01.day 1 - 945AM - B.Colins

Senior Economist
BuildForce Canada
19th Annual Shutdown Turnarounds SuperConference

December 8, 2020
Covid-19 Pandemic
▪ Heading into 2020, Canada’s construction industry was

poised for another year of strong growth.
− strongest demands expected in British Columbia and Ontario
with anticipated recruiting challenges.
− Weaker conditions in energy producing provinces; Alberta
(except for shutdown/turnaround maintenance work) and
Newfoundland and Labrador
▪ Pandemic took hold in March; construction was not
immune with the biggest impacts in Ontario and
Quebec with mandatory closures of non-essential
construction
− provinces introduced new health and safety protocols to allow
construction operations to continue throughout the spring, but
work proceeded at a slower pace; some project delays
− improved on-site sanitation and hygiene stations were
introduced, as well as other best practices to minimize the
contact of workers with each other.
2
National Highlights
▪ Residential construction, has been a little more resilient than Confused by the economy
initial expected with housing starts holding steady or moderate during the COVID-19
declines in some provinces; stronger renovation work. pandemic? Don't worry, so
are the economists
▪ Non-residential construction projected to decline in 2020 across CBC News · Posted: Dec 05, 2020
most regions; expected to rebound in 2021 but some markets

may remain more muted over the near term (commercial)
− institutional and civil construction; anticipated to remain strong to the
extent that governments at all levels retain their capacity to fund
projects.
▪ Key challenges to the outlook scenario is the increased risks
associated with the 2nd wave, vaccine distribution, lost
productivity driven by increased safety protocols, the impact on
project schedules/delays and potential rising costs.
▪ While markets have improved, conditions vary significantly across
provinces and sectors and much depends on the timing of current
and proposed projects over the near term.
Construction labour market, Canada
Monthly Labour Force Survey, 2019-2020

▪ February – April, (unadjusted for seasonality)
1,800 25
construction lost 266,100 Apr ‘20
jobs; unemployment 1,600 20.5%
increased from 8.1% to 20
1,400
20.5%
Excess supply rate (%)

▪ As economies reopened; 1,200
Number of workers
construction employment 15
1,000
increased recovering lost
jobs but remained 6% below 800 Apr ‘19
10
same period last year for 8.9%
600
October Feb ‘20
400 8.1%
▪ The unemployment rate 6.8% 5
currently stands at 6.8%, Oct ‘19

200 4.7%
compared to 4.7% last year.
0 0
Oct-19
Oct-20
Apr-19
Apr-20
May-19
Jul-19
May-20
Jul-20
Nov-19
Dec-19
Aug-19
Sep-19
Aug-20
Sep-20
Jan-19
Mar-19
Jun-19
Jan-20
Mar-20
Jun-20
Feb-19
Feb-20
Employment Labour force Unemployment Rate
Source: Statistics Canada. Table 14-10-0023-01 Labour force characteristics by industry, annual (x 1,000)
(Preliminary, December 2020) - Construction and Maintenance Looking Forward

Provincial construction labour market, Alberta
• Following a significant
Monthly Labour Force Survey, 2019-2020
recovery from the height of (unadjusted for seasonality)
the economic shutdown in 300,000 25
April, employment has seen
limited growth – hovering 19.1%
near 232,000 250,000
20
• On a year-over-year basis,
Unemployment rate (%)

employment in construction 200,000
was down 5% in October
Number of workers
15
• Hours worked have 150,000

rebounded at a slower pace 10
than employment – down 12% 100,000 Oct ‘20
compared to last year 10.1%
Oct ‘19
• The unemployment rate 50,000 6.5%
5
currently stands at 10.1%,
higher than the average
historic rate 0 0
Oct-19
Oct-20
Apr-19
Apr-20
May-19
Jul-19
May-20
Jul-20
Aug-19
Sep-19
Nov-19
Dec-19
Aug-20
Sep-20
Mar-19
Mar-20
Jun-19
Jan-20
Feb-20
Jun-20
Employment Labour force Unemployment Rate
Source: Statistics Canada. Table 14-10-0023-01 Labour force characteristics by industry

Key projects driving investment:
Non-residential construction, Alberta - Chemical manufacturing (Interpipeline, Pembina)
- Pipeline projects (TransMountain, Keystone XL,
Nova Gas, Keyera, Pembina)
Investment (adjusted for inflation in $2012 millions) - Light rail transit (Calgary Greenline, Edmonton
Valley Line)
60,000 - Commercial declines are partially offset by
increased institutional education and health care
Forecast projects
- Renewed oil sands investment starting in 2023
50,000 helps stabilize markets and generating a small
upward trend.
Investment ($2012 millions*)
40,000
30,000
20,000
10,000
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Non-Residential
* $2012 millions indicates that the investment values are in year 2012 dollars (base year), that is, adjusted for inflation. This is used to calculate the real physical
year-to-year change of the value of construction, factoring out growth (increase in value) due to increases in prices.
Source: Statistics Canada, BuildForce Canada (2020-2029)
** industrial, commercial, institutional
Note: Non-residential construction excludes the value of machinery and equipment.

Non-residential construction, Alberta
Investment: Oil sands (new and sustaining)

40,000
Forecast
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Sustaining New
Note: investment displayed in this chart includes the value of machinery and equipment
* $2012 millions indicates that the investment values are in year 2012 dollars (base year), that is, adjusted for inflation. This is used to calculate the real physical year-to-year change of
the value of construction, factoring out growth (increase in value) due to increases in prices.

Non-residential construction, Alberta
Investment: other engineering construction

14,000 Forecast
12,000
10,000
8,000
6,000
4,000
2,000
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Other engineering
* $2012 millions indicates that the investment values are in year 2012 dollars (base year), that is, adjusted for inflation. This is used to calculate the real physical year-to-year change of the value of
construction, factoring out growth (increase in value) due to increases in prices.
Note: Engineering construction excludes the value of machinery and equipment. Other engineering includes pipelines, water and sewer lines, pumping stations, treatment plants, transit systems, tunnels,
and other civil engineering.

Potential market challenges 2021 and 2022? Competing demands Major capital vs
maintenance work?
Retirements (older workers)?

Seasonal Shutdown/Turnaround Peaks
Mobility Decisions Leaving to other industries
(younger workers)?
BC: LNGs, pipelines,

infra.
Utilities
High demands!
Aging workforce –
Atlantic Canada
AB: Petro Chem - Less wiling to travel?
SK/MB: major projects QC: Steady rise in - Work at home?
Maint. work institutional, transit
Seasonal Peaks winding down - Retire?
Weaker conditions and utilities projects
ON: Nuclear Refurb.
Transit, Industrial
High demands
Non-residential construction investment, Ontario
$2012 millions – adjusted for inflation
60,000
Forecast
50,000
40,000 Current / proposed projects expected to sustain non-residential

construction investment to peak:
− nuclear refurbishment (Ontario Power Generation, Bruce
Power)
30,000 − industrial (maintenance, Nova Chemicals – Sarnia)
− light rail transit; subways, other transit infrastructure
− international bridge (Windsor)
20,000 − Low rates of unemployment contribute to recruiting
challenges; especially in the Greater Toronto Area and
Southwestern ON
10,000
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Non-Residential

Non-residential construction investment, British Columbia
$2012 millions – adjusted for inflation
25,000 Forecast
+4%
20,000
+19%
15,000 − Long list of current / proposed projects that spans all parts of non-
residential construction expected to step up over the next few years;
tight market conditions prevail over near term
− liquefied natural gas (LNG Canada, Woodfibre) and pipeline projects
10,000 − utilities (Site C),
− transit, road/bridge work
− heath and education services projects
5,000
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Non-residential

Market Risks into 2021 – Planned Major Projects
▪ Long lists of transit, health care, education, roadwork and other civil
infrastructure are key drivers of non-residential construction - timing
of ‘shovel ready’ projects is critical; some schedule implications with
project delays
▪ Commercial construction hit hard by 2020 pandemic that will carry
into 2021 and longer ~ a few years to get back to 2019 levels of
activity
▪ Demands are there but uncertainty remains – final investment
decisions (private, federal, provincial, municipal)
− private investors expected to be more cautious post-COVID
− Provinces / municipalities wrestle with deficits/debt over the near term
▪ Ongoing risks into 2021- productivity, increased costs, supply chain,
mobility, labour supply (some workers reluctant to return to work or
travel), aging workforce (supervisors/managers)
▪ Shutdown/turnaround work in 2021 and 2022 will be competing
against rising demands BC and ON

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Senior Economist

19th Annual Shutdown Turnarounds SuperConference

▪ Heading into 2020, Canada’s construction industry was

most regions; expected to rebound in 2021 but some markets

Monthly Labour Force Survey, 2019-2020

Excess supply rate (%)

currently stands at 6.8%, Oct ‘19

(Preliminary, December 2020) - Construction and Maintenance Looking Forward

Unemployment rate (%)

• Hours worked have 150,000

(Preliminary, December 2020) - Construction and Maintenance Looking Forward

Note: Non-residential construction excludes the value of machinery and equipment.

Investment: Oil sands (new and sustaining)

(Preliminary, December 2020) - Construction and Maintenance Looking Forward

Investment: other engineering construction

(Preliminary, December 2020) - Construction and Maintenance Looking Forward

Retirements (older workers)?

BC: LNGs, pipelines,

40,000 Current / proposed projects expected to sustain non-residential

(Preliminary, December 2020) - Construction and Maintenance Looking Forward

(Preliminary, December 2020) - Construction and Maintenance Looking Forward

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