With global financial markets in turmoil, the American housing industry devastated, government changes in both Canada and the United States, and labour shortages still a big factor in the industry, it is not surprising that many construction professionals across the nation remain “cautiously optimistic” about 2009, even as they gaze into a rather murky crystal ball.

“The crystal ball is a lot cloudier for us now that it was several months ago,” says Keith Sashaw, president of the Vancouver Regional Construction Association. “I think we’ll see a deeper and more profound slowdown in 2009 than we expected, with a lot of plans on hold until there is a little more certainty in terms of lending.”

British Columbia will still have “a strong year, but there are going to be adjustments,” says another industry professional from BC.

“While the major projects inventory list here continues to grow (currently at about $168 billion), we are beginning to see a slowdown in the private sector projects,” says Manley McLachlan, president of the BC Construction Association. “This is limited to high rise residential projects primarily in Vancouver and Victoria.”

McLachlan agrees the current financial crisis in the US will impact projects in the province as credit tightens and developers re-evaluate the viability of projects based on lending requirements. Public infrastructure projects, such as hospitals, government buildings, and engineering construction will continue to provide employment for construction workers in Western Canada; the trick will be to find enough skilled trades and labourers to start some projects.

Both BC organizations are facing serious labour shortages over the next six years. Canada’s Construction Sector Council estimates BC will need 45,000 new construction workers by 2015, not including an estimated 25,000 workers who are likely to retire during the same period.

“It’s not just the guys with the tools in their hands,” Sashaw says. “It’s also going to be very difficult to fill management and mid-management positions.” “Despite the slowing in the market we cannot afford to take our eye off the ball when it comes to labour supply,” says McLachlan. “The critical issue is the retirement factor.”

The BC Skilled Trades Employment Program will continue to inject new apprentices into the system, but both McLachlan and Sashaw agree labour shortages will drive their industry to look at more efficient ways of building to increase productivity in 2009 and beyond.

The labour outlook for the Atlantic provinces of New Brunswick and Newfoundland and Labrador is much the same, according to two senior construction association officials.

“What’s really hurting us is the lack of skilled trades,” says Rhonda Neary, president and chief operating officer of the Newfoundland and Labrador Construction Association. “We have concerns that some tenders are being held back because it may be more than our current labour force can handle.”

Neary says if some of that work is not tendered, it will worsen an already depleted skilled trades work force in Newfoundland and Labrador – a work pool that “dried up” when many east coast workers found steady employment in BC and Alberta.

Neary says also that with material costs “skyrocketing” almost weekly (steel alone jumped 79 percent in 2008), and fuel costs rising, it’s hard for builders to budget realistically for future projects, mainly in the commercial sector.

“We feel that there needs to be more open lines of communication between our association and owners, to ensure the industry remains viable in Newfoundland and Labrador,” she says.

The labour shortages are “currently specific to certain trades, but this is expected to change over the next few years with significant shortages developing in all trades,” says Hilary Howse, executive director of the Construction Association of New Brunswick.

Howse says that 2009 should bring “continued growth” in the level of construction in New Brunswick, with a “fairly strong year [predicted] for industrial and commercial construction.” However, he cautions that mega projects like a proposed refinery, or a second nuclear power plant in the province, will need to be firmed up in order to drive exponential growth for his members.

Most major construction projects in New Brunswick centre around the energy hub, Howse says, so Saint John is likely to be the place “with the most intense activity next year.” That concentrated growth can still be affected by continued downward changes in the global financial markets, and Howse sees some need for caution as the industry moves forward.

“Economic growth and construction go hand-in-hand, and anytime you see a significant fall in the market, a reduction in construction usually follows,” he says.

The Atlantic Provinces Economic Council (APEC), and the Atlantic Canada Opportunities Agency (ACOA) are jointly projecting major non-residential construction for the region will be in the range of $15 to $19 billion in 2009.

Saskatchewan is looking to continue the accelerated growth it experienced in 2008. Despite global commodities’ markets levelling, the Saskatchewan Construction Association is predicting strong growth in all sectors.

“We expect the construction industry to continue its strong pace in 2009,” says association president Michael Fougere. “Despite the market upheavals we are experiencing worldwide, all indications are that we will continue to see growth in our industry as our economy continues to expand.”

That optimism is also shared by major lenders. Several large Canadian financial institutions, including the Royal Bank, are maintaining predictions that Saskatchewan will lead growth in Canada next year.

Fougere says his province’s forestry sector, like those in BC and Alberta, has been impacted by the slumping US housing industry; but, he also sees strength in Saskatchewan’s other natural resource sectors, along with grain-based agriculture that will continue to drive growth in both non-residential and the housing markets. As the Royal Bank pointed out in October, Saskatoon and Regina are expected to grow faster than any other cities in Canada in 2009.

“Our resource sector and high prices for exports for commodities like potash, uranium, oil, and grains are indicative of strong economic growth,” Fougere says. “Unless some unforeseen event takes place, and that is always possible, we see continuing strong growth through next year.”

Fougere also agrees the skilled labour shortage is the single biggest issue facing our industry.

“Our industry is facing a severe shortage that will have an impact on the timing and cost of projects,” he says.

The Saskatchewan Labour Market Information Committee for the Construction Sector Council is predicting Saskatchewan will need about 3,800 skilled workers to meet industry growth, plus another 4,000 people to accommodate attrition over the next three to five years.

Fougere’s association is working closely with provincial and federal governments to ensure the skilled trades are not only promoted to younger Canadians, but that viable apprenticeship and other training programs are set up. That training strategy, along with lobbying to streamline immigration rules for skilled foreign workers is also a common goal among Canada’s various construction associations.

“We are promoting the construction trades as a first career choice and not a last choice for our youth,” Fougere says.

Katherine Jacobs, director of research and analysis for the Ontario Construction Secretariat, sees major institutional and heavy engineering projects as the drivers for non-residential construction there next year. Commercial development is slowing down, and “not much is happening” in the industrial construction sector in Ontario. Global financial stress is also making it difficult to plan ahead.

“It’s pretty hard to predict,” Jacobs says. “I don’t know that it will be a strong year, but it will be steady.”

“There’s always that pattern of growth, followed by recession and a lag in new starts, and then it takes a while for the economy to start up again,” she says.

“[The labour shortage] is not quite the same here as BC and Alberta, and our analysis indicates we’re in balance,” she says. “There may be peak time shortages, but nothing out of the ordinary. Most of our workers have chosen to remain in Ontario.”

Quebec’s construction industry is booming and geared for continued growth in 2009, according to Luc Bourgoin, chief economist for l’Association de la construction du Québec (Construction Association of Quebec), and capital investment in construction projects next year are expected to exceed the $38 billion realized in 2008.

Bourgoin says construction activity in Quebec has increased 120 percent since 2000.

“This is good news considering the difficult economic times Quebec and our major partners are going through right now,” he says. “Major investments in the public sector, along with a commercial demand that is still holding, are among the reasons why our construction industry is doing so well.”

Bourgoin says the residential sector is expected to slow down over the next several years, but that will be offset by increased activity in the non-residential sector. Industrial construction is sluggish, but “in the commercial sector, investment in retail construction will increase again in 2009.”

“All and all we should see a notable increase in capital investments in the commercial sector in 2009,” he says. “And the outlook is very good also in the institutional sector with three major hospital projects scheduled for Montreal, totalling at least $3.5 billion.”

The Quebec Infrastructure Plan recently announced $30 billion in major projects over the next five years.

“There will be a strong demand for many trades over the next few years, and some could face labour shortages,” Bourgoin says. “An annual average of 14,000 new employees will be recruited between 2008 and 2012, with an ongoing awareness campaign aimed at generating interest from students and people seeking jobs in the construction industry.”

George Gritziotis, executive director of the Construction Sector Council in Ottawa, says growth in Canada’s construction industry, as a whole, is expected to slow next year, with overall expenditures rising just over 2 percent, from an annual average of 6.5 percent since 2001.

“The weakest performance of the industry will be in Ontario where expenditures are predicted to decline by about 1 percent (from 2008),” Gritziotis says. “The strongest performance will continue to be in the west where growth is expected to be closer to 5 percent in 2009.”

The CSC expects the recent non-residential construction boom to peak in 2009, with residential investment declining across the country. However, Gritziotis says all non-residential investment is “expected to show relatively strong growth in 2009,” but still end up “well below the 10 percent [growth] observed in 2005.”

Nothing major has changed regarding CSC’s outlook for labour shortages in the medium term; but Gritziotis says weaker than expected economic and investment growth would take some pressure off of the construction labour market.

“The industry does not change in a 12-month period,” he says. “We must manage during times of labour shortages and surpluses.”

He also says the economic slowdown in the US has impacted our construction industry through Canadian sectors that traditionally supply their housing market with construction materials. BC has experienced “sharp drops” in wood products exports; Alberta’s energy industries are cutting back. Drops like these “produce weaker growth in the respective provinces, which affects both residential and non-residential investment spending.”

“With the recent events in the financial markets, it is difficult to predict new trends,” Gritziotis says.