BC construction companies struggling amidst inflation and worker shortage

Oct 26 2022, 1:28 am

The construction value of current major projects underway in British Columbia reached $135 billion in 2022 — an 80% increase compared to five years ago.

According to the BC Construction Association’s (BCCA) newly released Fall 2022 statistics, growing costs led to the largest industry in BC’s goods sector growing 10% in value despite the recent decrease in demand, contributing to 9.7% of provincial GDP.

Compared to February 2020, investment in industrial, commercial, and institutional construction projects is down by 11%. Even with the decrease, due to high inflation, the non-residential building price index went up by 19.6%.

“Contractors are struggling to balance declining commercial demand with rising costs of materials and labour, even as waning procurement standards on public sector projects add to project risk,” states BCCA.

The construction unemployment rate in BC is currently hovering at 5.7%, which is the lowest since 1976. Competition for the same limited pool of skilled workers has sent average construction wages up by 26% since 2017 and 11% since 2021, including a 2% increase from the provincial government’s January 2022 legislated five-days mandatory paid sick leave.

Currently across the province, there are now about 26,300 registered construction companies, but the number of skilled workers has dropped by 5% over three years, and the average company size has decreased by 7% over the same period to an average of 6.5 workers.

It is estimated that about 5,700 construction jobs in BC will be unfilled by 2027 due to labour shortages.

With growing and unpredictable costs, BCAA argues the provincial government needs to change legislation to shorten the window of time contractors are paid for their work. Otherwise, these companies will face growing cash flow issues, take on the increased cost of debt, and find themselves at greater risk of bankruptcy.

“The construction industry is massive, essential, and struggling,” said Chris Atchison, president of BCAA, in a statement. “Make no mistake: many employers are reaching a breaking point. The urgent need for more housing and other infrastructure development hangs in the balance.”

While the value of major construction projects in 2022 is $135 billion, the value of proposed major construction projects is $220 billion.

A recent report by Canada Mortgage and Housing Corporation also made similar warnings of the British Columbia labour market’s challenges with increasing the supply of skilled workers to significantly build more housing above targets.

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