B.C. contractors continue to operate in a challenging, high-risk market. Not long ago, industry insiders could say confidently that B.C.’s construction industry was “booming” and filled with opportunity.
Despite a shortage of skilled workers, things were good and getting better.
We can’t say that now.
The end to the concrete truck drivers’ strike couldn’t have come fast enough.
In the midst of a volatile economy, Vancouver’s industrial, commercial and institutional builders are straining to meet the record-setting demand for construction services. As the risk factors continue to rise, many contractors are nearing a breaking point.
The BC Construction Association’s 2023 provincial budget submission to the Select Standing Committee on Finance focused on the need for prompt payment legislation.
The legislation would unlock cash flow and offer some counterbalance to the increasing fiscal pressure on contractors.
Let’s look at just a few of the challenges industry operators are dealing with now:
- material cost escalations;
- supply chain disruptions;
- inflation and rising interest rates;
- contract terms and risk transfers so “creative” that all too often it’s a sickening risk to sign;
- high cost of staffing and the retirement of experienced workers;
- late payments – often well beyond 120 days – that are getting later (late payments beyond 30 days can be disastrous – only in construction do we consider longer terms “acceptable”); and
- surprise labour legislation, such as B.C.’s new five-day mandatory sick leave and Bill 10, which brings card checks and annual union raids back during the height of the summer building season.
More than ever before, market conditions are too unknowable, demands are too high and outcomes too unpredictable. The fact that there is so much work doesn’t diminish the risks or mitigate their impact to existing contracts.
Rather than layering on challenge after challenge and change after change, and playing to ideology rather than necessity, the provincial government needs to get back to basics to support B.C.’s 25,000 contractors and the 240,000 people who work for them.
With unprecedented levels of investment in public infrastructure comes a responsibility to strengthen the industry that’s needed to build that infrastructure.
Here are five actions to head off the failures that are looming on the near horizon:
1) Prioritize prompt payment legislation for fall 2022.
2) Implement targeted price escalation clauses that allow reasonable flexibility in existing and new fixed-price contracts.
3) Require public owners to limit bid and price acceptance to a maximum of 30 days (as even 30 days is not always possible).
4) Create a “fast track” for skilled tradespeople coming to B.C., like the fast track already created to bring in labour for the technology sector through the Provincial Nominee Program.
5) Forgive all post-secondary student loans for young people who get jobs in B.C.’s construction industry and register as apprentices, allowing them to earn out their loan with each year of completed apprenticeship training.
B.C.’s construction industry was designated essential as it worked throughout the pandemic and kept the economy going in communities across the province.
Now, as B.C. strives to recover from the economic effects of COVID-19, the construction industry’s role and survival is more important than ever.
Yes, there is opportunity. But if that opportunity is going to cost you your business, your health, your peace of mind…
We’ve all learned a lot about life balance in the last two years. When risks are so high that long-time, successful contractors are openly questioning their future in the industry, we need to listen. Let’s not take anything – or anyone – for granted.
• Chris Atchison is the president of the BC Construction Association.