The Globe and Mail,
December 5, 2000
By Gina Gillespie
Ottawa's gone from bust to boom in the last few years, and the strain is showing. Five years ago, building permit approvals peaked at $450-million. This year the expected total is $1.2-billion.
But in the wake of the boom come shortages in labour and materials.
"This boom has not come without its problems," says Paul Hindo, vice-president of Royal LePage Real Estate Services Ltd.'s commercial operations in Ot=
tawa. "It's affecting the commercial market big, big time. Before when you had an electrical job or mechanical job, you'd have eight or nine different companies bidding on the job. Now you're likely to get three."
Sometimes Sid Rothman, president of Progeny Management Ltd. only gets two bids back. He finds workers gravitate to large, long-term projects, leaving him struggling to complete his mid-size developments.
Traditionally migrant workers travelled to booming cities, but with the entire country in an upswing, that supply has dried up. And if local firms are too busy, outside companies must be brought in -- and rewarded with higher prices.
The Ottawa-Carleton Home Builders Association is trying to recruit women into the construction trades, but its efforts are a drop in the bucket in the face of widespread shortages.
In fact, the labour shortage is also hitting the transportation, engineering, food services and accommodation industries across the country, the Bank of Canada found in its latest quarterly review.
A study by project control specialists Hanscomb Ltd. determined that 500 people a year are required to maintain the status quo of 13,000 Ottawa-area trades workers. After 2005, that number doubles. But with the average employee in the trades fast approaching retirement age, and the high wages and sexy image of the high-tech sector swallowing the potential pool of recruits, there are no easy solutions.
"If I read any more high-tech articles about another 24-year-old millionaire, I think I'll throw it in myself and get out of this industry," says John DeVries, president of the Ottawa Construction Association.
While all the construction trades are working at full capacity, carpenters experienced in formwork are worth their weight in gold. (Form workers create wooden forms into which rebarred steel is placed, then covered in concrete.) Some firms are even securing formwork contractors before putting bids out to general contractors.
Romeo Bellai is chief executive officer of concrete form company Bellai Brothers Ltd.
"We're one of the base trades. Without us the project just doesn't go up," Mr. Bellai says. But he says there's also a shortage of steel setters right now. And without steel inside the forms, the form workers can't pour the concrete. The shortage in trades workers has him hiring carpenters who are not specialized in formwork and matching them with experienced workers.
At Ellis-Don Construction Ltd. they're restarting their own formwork division, a practice they abandoned during the last recession in the early 1990s. But rebuilding the division is a slow process.
"On a daily basis we talk with the union hall and there are no carpenters that are unemployed in the area," says area manager Mark Fazio. They're rehiring retired trades workers, and thinking of importing Ellis-Don carpenters from other cities.
But labour isn't the only problem area. A recent Progeny Management project took 20 weeks to complete instead of the expected 12 due to supply shortages, forcing Mr. Rothman to move tenants in to unfinished spaces.
"I'm trying to tighten up some of these timelines in terms of securing my building, and I'll worry about the finishing details later," he says.
Shortages in structural steel, drywall, hydro transformers, electrical switch gears and mechanical rooftop equipment are causing delays and driving up prices.
According to Arthur Maw, Hanscomb's vice-president, construction costs over the last 1=BD to two years have gone up 18 per cent, and continue to rise at a rate of 1 per cent a month.
And Wayne Jennings, vice-president and general manager of Canderel Management Inc., says the availability of materials and employees can affect their choice of building design.
The decision to build Mitel Corp.'s new five-storey building in Kanata, Ont., using a concrete and frame structure in lieu of structural steel hinged on the availability of a formwork contractor, whom they booked three months before starting the project.
He says one way they're dealing with shortages is to form partnerships with other firms to share resources and extend the work force.
But architect Eliseo Temprano worries that the need for trades workers coupled with the high-tech industry's need for speed will compromise quality. He's been through a few economic cycles, and says during the lean years buildings are constructed with less attention to detail because unqualified people enter the picture.
"What are we creating that's going to endure?" he questions, pointing out that the Parliament buildings weren't built as a result of moving fast.
"What kind of high quality architecture can be done when people want it tomorrow -- besides sheer warehouses as factories full of people and offices?" he asks.
But for the construction industry, the boom is good news. And Mr. DeVries of the construction association says the situation hasn't reached crisis stage yet.
"It's a nice time for the industry after several years of recession. We're going to hit a volume of $1.1-[billion] to $1.2-billion this year and that's the best since 1989."