The province is projecting a $4.2-billion deficit in 2023-24, declining to $3 billion in 2025-26.
The budget has a refreshed housing plan with $4.2 billion in operating and capital funding over the next three years to build thousands of new homes as well as funding for new transit-oriented development.
$480 million will be spent over three years to support Future Ready’s work to break down barriers to post-secondary training. The plan’s details are expected this spring.
$77 million will go towards up natural-resource permitting.
Starting April 1, 2023, the carbon tax will increase by $15 per tonne each year until it reaches $170 in 2030.
$1.1 billion will be spent over the next three years to fight climate change by building more climate-resilient communities.
The province said that it targets improving health and mental health care, creating more affordable housing, growing a clean economy and delivering more help with costs – especially for those most affected by global inflation.
“B.C. is a great place to live, but people are facing real challenges – not only from global inflation and the pandemic, but from ongoing and systemic challenges,” said Katrine Conroy, minister of finance. “This year’s budget helps protect people who can’t afford today’s high prices and takes action on the issues people care about, like finding affordable housing and accessing health care.”
Response from the province’s construction sector was mixed as many questioned if it will address the most critical issues facing builders.
BC Construction Association (BCCA)
Big spending on infrastructure did not impress the BCCA which said the construction industry is now left wondering what it means to have BC’s government in its corner.
“While we welcome the investment in infrastructure and relish the opportunity to build world-class structures that serve our communities, we know that getting it done is not as simple as adding a multi-billion-dollar budget line-item,” the group said in a release. “Funding infrastructure is important, but it isn’t a golden ticket with a guaranteed outcome. We are not building a brighter future for all British Columbians if we continue to ignore the jeopardy of BC’s more than 25,000 contractors and the 171,000 tradespeople who work for them.”
They also pointed out the province’s lack of movement on prompt payment legislation, noting that builders are working longer and harder than ever before without any guarantee that they will be paid.
“Non-payment and late payment is out of control, right alongside skyrocketing interest rates, cost of materials, and cost of labour,” wrote the group. “The result is that investment in infrastructure is becoming a catch-22 for all but BC’s largest contractors, whether open shop or union. Without complementary measures to mitigate the extreme financial risks of late or non-payment, a typical company could go broke building their share of the $4.2BN budgeted for housing. Brutal disregard of contract and payment terms plus skyrocketing costs of borrowing are bringing BC’s construction industry to the breaking point. The result is that contractors government needs might not be there to deliver.”
They called prompt payment legislation the single biggest thing government could do for construction businesses.
The group added that the industry also needs express-qualification for internationally educated and trained tradespeople, as well as faster permitting processes.
Independent Contractors and Businesses Association (ICBA)
Jordan Bateman, vice president of communications for ICBA, wrote that while government spending reached an all-time high, the provincial debt jumped to more than $100 billion for the first time in B.C. history, and $11 billion in deficits are expected over the next three years.
Bateman noted that despite higher than expected previous budget surpluses from recalculating corporate income taxes, the budget offered no tax cuts for entrepreneurs, employers and job creators dealing with escalating financial pressures.
“On the infrastructure side, the NDP touted record levels of capital spending,” said Bateman. “Unfortunately, that is in part due to the monopoly they have given their building trades union allies on several high-profile projects, which have inflated construction costs and frozen out of these projects 85% of construction workers in BC.”
Bateman wrote that the 65-year-old Taylor Bridge over Peace River was again left out of the budget, the Massey Tunnel replacement was scheduled for 2030, and there were funds targeted toward improving operations or infrastructure serving B.C. ports, a key supply chain chokepoint and as we experienced following the record floods in the fall of 2021, a major risk to our ability to trade goods.
He also argued that the province’s housing approach isn’t enough to address the housing crisis as housing starts are forecast to drop into 2024.
“Even with an infusion of government cash, housing supply is not keeping up,” he said.
While he did note that efforts to reduce natural resources permit backlogs could help potential, the ICBA would prefer they cut red tape rather than hire more bureaucrats.
“Canada generally, and B.C., has lost ground when it comes to attracting investment into our economy, which is no small reason why the national economy, according to the Organisation for Economic Co-operation and Development, is expected to be the worst performer among the 38 most advanced economies over the next decade,” he wrote. “This budget does nothing to change that, and in fact ignores the issue altogether.”
BC Building Trades
The province’s building trades unions were supportive of the budget.
“The BC Building Trades applauds Premier David Eby and Finance Minister Katrine Conroy for historic infrastructure investments in Budget 2023. The new budget commits a record $37.5 billion to capital spending over three years. That’s a $10.1 billion increase from Budget ’22,” they said on social media. “We look forward to seeing our members at work on the many crucial capital projects to come!”
Electrical Contractors Association of BC (ECABC)
ECABC President Matt MacInnis gave the budget a cautiously optimistic response.
“For Electrical Contractors Association of British Columbia’s membership, the budget is OK, and there are program-level details that will roll out over the year which are very important for electrical contractors,” wrote MacInnis in a social media post.
He praised the $37.5 billion in capital spending over the next three years across a range of project types: housing, hospitals, schools, transit – all of which will have electrical needs.
However, on the Future Ready plan, MacInnis is waiting for the details.
“Government has prioritized addressing climate change and green jobs,” he wrote. “We’re looking for a clear recognition – and allocation of resources – that electricians, line technicians and other electrical workers are foundational to British Columbia’s low carbon future. A climate change strategy will only be as strong as the expertise and workforce available to build it.
Progressive Contractors Association (PCA)
Paul de Jong, PCA president, said the province could have made better choices to protect residents and make infrastructure investments go further.
He noted that while the budget boosts capital spending to a record $37.5 billion over three years, projects are getting over budget.
“If the B.C. government is truly concerned about affordability, its labour policies should encourage competition to help reduce infrastructure costs,” said de Jong. “Scrapping the flawed CBA would go a long way in keeping project costs down, and making life more affordable for each and every taxpayer in this province.”
De Jong stated that the budget provides $480 over three years for a new skills training program that builds on the Future Ready plan. PCA supports additional funds for skills training and is hopeful there will be broad consultation before program details are announced in the months ahead.
“We look forward to providing our input on how to address B.C.’s skills shortage,” added de Jong. “Any new programs should support employers and workers through parity of esteem initiatives that help put the skilled trades on equal footing with all other academic pursuits.”
Key Takeaways:
The next 12 months could bring stable commodity pricing as supply disruptions have eased.
Owner-furnished, contractor-installed (OFCI) arrangements, avoiding volatile materials during design and acquiring hard to find items like HVAC units early on have been some of the ways the industry has been dealing with high prices and long lead times.
Economists predict some slowdown in the residential sector but this could be offset by high immigration targets set by the federal government.
The Whole Story:
The Canadian construction industry could have a year to catch its breath when it comes to material pricing.
Global construction consultancy firm Linesight released new data indicating the likely leveling out of prices in key commodities markets as supply chain disruptions ease and logistics return to a more normalized level. Linesight provides cost, schedule, program, and project management services to a multitude of sectors including life sciences, commercial, data centers, high-tech industrial, residential, hospitality, healthcare, and retail.
“Barring any major world events, it should be steady as she goes,” said Padraig Leahy, a director at Linesight. “Hyper inflation on commodity pricing is moderating. We see stability for the next 12 months.”
Leahy is a chartered quantity surveyor with over 30 years of industry experience in cost management. Essentially, he is an expert in construction economics.
“There was a tsunami that hit us in relation to COVID,” said Leahy. “All the shipping got out of position, cost to ship a container quadrupled. It was out of this world but that’s settled down. It’s slightly offset by the cost of fuel and labour went up but supply chains are back in kilter.”
Canadian lumber prices have continued along a slight downward trend over the past quarter as demand has remained subdued. Due to a high dependence on U.S. exports (85% of the US softwood imports are sourced from Canada), prices are linked to the US housing market, which is facing a prolonged downturn.
Hauler strikes and a shutdown of major plants due to fires reduced cement supply in mid- to late-2022. Supply has gradually recovered, and stocks have been replenished while intensive demand from the housing sector has subsided.
Although demand from the residential sector has subsided, energy prices have contributed to the high price of concrete blocks and bricks, which may continue to rise thanks to elevated oil and gas prices over the next quarter.
Canada produces roughly 50% of the North American steel supply, but with supply-side issues easing and inventories stable, demand-side uncertainty has weakened prices.
Anticipation of a global recession has hurt copper demand, though prices have picked up partly owing to political and social unrest in significant sources like Chile and Peru.
Adjusting to high costs and wait times
Leahy noted that clients have been working with Linesight during the past few years to choose the best products with the least amount of volatility for a project’s design. They are also budgeting in advance for significant commodities like electrical equipment and large HVAC equipment that they know they will eventually need so they can lock in price and availability.
He added that some have done master service agreements with mills or steel manufacturers to guarantee materials. But he noted that this is typically only done by large companies on large projects.
Another strategy has been for owner-furnished, contractor-installed (OFCI) arrangements.
“You have owners purchasing equipment in anticipation of a project so their contractor can install it later so projects don’t get delayed due to one piece of equipment,” said Leahy.
Hyperinflation events in the 70s and 80s
Just how unprecedented are these economic conditions? Leahy the last major hyperinflation event for Canada in recent memory was in the late 1970s and early 80s.
According to economists at TD Bank, in the 70s and 80s, there were two distinct inflation episodes that led to double-digit price increases in Canada. One from 1971 to 1976 and another from 1977 to 1983. In both cases, food and energy price shocks were the trigger. In the first episode, adverse weather in 1973 caused food prices to jump 18.4%. And following the Yom Kippur war in that same year, a quadrupling in the world price of oil caused a massive rise in gasoline prices. By December 1974, with Canadian inflation hitting a peak of 12.7%, the economy entered recession.
The second inflationary spike was an echo of the first. In 1978, meat prices skyrocketed by 70%, causing the overall food index to rise by 20.2%. Then the Iranian Revolution caused the 1979 Oil Crisis, which was followed by the Iran-Iraq war of 1980. This resulted in another doubling in the price of oil. Canadian gasoline prices ended up rising by 45.5% in 1981, which pushed Canadian CPI to an all-time high of 12.9%.
Residential slowdown likely
Leahy noted that while commodity pricing looks to be normalizing, residential construction will likely slow in 2023 due to overall economic sentiment and an increase in interest rates. But the Canadian government has announced a number of major infrastructure projects including road and light rail work in major metropolitan areas, which should help offset some of the slowdown in other areas of the construction industry.
“Canada has some oddities,” he said. “You have half a million people coming to the country from government immigration policy which will create demand so there could be a balance there as well. It might not hit as hard and be slightly offset.
A chart from Linesight’s Canada Commodity Report – Q4 2022 shows prices beginning to stabilize. – Linesight
Key Takeaways:
Teck plans to reorganize of its business into two independent, publicly-listed companies: Teck Metals Corp. and Elk Valley Resources Ltd. (EVR).
Teck also reached agreement with its steelmaking coal joint venture partners and major customers, Nippon Steel Corporation and POSCO, to exchange their minority interests in the Elkview and Greenhills operations for interests in EVR.
Teck will seek shareholder approval of the separation at its annual and special meeting of shareholders in April.
The Whole Story:
Teck Resources is getting a spinoff.
The Canadian mining company announced the reorganization of its business into two independent, publicly-listed companies: Teck Metals Corp. and Elk Valley Resources Ltd. (EVR)
Company officials stated that the separation will create two resource companies and provide investors with choice for allocating investment between two businesses with different commodity fundamentals and value propositions.
Officials explained that Teck Metals will be growth-oriented, with premier, low-cost base metals production, a top-tier copper development portfolio and a disciplined capital returns policy. Elk Valley will be a high-margin Canadian steelmaking coal producer, focused on long-term cash generation and providing cash returns to shareholders, with significant equity value accretion potential. They added that both companies will remain committed to strong environmental and social performance.
“This transformative transaction creates two strong, sustainable, world-class mining companies committed to responsibly providing essential resources the world needs,” said Jonathan Price, CEO, Teck. “Both Teck Metals and EVR have high-quality operating assets and strong financial foundations, with talented and dedicated employees, committed to ensuring safe and responsible operations. The transaction simplifies the portfolio of each company, allowing for strategic and financial focus and the ability to pursue tailored capital allocation strategies. It provides investors with choice in response to the evolving investment landscape, and establishes a pathway to full financial separation of the two companies over time.”
Sheila Murray, chair of the Teck’s board of directors, noted that the transaction is the culmination of a comprehensive review to determine the best path to realize the full potential of the two businesses, while at the same time ensuring ongoing responsible management and operation for the long term.
“We are confident that pursuing this plan will position both businesses for even greater success, allow shareholders to optimize their exposure to the different underlying commodities, and support a sustainable future for the benefit of employees, local communities, and Indigenous peoples,” said Murray.
Details of the Separation
The separation is structured as a spin-off of Teck’s steelmaking coal business by way of a distribution of EVR common shares to Teck shareholders. Teck Metals will retain a substantial interest in steelmaking coal cash flows through a transition period in the form of an 87.5% interest in a gross revenue royalty and preferred shares of EVR. Teck Metals will receive quarterly payments consisting of royalty payments and preferred share redemption amounts that will in aggregate equal 90% of EVR free cash flow.
Teck shareholders will receive common shares of EVR in proportion to their Teck shareholdings at an exchange ratio of 0.1 common share of EVR for each Teck share and approximately $0.39 cash per share for an aggregate of $200 million in cash. Shareholders will be able to elect to maximize the amount of cash or common shares of EVR they receive, subject to proration, through a Dutch auction election process. Details of the election will be set out in the management proxy circular to be provided to Teck shareholders.
As part of the separation, Teck will change its name to Teck Metals Corp. and continue to be listed on the Toronto and New York stock exchanges. EVR has applied to have its common shares listed on the TSX.
The Nippon Steel and POSCO Transactions
Teck has also reached agreement with its steelmaking coal joint venture partners and major customers, Nippon Steel Corporation (NSC) and POSCO, to exchange their minority interests in the Elkview and Greenhills operations for interests in EVR. As a result, EVR will own 100% of its steelmaking coal operations.
“This significant participation by two of the world’s largest steelmakers highlights the long-term, critical importance of high-quality steelmaking coal in order to reduce emissions and build essential infrastructure globally,” said Price. “We would like to thank our long-term partners NSC and POSCO for their continued support of the business. Their participation as shareholders of EVR is a testament to the strong outlook for the business.”
Teck will seek shareholder approval of the separation at its annual and special meeting of shareholders expected to be held in April.
The separation is expected to be implemented through a plan of arrangement under the Canada Business Corporations Act=.
Home building saw a rocky start to 2023.
According to Canada Mortgage and Housing Corporation (CMHC), the standalone monthly seasonally adjusted annual rate (SAAR) of total housing starts for all areas in Canada declined 13% in January (215,365 units) compared to December (248,296 units).
The SAAR of total urban starts declined 16%, with 191,491 units recorded in January. Multi-unit urban starts declined 20% to 146,267 units, while single-detached urban starts increased 3% to 45,224 units.
The rural starts SAAR estimate was 23,874 units.
The trend in housing starts was 259,412 units in January, down 4% from 269,781 units in December. The trend measure is a six-month moving average of the monthly SAAR of total housing starts for all areas in Canada.
“Both the Monthly SAAR and the six-month trend of housing starts declined nationally in the first month of 2023, with SAAR of housing starts hitting its lowest level since September 2020,” Aled ab Iorwerth, CMHC’s deputy chief economist. “Among Toronto, Montreal and Vancouver, Montreal was the only market with increases in total SAAR housing starts in January, up 36%. Toronto declined 52% while Vancouver declined 14%, which contributed to the overall monthly decline in SAAR housing starts for Canada.”
Established in 1946 in Moncton, New Brunswick, Hub Equipment moved its operations into Southern Ontario in the 1950s and is recognized today as a leading provider of specialized heavy equipment, offering brands such as CAT, Volvo, Hitachi, John Deere, Komatsu and more.
“We are thrilled with the opportunity to be a part of the Cooper organization from coast-to-coast, and to grow our legacy with a diverse, larger and rapidly growing organization that shares our common values and vision,” said Hub President Tom Stevenson.
Hub Equipment will operate as a specialty division of Cooper under the leadership of Stevenson and Raegan Fatouros, general manager.
“Hub’s prime location and facility in Etobicoke intensifies our coverage in the important Greater Toronto market and their strong presence in Alberta enhances our ability to serve customers better in Western Canada,” said Darryl Cooper, president & COO, Cooper Equipment Rentals.
Cooper CEO Doug Dougherty said he was pleased to welcome Hub Equipment into the Cooper family.
“The Hub family have built a fine business with a reputation for quality and integrity in the construction equipment industry,” he said. “Consistent with the growth vision for Cooper Equipment Rentals, this acquisition is a further step towards Cooper firmly establishing itself as the only Canadian-owned, nationally positioned, rental company.”
Based in Ontario, Trinity provides services to major national and regional telecommunication, utilities, power, and internet service providers. The total consideration for the transaction is being funded 90 per cent through cash on hand, with the balance coming from Bird common shares. The transaction is expected to be accretive to earnings per share in 2023. All transaction agreements have been completed, and the transaction will be effective at 12:01 a.m. on February 1.
Trinity specializes in underground, aerial, commercial inside plant, and multi-dwelling unit installations. According to Bird, these self-perform capabilities enable cross-selling opportunities to Bird’s national client base across multiple sectors.
The company said vertical integration in its buildings business is achieved with Trinity’s commercial inside plant and multi-dwelling telecom, fibre, and security expertise. Together with Bird’s Centre for Building Performance, Bird will be equipped to provide a comprehensive, integrated suite of smart and sustainable building services for major developers across sectors.
The company added that Trinity’s capabilities complement Bird’s electrical service offering and serve as a growth catalyst for Bird’s utilities portfolio, currently active across Canada and in select U.S. states.
“Trinity’s scalable operations align with our tuck-in M&A strategy to seek out high growth potential businesses with strong margin and cashflow profiles. To that end, we will progressively grow the business throughout our core markets, consistent with our successful track record on recent acquisitions,” said Teri McKibbon, president and CEO of Bird. “We are pleased to welcome Trinity’s team of industry experts to Bird and are excited to work closely as we continue to grow our portfolio of high-demand specialty services.”
Long approval times, high costs and confusing systems have long plagued developers trying to get projects off the ground. The latest municipal benchmarking report from the Canadian Home Builders’ Association shows which major markets are getting better and which ones still need improvement. From their list of 21, here are top five jurisdictions to build housing in Canada.
5. Regina, Saskatchewan
While a fifth place finish is commendable, it’s important to note that Regina was in first place the last time this study was done. The city boasted a 4.2-month approval time. However, cities higher up on the list have begun modernizing their systems significantly.
Regina has numerous features enabled including the ability to appeal land use decisions, mandated timelines for appeal decisions to be rendered and others. However, many municipalities bolstered their rankings by offering additional features.
The study gave strong praise to the city for its Development Standards Manual which offers a comprehensive, digestible guide to the city’s application process and procedures. According to the study, the manual is written in well-structured language and uses flow charts that provide the reader with a clear sense of the stages and processes. In addition, it covers a range of topics that are pertinent to the development process, such as land-use policy considerations and report requirements.
4. London, Ontario
At ten months, London had the shortest average approval period of any Ontario city in the study. This is making it a popular spot for homebuyers looking to leave larger cities.
London has been growing at record pace over the last five years, with the population rising by 10 per cent between 2016-2021. This is led by an influx of residents leaving the Greater Toronto Area to make their money go further. Recent census data shows the London CMA is the fastest growing region in Ontario and the fourth-fastest growing nation-wide only behind Kelowna, Chilliwack and Kamloops.
As a result, its labour market is booming. Statistics Canada data shows employment in the region has gone up 20 per cent since 2018.
3. Calgary, Alberta
2021 view of downtown Calgary from Centre Street Bridge
One of the big reasons people are leaving other major metro areas for Alberta is affordable housing. The city saw an average approval time of 5.4 months. The study noted that Calgary has one of the fairest ratios of charges imposed on low-rise development and high-rise development at $19 per square foot and $21 per square foot, respectively. On average, high-rise charges in the study municipalities are 80 per cent higher per square foot than for low-rise.
The study noted that Calgary has seen significant improvement since the last time cities were ranked. Approval times were down from 12 months in 2020. The city improved its ranking in this area from 9th to 5th place since the 2020 Study.
The city also took the unique step of committing a $100 million in incentives for converting vacant office space to residential uses.
2. Charlottetown, P.E.I
This island town’s high level of accountability earned it second place in the rankings. It had an average approval time of 3.4 months – the lowest of all the cities in the study.
The city also benefited from provincial action which requires municipalities to think carefully about how they grow. The Prince Edward Island Planning Act requires that all municipal official plans contain policies on future land use, management and development for a time horizon of no more than 15 years. As well, the PEI Planning Act requires that all land-use bylaws be reviewed every 5 years.
1. Edmonton, Alberta
When it comes to developing housing in Canada, Edmonton is king.
The CHBA gave them a score of 91 per cent, earning them the top spot on the list. While its average approval time wasn’t the best (7.2 months), other strong features boosted its ranking.
City officials say they have spent a great deal of effort making home-building rules easy to navigate, automating most development permits and banning single-family-home only zones. The city’s online portal services have advanced functionality – it is possible to apply for pre-application meetings for rezoning, subdivision and development permits. There are also online services for submitting various actual planning applications, in addition to building permits. They were also the first jurisdiction in Canada to cut minimum parking requirements.
And they aren’t done yet. The city is in the middle of the first major overhaul of its zoning bylaws in sixty years. The goal is to reduce the number of zones and land uses to make the development process even clearer and easier.
These changes come at the perfect time. From 2016 to 2021, Edmonton saw its population grow from 964,000 to more than a million.
Key Takeaways:
Doosan has changed its name to DEVELON following the sale of Doosan Infracore to HD Hyundai.
More information about the new branding will be revealed this March at CONEXPO.
The company still plans to continue manufacturing and supporting construction equipment in North America with a focus on sustainably-powered equipment.
The Whole Story:
The global orange construction equipment brand known as Doosan will now be called DEVELON. Under the new brand name, the company will continue providing products for the construction equipment and infrastructure industry.
Work began to identify a new brand name to replace Doosan following the August 2021 sale of Doosan Infracore to HD Hyundai (formerly Hyundai Heavy Industries Holdings Co. HHIH). The company explained that the name DEVELON was chosen to convey the company’s drive to develop onward to bring innovative solutions to the construction equipment industry through technological transformation and the development of exceptional equipment and services.
“We believe the new DEVELON brand will help us build on the success we’ve had in North America over the past 30 years and throughout the world for more than 80 years,” said Todd Roecker, vice president of growth initiatives.
DEVELON will continue to focus on manufacturing construction equipment to build critical infrastructure. DEVELON officials noted that efforts will also be placed on advancing sustainable development through alternative energy sources of power for construction equipment.
New Brand to Debut at CONEXPO
Company officials said the new name announcement is the first of many in a series of steps to launch the brand. Visitors to CONEXPO-CON/AGG in March will see the next phase of the launch with newly branded construction equipment in the outdoor DEVELON exhibit. This will include the latest developments in the Concept-X autonomous equipment solution and live demonstrations at the outdoor exhibition in the Festival Grounds lot.
“Our commitment to the construction equipment industry and advancing new technologies has never been stronger than it is today,” says Roecker. “DEVELON anticipates changes in the industry and prepares solutions to address these challenges. This is evident by our ongoing development of the world’s first autonomous jobsite solution — Concept-X — and the work we are doing with alternative energy sources like electricity and battery packs for our mini excavators.”
After CONEXPO, continued efforts will be made to advance the brand at the local dealer level through updates to signage and machine decals. Customers are likely to begin to see newly branded machines at their local DEVELON dealerships and on job sites as early as the end of Q2 2023.
Focusing on North America
In North America, DEVELON stated it will continue supporting its more than 180 dealer locations in the U.S. and Canada. DEVELON North American operations will remain headquartered near Atlanta, in Suwanee, Georgia, where the company continues to offer a training center for dealership service technicians.
The company will maintain parts availability through its two regional parts distribution centers: one in Atlanta and a second in the Pacific Northwest. A customization plant in Savannah, Georgia, will still play a key role in supplying machines to DEVELON dealers and customers: getting products into the hands of customers faster, with the configurations they need for their applications.
“Our dealers and customers should expect the same strong support from DEVELON in the future,” says Roecker. “We are committed to the long-term success of the new brand and ensuring our customers have the support they need to be successful. DEVELON makes best-in-class equipment, excelling in performance, durability and reliability. That commitment will remain constant.”
DEVELON will continue as a subsidiary in the Hyundai Genuine group alongside Hyundai Construction Equipment (HCE). These two subsidiaries will remain independent construction equipment companies under HD Hyundai.
“We’ve grown our construction equipment offering in North America with our line of mini excavators and most recently the addition of dozers,” says Roecker. “These product expansions represent our goal of providing a full line of equipment for our dealers and our customers. We believe that this demonstrates our commitment to North America, and we look forward to continued growth here for many years to come.”
Key Takeaways:
B.C. is implementing a single application window to eliminate the need for multiple applications across ministries.
Decisions will be expedited by a dedicated cross-ministry team.
The strategy will prioritize Indigenous-led projects, BC Housing applications and multiple-unit applications
The Whole Story:
B.C. announced it is creating a “one-stop-shop” approach to provincial permitting to help speed up approvals and construction to build more homes.
“Every British Columbian deserves a safe and affordable place to call home. Unfortunately, this simply wasn’t a priority for more than a decade,” said Premier David Eby. “As we turn things around and start to build record levels of housing, we are taking action today to remove obstacles to constructing new homes that families desperately need.”
New strategy to streamline approvals
Currently, authorizations related to homebuilding in B.C. can require multiple provincial permit applications spanning different ministries with different processes. This includes permits related to riparian area approvals, water licences, transportation approvals, road rezonings, contaminated sites, and requirements for heritage inspections.
Officials say the province’s new strategy will streamline the process and create a single, co-ordinated approach to housing-related permits and authorization. They anticipate it will speed up the process and eliminate the need for multiple applications across ministries. While the single application window is being established over the coming months, permit and authorization decisions will be expedited through a cross-ministry team focused solely on processing housing permits. The Housing Action Task Force includes decision-makers, information technology systems, project managers and policy support teams working together to speed up processing.
Prioritizing developments
A co-ordinated provincial approach is also expected to make application reviews more streamlined for First Nations, which are consulted on each provincial authorization.
“Having dedicated resources and a cross-ministry team prioritizing housing permits means we can make significantly more progress on getting British Columbians the housing they need,” said Nathan Cullen, minister of water, land and resource stewardship. “Establishing a single-application approach is an investment that will deliver more housing for people faster, and this will also result in immediate and future benefits for the entire natural resources sector.”
To start the strategy, the province is creating 42 new full-time positions. It will prioritize the housing that most urgently needs to be built, such as Indigenous-led projects, BC Housing applications and multiple-unit applications. Priority will also be given to authorizations and permit approvals for housing projects in municipalities that are subject to the speculation and vacancy tax, because they have the greatest housing shortages, lowest vacancy rates and most demand for housing.
“Housing is a top priority for British Columbians and our government,” said Ravi Kahlon, minister of housing. “We are working with municipalities to get more housing built faster. At the same time, we recognize that as a Province we have work to do to speed up our approvals. This new permitting approach is an important step in providing the homes people need.”
Where B.C. ranks with red tape
The announcement comes just after a report was released by the the Canadian Home Builders’ Association (CHBA) which ranked municipalities based on the difficulty and cost of their development process.
On a list of 21 municipalities the report investigated, Vancouver ranked 12th, Surrey 13th and Burnaby was 17th.
The average time for a planning application to reach the approval stage in Vancouver was approximately 15 months, a moderate increase from the 13 months in the 2020 Study.
Despite this, the study noted that Vancouver has numerous good features enabled including a development guide showing required studies, requirement to review municipal plans on a regular basis and others. Vancouver is also one of the few municipalities to incorporate the ability for public comments to be submitted through their development application tracker.
The Surrey has average approval timelines at 13.8 months, just below the study-wide average of 13.9 months. The study praised the city for its robust electronic submission and payment capabilities, but noted its charges have increased substantially.
Despite making significant improvements since the last study, planning applications still take 20.9 months on average in Burnaby. This is the fourth highest approval timeline amongst the studied municipalities. The study noted that permits still must be physically mailed in and the city does not provide information on the status of applications, their location or historical data.
Key Takeaways:
The short term forecast, particularly for public and civil work, looks strong.
Inflation and long lead times on materials are expected to continue but might ease a bit.
Labour shortages are here to stay as expected.
Sustainability efforts, like electrification and the shift to greener energy sources are fueling projects.
Inflation and recession concerns are likely to impact some parts of the residential sector.
The demand for digitization and data continues to rise.
The Whole Story:
Few could have predicted that Russia would invade Ukraine, Elon Musk would buy Twitter and that inflation would soar in 2022.
While there’s no crystal ball to peer into for hints at how 2023 will go, we did the next best thing and asked as many construction leaders as we could about how they felt going into the new year. Generally, the industry is confident that despite some familiar challenges, the short-term forecast is looking rosy.
Orion Construction – (general contractor)
“We are cautiously optimistic,” said Josh Gaglardi, president of Orion Construction. “We are really hopeful to see some normalization and reduction in construction costs in the next 6-12 months as supply chains normalize a bit and demand for materials comes off a bit.”
He added that regardless of what’s going on in the private market, there is still extremely strong demand for labour and materials in public work.
“Demand will remain high this year so I am not too concerned about having work,” he said. “We have a firm footing to know where we are at and we can put together a strong gameplan.”
In 2022, Gaglardi saw the stickiness of ESG and believes in the coming year and years after that, the industry could see those trickle down effects from investors.
“In 2023 we have a handful of net-zero projects that we wouldn’t have had in years prior,” said Gaglardi. “We will see more solar panels, more sustainable initiatives, more consultation with First Nations groups for sure.”
Alltrade Industrial Contractors – (industrial)
Electrification is here and it’s poised to create shockwaves.
Kevin Ritzmann, senior director for Alltrade Industrial Contractors, said grid electrification will continue to increase both for new power generation with increased demand and for electric vehicle mandates across the country. He believes this will drive new investment in renewables across Canada and increase investment in provinces that are currently building renewables heavily – like Alberta, Saskatchewan, Quebec, and Ontario. This could also be bolstered by federal incentives which could slice the cost of renewable energy projects down.
“What’s interesting is we thought in Ontario that we had enough power but it looks like there is more demand and with Pickering Nuclear coming down, we need more investment in power generation,” said Ritzmann.
He added that major car manufacturers are anticipating EV regulations and investing big in new or renovated facilities.
2023 will also see continued investment in major transit infrastructure projects across Ontario, Quebec, and Alberta. And as new projects enter into design phases there will be a pipeline of future work across Canada (Ontario Line, Eglinton Crosstown West Extension, GO Regional Express Rail, Calgary Green Line LRT).
Alltrade continues to see shortages of tradespeople and long lead times on materials, making one’s planning and partners more important than ever. He doesn’t expect these challenges to ease significantly in the coming year. He noted that the U.S. is experiencing similar project booms and is also competing for talent and materials.
“We were seeing power transformers go from ten months to a year and half to as high as two years,” he said. “That’s a huge lead time.”
Naikoon Contracting – (homebuilding)
Josef Geluch, president of Naikoon Contracting, believes there may be some sunny skies before the storm.
“We are confident in our construction market and I feel that we are starting to see some indicators of settling for some of those supply chain issues,” he said. “It’s going to be very interesting and I will be on the edge of my seat to see how the year unfolds.”
However the later part of the year and going into 2024 could be rough for some parts of the sector, like low density housing. He said watching leading indicators like architectural work and build permit application volumes will be key to see into the future.
“2024 looks a bit concerning, but we are lucky to be in Vancouver as we have a bit of insulation here compared to the rest of North America,” said Geluch. “Everything is still firing on all cylinders for active construction. We are still building out a backlog from two, three, four years ago.”
He also highlighted the issue of municipal processing times as something that should be addressed.
“Bottlenecks and bureaucracy cause problems and it takes years and years to get a project off the ground,” he said. “There have been ambitious statements made by cities and the province to fix this. If that is possible, I don’t know, but it would be timely to do so. It might save us in subsequent years where the market might be soft.”
On the tech side, Geluch believes the industry is in the midst of its most exciting decade ever as digitization tools like BIM and VDC are becoming more widely adopted.
“It can allow you to see into the future more tangibly,” he said. “Leveraging digital assets into value propositions is gonna grow and be huge. It will change the way projects are managed. It’s nothing new but people have begun to figure out its true implementation.”
COWI Canada – (consulting)
Jesse Unke, vice president of COWI in Canada, believes that finding and retaining people will be the biggest issue.
“Going into 2023, I think a lot of my concern on the engineering side is finding and retaining people,” he said. “I think it is still a big concern for myself and my colleagues and people in the industry. If you are in consulting, law, contracting or anything that touches construction, retaining and attracting new staff is going to continue to be a challenge.”
He added that it’s no longer just a simple formula of compensation or opportunity that people are looking for. Company culture, and approaches to EDI, sustainability, remote working and technology are some factors that are retaining and attracting staff.
“Also, in the back of my mind is if we are really through COVID. Is there going to be another wave?” he said, noting that getting back to in-person, face-to-face meetings has been great for the industry in terms of building relationships and trust. “I would hate to see that taken away from us, but if that happens, we obviously have to do our due diligence to keep our staff safe.”
Unke said supply chains and material costs continue to be a big issue, especially on infrastructure projects. The long lead times and unseen costs negatively impact schedule and costs.
“Whether it’s vertical or linear construction, it can really hold things up,” he said. “A good example would be climate resiliency work. You can put all the infrastructure in place, but without a critical piece of the project like a pump, you’re out of luck. These are similar things we were concerned about in 2022 and it’s carrying over.”
He noted that inflation could cause some projects to get shelved or cut back as borrowing power for private clients isn’t as strong.
On the tech side, increased innovation in technology and digitalization – especially in engineering – such as the transition to and utilization of BIM from traditional CAD, is changing the way business is done.
Gensler – (design)
Steven Paynter, principal at Gensler’s Toronto office, explained that following a pandemic-fueled course correction, the real estate industry continues to face transformational shifts in how buildings will be designed and used.
“Amid high uncertainty, many of our clients are now focusing on strategic, asset-level decision-making,” he said. “We’ve seen the conversation about office to residential conversions move from the fringes to the mainstream in 2022, and I’m confident that will continue to be a hot topic into 2023.”
According to Paynter, in times of uncertainty, quality really reigns supreme.
“We’ll see winners and losers in the different sectors as well as a heightened bifurcation between high quality and low quality assets,” he said. “This trend continues to drive the demand for architects to come to the table as strategic partners to help their clients reposition stranded assets and create places that really lead with experience.”
Pitt Meadows Plumbing and Mechanical Systems – (mechanical)
“We’re probably suffering through all the current industry-wide problems that everybody has been verbalizing,” he said, listing supply chains, pricing challenges and finding adequate labour as the usual suspects.
“Looking forward, we think the coming year will be significantly better for us from a revenue perspective,” he said. “We have a significant amount of work booked already and we will continue to leverage benefits of off-site construction to ensure that the labour challenges as well as supply challenges don’t affect our productivity or ability to turn your project over to you in the timeframe we told you we would.”
Robinson noted that the company has used unique strategies in the past year that allowed it to continue to optimize its jump into industrialized construction including the purchase of WQC Mechanical.
“We will continue to do synergies similar to that in the future,” said Robinson.
He added that they will also continue to leverage extreme planning and moving as much labour off a job site into their shop environment.
“If you’d talked to us four or five months ago, we saw significant evidence and the traditional pointers for a significant or minimal slowdown,” he said. “But you can’t really have a recession without significant unemployment. It’s as simple as that. And until we start to see significant unemployment, I don’t believe you will see any significant recession of any kind.”
He noted that there are significant initiatives from the province and federal government to build large amounts of homes and improve infrastructure, and immigration targets are set to expand.
“The slowdown in construction is probably over-reported and may never actually come to fruition anytime in the short term,” he said. “For sophisticated construction service purchasers who understand the value of time and money and whose expectations are high, we will continue to be their provider of choice.”
Procore – (technology)
“Looking ahead to 2023, I expect a year of challenge and change as the Canadian construction industry grapples with ongoing problems such as the labour shortage while continuing to move toward integrated project delivery to achieve greater efficiency,” said Jas Saraw, Procore’s vice president in Canada. “At Procore, we are watching adoption of on-site technologies such as drones and augmented reality with interest, while we also expect further developments in project tools that improve the connection from the field to the back office, and offer predictive insights in order to further drive project efficiency.”
Saraw added that as labour, supply chain and financial constraints put pressure on the industry, there will be accelerated adoption of integrated project delivery to improve efficiency, streamline collaboration between stakeholders and minimize waste.
As the industry continues to digitize, Saraw believes data will become more and more powerful.
“With more contractors moving project information from paper to the cloud, it will be increasingly possible to draw insights from historical data to inform decisions about budgets, scheduling and other aspects of construction,” they said. “AI (Artificial Intelligence) and ML (Machine Learning), will take the complex data and voluminous data that is collected on jobsites and start to make sense of the data in order to drive predictive insights that will allow all project stakeholders to make more effective decisions earlier in the design and build process and ultimately shield themselves from downstream risk as the project schedule progresses.”
505-Junk – (waste/recycling)
Builders want more data – that includes tracking their waste and where it goes.
Barry Hartman, CEO and founder of 505-Junk, said he is seeing an increase in requirements for diversion and an increase in accountability data requested from clients. In the past, data on waste diversion had usually been requested for LEED requirements.
“Those clients can actually view those metrics and know their waste is being kept out of a landfill and they have evidence,” said Hartman.
He attributed this shift partly to the rise of online storytelling through social media.
“What story do construction companies want to tell? Not only is it the right thing to do, it’s a good marketing play as well,” he said.
505 is following this trend by testing out incentives where they will plant trees on their client’s behalf if more waste is diverted from landfills.
505 has also found the density of Metro Vancouver and the number of projects have made it challenging to place bins on site. Hartman is finding the demand for live loading is increasing to a point where using cranes to empty self-dumping bins is becoming common.
ATCO Ltd. has acquired Triple M Modular Housing, a leading North American manufacturer of factory-built, modular housing based in Lethbridge, Alta. Triple M will now operate as a specialized housing division for ATCO Structures within Canada.
“This acquisition boosts ATCO’s status as a global leader and innovator in modular construction, offering our customers a diverse range of modular products from residential to commercial to industrial,” said Adam Beattie, president, ATCO Structures. “Triple M’s ability to deliver affordable, high-quality homes within a short construction timeline is a strategic advantage for us in the current housing market.”
Established in 1981, Triple M is the largest manufacturer of modular residential homes in Western Canada. With more than 300 production employees and an experienced management team, Triple M constructs residential homes and associated products from its 230,000 square foot climate-controlled manufacturing facility. The company has an extensive dealer network in Canada that retails Triple M products to the residential housing market.
The founding business line of ATCO group, ATCO Structures has been in business for 75 years. With manufacturing facilities in Canada, the United States, Mexico, Chile and Australia, ATCO Structures provides global solutions for workforce housing, hotels, medical facilities, schools, multi-family housing and more. ATCO has approximately 6,400 employees and assets of $23 billion.
*Editor’s note: SiteNews is compiling a list of the top modular construction companies for next week. Subscribe so you don’t miss it.
Key Takeaways:
The global precast concrete market is expected to reach USD $154.89 billion by 2030.
The major factors driving this growth are urbanization and population growth.
The Internet of Things and 3D modeling are driving innovation in the sector.
The Whole Story:
Experts are forecasting major growth in the precast concrete market.
The global market reached USD $95.20 billion in revenue in 2021 and is expected to grow to USD $154.89 billion by 2030, according to the latest analysis by Emergen Research. The market is also expected to register a compound annual growth of 5.7 per cent over the forecast period.
Emergen noted that the two main factors driving market expansion are rapid urbanization and exponential population growth.
“Increased demand for non-residential buildings like airports, sports facilities, shopping centers, and commercial spaces will have a significant impact on the supply chain because of the expedited and cost-efficient construction process,” wrote researchers. “Precast concrete will be even more in demand as a result of the growing demand for residential spaces brought on by the expanding population and government programs to build housing for the Economically Weaker Section.”
In addition, the need for improved employment possibilities has increased urbanization efforts, expanding its use in offices and other commercial facilities, stated the report. Residential constructions also employ precast concrete items such as walls, beams, columns, and staircases. Emergen found that these items are in high demand in the building and construction sector because of how simple and quickly they can be constructed.
“In a variety of weather situations, cast concrete products enable effective and affordable construction,” said the researchers. “These goods are meticulously produced off-site, which raises the level of quality in general. Utilizing pre-casted items dramatically decreases building time, cost, and waste.”
Impacts of COVID-19
The report added that the building and construction sector is expected to be significantly impacted by the COVID-19 pandemic. The epidemic caused the abrupt end of infrastructure development and building activity. The market was hindered by the reduced output of raw materials, interruptions in the supply chain, limitations on the movement of people and goods, and problems with trade movements.
“The epidemic has resulted in an oversupply of precast materials,” noted researchers. “In addition, precast concrete is fragile like other concrete materials. If in any instance precast concrete is not handled properly, components can be quickly damaged.”
They explained that because of this it’s vital to set up certain tools and procedures to protect the goods. What matters most, in this case, is the transit process. Care should be taken during the lifting and transporting stages to avoid any unforeseen circumstances. Precast concrete is very versatile, but because of its robust and enduring structural behavior, building each piece is rather difficult. In order to maintain everything correctly connected, the connections formed should be continuously monitored and should assure durability. Faulty connections could cause sound insulation to fail or cause water leaks.
Current Trends and Innovations
Internet of Things (IoT) is a hot topic in the sector. The newest technologies already make it possible to identify production bottlenecks and the need for preventative maintenance. IoT is used to process data, such as produced square meters, the speed of the machine and screws, and the quality of the casting, to decide the best time for maintenance. To maximize the length of a maintenance break and reduce production disturbance, these variables can be changed specifically for each facility and machine. Precast concrete 3D models are currently used successfully by designers in many different sectors.
For instance, when their models are available in 3D format, architects and structural designers may more effectively communicate their ideas, explained researchers. Precast plants follow the same rules. Evaluation of the space and safety requirements is made simpler by 3D industrial models. 3D models aid in the analysis of approaches to increase safety and usefulness in machine development. Additionally, it is simpler to identify any particular requirements when engineers have the opportunity to view a product in 3D prior to its manufacturing.
Ontario’s property inventory continued to grow in 2022, with more than $37.8 billion in new assessments, which includes new construction and improvements to existing properties. According to the Municipal Property Assessment Corporation (MPAC), residential homes made up over $28.6 billion of the increase, while commercial and industrial properties comprised $4.6 billion.
The assessed value of Ontario’s 5.5 million properties is now estimated to be more than $3.08 trillion. MPAC summarizes these changes in the annual assessment rolls that they delivered to Ontario’s municipalities.
Condos slow down
Over the course of the year, Ontario added more than 48,000 residential homes. While the number of new detached homes increased 10.5 per cent year over year (25,727, up from 23,279), the number of new residential condominiums dropped by 37.4 per cent (7,097, down from 11,331). There was also a small increase in new townhouses, coming in at approximately 1.3 per cent (10,484, up from 10,350).
“The slowdown we see in new residential condominiums is attributed to construction delays arising from changing economic considerations and supply issues,” said Nicole McNeill, MPAC’s president and CEO. “Despite this slowdown in new residential condominiums, we did see year-over-year growth in other property types.”
10 municipalities key to growth
Across Ontario, more than 55 per cent of new property value was located in 10 municipalities. Toronto led the way for another year at $8.7 billion (down from $10.7 billion in 2021) followed by Ottawa at $4.4 billion (up from $3 billion), then Mississauga at $1.2 billion (down from $1.6 billion), Vaughan at $1.1 billion (down from $2 billion), and Oakville at $1.1 billion (holding steady) for another year.
When looking at the growth rates for small municipalities (under 15,000 population), Blue Mountains had the largest overall growth this year ($140.2 million) despite a drop in new seasonal properties from the previous year (down to $29.3 million from $32.7 million). Muskoka Lakes followed with $120.3 million, then Middlesex Centre with $103.7 million, North Perth with $90.9 million and Carleton Place with $89.9 million.
Key Takeaways:
The Quintette coal mine in northeastern B.C. has been sold to Conuma by Teck for $120M.
The mine has been on care and maintenance since 2000.
The coal produced by the mine is used to create steel.
The Whole Story:
A dormant B.C. mine site is getting a new lease on life.
Teck Resources Limited announced that it has agreed to sell the Quintette steelmaking coal mine in northeastern British Columbia to a subsidiary of Conuma Resources Limited. Conuma will pay Teck $120 million in cash in staged payments over the next 36 months, and an ongoing 25 per cent net profits interest royalty, first payable after Conuma recovers its investment in Quintette.
Closing of the transaction, expected to occur in the first quarter of 2023, is subject to receipt of regulatory approvals and other customary conditions.
The steelmaking coal mine, which produced a semi-hard coking coal product, operated for nearly 18 years up until 2000 and has been on care and maintenance since then. Steelmaking coal is a vital ingredient in the production of steel, which is essential for low-carbon infrastructure such as rapid transit, transmission systems and wind turbines.
Founded in mid-2016, Conuma Resources is a steelmaking coal producer based in Northeast B.C. Conuma’s surface mine operations at Brule, Wolverine and Willow Creek have a rated capacity to produce more than 5 million tonnes of steelmaking coal annually, and provide more than 900 direct and 3,000 indirect jobs in the Peace River Regional District.
A rainbow arcs over a Conuma Resources truck in B.C. – Conuma Resources
Key Takeaways:
CDPQ is investing $150 million in Pomerleau on top of $50 million it invested in 2018.
The firm’s investments helped Pomerleau acquire residential builder ITC Construction Group earlier this year.
Pomerleau says it plans to use the acquisition and investments to expand its residential offerings across Canada.
The Whole Story:
Pomerleau is getting a massive new investment from one of its strategic partners as it looks to expand.
CDPQ announced it will invest an additional $150 million in Pomerleau to accelerates its growth in Canada. The global investment group’s support played a significant role in Pomerleau’s acquisition of Vancouver-based residential builder ITC Construction Group earlier this year.
“We are proud that the CDPQ is extending its commitment to our 4,000 people, our values and our growth strategy,” said Pierre Pomerleau, Pomerleau president and CEO. “CDPQ is an outstanding partner and shareholder, and we are delighted that this renewed confidence can support the deployment of our strategic plan.”
CDPQ officials noted that so far their investment strategy has paid off big. The firm invested $50 million into Pomerleau in 2018. Since then, the construction company has more than doubled its revenues from $1.8 billion to $4 billion, and more than tripled its order backlog from $3.5 billion to $11 billion. Founded 60 years ago in the Beauce region of Québec, Pomerleau’s Canadian projects outside of Quebec now account for almost 50 per cent of its revenues.
“CDPQ is proud to have been at the company’s side during this expansion and looks forward to continuing our commitment to support the execution of the company’s strategic development plan,” said Kim Thomassin, executive vice-president and head of Québec at CDPQ. “In addition to fostering the organization’s expansion across Canada with the ITC Construction Group acquisition, this investment is aligned with our desire to develop more sustainable living environments, and Pomerleau continues to play a major role in that regard.”
The acquisition of ITC was the largest in Pomerleau’s history. The company says it plans to use it to provide sustainable and innovative housing solutions across the country. ITC has 200 residential projects worth more than 5 billion dollars under its belt in B.C. and Alberta, and 18 major residential projects underway.
“Over time, Pomerleau has become more than a construction company,” said Pomerleau. “Today, it structures alternative and collaborative models of delivery and financing. This allows us to tackle a wide range of increasingly complex projects – from hospitals to industrial facilities, wind farms and light-rail transit. We are also proud to offer much-needed solutions to Canadians, including low-carbon buildings as well as public transit and renewable energy infrastructure that help tackle climate change and improve the quality of life.”
The future of technology and energy requires critical minerals and Canada has released its plan to secure them.
This month, the federal government released the Canadian Critical Minerals Strategy, a plan to establish and maintain resilient critical minerals value chains that adhere to the high ESG standards.
“There is no energy transition without critical minerals: no batteries, no electric cars, no wind turbines and no solar panels,” wrote Jonathan Wilkinson, minister of natural resources. “The sun provides raw energy, but electricity flows through copper. Wind turbines need manganese, platinum and rare earth magnets. Nuclear power requires uranium. Electric vehicles require batteries made with lithium, cobalt and nickel and magnets. Indium and tellurium are integral to solar panel manufacturing.”
Canada is also in a unique global position. It is home to almost half of the world’s publicly listed mining and mineral exploration companies, with a presence in more than 100 countries and a combined market capitalization of $520 billion.
The strategy, backed by nearly $4 billion in Budget 2022, envisions Canada as a global supplier of choice for critical minerals.
But what does the strategy mean for builders? Here are five major takeaways:
1. We have to get better at finding minerals
Locating critical minerals in Canada’s vast landmass is a complex endeavor. It requires advanced geoscience capabilities, including geological mapping, geophysical surveying, and scientific assessments and data.
Ottawa plans to spend $79.2 million for public geoscience and exploration to better identify and assess mineral deposits. They also want to offer a 30 per cent Critical Mineral Exploration Tax Credit for targeted critical minerals. $47.7 million will be spent on targeted upstream critical mineral R&D through Canada’s research labs and $144.4 million will go towards critical mineral research and development, and the deployment of technologies and materials to support critical mineral development for upstream and midstream segments of the value chain.
2. Projects need to speed up
It takes anywhere from 5 to 25 years for a mining project to become operational, with no revenue until production starts. The federal government says that’s not good enough so they are looking to accelerate the development of strategic projects.
Ottawa is pouring $1.5 billion into the Strategic Innovation Fund (SIF), one of the most significant direct funding mechanisms in the entire strategy. Officials say the SIF will help build world-class critical mineral value chains in which prefabrication and manufacturing activities are done domestically by default. It will support projects that decrease or remove reliance on foreign critical mineral inputs across a range of priority industrial sectors or technologies. SIF investments will favour critical mineral development opportunities that aim to reduce GHG emissions in critical mineral and manufacturing sectors.
Officials also plan to spend $21.5 million to support the Critical Minerals Centre of Excellence (CMCE) to develop federal policies and programs on critical minerals and to assist project developers in navigating regulatory processes and federal support measures.
A map shows areas of potential mineral project development. – Government of Canada
3. Sites need to be accessible and supported
Critical mineral deposits are often located in remote areas with challenging terrain and limited access to enabling infrastructure such as roads or grid connectivity. Officials say the cost implications of this infrastructure deficit discourage investment and hinder the socio-economic development of local communities that welcome mineral development. It also increases the risks associated with economic and logistical feasibility, particularly with rising inflationary pressures and challenges in global supply chains.
Ottawa is proposing $1.5 billion for infrastructure development for critical mineral supply chains, with a focus on priority deposits. They also want to make strategic infrastructure investments in green energy and transportation to unlock critical mineral regions, while also improving environmental performance and driving emissions reductions in existing operations through electrification.
4. A lot more workers are needed
Mining experts anticipate that up to 113,000 new workers will be needed by 2030 to meet new demand and replace those workers anticipated to exit the mining workforce. Sound familiar?
Officials are also looking for partnership opportunities with provinces and territories, Indigenous-led organizations, and several stakeholders, including universities, colleges, and specialized training institutions, to create greater awareness and understanding of the minerals and metals sector, sometimes referred to as mineral literacy. These partnerships would encourage enrolment in mining curriculum, skilled trades, and by socializing the role critical minerals play in the green energy transition and showcasing the diversity of careers available in the sector.
A diagram show all the minerals Canada has identified as “critical”. – Government of Canada
5. Indigenous people must be included
Indigenous peoples are the stewards, rights holders, and in many cases, title holders to the land upon which mineral resources are located. Historically, Indigenous peoples have not always benefited from natural resource development on their traditional territories, and some developments have caused adverse environmental and social impacts on communities.
But federal officials say that in the past few decades, Indigenous participation in the mining sector has grown significantly.
Ottawa is allocating $103.4 million to advance economic reconciliation through enhanced readiness to meaningfully participate in the natural resource sector, including at least $25 million to support Indigenous participation and early engagement in the strategy. Funding is available through the Indigenous Natural Resource Partnerships Program, which funds activities that help increase the economic participation of Indigenous peoples in natural resource projects. The Program is accessible to Indigenous communities, businesses, and organizations.
Key Takeaways:
The Bank of Canada raised the rate 50 basis points to 4.25 per cent, the seventh rate hike this year.
The hike was bigger than many experts anticipated.
Their latest data put CPI inflation at 6.9 per cent.
The Whole Story:
The rate hikes keep coming.
The Bank of Canada announced that it has increased its target for the overnight rate to 4.25 per cent, with the Bank Rate at 4.50 per cent and the deposit rate at 4.25 per cent. The bank is also continuing its policy of quantitative tightening. It’s the seventh rate hike this year.
Bank officials explained that inflation around the world remains high and broadly based. Global economic growth is slowing, although it is proving more resilient than was expected at the time of the October Monetary Policy Report (MPR). In the U.S., the economy is weakening but consumption continues to be solid and the labour market remains overheated. The gradual easing of global supply bottlenecks continues, although further progress could be disrupted by geopolitical events.
According to the bank, Canada’s third quarter GDP growth was stronger than expected, and the economy continued to operate in excess demand. Officials explained that Canada’s labour market remains tight, with unemployment near historic lows.
“While commodity exports have been strong, there is growing evidence that tighter monetary policy is restraining domestic demand: consumption moderated in the third quarter, and housing market activity continues to decline,” said the bank in a press release. “Overall, the data since the October MPR support the bank’s outlook that growth will essentially stall through the end of this year and the first half of next year.”
Their data shows that CPI inflation remained at 6.9 per cent in October, with many of the goods and services Canadians regularly buy showing large price increases. Measures of core inflation remain around 5 per cent.
“Three-month rates of change in core inflation have come down, an early indicator that price pressures may be losing momentum,” said the bank. “However, inflation is still too high and short-term inflation expectations remain elevated. The longer that consumers and businesses expect inflation to be above the target, the greater the risk that elevated inflation becomes entrenched.”
Bank officials said they will be considering whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target.
“We are resolute in our commitment to achieving the 2 per cent inflation target and restoring price stability for Canadians,” officials said.
The hike was higher than expected by some experts, who anticipated a 25 basis points rather than 50. Commercial real estate firm Avison Young did not expected the larger hike due to recent signs that domestic demand, earnings growth and core inflation are starting to ease.
“Third quarter GDP data came in stronger than expected, and the labour market remains tight with the unemployment rate falling marginally last month,” said Nick Axford, Avison Young’s chief economist. “This probably tipped the balance to go for a larger increase in policy rates in what must have been a tight decision.”
Axford explained that the accompanying forward guidance suggests that rates may well now have peaked, however he believes another 25 basis point hike could come in January, depending on what the data show.
“Interest rates should therefore stabilise early in 2023, if they have not done so already – provided that inflation starts to move sustainably downwards from the early part of next year,” said Axford. “Rates may even start to fall later in 2023 – again, very dependent on the data. In the meantime, the latest increase coupled with the quantitative tightening that is also underway represents a significant tightening of financial conditions, which will restrict the flow of credit in the economy.”
He believes this will act as a further constraint on the commercial real estate sector and housing market, impacting both pricing and transaction volumes.
Canada’s unions were not pleased by the hike which they say could lead to the loss of jobs and homes.
“Economists have urged the Bank of Canada to let the impact of previous rate hikes take hold before taking further action that could risk causing a damaging recession. It’s regrettable the Bank of Canada rejected that advice,” said Bea Bruske, president of the Canadian Labour Congress. “Moving ahead on another rate hike today could mean hundreds of thousands of workers losing their jobs and families losing their homes. There is a better way.”
Bruske argued that wage growth is being unfairly blamed for the country’s economic woes and the bank’s attention should be shifted elsewhere.
“Central banks raise rates to cool the economy and lower inflation. But the Bank of Canada has gone further and has waged a public relations campaign warning about the phantom menace of higher wages,” continued Bruske. “There is simply no evidence of this. Real wages are down more than 5 pe rcent over the past two years and continue to lag behind inflation. Meanwhile, corporate profits have ballooned to record levels. It is time for a more balanced policy approach.”
Bruske urged the government to take action against price gouging, including an excess profits tax on corporations.
Burnaby is in the midst of a construction boom that is destroying records.
The latest data from the city shows it continues to set a record pace for construction. Earlier this month it surpassed $2 billion worth of building permits so far in 2022, smashing all previous full-year records.
“During the COVID-19 pandemic when much of the world went on pause, our staff worked hard to continue to process permits and applications, carry out inspections, and establish the master plans that will guide Burnaby’s future development,” said Mayor Mike Hurley. “This report shows that our approach is generating real results – we’re building much-needed new homes and helping to drive economic growth in Burnaby.”
As of November 15, the city has issued 1,133 building permits for a value of $2.105 billion – already a substantial increase over the annual (full year) totals over the last five years. Last year’s total building permit value was $1.02 billion and the year before that it was $1.45 billion.
The city attributed some of its success to innovative housing policies. They noted that these policies are also driving the creation of a record amount of rental housing in Burnaby, with more than 12,000 units of rental housing now being built or in the development stream. The city added that more non-market rental units are being built than market rentals – a first for the city.
Burnaby building permit value totals:
2022 (to Nov. 15) 1,133 permits – $2.105 billion
2021 1,095 permits – $1.02 billion
2020 1,007 permits – $1.45 billion
2019 1,116 permits – $1.22 billion
2018 1,520 permits – $1.69 billion
2017 1,649 permits – $1.05 billion
Alberta construction leaders believe the province is making an effort to address major concerns in the premier’s latest mandate letters to ministers.
The Alberta Construction Association (ACA) stated that Premier Danielle Smith’s recent direction to ministers is a solid step towards addressing long standing and emerging issues in Alberta’s construction industry. The ACA explained that the ministerial mandate letters across Government address key issues for Alberta’s contractors.
Highlights include:
Sustained infrastructure investment including a focus on trade corridors.
Best value procurement and standardized contracts to reduce risk.
Extending prompt payment provisions to Government of Alberta contracts.
Promoting trades education, working training, recognition of out of province credentials, fostering opportunities for people from under-represented communities, and expanded Provincial Nominee Program.
Continued red tape reduction with an emphasis on streamlined permitting and Land Titles processes.
Complete Occupational Health & Safety Code review and more focus on mental health supports to keep workers safe.
Review Building Code changes to ensure safety and affordability.
The Alberta Construction Association and the province’s regional construction associations offered their expertise to partner with the government to rapidly implement the directions. They added that numerous meetings with ministers are imminent to advance the work.
Key Takeaways:
Inflation continues to be an issue domestically and abroad.
Global growth is expected to slow in 2023 but perk up in 2024.
The bank expects that the policy interest rate will need to rise further.
The Whole Story:
Interest rates in Canada have once again gone up.
The Bank of Canada announced it has increased its target for the overnight rate to 3.75 per cent, with the bank rate at 4 per cent and the deposit rate at 3.75 per cent.
During the height of the COVID-19 pandemic, the bank chopped the lending rate to almost nothing but has hiked its benchmark rate six times since March.
Bank officials noted that they also intend to continue their policy of quantitative tightening.
Inflation outside Canada is still high
“Inflation around the world remains high and broadly based,” stated bank officials in their rate hike announcement. “This reflects the strength of the global recovery from the pandemic, a series of global supply disruptions, and elevated commodity prices, particularly for energy, which have been pushed up by Russia’s attack on Ukraine. The strength of the US dollar is adding to inflationary pressures in many countries. Tighter monetary policies aimed at controlling inflation are weighing on economic activity around the world. As economies slow and supply disruptions ease, global inflation is expected to come down.”
Bank officials noted that labour markets in the U.S. remain very tight even as restrictive financial conditions are slowing economic activity. The bank projected no growth in the U.S. economy through most of next year.
“In the euro area, the economy is forecast to contract in the quarters ahead, largely due to acute energy shortages,” said the bank. “China’s economy appears to have picked up after the recent round of pandemic lockdowns, although ongoing challenges related to its property market will continue to weigh on growth.”
Growth is expected to slow
Overall, the bank projects that global growth will slow from 3 per cent in 2022 to about 1.50 per cent in 2023, and then pick back up to roughly 2.50 per cent in 2024. This is a slower pace of growth than was projected in the Bank’s July Monetary Policy Report (MPR).
“In Canada, the economy continues to operate in excess demand and labour markets remain tight,” noted the bank. “The demand for goods and services is still running ahead of the economy’s ability to supply them, putting upward pressure on domestic inflation. Businesses continue to report widespread labour shortages and, with the full reopening of the economy, strong demand has led to a sharp rise in the price of services.”
Bank officials explained that the effects of recent policy rate increases are becoming evident in interest-sensitive areas of the economy: housing activity has retreated sharply, and spending by households and businesses is softening. Also, the slowdown in international demand is beginning to weigh on exports. Economic growth is expected to stall through the end of this year and the first half of next year as the effects of higher interest rates spread through the economy. The Bank projects GDP growth will slow from 3.25 per cent this year to just under 1 per cent next year and 2 per cent in 2024.
Higher rates could help rebalance economy
In the last three months, CPI inflation has declined from 8.1 per cent to 6.9 per cent, primarily due to a fall in gasoline prices. However, price pressures remain broadly based, with two-thirds of CPI components increasing more than 5 per cent over the past year. The bank noted that its preferred measures of core inflation are not yet showing meaningful evidence that underlying price pressures are easing.
“Near-term inflation expectations remain high, increasing the risk that elevated inflation becomes entrenched,” officials said.
The bank expects CPI inflation to ease as higher interest rates help rebalance demand and supply, price pressures from global supply disruptions fade, and the past effects of higher commodity prices dissipate. CPI inflation is projected to move down to about 3 per cent by the end of 2023, and then return to the 2 per cent target by the end of 2024.
“Given elevated inflation and inflation expectations, as well as ongoing demand pressures in the economy, the governing council expects that the policy interest rate will need to rise further,” officials said. “Future rate increases will be influenced by our assessments of how tighter monetary policy is working to slow demand, how supply challenges are resolving, and how inflation and inflation expectations are responding. Quantitative tightening is complementing increases in the policy rate. We are resolute in our commitment to restore price stability for Canadians and will continue to take action as required to achieve the 2 per cent inflation target.”
Inflation to worsen before improving
Experts at Avison Young, a global real estate firm, believe inflation is likely to get worse before it gets better and believe more modest rate increases could be on the way.
“The Bank of Canada is leading the charge by global central banks in raising interest rates to tackle inflation and had already aggressively raised rates by 300 bps this year prior to their latest announcement,” said Nick Axford, principal and chief economist at the firm. “The housing market is slowing sharply and growth across the economy as a whole has effectively come to a halt, with a recession now looking likely in the early part of 2023.
Axford explained that despite this, consumer spending remains robust and the labour market is still tight.
“Headline inflation has stabilised for now, but at around 7 per cent this is uncomfortably high – and is likely to rise again before it declines,” he said. “As a result, the Bank continues to focus on preventing a wage-price spiral and remains concerned about the high level of core inflation.”
Rate hike to restrict credit flow
Axford noted that the rate increase was well above the bank’s estimate of the “neutral” rate of 2-3 per cent.
“This was below consensus expectations of a 75bps rise, given the strength of the latest consumer and retail sales data,” he said. “Looking ahead, we expect rates to be pushed up further, but in more modest increments with one or two 25bps hikes over the coming months. Markets are pricing a peak for rates at just below 4.5 per cent, sensing that the Bank will be reluctant to push beyond this level until they have seen the impact of previous rises.
According to Axford, these impacts likely won’t be broadly felt through the economy for 12 to 18 months. He believes interest rates should stabilise early in 2023 – provided that inflation starts to move sustainably downwards from the early part of next year.
“In the meantime, the latest increase coupled with the quantitative tightening that is also underway represents a significant tightening of financial conditions, which will restrict the flow of credit in the economy,” said Axford. “This will act as a further constraint on the commercial real estate sector and housing market, impacting both pricing and transaction volumes.”
