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Ontario: Construction Industry Forecast for the next decade

We add to our series of construction industry forecast, the situation in Ontario. Ontario’s construction industry has seen a 50% growth since 2000. The estimated number of existing jobs is about 413,600 and it is almost evenly split between the non-residential and residential sector. However, growth and labor requirements are not consistent amongst the 5 regions in Ontario. Greater Toronto Area (GTA) has the most expansions with many new condos springing up in the last few years and ongoing nuclear refurbishments both there and in Southwestern Ontario. The outlook for the next decade sees an overall moderate growth in demand, driven by an increase in population, a strengthening economy, immigration, and rising costs in housing and public transportation. The ongoing expansion across construction segments and regions has resulted in labor challenges for some occupations and with one-fifth of the labor force looking to retire within the next decade, it is necessary that industry experts would have to do more to attract workforce to the province and engage in massive recruitment. The following are key points to look forward to for the next decade.

THE AVAILABLE WORKFORCE

Four consecutive years of expansion in the region across all sectors combined with an increased number of retirees has kept unemployment rates below levels experienced in recent times. Over the coming decade, industry experts predict that an estimated number of 87,000 workers will retire and an estimated 84,000 new entrants will join the construction sector (BuildForce). However, considering future projects, the expected number of new entrants might be unable to satisfy labor requirements and more workers might be required from other provinces and or other sectors of the economy. Migration of workers from Alberta and other provinces between 2015-2017 as a result of low job vacancies in their provinces aided the residential boom in Ontario and an increase of available workforce. Recently, migration to Ontario is on a snail’s pace as most provinces are gradually recovering from their economic woes. Attracting additional workforce might be difficult.

Labor pressure is expected to reach its peak between 2018 -2020 and thereafter moderate in many regions as major projects would have been completed and construction of new houses slowed down. This should return balance to the labor market except for specialized labor which will be required in the commencement of 2 nuclear refurbishment projects in 2020.

Looking forward, an increased number of retirees account for a higher number of job vacancies. Natural population growth factors such as improved health care systems, low mortality rate, and immigration should help sustain the workforce.

RESIDENTIAL SECTOR

The Non-residential sector will be the leading driver in employment for the next decade. Non-residential construction may attract new entrants to the workforce but areas where specialized skills are needed may require seeking workers outside the province. A slow growth in the residential sector may offer recruitment opportunities to the non-residential sector in areas where the skills are transferable.

Major projects like the nuclear refurbishments in GTA and Southwestern Ontario and industrial and commercial expansion projects in the Sarnia area will experience employment challenges due to increased demand for certain skills between 2018-2020. Engineering construction may moderate after 2020 leaving overall employment almost unchanged till 2027.

CONCLUSIONS AND IMPLICATIONS

Overall construction will see progressive growth with peaks at 2020 driven by nuclear refurbishments, industrial expansions, transportation and government policies. Beyond 2020, construction should recede moderately, but employment should remain above historical levels while renovation activity should rise consistently. The recruitment challenges due to increasing retirees can be curbed by attracting skilled workers to the province with improved employee welfare.

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Chris Wright