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Victoria Construction and Development Blog by Yellow Sheet »

Nanaimo Residential Development – What? Where? and Who?

There are currently 1,711 new residential units at various stages of development within the City of Nanaimo as of August 31, 2016.

The distribution of these units by Product Type and Development Stage can be seen in the chart below.

nanaimo-res-x-product-type

 

Rental apartments, townhouses, and residential lots account for 66% of the number of units currently under development. Units were distributed fairly evenly among these 3 product types with 341 units (20% of total) in 9 rental apartment projects, 381 units (22%) in 22 townhouse projects, and 408 new residential lots (24%) in 14 plans of subdivision. The other 581 units (34%) are either condominium projects, senior’s housing, or other types of residential housing (student housing, long term care facilities, live/work units, condo singles).

Most of those new residential units (693 units) are currently under construction while another 335 units are approved but have not yet started construction. There are another 593 residential units awaiting approval (rezoning or development permit) and 90 units in preliminary planning.

 

The location of new residential development covers most areas of Nanaimo as indicated on the map below.

nanaimo-res-projects-map

 

Individual project sizes range from 2 units to 177 units with the size of each circle representing the number of units within each project. The colour of each circle represents the current stage of development.

 

To get an idea of the firms behind these projects we can segment the data by a variety of company types associated with new development projects. Since about 67% of the units currently within the development process in Nanaimo have an architect working on the project, we can break down the data by Architect.

nanaimo-res-x-architect

 

Based on this chart there are 13 architecture firms currently working on 32 projects at various points within the development process.

 

Using residential development data broken down by type of housing, location of new projects, current progress of those projects, and the firms associated with them can assist in making decisions regarding these projects or new projects being contemplated for the area. Of course, using Yellow Sheet Construction Data one can also drill down through each of these charts into the details of each individual project.

 

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CRD Residential Building – What? and Where?

As mentioned in last week’s blog post, new residential building permits are up +29% in the CRD through the first 7 months of 2016 over the same period last year. Sitting at $326M so far this year, that’s up +52% from the 7 year average for year to date (YTD) figures at the end of July. Those figures are based on all new residential construction including Low Density, Multi-Family (condominium and rental) and Mixed Use buildings. The chart is below.

ytd bldg permit 2016-08-16

Breaking the numbers down by Low Density residential housing and Multi-family housing we can get a better idea of the form new residential building is taking as compared to previous years. The chart is below.

ytd bldg permit x type 2016-08-16

Multi-family building permits in the first 7 months of 2016 amount to $105M which is relatively unchanged from the $109M seen during the same time period in 2015. However, this is up significantly from the same time period in 2013 and 2014 where there were $39M and $49M in Multi-family building permits.

What has changed dramatically from 2015 to 2016 is the amount of new Low Density housing (detached) resulting in a changed mix of new residential building type. In YTD 2015 the split in the dollar volume of building permits was 57% Low Density to 43% Multi-family and in YTD 2016 the split is now 68% Low Density to 32% Multi-family. That’s based solely on the dramatic rise in the value of Low Density building permits so far this year. YTD 2015 saw $143M in new Low Density residential permits as compared to the $221M so far in 2016.

The next chart will provide a sense of where the increase in residential building permits is taking place. The same YTD dollar volume of residential building permits is broken down by Municipality in the chart below.

ytd bldg permit x muni 2016-08-16

The 3 municipalities of Victoria, Saanich and Langford generally lead the way in total dollar volume of  residential building permits as illustrated in the chart above showing the totals by municipality for the first 7 months of each year.

YTD 2016 has the top 3 municipalities accounting for 66% of all residential building permit dollar volume. That’s up from 64% for the same period last year. Over the last 7 years, the YTD residential building permit dollar volume has only dipped below 50% once (48% in 2014).

Langford has been the top municipality by residential building permit dollar volume over the first 7 months of the year for the last 3 years with about a quarter of the volume each year. Langford accounted for 23% in 2014, 27% in 2015, and 26% of residential building permit dollar volume so far this year.

In breaking down the overall building permit numbers we see a larger share of the total dollar volume going to Low Density residential building types and the City of Langford receiving the bulk of that construction investment.

 

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Residential Building Permits Up +29%

YTD new res bldg permits

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Vancouver Island Residential Building Permits Nearly Double in 3 Years

The residential construction industry on Vancouver Island has seen a dramatic increase (almost double) of building permit values in the last 3 years.

The 12 month rolling total of new residential building permit values rose to $965M at the end of June 2016. That’s an 85% increase over the 12 month period ending June 2013 as seen in the chart below.

res bldg permits VI

This measure of residential building permits includes all new residential construction activity for new Low Density and Multi-family (condo and rental) units.

The following chart illustrates the same 12 month rolling new residential building permit values broken down by Region.

res bldg permit VI region

The Capital Regional District leads the way with more than 57% of new residential construction activity over the last 12 months on the Island followed by the Nanaimo Regional District with 22% of activity and the Cowichan Valley Regional District with about 8% of total activity.

 

 

 

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Nanaimo Downtown Set for Renaissance?

photo151_lrg

It may come as a surprise to those of driving by on the magnificent Inland Island Highway, but downtown Nanaimo is undergoing a Renaissance.

Anchored by the Vancouver Island Conference Centre (which, of course, needs some help attracting more visitors) and the Nanaimo museum, Nanaimo’s downtown Commercial Street strip is a pleasant, walkable area.

There is not a lot of out-of-town foot traffic for these shops, mostly because the highway passes by up the hill to the west, bypassing downtown completely.

Those of us who grew up on the Island remember the old days when the Island Highway passed through the heart of town. Delays were to be expected back then as the Bathtub Races and other events blocked major arteries.

But downtown Nanaimo, with its easy access to the waterfront and Maffeo Sufton Park and the Newcastle Island, ought to really be an obvious draw for visitors and developers who cater to them.

The promise of long-hoped-for Convention Centre Hotel may be the spark downtown Nanaimo needs to make it a destination.

Low-key sod-turning

It has been a year since we reported on Nanaimo Council’s DP for the proposed $50M hotel across from Vancouver Island Convention Centre. In that time, discussions have apparently inched through Nanaimo city council.

The explanation seems to be that Nanaimo is hoping to avoid getting left with a massive unfinished development like it did in the previous decade.

Online chatter seems to focus mainly on wondering when sod-turning will ever take place, although some sort of ground-breaking event seems to have happened in early August.

Once the project goes ahead, the $50M planned hotel should see significant opportunities for Vancouver Island contractors, while continuing to power the renewed energy powering downtown Nanaimo.

Technology Bets on Nanaimo’s Old Town

The heritage buildings and storefronts of Nanaimo’s downtown have proven to be irresistible to tech firms on the Mid-Island.

Over the summer, BC Minister of Technology Andrew Wilkinson joined local software developers to launch Square One on Commercial Street.

Squareone_580x390

Square One is a collaboration between local industry association Innovation Island, local government and private partners.

Housed in a beautifully restored heritage building on Victoria Crescent near the iconic Cambie Hotel, overlooking the old town, Square One is a bit of Silicon Valley in a region better known for forestry, mining and fishing.

Square One reflects the growing shift to a service and knowledge economy, providing office space, mentorship and support to businesses looking to grow past the start-up phase.

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The eventual goal?

Startups inhabiting Square One are intended to launch their wings and set up shop on their own.

Most of these companies will want to stick around Nanaimo’s walkable downtown filled with cafes and coffee shops.

This means yet more economic activity for downtown Nanaimo in the years ahead as these companies renovate buildings or even build their own.

In the meantime, we’ll keep an eye on developments with the proposed $50M hotel project. Things have been pretty quiet at NEDC, the city economic development bureau that is quarterbacking negotiations between the Chinese developer and council.

And sometimes no news is good news.

Posted in BC economy, Building Permits, Community, Contractor Issues, Dealing with Municipalities, Jobs in BC, Major projects on Vancouver Island, Nanaimo, Technology, Yellow Sheet News | Tagged | Comments Off on Nanaimo Downtown Set for Renaissance?

Yellow Sheet Construction Data Celebrates 35 years in Business

 “I Prefer Stilettos to Steel-toed Boots!”

VICTORIA – A local business intelligence company named after its colourful original format is celebrating its 35th anniversary this fall.

Yellow Sheet Construction Data Ltd. has weathered the highs and lows of more than three decades in the construction business to emerge as a strong and valuable resource. The name stems from the early format of the data – printed each week on yellow paper. “In the beginning it was just me and an IBM Selectric typewriter,” said founder and publisher Lori Appleton, who was inspired to launch the service after working as a realtor. To grow the business, she worked seven days a week and made frequent trips up the Island, stopping in at job sites and municipal offices to gather information.

In 2000, Appleton successfully made the switch from a printed product to an online service. The move meant printing and mailing costs were replaced with programming and IT development. Today she has five employees, consultants and a full-service software team.

Island construction companies follow the latest news on building plans from the idea stage right through to tender calls, bid results and permits. “We use it all the time,” said Derek Emery, president of Emery Electric Ltd., a customer for more than 25 years. “Yellow Sheet data keeps us apprised of all the developments. Otherwise we can miss out on something easily.”

Yellow Sheet has delved into other service opportunities as well. In the past, the company designed websites, managed trade shows, provided credit information and created membership directories for clients. Currently her companies focus on searchable private and public construction information. The Yellow Sheet has also expanded to Vancouver where Appleton has a stake in Green Sheet Construction Data.

“I prefer stilettos to steel toed boots,” said Appleton. “And as it turns out you can have great shoes and be successful in the construction industry. I’m proud of our team’s accomplishments, and I’m thrilled to see Vancouver Island construction develop and flourish.”

About Yellow Sheet

Yellow Sheet Construction Data Ltd. provides exclusive private and public sector construction leads for projects on Vancouver Island. Access to the searchable database is available by subscription. www.yellowsheet.ca

For more information:

Lori Appleton, owner and publisher
250-480-1230 lori@yellowsheet.ca

Please contact me should you require any high resolution images from our 35 year celebration photo shoot taken at Homewood Constructors’ Uptown Place, currently under construction.

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More than $30 M in marine projects expected for Victoria

More than $30,000,000 in marine projects should be underway around Greater Victoria’s shores over the next twelve months. Some projects represent success after years of planning and navigating Victoria’s often contentious court of public approval.

Royal Victoria Yacht Club – Marina Rebuild (YS 12421)

Construction has started on the Royal Victoria Yacht Club (3475 Ripon Rd) on a relatively large project to completely rebuild new docks, including piles, as well as water and electrical service for the marina. The project, which will cost $3,500,000, started in May, 2014.

Notably, the general contractor is Salish Sea Industrial Services, a joint company between the Esquimalt and Songhees Nations that was launched in 2012 and provides marine industrial services on Vancouver Island including dredging, pile driving, water and land based construction, maintenance, and other services.

Songhees and Esquimalt have a 51 per cent controlling interest in the company and a board of directors made up of members of the communities, along with Ralmax Contracting Ltd., which owns the other 49 per cent.

Victoria International Marina (YS 4886)

Construction is anticipated to start in summer 2014 and presales are underway for the long-awaited luxury “super yacht” marina, estimated to cost $22,000,000 to build.

It has been a long road for the Victoria International Marina, with significant public dialogue and opposition before Victoria council finally endorsed the project in September 2011. Federal approval occurred not long after.

Three piles were installed in August, 2013 before work stopped because of a shortage of metal pilings.

The marina will eventually be constructed on 100 of the pilings in front of the Songhees development, in Victoria’s Inner Harbour.

Calgary’s WAM Development Group is the lead developer for the project. The 2.63 hectare water lot will be home to two one-storey buildings housing the marina, a restaurant and café, and other amenities.

A 900 meter floating concrete breakwater will provide 29 slips, with 48 “parking spaces” for mega yachts.

Harbour Air’s Seaplane Terminal and Docks (YS 8704)

Harbour Air Seaplanes (“the world’s largest seaplane airline”) will also be launching yet another marine project expected to cost $4,500,000 at 950 Wharf St in the Inner Harbour.

The project will see the construction of a 2-storey, 5,200 sf seaplane terminal on floats and the realignment and extension of existing docks 25 metres north into parts of the harbour owned by the GVHA.

This is part of a process where the GVHA took back its water lot lease and bought the assets of Hyack Air (to the north of the existing terminal) to organize a single float plane terminal in the Inner Harbour.

Phase 1, the creation of a rectangle of 300 feet of new docks that will allow 12 planes to tie up, has been completed.

Phase 2 will see the creation of a new terminal in 2015. The existing terminal (currently an aging temporary building at the end of the parking lot below Wharf Street) will be demolished and replaced with a plaza, public walkway, benches, trees and bicycle rack.

A public hearing is complete, and construction is expected to start 2015. Strongitharm Consulting is serving as project manager.

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The Rise and Fall, and Rise Again of High Rises in Victoria

orchard house victoria bc

At 21 floors, perched on a rocky outcrop high above the Inner Harbour, the Promontory, located just west of the Johnson Street Bridge between Songhees and Dockside Green, will be Vancouver Island’s tallest building.

It’s hard to think of any similarly tall buildings that have been built in Victoria’s downtown core in recent memory. Sussex Place, which dominates Victoria’s downtown core, stands at 11 stories. The Era, currently being built by Concert Properties on Yates Street, will eventually stand at 15 stories.

In terms of other buildings of stature comparable to the Promontory, there seems to have been a long building drought in the 1970’s, 80’s and 90’s; one has to go back 40 years to when the last ones were built.

View Towers (19 storeys), in downtown Victoria, was built in 1968. Orchard House (22 storeys) was completed in 1969. Until the condo building boom in Victoria over the last ten years or so, these were some of the last truly high-rise apartment buildings to be built in the city.

A bias against high-rise buildings?

Towering over James Bay, Orchard House juts out like a sore thumb behind the Inner Harbour and the Legislative Precinct. “There was a real effort to protect affordable housing in James Bay,” says Peter Pollen, who served two separate stints as Victoria mayor in the 70’s and 80’s. “In the 1960’s many developers were buying up lots, combining them, and building apartment buildings.”

While Pollen says that the planning and construction of Orchard House was before his time as mayor, he notes that what we now consider heritage houses in James Bay had traditionally provided low-cost housing for Victoria’s service workers.

Demolishing the old houses to create highly profitable apartment high-rises were pushing people out of the neighbourhood. Pollen recalls that one tool to deal with the problem was height restrictions, but that the establishment of neighbourhood plans had more of an effect on limiting building heights in Victoria.

Changing ways of thinking about planning

Doug Koch, retired City of Victoria planner, was hired in the 1970’s after the decision to approve and build Orchard House, View Towers and other high rises occurred.

Koch says changing planning decisions in Victoria were also influenced by worldwide trends. Post-war tower blocks like View Towers had been fallen out of favour because they were considered to cause crime and other social problems.

While Victoria never built tower blocks (“View Towers served, and continues to serve as an important source of low-cost housing in the heart of the city,” says Koch), the city experimented with a massive “urban renewal” project in the 1960’s.

As part of this post-war approach to planning, a large swath of “undesirable” housing in the Blanshard-Rose neighbourhood was removed north of Bay Street to make way for what is now the Blanshard Street connector to Hwy 17, as well the Blanshard Court public housing project to the east.

Heritage preservation versus urban renewal

While the Blanshard Court public housing project is still considered to be a success, attitudes towards development were changing by the late 1960’s.  A backlash against the Blanshard-Rose project contributed to the changing mood.

“Instead of urban renewal, the focus changed to heritage preservation,” says Koch. “Initiatives coming out of the 1967 Centennial helped.” As part of the Centennial, the federal government created and offered funding for a neighbourhood renewal program.

A neighbourhood plan was needed qualify for the program and for funding. So, three neighbourhoods in Victoria – James Bay, Fernwood, and Vic West – each created neighbourhood plans of their own.

These plans essentially changed the way development was approached in Victoria from the 1970’s onward. “Until the 1970’s, there was no grassroots planning in Victoria,” says Koch. Residents of the various neighbourhoods had more of a say over planning, which contributed to a decline in massive high rise developments. There was more of an emphasis on heritage preservation, beautification and the creation of green space. It would become more difficult to combine lots and build high-rises.

Martin Segger, a former Victoria city councillor and UVic faculty member who has spent most of his professional career writing about Victoria’s architectural history, notes that infrastructure – or a lack of it – also contributed to a decline in tall, “dense” high-rises in neighbourhoods like James Bay.

“At one time James Bay was actually intended to resemble the dense West End neighbourhood of Vancouver. But after a number of high-rises were built in James Bay, Victoria realized there was service overload,” says Segger. “In order to support more densification in James Bay there would have to be major infrastructure upgrades including sewage and water, and Victoria did not have the money to do it.”

The construction of UVic in the 1960’s, says Segger, also influenced approaches to building in Victoria. “The University of Victoria originally planned to build high-density towers for student housing, but this met with a lot of resistance in Saanich and Oak Bay,” says Segger. “This controversy also had an effect on planning in Victoria, making planners wary of dense high rises.”

Segger says that Victoria actually has a long history of promoting densification. “If you had arrived in the Inner Harbour early in the last century, you would have stepped up from the harbour and, block by block, the building height would have become taller,” with Church Hill and Christ Church Cathedral dominating the skyline in the east.

A legacy of densification, says Segger, and efforts after the war to preserve a walkable downtown, was the creation of high-rise car parks, which still exist today in the downtown core. Planners recognized the automobile was going to have a profound effect on post-war cities. One discarded project was to construct a Trans-Canada Highway viaduct that passed through Vic West, over the Inner Harbour and into James Bay behind the Parliament Buildings.

In the end, says Segger, there is no one cause of building trends in Victoria, such as the apparent decline of high rise towers like Orchard House. Instead, multiple factors influence how things get built, and what does not.

Nevin Thompson regularly writes about Vancouver Island construction projects on behalf of Dinning Hunter, a law firm in Victoria BC.

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“The best way to create more skilled trades jobs is to build more houses”

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“The best way to create more skilled trades jobs is to build more houses,” says Casey Edge, Executive Director of the Victoria Residential Builders Association (VRBA). “At least 20% of the price of a new house goes towards taxes and fees. We have to make it easier for builders.”

Incorporated in 1940, VRBA is the second oldest builders’ association in Canada and represents 100 professional builders and renovators, plus designers, trades and suppliers totaling more than 175 members living and working in Greater Victoria.

Edge points out that housing construction plays an important role powering our economy and creating jobs.

“Besides skilled trades, there are many jobs created downstream of residential and commercial construction,” Edge says. “When you purchase a house you also have to buy furniture. The implications on the economy are profound.”

Edge says he sees increasing life and vitality in store for the region’s home builders, pointing to ongoing growth in the West Shore region, notably the Royal Bay project which is set to transform Colwood.

Edge also points out that a Boomer population edging towards retirement also indicates there will be more jobs in the construction industry.

This demographic shift also presents an opportunity, Edge says, to rethink our approach to post-secondary education.

“Traditionally there are have two choices: go to university, or go learn a trade,” says Edge. “While it’s often said that liberal arts graduates have a tough time finding a job after graduation, on the other hand skilled trades are not entering the workforce with ‘soft skills’ such as business training they need if they want to become contractors.”

Edge is himself a graduate of a liberal arts program, and says having the opportunity to learn some sort of trade would have really helped his career.

“I would have loved to have learned framing while I was in university,” Edge says. “Why can’t university students take a trade as an elective while completing a Bachelor degree?”

Edge also says skilled trades should be given the opportunity to learn more business fundamentals so they can grow construction companies of their own.

“It’s all about creating well-rounded individuals who can play a key role in growing our economy,” says Edge.

The BC provincial government has struggled for over a decade to revamp its approach to training skilled trades.

Most recently, Jessica McDonald, a Ladysmith native and former deputy premier under Gordon Campbell, has released a damning report of the Industrial Training Authority, the provincial lead organization tasked with executing a strategy for increasing skilled trades.

McDonald’s report can be read here.

According to McDonald, while the ITA has created impressive numbers of new apprenticeships since its formation 11 years ago, there are serious questions about the quality of apprenticeship training.

As well, under the ITA’s watch there is a low completion rate and lack of engagement with trade unions, who had traditionally played a key role in apprenticeship training.

In other words, the funnel of tomorrow’s skilled trades is not being filled.

McDonald also recommended that the ITA board include more visionaries, and fewer bureaucrats.

And so the provincial government has appointed Gwyn Morgan as the ITA’s new chairman. Morgan, a former CEO of Encana, has long been critical of the status quo with post-secondary education.

Morgan’s mandate: building stronger partnerships with industry and labour to deliver training and apprenticeships as part of B.C.’s Skills for Jobs Blueprint.

Morgan is on record earlier this month arguing that corporate subsidies should be ended in favouring funding for work skills development.

So Casey Edge’s vision of a more cross-disciplinary educational system may be coming true.

But the three levels of government reducing taxes on new housing, which could in turn help create more jobs for these well-rounded trades?

We’re not so sure if that will be a reality any time soon.

Nevin Thompson regularly writes about Vancouver Island construction projects on behalf of Dinning Hunter, a law firm in Victoria BC. 

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Challenges Facing Mechanical Contractors in 2014 (and for the foreseeable future)

wilf pro star

Wilf Scheuer, president of Pro Star Mechanical, recently addressed a luncheon meeting of ASHRAE’s Vancouver Island Chapter.

The topic was “Challenges Facing Mechanical Contractors in 2014 and onward.”

Wilf’s main observations were:

  1. Take a financial interest in a mechanical and electrical firm to assure allegiance to the General Contractor and no worries on not getting a sub trade price. The GC’s will need to find a suitable partner that works for them.
  2. Open an internal mechanical division or open a separate but captive mechanical – electrical company.

However, Wilf had a lot of insights, so we have published the full text of his speech below.

Challenges Facing Mechanical Contractors in 2014 and onward

– Wilf Scheur

Here’s a short historical look at the industry for the younger folks:

The mechanical business has changed greatly over the years as has the entire construction sector.

I entered the industry in the late 1960’s as an apprentice steamfitter for Comstock Mechanical in Winnipeg Manitoba.  Things were different in those days:

  • Sanitary plumbing was still based on bell and spigot cast iron with melted lead and oakum joints.
  • We assembled threaded galvanize pipe up to 8 inch, using 5ft long chain tong wrenches.
  • Every concrete anchor was drilled in by hand with a large hammer and star bit.
  • All big inch heating and cooling lines were stick welded.
  • Pneumatic controls required miles of copper tubing to be run. Drums of R-11 were used to clean and purge the lines.
  • Hand threading of pipe was still common.
  • Ducts and fans were enormous as were boilers and chillers.
  • Wall fin and big air handlers were high tech.

20 Fitters Working For A Year to Complete a Project

Applying for a job as an apprentice steamfitter – my first test was to arm wrestle the foreman proving that I was strong enough for the job.

A medium sized commercial building would require a crew of 20 plumbers and fitters working for a year or more to complete the mechanical piping systems.

Fast forward – along came MJ couplings, Hilti type drills, Victaulic grooved fittings, ABS and PVC, PEX.

Pressfit has made soldering and threading obsolete. Now we have Sharkbite and John Guest fittings that don’t even need tools they just push together!

DDC controls, wireless controls, high velocity ducting, computerized plasma cutters for sheet metal fittings, plastic tube radiant heating, chiller beams, ductless splits, highly efficient City Multi type units and we find that the actual physical labour required to install all this high tech gear for mechanical systems is cut in 1⁄2 or less, for a similar sized but much more sophisticated building.

Today’s Ideal Worker

The ideal worker today is highly skilled and is required to interface with technologies and controls that are constantly changing.

There are many more code requirements to be aware of and updates to stay on top of. Systems are far more complex now and unforgiving if you make an error. We install equipment across a wide variety of industries.

The new apprentice no longer has to arm wrestle the boss!

Remember Dome Petroleum and Murbs?

Contractors saw steady growth through to the late 70’s.

Besides the commercial and institutional construction that we see in our cities, many industrial projects were on the go. Large hydro dams, power plants, refineries, natural gas pipelines, pump stations, water and sewer plants, pulp mills and mines, nuclear plants, military facilities, and ship building.

Remember Dome Petroleum and Murbs?

Most projects were based on the bid market with the larger industrial projects based on a cost plus or cost recovery model.

Tradesmen enjoyed many opportunities to work on industrial type projects with work available 7 days a week with double time pay rates.

Tradesmen made more money than they ever dreamed of. Union locals were poaching tradesmen from each other, with promises of ever more money and overtime hours. Workers were recruited from Jamaica, Newfoundland and Europe to fill trades positions.

We all thought the good times would never end.

Change Occurred Overnight

We were all shocked to see how fast it did end – and it was almost overnight.

Between 1979 and June 1981 interest rates soared from 11% to 20%. Jobs disappeared; projects were left unfinished and boarded up, capital investment died out along with many construction companies.

In BC the dark age lasted for 6 years and recovery did not start until 1987.

We Face Similar Issues… With an Added Twist

I think we are facing some similar issues with an added twist.

Mechanical contractors in BC saw good times from the late 1980’s until about 1993 when Glen Clark and the NDP government put a big chill on construction in the province.

Fortunately Alberta was booming and many trades workers and contractors were able to fill jobs in the Alberta general construction and energy sector. Many BC trades still work there today. Things improved after the election of 2001 and have generally been good with a few downward blips from the 2008 meltdown.

What Lessons Have We Learned?

What lessons does this bit of history have for us today?

Currently the BC economy is poised for a large and sustained upswing. Commercial, institutional and residential projects continue to be built and major new projects loom on the horizon.

On Vancouver Island we have:

  • A new $1 billion hydro dam project in Campbell River
  • 2 new major hospitals
  • A large CRD sewage plant, plus pump stations and pipelines for the CRD sewage plant
  • Large contracts in our shipyards.

On the Mainland we have the long planned site C Hydro dam pending, a host of pipeline projects, and the enormous LNG industry that the government of BC is pushing to develop.

We already have a shortage of skilled trades in some sectors with recruitment on going now in Europe and the USA.

This will develop into a tighter market for the mechanical and electrical trades and will affect the commercial institutional residential sector in a big way.

Possible Scenarios for Mechanical Contractors

Possible scenarios include:

  • A shortage of workers in our local industry as more workers are lured away by the higher wages in the industrial sectors of northern BC and Alberta.
  • Attrition of mid-sized mechanical and electrical contractors as older contractors either retire or also go to work in the industrial sector. Why beat your head against a wall in Victoria when you can make a $150K a year with no risk on an industrial project.
  • Another scenario is the Baby boomer affect. Many experienced contractors and skilled tradesmen are in their late 50’s to early 60’s and due for retirement. The highly developed skill levels of the older tradesmen will be lost. It is also very difficult for younger tradesmen to qualify for bonding, financing, and obtain major supplier open credit accounts, all of which are required to operate new mechanical and electrical firms.
  • Some projects will not attract any qualified bidders as the supply of workers evaporates.
  • Prices will rise substantially for bids as the amount of work available far exceeds the capability of the work force.
  • Contractors will not be able to meet the project schedules as workers become harder and harder to recruit and quality issues become a problem. Projects will require overtime to come in on schedule. Overtime is very expensive and will drastically cut profits on projects.
  • Many opportunities for apprentices and trainees. The BC government is suggesting that 25% of workers in the LNG sector will be apprentices. This means one apprentice for every 3 journeymen. To allow for growth in the construction sector and allow for workers who retire I believe the ratio should be much higher. Young men and women have many opportunities for high paying jobs in the construction industry.
  • Some projects are delayed or cancelled due to uncertainty in the market.

Strategies for Mechanical Contractors

Mechanical contractors will have choices:

  • Stick with the existing system and continue as per past practice. This may not be the most profitable plan.
  • Develop alternate strategies and pursue expanded opportunities in the residential and commercial sectors to upgrade mechanical systems in existing buildings. Improving energy efficiency is becoming more and more important as prices for energy rise and building codes tighten up.
  • Work directly with owners and engineering consultants on a design build basis. Sell new construction services directly to owners and bypass the bidding process all together. Specialize in a selected technology or product that offers a high value return.
  • Partner with utilities in providing upgrade equipment with built in financing, for mechanical systems on existing and new projects.
  • Explore partnerships with industrial contractors or owners to provide specialty services.
  • Take a financial interest in a mechanical and electrical firm to assure allegiance to the GC and no worries on not getting a sub trade price.
  • The GC’s will need to find a suitable partner that works for them.
  • Open an internal mechanical division or open a separate but captive mechanical-electrical company.

Solutions for General Contractors:

In summary there are significant opportunities in the mechanical construction sectors for the next 10 to 15 years for expansion and growth in sales and overall profit.

However much planning and industry wide co-operation will be required, to ensure that the skilled manpower required is available to complete projects on time and on budget.

BC and Canada are competing in a world market for skilled labour resources and this reality will change the way we do business.

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