Spending on public, commercial, industrial projects slides in Alberta
'People are in survival mode,' says Calgary Construction Association
You've probably never heard of Executive Millwork, a Calgary company that designs, builds and installs custom woodwork.
Many of its projects are on full display in some of the city's high-profile buildings — including the new downtown library, a concert hall at Mount Royal University and the YMCA in Rockyridge.
But the 35-year-old company has seen some of its work dry up, and as a result some employees have been let go.
"This past year, we've seen a decline in our staffing levels … it looks to be a slow year this year," said Kyle Roll, the company's business manager.
The company peaked with about 75 employees last year, but when those big projects wrapped up last year, people were let go. Today, they're down to 65 employees.
Like so many things in Calgary, Executive Millwork's future is tied to the health of the oil and gas industry. He says the emptying out of nearly a quarter of the offices in downtown Calgary has had a big impact.
"There's an overabundance of office space, so that's been a large slowdown in the building community," he said.
Statistics Canada backs up what Roll is seeing. Investment in non-residential building projects has been falling in Alberta and Calgary this year.
Over the past 12 months, investment peaked at $333 million in October in Calgary — and it's been trending downward since, settling in at $287 million in May.
On the non-residential side, there are several megaprojects underway in Calgary, including the $1.4-billion cancer centre and the $1.4-billion southwest ring road. There's also hundreds of millions of dollars in school construction projects scheduled to continue over the next few years — all of those projects are publicly funded.
Statistics Canada figures suggest that number is also trending downward in Alberta.
In May 2018, the amount of investment in government and institutional projects was $227.6 million. Fast forward to May of this year, when the number came in at $178 million.
Commercial and industrial investment has also been trending downward in Alberta, but year over year it's up by $25 million to $531 million.
'People are in survival mode'
The Calgary Construction Association says many of its 800 member companies are familiar with Calgary's up and down economic cycle, with plenty of peaks and troughs, but this downturn has lasted longer than most.
"There's a protracted bottom to this downturn that is extending with no quick end in sight," said Bill Black, the association's president.
Black says three big city projects are creating some optimism: the BMO centre expansion, the Green Line LRT project and the proposed event centre. But most of that work — if it proceeds — is still a few years off.
"They are not going to lead to volume and opportunity for our members and our industry right now," he said.
He says those timelines are creating anxiety.
"Above all else, people are in survival mode in a very tight market where even if there is work, there are very tight margins," said Black.
It means more companies are bidding on fewer projects, driving costs and profit margins down.
Black says the three Calgary megaprojects are simply not enough to create what he calls a "true backlog of opportunity."
He says there have been a number of business bankruptcies and he fears there could be more.
More people working in construction
While investment is trending downward, the number of people working in construction in Alberta is hovering at just under 245,000 — the highest number since last November. It could climb even higher.
KGL Constructors, a partnership that's building the southwest ring road, says it has yet to ramp up hiring this construction season.
"We're continuing to hire skilled trade workers, as well as other roles such as engineers, quality inspectors and superintendents," said Ian McColl, a spokesperson for the joint venture between Kiewit, Graham and Ledcor.
McColl says they expect employment to peak at over 1,400 employees later this summer.
The city has a number of large scale projects underway or planned, including the widening of Crowchild Trail over the Bow River, the Bonnybrook wastewater expansion and a new parkade in East Village.
The Calgary Construction Association fears the province may cut public infrastructure spending when the UCP government tables its first budget in late October.
"If that does change and it is no longer a major conduit of work, it will absolutely create further stress on the industry," said Black.
Roll is hoping things turn around next year. Executive Millwork is putting together a bid for some of the custom woodwork inside the city's new cancer centre.
"We're fighting hard to keep busy and hope that the large projects keep coming around because those are the ones that really keep people working for a longer period of time," he said.
Bryan Labby is an enterprise reporter with CBC Calgary. If you have a good story idea or tip, you can reach him at firstname.lastname@example.org or on Twitter at @CBCBryan.
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