CONSTRUCTION LOOKING FORWARD

An Assessment of Construction Labour Markets from 2012 to 2020

ALBERTA

Construction Looking Forward Alberta

Contents

Highlights and Introduction Economic Assumptions Investment Outlook: Building Trends and Major Projects Construction Labour Requirements The Available Workforce Market Rankings and Mobility Conclusion

Note: Definitions, methodology and detailed tables are available at www.constructionforecasts.ca

Construction Looking Forward 2012

Reports on the state of construction labour markets in Alberta from 2012 to 2020 are based on:

• a current macroeconomic and demographic scenario

• a current inventory of major construction projects

• the views and input of provincial LMI committees

Introduction

Highlights

Construction Looking Forward for 2012 provides an assessment of labour markets from 2012 to 2020.

Alberta’s construction industry returns to the record high peak levels of activity reached between 2006 and 2008, surpassing previous peak employment requirements by 2015.

Meeting near-term labour requirements depends on the industry's ability to draw in an equivalent number of out-of-province workers to replace the number that exited during the 2009 recession.

The expansion that begins in 2015, however, will once again test the capacity of the industry’s workforce, as growing residential and non-residential building construction requirements stack on top of a second wave of major natural resource-related engineering projects.

Highlights

Over the long term, sustaining capital projects and shutdown/ turnaround work will play a more important role, as all the new facilities being built will need to be maintained.

The ability of Alberta’s construction industry to recruit for the oil sands, pipelines, utilities and other industrial projects depends on the mobility of key trades and on competing demands from other major resource-based projects across Canada.

Economic Environment

It is assumed that the federal and provincial governments will begin to reduce both current and capital expenditures in an effort to eliminate deficits.

The short- to medium-term outlook for major trading partners is weaker.

In the long-term, economic growth strengthens in both major trading partners and Canada, as deficits and debt come under control.

Canadian output growth will average around 2 percent across the 2012–2020 period.

In the medium term, inflation and interest rates remain low, but rise in the long term as growth strengthens.

The Canada-U.S. exchange rate remains strong in the short term, but falls toward its underlying value over the scenario period.

Economic Environment

Commodity prices

Oil prices recovered in 2010 and into 2011, but are expected to weaken somewhat in 2012 and 2013 in line with weaker world growth, and then recover thereafter in line with stronger economic growth.

Natural gas prices remain weak because of expected increases in shale gas and then start to strengthen after 2015.

Agricultural prices continue upward over the scenario period reflecting a tightening of these markets.

Metals and mineral prices continue to trend upward, reflecting the growth of the world economy driven to a large extent by China and Asia.

Construction by sector

Residential investment experiences an extended period of rapid growth from 2012 to 2017 driven by rising housing starts.

• By 2014, investment reaches historical peak levels experienced in 2007.

Commercial building construction grows in line with business activity and population growth across the scenario period.

Institutional and government investment picks up later in the scenario period following a period of deficit elimination induced by fiscal restraint.

Oil sands investment continues to rise slowly to 2014 and then accelerates over the latter half of the scenario period.

Investment Outlook for Alberta

Residential Construction Investment($2002 millions)

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

New housing Renovations

Housing Starts and Household Formation (000s)

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

0

10

20

30

40

50

60

Housing starts Household formation

Non-residential Construction($2002 millions)

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

0

5,000

10,000

15,000

20,000

25,000

Building Engineering

Investment Outlook

Alberta: selected major projects

The CSC tracks major projects underway or planned for construction in the province. While there are too many to list here, following are a few examples:

• oil sands and related projects

• pipelines (Northern Gateway, Woodland extension, etc.)

• transmission lines (ATCO Power and AltaLink)

• Quest Carbon Capture and Storage (CCS) Project

• Bow City Power’s 1000MW coal-fired power plant

• Maxim Power’s 500MW generation plant

• transportation projects (light rail, airport developments, etc.)

Building Construction($2002 millions)

20

03

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

0

1,000

2,000

3,000

4,000

5,000

6,000

Industrial Commercial and institutional

Engineering Construction($2002 millions)

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

0

2,000

4,000

6,000

8,000

10,000

12,000

Highway and bridge Oilsands Other engineering

Construction Labour Requirements

The outlook for Alberta’s construction industry can be characterized as a volatile and extended period of expansion as the province continues to develop its natural resources.

• Construction employment recovered some of the losses from the 2009 recession by 2012, restoring more normal levels of unemployment and balanced labour market conditions for most trades.

• The current cycle of major resource-based engineering projects sustains moderate employment growth to 2013, tightening labour markets for some specialized trades and occupations.

• Expansion resumes from 2015 with a second wave of oil sands-related engineering investment. Rising demands from non-residential building and new housing construction further limit the local pool of labour to meet demands.

Construction Employment in Alberta

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Non-residential Residential Total

Nu

mb

er

of

wo

rker

s

History Scenario

Construction Labour Requirements

Residential cycle

A housing boom from 1999 to 2007 carried housing starts over household formations.

Economic conditions weakened in 2008 and 2009. Housing starts fell from 48,000 units in 2007 to approximately 20,000 in 2009.

Conditions improved in 2010 as both housing starts and total residential investment increased. Activity slowed in 2011 and then resumes across the remainder of the outlook scenario.

New residential and renovation investment increases steadily between 2012 and 2018.

Employment increases by 17 percent between 2012 and 2020.

Residential Construction Employment Index for Selected Trades in Alberta

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

90

95

100

105

110

115

120

125

130

135

140

Painters and decorators Residential and commercial installers

Residential home builders and renovators Roofers and shinglers

Ind

ex 2

009

= 1

00

History Scenario

Construction Labour Requirements

Non-residential activity

Strong gains from 2010 to 2011 improved employment conditions, but employment remained below the 2008 peak.

Non-residential construction labour requirements continue to rise steadily from current high levels, surpassing the 2008 peak by 2016.

Labour requirements are driven by rising oil sands investment and increased activity in electric utility, transmission, pipeline and other industrial construction.

Distinct changes in sub-sectors will shift labour requirements.

Non-residential construction employment rises 20 percent from 2012 to 2020.

Non-residential Construction Employment Index for

Selected Trades in Alberta20

06

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

90

100

110

120

130

140

150

160

170

Gasfitters Sheet metal workers

Steamfitters, pipefitters and sprinkler system installers Welders

Ind

ex 2

009

= 1

00

History Scenario

Non-residential Construction Employment Index for

Selected Trades in Alberta20

06

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

70

80

90

100

110

120

130

140

150

Drillers and blasters Heavy-duty equipment mechanics

Ind

ex 2

009

= 1

00

History Scenario

Non-residential Construction Employment Index for

Selected Trades in Alberta20

06

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

70

80

90

100

110

120

130

140

150

Glaziers Painters and decorators Plumbers

Refrigeration and air conditioning mechanics

Ind

ex 2

009

= 1

00

History Scenario

The Available Workforce

Supply-side adjustments – unemployment

Unemployment hit all-time lows in 2007 and 2008, far below the long-term trend value.

• The 2009 recession more than tripled the unemployment rate.

A strong recovery in 2010 quickly returned unemployment to more normal levels.

• Moderate employment growth from 2012 to 2014 will hold unemployment near 2011 levels.

From 2015 to 2018, the labour force will struggle to keep up with sustained employment growth.

• Expansion demands combine with demographics to move unemployment steadily lower.

The mobility of the provincial workforce to meet demand requirements will not provide the needed workers.

The Available Workforce

Supply-side adjustments

Supply side, 2012 to 2020:

• labour force requirements rise by 37,500 in response to expansion demand

• estimated retirements total 34,000

• estimated new entrants into the construction workforce total 27,000 (comprises local residents aged 30 and younger)

• net in-mobility rises by 44,000 to balance labour force requirements

Change in Construction Labour Forcein Alberta

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

-6,000

-4,000

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

Net in-mobility New entrants Retirements Total change in labour force

Nu

mb

er

of

wo

rker

s

Total change in labour force N = New entrants N + Net in-mobility

N - Retirements N

Market conditions are assessed by combining four measures into a ranking:

• excess supply (unemployment)

• annual change in employment

• net in-mobility as a percent of the labour force

• industry consultations

Rankings describe conditions on a scale from 1 to 5.

Labour Market Rankings

Labour Market Rankings

5Qualified workers are not available in local or adjacent markets. Competition is intense.

4Qualified workers are generally not available in local and adjacent markets. Recruiting may extend beyond traditional sources and practices.

3Qualified workers in the local market may be limited by short-term increases in demand. Established patterns of recruiting are sufficient.

2Qualified workers are available in local or adjacent markets.

1Qualified workers are available in local markets. Excess supply is apparent. Workers may move to other markets.

Labour Market RankingsTrades and occupations 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Boilermakers 5 4 3 3 4 4 4 4 4 3

Bricklayers 3 4 3 3 3 4 3 3 3 3

Carpenters 4 4 4 4 3 4 4 4 3 3

Concrete finishers 3 3 3 3 3 3 3 4 3 3

Construction estimators 3 3 3 3 3 4 4 4 3 3

Construction managers 3 4 3 3 3 3 3 3 3 3

Construction millwrights and industrial mechanics

5 4 3 2 3 3 4 4 3 3

Contractors and supervisors 3 3 3 3 3 3 4 3 3 3

Crane operators 4 3 3 3 4 4 4 3 3 3

Drillers and blasters 4 3 3 3 3 3 4 3 3 3

Electricians (including industrial and power systems)

4 4 3 3 4 4 4 4 4 3

Elevator constructors and mechanics 3 3 3 3 3 3 4 4 3 3

Floor covering installers 3 3 3 3 3 3 3 3 3 3

Gasfitters 3 4 4 3 4 4 4 3 3 3

Glaziers 3 3 3 3 3 3 3 4 4 3

Heavy equipment operators (except crane) 3 3 3 2 3 3 3 4 4 4

Heavy-duty equipment mechanics 3 3 3 2 3 3 4 4 3 3

Labour Market RankingsTrades and occupations 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Industrial instrument technicians and mechanics 4 3 3 3 3 3 3 3 3 3

Insulators 3 3 3 3 4 4 4 4 3 3

Ironworkers & structural metal fabricators & fitters 4 3 3 3 4 4 5 4 3 3

Painters and decorators 3 3 3 3 3 3 3 3 3 3

Plasterers, drywall installers and finishers, and lathers

3 4 3 3 3 3 4 4 4 3

Plumbers 4 4 3 3 3 3 4 4 3 3

Refrigeration and air conditioning mechanics 3 3 3 3 3 3 4 4 3 3

Residential and commercial installers and servicers

3 3 3 3 3 3 3 3 3 3

Residential home builders and renovators 3 4 3 4 3 3 3 3 3 3

Roofers and shinglers 3 4 3 3 3 3 4 4 4 3

Sheet metal workers 4 3 3 3 4 4 4 4 3 3

Steamfitters, pipefitters and sprinkler system installers

4 3 3 3 4 4 4 4 4 3

Tilesetters 3 3 3 3 3 3 3 3 3 3

Trades helpers and labourers 3 4 3 3 3 3 4 4 4 3

Truck drivers 3 3 3 3 3 3 4 4 4 3

Welders and related machine operators 4 3 3 3 4 4 4 4 3 3

Labour Market Rankings and Mobility

Rankings in Alberta and other markets suggest the potential for mobility across:

• sectors

• industries

• regions

Potential for mobility by region

Utility, mining and other resource projects are planned for several regions and will draw key trades out of Alberta to (for example):

• Newfoundland and Labrador: 2012–2014

• Northern Ontario: 2012–2014

• Ontario (GTA): 2013–2018

• Manitoba: 2012–2015

• Saskatchewan: 2012–2013

Labour Market Rankings and Mobility

Labour Market Hot Spots

Conclusions

Strong employment growth

Increased construction activity in other provinces could make recruiting more challenging than in the past.

The continuing growth and refinement of the supporting systems will help to match the local workforce to emerging requirements.

Emphasis on recruiting youth, women, Aboriginal workers and immigrants will continue to be a priority.

Our Thanks To. . . The production of Construction Looking Forward 2012−2020 would not have been possible without the partnership between the CSC and the Construction Owners Association of Alberta (COAA) and the valuable input from the following organizations: Alberta Advanced Education and Technology Alberta Construction Association Alberta Employment and Immigration Alberta Finance and Enterprise Alberta Roadbuilders and Heavy Construction Association Building Trades of Alberta Canada Mortgage and Housing Corporation Canadian Home Builders' Association – Alberta Christian Labour Association of Canada Construction Labour Relations – Alberta Enbridge Inc. Merit Contractors Association Nexen Inc. Progressive Contractors Association of Canada Service Canada Syncrude Canada Ltd.

About the CSC

The Construction Sector Council (CSC) is a national industry-led organization committed to the development of a highly skilled workforce that will support the future needs of Canada’s construction industry. This report is part of the CSC’s Labour Market Information Program. It is available in both official languages and can be obtained electronically at www.constructionforecasts.ca and www.csc-ca.org. Timely construction forecast data is also available online at www.constructionforecasts.ca. Create customized reports on a broad range of selected categories within sector, trade or province covering up to 10 years. 

For more information contact:

Construction Sector Council

Phone: 613-569-5552Fax: 613-569-1220

info@csc-ca.org  

March 2012