British Columbia and Alberta have some things in common. Both are unusually dependent on natural resource-based industries to drive their economies and supply the exports that are vital to sustaining prosperity. Both have been experiencing robust population growth over the last few years. And neither has been well-served by a distant national government in Ottawa with a policy thrust focused more on keeping natural resources in the ground than on harnessing them in an environmentally sustainable way for the benefit of all Canadians.

Recently, B.C. Premier David Eby and Alberta Premier Danielle Smith released their budgets for the coming year, and it is here where it becomes clear that other than sharing a border and natural resource advantages, not much else binds the two provinces together. Perhaps the greatest schism is the difference in the two premiers’ economic vision.

To begin with, Alberta’s updated fiscal plan aims to stay in the black, with small operating surpluses expected over the forecast horizon. B.C. is taking a different path, one featuring unprecedented annual deficits as the NDP government ramps up spending in advance of the fall 2024 election and gives free rein to its ideological inclinations to expand the size and reach of government. The Fraser Institute recently reported that in the three years from the onset of the COVID-19 pandemic in 2020 to Q2 of last year, 94% of net new payroll jobs created in B.C. were in the public sector. This lopsided labour market is one sign of B.C.’s deteriorating business climate.

Returning to the fiscal outlook, B.C. is planning to incur a combined operating deficit of $28 billion from 2023/24 through 2026/27, which is a marked departure from the surpluses posted over most of the preceding dozen years. For its part, Alberta is banking on continued budget surpluses, albeit significantly smaller than the $5.2 billion in black ink projected for the current fiscal year (2023/24).

It is worth noting that Alberta’s surpluses are set to shrink beyond 2023/24 in part because of assumed softer global oil markets – the province garners up to one-quarter of its revenues from energy royalties. Should oil prices trade higher than the government’s forecast, the small surpluses pencilled into Budget 2024 would increase significantly, further strengthening Alberta’s financial position over the medium-term.

Turning to government spending, while both provinces are facing pressure in areas like heath care and housing costs, owing in part to surging populations, the idea of spending restraint is clearly less popular in Victoria than Edmonton. The B.C. NDP government intends to boost expenditures by 8% in 2024/25. In Alberta, expenditure growth next year will come in at roughly half of that figure.

The two provinces have both embraced ambitious capital spending plans, which involve long-term borrowing outside of the confines of the annual operating budget. Total B.C. public sector capital spending will climb to $18-19 billion per year over 2024/25-2026/27. Alberta’s revised capital plan foresees $25 billion being spent on infrastructure and other public sector capital assets in the next three years. Public sector capital outlays in B.C. include borrowing undertaken by large Crown corporations like B.C. Hydro and ICBC – which don’t exist in Alberta.

Alberta also has structural advantages over B.C. and the rest of the country in the form of lower tax rates and lower debt levels. Alberta has no provincial sales tax and a lower business income tax rate (8% vs 12% in B.C.). And Alberta’s public sector debt is roughly 9.3% of GDP and on track to decrease in the coming years, whereas B.C.’s is currently 17.6% of GDP and expected to climb to 27.5% by 2026/27.

Overall, the two budgets suggest Alberta is very well-positioned to continue to lead the country in economic growth, business investment, and wage increases in the next few years. Albertans already enjoy an average GDP per person almost $28,000 higher than the comparable figure in B.C. Alberta should continue to reap the advantages of lower taxes and healthier provincial finances.

The extraordinary growth in government in B.C., combined with its large operating deficits and fast-rising debt/GDP ratio, mean that taxpayers should brace themselves for the inevitability of significant tax hikes and lagging investment and lower incomes in the future.

The Independent Contractors and Businesses Association (ICBA), the largest construction association in Canada, represents more than 4,000 members and clients through chapters in Alberta and British Columbia. ICBA is one of the leading independent providers of group health and retirement benefits in western Canada, supporting more than 170,000 Canadians. ICBA is also the leading sponsor of trades apprentices in B.C. www.icba.ca and www.icbaalberta.ca

Key Takeaways:

• TC Energy is selling its shares in the Prince Rupert Gas Transmission Project to Nisga’a Nation and Western LNG.
• The proposed project is a 900 kilometre natural gas pipeline running from Hudson’s Hope to Lelu Island, near Prince Rupert.
• The Nation and Western believe that as other B.C. pipeline contracts come to a close, experienced contractors will become available to work on the project.

The Whole Story:

TC Energy Corporation announced it has entered into a binding letter agreement with Nisga’a Nation and Western LNG regarding the purchase and sale of all outstanding shares in Prince Rupert Gas Transmission Holdings Ltd. and the limited partnership interests in Prince Rupert Gas Transmission Limited Partnership (PRGT). 

PRGT is a wholly owned subsidiary of TC Energy and the developer of a natural gas pipeline project in B.C. The proposed project is a 900 kilometre natural gas pipeline running from Hudson’s Hope to Lelu Island, near Prince Rupert. The pipeline route would include both terrestrial and marine sections and would have a proposed capacity of 2-3.6 billion cubic feet per day (Bcf/day).

“Today is a historic day for the Nisga’a Nation and represents a sea change in major industrial development in this country,” said Eva Clayton, president of the Nisga’a Lisims Government. “In taking an equal ownership role in this pipeline, we are signalling a new era for Indigenous participation in the Canadian economy. First Nations are no longer being left behind as generational wealth is built from the resources of our lands. At long last, hop and optimism are returning to Indigenous communities across northern B.C.”

TC Energy stated that the transaction demonstrates its resolve toward delivering its 2024 strategic priorities while facilitating the development of critical energy infrastructure. TC Energy’s strategic priorities are focused on staying within its $6 to $7 billion annual net capital expenditure limit, post-2024, maximizing the value of its assets and further enhancing the strength and flexibility of its balance sheet.

“We are pleased to see this important project move forward while remaining firm on our commitment to our strategic priorities. This is an important agreement that will see Indigenous co-ownership and development of an integrated LNG project. Enabling LNG development in British Columbia is good for Indigenous communities, our customers, supports the long-term growth of the WCSB and global emissions reduction through the export of responsibly produced Canadian natural gas,” said François Poirier, president and CEO, TC Energy.

As part of the letter agreement, TC Energy has committed to provide transition services, on a reimbursable basis, to facilitate the seamless transition of the pipeline project and support development work planned for this year. Subject to the execution of definitive agreements and customary closing conditions, the transaction is expected to close in the second quarter of 2024. Initial proceeds from the transaction are not expected to be material to TC Energy, with the potential to receive additional payments contingent upon the project achieving final investment decision and commercial operation.

The Nisga’a Nation and Western LNG stated that they plan to enter into an agreement with an internationally respected construction manager to build the pipeline. The Nation and Western believe that as other B.C. pipeline contracts come to a close, experienced contractors will become available to work on the project.

Key Takeaways:

• LaPrairie Works has acquired Carwald Redi-Mix’s concrete and aggregate operations in Slave Lake and Wabasca, Alta.
• As part of the acquisition, LaPrairie Works has taken on Carwald’s employee team, including equipment operators, crushing crew operators, drivers, and management personnel.
• Carwald’s ready-mix concrete, asphalt concrete pavement (ACP), and aggregate products will now be available to customers through a new division of LaPrairie Works Inc.

The Whole Story:

LaPrairie Works Inc., a highway and bridge maintenance and civil construction contractor, has announced its acquisition of Carwald Redi-Mix’s concrete and aggregate operations in Slave Lake and Wabasca, Alta.

Carwald’s ready-mix concrete, asphalt concrete pavement (ACP), and aggregate products will now be available to customers through a new division of LaPrairie Works Inc.

“We are very pleased to have Carwald, one of Alberta’s premier concrete and aggregate suppliers, join the LaPrairie Works team,” said Kelly McManus, president of transportation & highway operations of LaPrairie Works Inc. “In the highway maintenance and civil construction industries, concrete, ACP, and aggregate products are frequently used. With this acquisition, we will now be able to source these products for our own operations in-house, while continuing to supply loyal Carwald customers with the quality products and excellent customer service they are accustomed to.”

As part of the acquisition, LaPrairie Works has taken on Carwald’s employee team, including equipment operators, crushing crew operators, drivers, and management personnel.

Ken Porisky, previous owner of Carwald’s operations, has also joined LaPrairie Works to assist with helping the business successfully transition into this new division.

“Carwald is a family-owned business and so are we. With their dedicated employee team joining our operations, we look forward to the future growth and success we will be able to cultivate together.” said McManus.

Financing for the acquisition was provided to LaPrairie Works by Dynamic Capital Equipment Finance and BMO.

“The folks at Dynamic Capital, who we have worked with on other transactions, were uniquely responsive to assisting us with the equipment acquisition. Our lead bank, BMO, provided the property financing. We appreciate the support of our lenders in facilitating this acquisition,” said Jim Feragen, chief financial officer, LaPrairie Group of Companies.

LaPrairie Works is a member of LaPrairie Group of Companies and provides highway and bridge maintenance and civil construction services across Alberta. LaPrairie Works currently maintains Alberta provincial highways in contract maintenance areas CMA 501, 502, 503 & CMA 6; these areas include Peace River, Grimshaw, Fairview, Manning, High Level, Fort Vermilion, Red Earth Creek, High Prairie, Kinuso and Swan Hills. In August 2024, LaPrairie Works will also be taking on a new contract maintenance area, CMA 506; this area encompasses Slave Lake, Wabasca, Barrhead, Westlock, Egremont and surrounding areas.

LaPrairie Group of Companies is a family-owned group of companies that provides full-service crane and rigging, heavy hauling, highway and bridge maintenance, civil construction, fleet maintenance and industrial mineral mining and distribution services to customers across Western Canada and Northeastern U.S. The 100% Canadian family-owned group of companies’ services customers through their various subsidiaries, including, LaPrairie Crane, Northland Fleet Services, Entrec Alberta, Capstan Hauling, LaPrairie Works, LaPrairie Works Oilfield Services, and Canadian Silica Industries.

Key Takeaways:

• While optimism remains high, contractors’ expectations for the coming year have dipped since 2023, mostly due to rising costs.
• A majority of respondents cited labour supply as a top concern, but also noted an easing of supply chain challenges.
• While contractors stated that new technology can have excellent ROI and should be a focus, they noted that initial startup costs and training requirements remain a barrier.

The Whole Story:

Ontario’s construction community has spoken. 

The Ontario Construction Secretariat’s (OCS) annual Contractor Survey results are out and it covered a wide range of topics including business predictions, technology, labour, rising costs and more. 

Each year the survey polls Ontario’s ICI contractors to gauge their expectations for the year and capture their views on salient issues in the industry. The survey includes ICI contractors from every region in the province,  including union and non-union labour models. The results came after 500 telephone interviews with Ontario ICI contractors, 35% general contractors 60% trade contractors 5% unspecified. 

Outlook

Respondents expect a mixed picture for the coming year. Coming off the strong momentum in 2023, expectations for business in 2024 ran cooler than in the 2023 survey. However, the majority predicted more business, pointing to the abundance of current work and projects in the pipeline. Two-thirds (66%) of contractors are feeling positive, down from 81% in last year’s survey.

Many contractors commented on the large amount of work currently being done, as well as the number of upcoming projects. Some of the reasons cited for increased activity were the abundance of infrastructure projects, increasing population and housing demand, policies helping to push housing, and government support. Some also anticipated a drop in interest rates, which they believed would spur more activity.

Concerns

The most common reason for a negative outlook, comprising over 20% of the negative open-ended responses, was increasing costs. The most frequent costs mentioned were higher interest rates (noted by almost a fifth), material costs, and high taxes. Other prominent items were labour shortages (16%) and a weak/declining/uncertain economy (12%). Some responses also mentioned government policy and regulation, as well as tight money or a lack of financing.

Consistent with last year’s survey, just over one-third of contractors reported having projects cancelled by the owner. In terms of postponed projects, 56% of contractors report having projects postponed to a later start date (up modestly from 53% in last year’s survey).

Material cost inflation, interest rates, and labour costs were cited as the most common reasons for project cancellations. While high costs were also noted as the primary reason for project cancellations in the 2023 contractors survey, this year’s results suggest that it has become an even greater concern. 

Labour

Hiring intentions remained roughly the same as in last year’s survey, with 34% of contractors expecting to increase their hiring. However, contractors also noted ongoing concerns related to labour availability, with 65% reporting that accessing skilled labour would become more difficult in 2024.

Almost three-quarters of contractors (73%) pointed to rising costs as a consequence of skilled labour shortage (up from 63% in last year’s survey), whereas project delays decreased to 52% from 58% last year. Fewer contractors also reported having to turn down work (46% compared to 50%).

Technology

This year, 81% of ICI contractors said that adopting new technologies is important to the future of their business, up from 71% in 2018. The number of naysayers has dropped dramatically to 17% (from 29% in 2018).

Overall, 15% of contractors reported having a budget for technology, which is slightly higher than 13% from our 2018 survey. Productivity enhancement jumped to the top spot of motivators for adopting new tech, comprising 28% of responses. Filling out the top three motivators were reducing costs (22%), and client needs (21%).

Thirty-two percent (32%) of contractors said that cost or budget restrictions was their most significant barrier. This was followed by lack of evidence that new technologies will bring a return-on-investment, and training requirements, both of which were identified as the most significant barrier by 22% of contractors. At 14%, lack of awareness of new technologies was the least commonly selected of the four.

The most commonly used technologies were BIM (44%) and jobsite data collection apps (43%). Other technologies utilized by approximately one-third of contractors include: smart sensors (38%), advanced building materials (35%), clean tech (29%), and prefabricated or modular building (29%).

Despite the buzz around artificial intelligence, robotics, 3D printing, augmented/virtual reality, wearables, digital twins and drones, the survey suggested these technologies are still emerging in terms of widespread adoption by contractors. Of these niche technologies, the use of drones is increasingly being reported. One in five contractors reported they have experience with drones, double what was reported back in 2018.

Key Takeaways:

• CIB’s $100 million participation agreement with the First Nations Bank of Canada will enable new infrastructure projects in First Nations, Métis, and Inuit communities.
• Interested Indigenous communities can apply for loans to finance enabling infrastructure, with the process managed entirely by FNBC.
• Enabling infrastructure can include site works, roadworks, water and wastewater management and utility connections.

The Whole Story:

The Canada Infrastructure Bank (CIB) has announced a $100 million loan participation agreement with the First Nations Bank of Canada (FNBC) for enabling infrastructure in First Nations, Métis, and Inuit communities.

Indigenous communities will have access to affordable and flexible financing to unlock enabling infrastructure development that can support improved living conditions, new economic opportunities and housing.

“This first-of-its-kind loan product with FNBC catalyzes innovation in the financial services sector and in the Indigenous market. Through this investment, Indigenous communities will work with FNBC to access critical financing to develop much-needed infrastructure in their communities and advance socio-economic reconciliation,” said Ehren Cory, CEO of CIB.

According to CIB, Indigenous communities’ limited access to affordable capital at flexible terms can constrain, impede or stop the achievement of community development projects.

Enabling infrastructure can include site works, roadworks, water and wastewater management and utility connections, and is needed to support economic and community growth through residential, commercial or industrial developments.

To pair with the CIB’s commitment, FNBC will provide concurrent project lending. CIB stated that together, this comprehensive financing package will enable Indigenous communities to realize their community and/or economic development plans faster.

FNBC is the largest Indigenous-owned and -led financial institution in Canada. More than 70% of FNBC’s employees are Indigenous, and Indigenous clients comprise 90% of its loan portfolio.  FNBC provides services to First Nation, Métis and Inuit people and communities in urban areas and remote locations, including in Canada’s arctic region.

“This new loan program will make infrastructure projects in Indigenous Nations and communities more affordable and allow for more opportunities to develop Indigenous-owned lands,” said Bill Lomax, president and CEO of FNBC. “By partnering with CIB, we can leverage our expertise in working with Indigenous communities and support new projects in a way we have not seen before.”

Through the CIB’s Indigenous Community Infrastructure Initiative, the CIB collaborates with First Nation, Métis and Inuit communities across Canada on infrastructure projects in partnership with, and for the benefit of Indigenous communities across Canada.

Indigenous communities interested in accessing this community development financing, can learn more on the FNBC site.

This first-of-its-kind loan product with FNBC catalyzes innovation in the financial services sector and in the Indigenous market. Through this investment, Indigenous communities will work with FNBC to access critical financing to develop much-needed infrastructure in their communities and advance socio-economic reconciliation.

Key Takeaways:

• McElhanney Ltd. will acquire 60-year-old Edmonton Engineering firm BPTEC, which specializes in bridge and structural projects.
• The firm’s project history includes Latta Bridge Replacement, North Saskatchewan River Crossing at Drayton Valley, and the Health Research Innovation Facility.
• McElhanney officials stated that the acquisition with strengthen its offerings in Alberta.

The Whole Story:

McElhanney Ltd. has announced plans to acquire BPTEC Engineering Ltd., an Alberta firm that specializes in bridge and structural engineering.

McElhanney officials stated that its offerings in Albert will be strengthened by BPTEC’s six decades of expertise. By expanding these bridge and structural engineering services, McElhanney’s clients will have access to skilled engineering experts committed to delivering transportation projects that meet and exceed the needs of communities.

“It’s undeniable that BPTEC’s expertise and strong reputation will mean an elevated experience for everyone,” says Stewart Smith, McElhanney vice president, Transportation and Transit. “This expansion means we will bring new service offerings to our northern Prairie clients and beyond, with the added touch of exceptional client service and high-quality work. We look forward to having their expert hands supporting our transportation and transit partners.”

Originally founded in 1961, BPTEC provided structural engineering solutions to the infrastructure industry with successful projects including the Latta Bridge Replacement, North Saskatchewan River Crossing at Drayton Valley, and the Health Research Innovation Facility.

“McElhanney is always looking for how we can amaze our clients, care for our communities, and empower our people,” said Allan Russell, McElhanney president and CEO. “Welcoming BPTEC into our growing team enhances our bridge and structural engineering services in Alberta and will enhance our communities with thoughtful, leading design.”

BPTEC stated that it looks forward to their future as part of the McElhanney team

“At BPTEC, we are all looking forward to joining the McElhanney team,” said Mike Swanson, BPTEC engineering director. “This partnership means expanded services for our clients and communities, and more opportunities for our team to grow their careers with an exceptional company supporting them every step of the way.”

Key Takeaways:

• Great West Equipment has 11 branches in B.C. and the Yukon.
• With the acquisition, Nors’ operation now has a total of 37 branches and more than 750 employees in Canada, covering more than 80% of the Canadian market.
• Nors noted that the construction equipment sector is one of its big focus areas in its strategy until 2030.

The Whole Story:

Portuguese-based heavy equipment company Nors Group has entered into an agreement to acquire Canadian forestry and construction equipment dealer Great West Equipment (GWE) for around $150 million.

“We are very proud of the legacy of ‘Service First’ attitude that our incredible team at Great West Equipment has ensured for our many customers,” said Colin Matejka, CEO of Great West. “As part of the Nors Group, we now have access to the resources that will enable us to elevate GWE’s ability to serve the territories in which we work. We remain committed to listening to our customers and growing alongside them.”

The announcement comes three years after Nors entered the Canadian market with the acquisition of Strongco in 2020.

Great West Equipment has 11 branches in B.C. and the Yukon.  With its origins in the forestry and construction sectors, Great West has grown to become a major player in all segments of construction equipment, including mining, oil and gas, recycling, waste management, utilities, ports and aggregates. 

The company represents leading equipment manufacturers with globally recognized brands including Volvo Construction Equipment, Madill, Metso, Sennebogen, Falcon and others. 

With the acquisition, Nors’ operation now has a total of 37 branches and more than 750 employees in Canada, covering more than 80% of the Canadian market.

“We are very excited to welcome Great West Equipment to the Nors family, amplifying our presence in Canada, a market that has proven to be very relevant and strategic for the Group. We believe that Great West Equipment will benefit from the global presence and growth momentum that Nors is experiencing, combined with our 90 years of experience, to improve its performance and promote its future growth,” said Tomás Jervell, group CEO of Nors. 

Nors noted that the construction equipment sector is one of its big focus areas in its strategy until 2030, having recently completed an operation in the same sector in the Brazilian market.

The 90-year old company has been one of the Volvo Group’s main partners since 1933. The Group has been a family business since its foundation and is currently present in 17 countries on four continents, such as Portugal, Canada, U.S., Brazil, Angola, Turkey, Spain, Austria, among others. Nors has more than 4,200 employees worldwide and an aggregate turnover of 2.8 billion euros.

Key Takeaways:

• Toronto is one of several cities Ontario is awarding funding this month.
• Brampton, Brantford and Chatham-Kent also received millions for their progress on housing goals.
• The money stems from the province’s Building Faster Fund, a three-year, $1.2 billion program that is designed to encourage municipalities to address the housing supply crisis.

The Whole Story:

It pays to crush your housing goals. 

Premier Doug Ford announced Ontario is providing Toronto with $114 million in funding through the Building Faster Fund after the city exceeded its 2023 housing target. Toronto broke ground on a total of 31,656 new housing units last year, unlocking an additional $38 million by exceeding their 2023 target by 51%.

“Toronto has shown it can get it done on housing and we are proud to reward them for their success,” said Premier Doug Ford. “My challenge to Mayor Chow and to every mayor in Ontario is to get even more homes built in the coming years so we can make life more affordable and keep the dream of homeownership alive for families across the province. We’ll be there to support you every step of the way.”

Announced in August 2023, the Building Faster Fund is a three-year, $1.2 billion program that is designed to encourage municipalities to address the housing supply crisis. The fund rewards municipalities that make significant progress against their targets by providing funding for housing-enabling and community-enabling infrastructure. Funding is provided to municipalities that have reached at least 80 per cent of their provincially assigned housing target for the year with increased funding for municipalities that exceed their target.

“It’s harder than ever for people in Toronto to find a home they can afford,” said Mayor Olivia Chow. “We are committed to addressing the housing crisis by building more homes of all kinds, faster. Toronto has an ambitious plan to speed up approval times and build 65,000 rental homes in the coming years. The Building Faster Fund will help us meet and exceed our housing targets and provide the critical infrastructure that creates great neighbourhoods for people to live in.”

In the coming weeks, the province will announce Building Faster Fund rewards for all municipalities that met, exceeded or achieved 80% of their assigned housing targets in 2023. Any unspent funding will be made available for housing-enabling infrastructure to all municipalities, including those that have already received funding as a result of reaching their targets, through an application process. In addition, ten per cent – or $120 million – of the Building Faster Fund is being set aside for small, rural and northern municipalities to help build housing-enabling infrastructure and prioritize projects that speed up the increase of housing supply.

“I applaud the work being done by Toronto and all the other municipalities that have met or exceeded their housing targets,” said Paul Calandra, Minister of Municipal Affairs and Housing. “Our government is committed to building at least 1.5 million homes by 2031 and I look forward to unveiling the next steps in our plan to build more homes with the release of our fifth housing supply action plan next month.”

Other cities that have received funds include:

• $25.5 million for Brampton for substantial progress towards meeting its 2023 housing target. Brampton broke ground on a total of 7,028 new housing units last year.
• $440,000 for Chatham-Kent after the municipality exceeded its 2023 housing target. Chatham-Kent broke ground on a total of 522 new housing units last year, unlocking an additional $146,667 by exceeding their 2023 target.
• $3 million for Brantford for exceeding its 2023 housing target. Brantford broke ground on a total of 788 new housing units last year, unlocking an additional $400,182 by exceeding their 2023 target by 8%.

You wouldn’t step onto a job site with someone you can’t trust. 

First West Capital believes the same reasoning applies to financing your construction business. They explained that their team has in-depth knowledge of how the industry operates and are committed to the long-term success of their clients.  

Steve Chen, vice president and head of First West Capital, explained that trust is a requirement  for the job site and it’s no different for finance. 

“You can’t document or put in the legal contracts every nook and cranny, every possibility that comes up, so you have to trust the people that you’re working with will do the right thing right at the end of the day,” said Chen. 

A partner that will be there

First West Capital understands the intricacies of construction work and has the risk appetite to finance it. Rather than just being a lender, they want to seek out firms that are looking for someone to help them grow. 

“Those that have gone through different financings, or needed financing to finance a larger project or a bigger order, understand that they need a financial partner who will be there throughout all their cycles and changes and that’s what I mean,” said Chen, “Risk appetite means that the money will be there when you need it.”

He explained that this means the First West Capital team will help their partners figure out cash flows and forecasts so they are on solid financial footing. They want to remove uncertainty. 

“For the right companies, we are the partner that will make sure that you have that piece figured out so that you don’t need to worry or second guess whether or not that lender will be there,” said Chen. “I think that’s a big thing because, for folks in the sector, they’re good at running their business, they’re good at whatever their expertise is. They know they’re going to make money. It’s just they need that financing help to make money because the dollars are big and the projects get larger and they need somebody there with them.”

Geoff Devereux, a director at First West Capital, recalled that this was the exact reason one of their former clients sought them out. A project had gone sideways, leaving them short of working capital. 

“We were able to understand that it was really a one-off kind of Black Swan type of event,” he said. “They have really strong management and we were able to come in to provide some additional financing to right-size their working capital on the back of that and fast forward and they are back in great shape. That’s an example of us putting our money where our mouth is.”

Devereux noted that traditionally in lending there is less appetite for this due to cautionary tales or the niche understanding required for the ebbs and flows of a project-based business.  But First West Capital can demonstrate the patience required of a lender or for managers who are doing all the right things.

Finding the right fit

Whether you are looking to buy your first building, finance a project or need extra equipment, First West Capital’s team wants to dig deep into how major financial decisions can help you thrive. The boutique firm of only seven people are specialists that are zeroing in those looking for growth.  

“We are here for your ongoing success,” said Chen. “We are looking beyond just the credit metrics to what will benefit the business most in the long term.”

If, in their opinion, the project doesn’t build value, if the margins are too thin, if project risk is high, if overruns seem likely, if the bids are too tight, they will express those views which could help a company think more deeply about a project. 

“But sometimes it really makes sense,” said Chen. “It’s a fantastic project, you’re expanding in the right areas. You’ve done all your homework and we want to be there for you to support you financially with that.”

He stressed that above all, they are looking for partners with a growth mindset and who are looking for a financial partner. 

“We want people who are looking for advice and are willing to spend the time and money investing in systems and processes that will elevate your business,” said Chen.

Green flags 

It also comes down to the right people. 

“A key thing for us is character,” said Devereux. “The character of the people we’re working with is paramount, the grit, resilience and hard-working nature of our clients.”

Other “green flags” that First West Capital looks for are a diversity of projects (size, type, location, customer), owners who delegate effectively, companies with strong systems, processes, and procedures, and long-term business planning.

Carmel Tang, operations advisor at First West Capital, noted that once the firm finds a company that’s a good fit, the partnership that’s formed is unique. 

 “What makes us really special and really unique is how much we work with our clients,” she said. “Working with First West Capital means you have a partner who will be responsive and understanding. I am Just so proud of the level of service and communication that we give to our clients. It really is a working relationship to try to make them as successful and I think that’s what really truly sets us apart.”

Connect with the team to see if First West Capital might be a good fit to achieve your growth goals. Here’s how to get in touch:

Steve Chen, CFA,VP and Head of First West Capital

c: 604 862 7564 e: schen@firstwestcapital.ca 

610 – 1040 West Georgia Street, Vancouver, BC V6E 4H1

Geoff Devereux, Director, First West Capital

t: 604-335-1239  c 604-996-4581 e: gdevereux@firstwestcapital.ca

610 – 1040 West Georgia Street, Vancouver, BC V6E 4H1

Key Takeaways:

• Environment Minister Steven Guilbeault said earlier this week he was against government support for new road infrastructure.
• He said this was because more roads encourages more car use, something Ottawa is looking to move away from.
• This week he sought to clarify those comments, saying he was against federal support for “large” road projects.
• The comments drew strong criticism from provincial leaders as well as the construction sector.

The Whole Story:

Environment Minister Steven Guilbeault has clarified controversial comments about road infrastructure investment after drawing heavy criticism from political leaders and the construction sector. 

On Monday, Guilbeault said the federal government will stop investing in new road infrastructure. However he has since clarified his comments, stressing that he meant to say Ottawa will not be funding “large” road projects. 

“Of course we’re funding roads. We have programs to fund roads,” he told reporters, adding that the federal government can be counted on to support provinces paying for maintenance. 

However, he noted that Ottawa has decided that existing road infrastructure “is perfectly adequate to respond to the needs we have.”

Guilbeault explained that the federal government’s goal is to get people out of their cars and into public transportation.

He told reporters that Quebec City’s long-proposed third link is an example of a project that will not receive funding from Ottawa.

“What we have said, and maybe I should have been more specific, is that we don’t have funds for large projects like the ‘3eme lien’ that the CAQ has been trying to do for many years,” he said of Quebec’s provincial government.

Criticism from industry

The Canadian Construction Association noted that a report by the Federation of Canadian Municipalities (FCM) estimates that it will require $107,000 in public investments per new housing unit. This amounts to a total of $620 billion in public funding needed – an additional $375 billion beyond the current planned budget.

“These new communities need new roads. People need to be connected to their jobs, their schools, and their hospitals,” said Mary Van Buren, CCA president. “A growing population has growing demands. We not only need the road networks to support their movement; we also need to shore up our trade infrastructure, which includes roads, bridges and highways.”

The CCA added that Canada has been under-investing in its trade-enabling infrastructure for 15 years and builders need the federal government to partner with industry and work with municipal and provincial governments to build a strong foundation for a stronger Canada.

In response to the minister’s initial comments, the Ontario Road Builders Association (ORBA) stated that he did not understand the importance of Canadian infrastructure. 

“While the Minister’s previous actions – including an attempt to encroach on provincial jurisdiction over infrastructure development recently deemed unconstitutional – demonstrate a bias against development, it is shocking to see the Minister make these comments on behalf of the government, suggesting a naive understanding of Canada’s infrastructure needs at a time of record immigration and a push towards removing barriers to trade and economic growth,” said the group, adding that his comments were “elitist” and “out of touch” with the reality of everyday life in suburban and rural communities. 

They noted that the road building industry employs more than 56,000 workers in Ontario alone and earlier this month, Prime Minister Justin Trudeau’s spoke at ORBA’s 97th Annual Convention, emphasizing the importance of road and highway infrastructure for Canadian prosperity.

“We call on Minister Guilbeault to stop playing politics and join us and provincial governments across Canada to get shovels in the ground on much needed projects in Ontario and across the country,” said the group. 

LiUNA International Vice President and Canadian Director Joseph Mancinelli called the minister’s comments “beyond disappointing”. 

“Growing regions require resilient infrastructure, including our roads,” he said in a statement on social media. “This has a direct impact on our economy, jobs, connectivity and the strength and function of our communities. Enough delays and political games. It’s time to get shovels in the ground.” 

Provincial leaders weigh in

Various political leaders took to social media to give their response to the comments.

Federal Conservative Leader Pierre Poilievre said in a post on X that Mr. Guilbeault “won’t be happy until we’re living back in mud huts.”

Saskatchewan Premier Scott Moe also posted on social media, saying this: “Guilbeault wants us all to walk everywhere. The Trudeau government gets more out of touch with reality every day.”

Alberta Premier Danielle Smith suggested the minister is out of touch with the transportation needs of Canadians.

“Does this minister understand that most Canadians don’t live in downtown Montreal? Most of us can’t just head out the door in the snow and rain and just walk 10km to work each day,” said Smith.

Key Takeaways:

• Canada is seeing rapid reductions (potentially up to 5%) in both high and low-rise residential construction costs, with much larger reductions anticipated in Toronto, followed by Montreal and Vancouver.
• Interest rates are expected to begin their decline in 2024, at which point condominium sales will likely recover. By this time, we should also see increased momentum in purpose-built rental development, with credit to government-led incentives and an increase in infrastructure spending.
• Mid-term (2025-2026) success will hinge on timing the market and beating the rush, taking a deal, and hitting the ground running.
• In the long term, we are likely to find ourselves losing the demand versus supply fight, and costs may continue to escalate while the housing crisis intensifies. 

The Whole Story:

Builders could be seeing some relief from high construction costs, however in the long term, the industry will continue to face significant challenges . 

The latest construction costs forecast from Altus group shows that Canada is seeing rapid reductions (potentially up to 5%) in both high and low-rise residential construction costs, with much larger reductions anticipated in Toronto, followed by Montreal and Vancouver.

Marlon Bray, Altus Group’s senior director of cost consulting & project management, wrote that as the industry heads into 2024, development demand is ripe (particularly in the case of residential development), but investors, builders, and developers are wary in this high-interest rate environment. 

“While escalation projections are, in essence, a well-educated guess – especially in the current, more volatile landscape – it remains important to highlight the anticipated impact of cost escalation over the short term, midterm, and longer term,” said Bray.

Across Canada, Altus is seeing rapid reductions (potentially up to 5%) in both high and low-rise residential construction costs, with much larger reductions expected for Toronto, followed by Montreal and Vancouver. However, in the Atlantic (Halifax, in particular) and the Prairies (Calgary, in particular), cost reductions are not expected. Bray noted that instead, these regions could see a continued upward trajectory.

“This cost correction can largely be attributed to interest rate hikes, which have impacted the condominium and low-rise markets in the most expensive cities, by the largest degree,” said Bray. “In the current environment, sales have plummeted, and construction starts are slowing (if not coming to a near halt). The ongoing housing crisis is expected to worsen as a result, with regions like the Greater Toronto Area (GTA) expected to be hit the hardest.”

According to Build Force Canada, employment in the residential sector is forecasted to decline by more than 11,000 workers – or approximately 5% of the 2021 workforce – as demand for new home construction recedes. The non-residential sector helps to offset this; however, the skills need to be transferable, and location plays a key role. Quebec and B.C. will also see large drops in workforce, with a significant decline in Quebec non-residential expected as well.

Even in the best-case scenario, housing needs, infrastructure challenges, and the lack of skilled labour in the market are on a collision course to create a massive construction cost headache – or hangover.

Marlon Bray, senior director of cost consulting & project management, Altus Group

Labour costs are not expected to decrease; union agreements in addition to the increased cost of living mean there is little wiggle room. Material costs have stabilized (albeit higher than pre-pandemic) with some reductions, but nothing significant on an overall project scale.

Bray said the industry will likely see a reduction of overhead and profit as companies adopt lean operational models. To insulate profit margins, some construction trades will reduce their labour force and focus on recreating productivity for the inevitable resurgence in residential construction.

Housing development is expected to slow outside of Calgary and Halifax in 2024. However, the infrastructure/institutional market (including transit and social investments) will remain robust for the foreseeable future in Ontario, Atlantic, and Alberta regions – and to a lesser degree in B.C.

Mid-term: 2025-2026

Interest rates are expected to begin their decline in 2024, at which point condominium sales will likely recover. By this time, we should also see increased momentum in purpose-built rental development, with credit to government-led incentives and an increase in infrastructure spending.

As sales increase, the construction market could become flooded with development projects, especially in regions like Toronto. There are potentially 90,000 condominiums on deck, ready to go out for sale over the next few years in the GTA, along with 30,000 rentals that should be approved and ready to go (with even more moving through the system). 

“In simpler terms, we may see the construction industry shift from 2nd gear to 8th gear in the span of 6 to 9 months,” said Bray.

He explained that success in this mid-term period will hinge on timing the market and beating the rush, taking a deal, and hitting the ground running. This kind of environment is all about relationships, rather than competitive tendering. 

“The lowest bid is not always the best choice; rather, it’s about selecting the right person who can get the project finished,” said Bray. “This sentiment applies to trades as well – pick the right owner, because getting paid should be the priority in a high-interest environment.”

He added that when considering private sector construction costs, it’s also important to recognize that time is an exceedingly important factor in the overall cost of any project. Slow construction timelines (and delays) translate to higher trade, interest, and overhead costs, as well as the loss of opportunity. Within a construction site, “too many white hats” is often a bad sign for coordination and efficiency. 

Bray says the most efficient construction sites are typically those that have leaders and decision-makers in more limited quantities. The presence of too many “cooks in the kitchen”, so to speak, can become more of a productivity bottleneck than an asset. 

“In the world of development, the speed at which decisions are made is a key determinator of profit potential, and if you have the right people, they know how to get things done,” said Bray.

Altus expects the mid-term to endure some serious turbulence. Labour demand is likely going to exceed available supply in 2026; most acutely in Ontario, B.C., and Nova Scotia.

The long-term outlook

In the worst-case scenario, the “wheels may come off the hypothetical development freight train” and we could see double-digit escalation over the long-term, predicted Bray. 

“Even in the best-case scenario, housing needs, infrastructure challenges, and the lack of skilled labour in the market are on a collision course to create a massive construction cost headache – or hangover,” he said. 

When it comes to the housing crisis, Bray said the biggest challenge won’t be policy, it’s the shortage of skilled labour. 

He explained that in the long term, we are likely to find ourselves losing the demand versus supply fight, and costs may continue to escalate while the housing crisis intensifies. 

“The fix? It’s a complicated issue, but the development of a national housing plan that is focused on tangible outcomes and the continued removal of red tape and bureaucracy would be a step in the right direction,” he said. 

Bray believes that if we don’t make major changes to the market now, it’s going to become expensive to build anything, anywhere. He noted that innovation is required; modulization, building information modelling (BIM), and artificial intelligence (AI) need to be applied across the industry. Moreover, we need to find a way to better attract and retain skilled labour. 

“Trade workers build homes that house families and foster communities – this is critical and honourable work that should not be minimized, but celebrated and propped up, now more than ever,” said Bray.

Transferring ownership of a construction business is no simple task. 

It’s a unique industry based on relationships, projects pipelines and processes. Financial services firm First West Capital has in-depth knowledge of the construction sector. When navigating a business sale, their goal is to ensure a fair deal that rewards the owner and sets up the new one for success. 

One of the most complex tasks is answering a deceptively simple question: What is a construction business worth? 

Construction is project-based

Geoff Devereux, a director at First West Capital, explained that while equipment, real estate and other assets are part of this equation, unlike other industries, construction is mostly a project-based business. The common refrain is that you are only as good as your next project. Most construction businesses can produce a forecast of the next six to nine months based on what projects are in the queue.

“But after that it just falls off a cliff and it’s really tough to estimate how things are going to be,” he said. “Even businesses that have been in the industry for 20 years, they’re still very much averse to thinking about multi-year forecasts not based on an actual pipeline. And so figuring all of that out when you’re buying a business is going to be pretty critical to its value.” 

This is often why valuation multiples tend to be a bit lower than other sectors that aren’t subject to the project dynamic. Having a diverse portfolio of projects, sticking with work that your team is experienced with and cultivating relationships with multiple clients are ways to mitigate some of these risks and maintain a business’s value. 

Finding the hidden value

While important, project value isn’t everything. 

Steve Chen, vice president and head of First West Capital, explained that often construction businesses overlook some of their biggest assets for buyers. 

“When we are talking to construction companies — could be trades or subtrades or whoever — they are always talking about their pipeline, saying ‘these are our customers, this is our pipeline’ and we find a lot of value in that for sure, but I think that they undersell the processes, systems and controls that they have built internally,” said Chen. 

How bidding is organized, project management, software systems and many other factors can be a huge in determining the value of a company. First West Capital added that this is especially true of companies with strong estimating offices that are pragmatic and realistic in their work. 

“A lot of companies do these things well. My two cents is that you should be talking about all these processes and systems that you have put in place and how they have contributed to the ongoing profitability and success of the business,” said Chen.     

Thinking beyond price

Chen added that coordinating ownership changes is about more than money. He believes the early conversations should also include planning how the transition will create success for both parties going forward. 

“At the end of the day there is going to be a valuation that includes something paid now and something that gets paid over time,” he said. “If  you just focus on what’s paid today, no matter how well you structure it, you’re probably not going to get the amounts that are paid later. The business is not going to be successful or the projects will fall off when customers aren’t happy.”

Chen encouraged companies thinking of selling to make sure that good systems and processes are in place that will set the business up for ongoing success after ownership changes hands and key people might not be in place. 

He also stressed the importance of understanding who an ideal buyer might be. It could be a competitor down the street, members of your own management team or a large company on the other side of the country who wants to expand into your market. 

“Identify who your ideal buyer is, why they want your business and what it would take to make them successful,” he said. “If you can do that, you’re maximizing your dollars.”

Common pitfalls 

While it may be tempting to try and simplify the process with a handshake deal, Devereux cautioned owners and buyers from avoiding the details. 

“What we sometimes see is an existing owner and several key employees show up at our door with an agreed upon price but not enough work has been done to support the valuation,” he said. “Then things get bogged down because as soon as you dig in, everyone’s expectations get blown apart and things become contentious.” 

While he noted that there can be some hesitation to include consultants, high quality ones exist and can create a deal that is a win for everyone. 

“Typically there is some contingent compensation or transition period so the deal is going to close and then you’re going to have to still work together,” he said. “And if you’re feeling like you just got sort of whatever short end of the stick, suddenly all that cooperation gets a lot tougher.”

Mary Liu, an associate director at First West Capital, believes that structuring a buyout can be complex and many owners tend to avoid advisors, instead opting to keep things in the company. 

“A lot of that work ends up getting done in-house by having these conversations with their more senior employees and thinking about what kind of home equity can be borrowed to buy out a business,” she said. “So they’ve done it in a very grassroots kind of way and instead of seeking professional help on that and I think  because of that, they’ll tend to leave some money on the table.”

If you are thinking about transferring ownership of your construction business, connect with First West Capital’s team to see if they can help your journey. 

Listen to the episode:

It’s not breaking news in the construction sector that construction costs have gone up.

Canada’s residential construction price index has soared 51% since the start of the pandemic, putting new pressure on home prices amid a severe housing affordability crisis. 

Compared to 2017, residential building costs are now 79% higher in Calgary, 65% higher in Edmonton, and 57% higher in Metro Vancouver. For the 11-city Canadian composite, the comparable increase is 73%.

The deeper question is why these costs have skyrocketed in recent years. SiteNews Editor Russell Hixson stopped by the Free Lunch by The Peak podcast to share how much construction costs have gone up and what the major forces behind these increases are.

“Without question, the number one thing that keeps builders up at night … we are going off a demographic cliff,” said Hixson, highlighting the impact worker shortages are having on rising costs. “You have a lot of people who have been in the trades , they are highly skilled workers, they are electricians, project managers, carpenters, and they are getting to retirement age. And there are not as many people going into the industry.”

According to BuildForce Canada, overall hiring requirements in the industry are expected to exceed 299,000 by 2032 due to the retirement of approximately 245,000 workers (20% of the 2022 labour force) and growth in worker demand of more than 54,000. They are predicting a possible retirement-recruitment gap of more than 61,000 workers.

To compete for this smaller pool of workers, the industry has had to offer better wages and more benefits. And many builders are having to turn down work. According to the Independent Contractors and Business Association’s most recent survey in B.C., in 2025, the industry’s average hourly wage – before any bonuses, benefits, profit-sharing or overtime – will reach $37.51, or about $78,000 annually.

Hixson also spoke about the challenge builders have acquiring materials and how those costs have also gone up due to supply chain disruptions and high demand. Some of these disruptions include COVID-19 causing reduced mill capacity, storms cutting off highways in B.C., port strikes, the war in Ukraine and more.

When asked by the hosts what can be done to address these challenges, Hixson spoke about the movement to enact prompt payment, contracts that encourage more project collaboration, technology that can reduce labour demands and more.

“More and more what we are seeing is that builders on a project need to work together to share risk,” said Hixson. “There is always going to be volatility. Stuff is going to happen. If you just try and gouge each other and beat each other, everyone is going to lose. Builders will go bankrupt and you won’t have that partner to work with in the future.”

Key Takeaways:

• The US$3.5 billion deal includes Tricon’s multi-family development platform in Toronto.
• The company plans to complete its US$2.5 billion development pipeline of 5,500 new apartments in Canada.
• The company’s single-family business in the U.S. has approximately 2,500 homes under development. 

The Whole Story:

Blackstone, the world’s largest alternative asset manager, plans to purchase Tricon Residential in a US$3.5 billion deal.

Blackstone and Tricon Residential announced that they have entered into an arrangement agreement under which Blackstone Real Estate Partners X together with Blackstone Real Estate Income Trust, Inc. (BREIT) will acquire all outstanding common shares of Tricon. The transaction price represents a premium of 30% to Tricon’s closing share price on the NYSE on January 18, 2024, the last trading day prior to the announcement of the Transaction, and a 42% premium to the volume weighted average share price on the NYSE over the previous 90 days, and equates to a $3.5 billion equity transaction value based on fully-diluted shares outstanding. BREIT will maintain its approximately 11% ownership stake post-closing.

Tricon provides rental homes and apartments, along with resident services through its tech-enabled operating platform and dedicated on-the-ground operating teams. Tricon serves communities in high-growth markets such as Atlanta, Charlotte, Dallas, Tampa and Phoenix as well as Toronto, Canada. In addition to managing a single-family rental housing portfolio, Tricon has a single-family rental development platform in the U.S. with approximately 2,500 houses under development, as well as numerous land development projects that can support the future development of nearly 21,000 single-family homes.

The company also has a Canadian multifamily development platform that is building approximately 5,500 market-rate and affordable multifamily rental apartments.

“We are proud of the significant and immediate value that this transaction will deliver to our shareholders, while allowing us to continue providing an exceptional rental experience for our residents. Blackstone shares our values and our unwavering commitment to resident satisfaction, and we look forward to benefitting from their expertise and capital as we partner in building thriving communities,” said Gary Berman, president & CEO of Tricon.

Under Blackstone’s ownership, the company plans to complete its US$1 billion development pipeline of new single-family rental homes in the U.S. and US$2.5 billion of new apartments in Canada (together with its existing joint venture partners). The company will also continue to enhance the quality of existing single-family homes in the U.S. through an additional US$1 billion of planned capital projects over the next several years.

“Tricon provides access to high-quality housing, and we are fully committed to delivering an exceptional resident experience together,” said Nadeem Meghji, global co-head of Blackstone Real Estate. “We are excited that our capital will propel Tricon’s efforts to add much needed housing supply across the U.S. and in Toronto.”