Activity in Edmonton’s construction sector is feeling the effects of a prolonged slowdown and local companies are moving their workers out of the city in an attempt to cope.
New data released by Statistics Canada this week shows the total value of building permits in the Edmonton region fell to $3.9 billion in 2019, a 21.5 per cent decline from the $4.9 billion recorded the year before.
It was the fifth consecutive drop in building permit values for Edmonton and the steepest annual loss recorded among metropolitan regions across the country.
John McNicoll, executive director of the 1,300-member Edmonton Construction Association, describes the ongoing slump as a crisis.
As work dries up in the capital region, large construction companies such as PCL Construction are bidding on projects across Canada, the United States and beyond, McNicoll told CBC Radio’s Edmonton AM on Tuesday.
‘Go to where the fish are running’
“The largest of our companies, they go to where the fish are running,” McNicoll said. “It’s hot right now in Vancouver and Toronto; there is a lot of building going on. And internationally and just south of the border, some companies will be headed there.
“It’s not dire to the point where you would say, ‘We’ve got to shut down and go to another place,’ but some have had to be creative to find work.
“It depends on their balance sheet, if they have the health to hold their employees through these cycles.”
When it comes to construction, Alberta is facing a different reality from other parts of the country where construction activity is comparatively busy.
According to Statistics Canada, municipalities across the country issued $102.4 billion worth of permits in 2019, an increase of 2.6 per cent from 2018.
Alberta, meanwhile, recorded a decrease of $1.8 billion, the largest decline across the country.
McNicoll said business has been slow for the local construction sector since oil prices started to plummet in 2015. Commercial construction projects have taken the biggest hit, he said.
Edmonton non-residential building permit values declined 30 per cent year over year, falling from $509 million in the final three months of 2018 to $355 million during the same period in 2019.
“We had three years in 2013, 2014 and 2015 that were incredibly high on the build side and that was partially due to the high price of oil at that time,” McNicoll said.
“There is a slowdown that is happening in Alberta and there is a trickle effect … as people get concerned about the whole economy, they think, ‘Let’s hold off on spending.'”
Lower oil prices have hit the construction sector hard as investors claw back spending on major projects or shelve them altogether.
“When money is great, you start planning to build and then two years later, you’re actually building and people are getting paid in construction,” McNicoll said. “There is quite a cycle and lag in construction.”
The city expects to see a continuation of current conditions. City of Edmonton spokesperson Karen Burgess said a “modest” reduction of 1.2 per cent in overall building permits is expected in 2020. Fewer new projects are breaking ground, she said.
The mobility of construction people is a wonderful thing.-John McNicoll
McNicoll said even if construction activity remains sluggish, companies have been surprisingly resilient.
“The mobility of construction people is a wonderful thing,” he said.
“If you put up your hand right now in Edmonton sand say, ‘I’m willing to move,’ you’re going to get a move.
“And there is an increased volume of bidders on jobs and that tends to drive the price down so it’s a phenomenal time to build.”