Industry sees a lot of positives for 2023
Road builders and aggregate producers across Canada have looked into the crystal ball and, for the most part, like what they see for 2023.
There are some strong headwinds, mind you, namely the looming threat of a recession, possibly more interest rate hikes, continued supply chain issues and labour shortages, but they are generally optimistic about the year ahead.
In Ontario, more work is expected as the industry plays catchup from the COVID-19 lockdowns. The provincial government has given the green light to the Highway 413 and other projects, and has raised the target for new home building, so aggregate producers are looking at the need for more licence applications.
In Quebec, several big projects are still on the books and industry leaders are expecting additional work in the roads and civil engineering sectors. The outlook is also positive for the four Atlantic provinces.
B.C. and the Prairie provinces are expecting steady work. Stakeholders in British Columbia, in particular, anticipate it will be busy again in 2023 as crews contend with a backlog of repairs caused by the atmospheric river event.
In Ontario, industries are coming off a relatively strong 2022. Companies are still catching up on projects that were put on the shelf during the pandemic and governments continue to invest in capital projects.
“With increased demand for aggregate on the horizon, many producers are beginning to look at new licence applications,” says Norm Cheesman, executive director of the Ontario Stone, Sand and Gravel Association.
Highway 413 is perhaps the most high-profile of the road projects. The province has committed funding to the proposed 52-kilometre corridor and it is currently undergoing an environmental assessment.
The population of the province is also expected to grow, increasing the need for roads around bigger cities.
We see this problem as continuing as local groups continue to make delegations to councils in an effort to put a hold on new applications. The industry has responded by issuing op-eds and emails to local councillors explaining the importance of close-to-market aggregate…
The province also committed to building 1.5 million homes in the next 10 years, which means more roads, schools, hospitals, bridges and more – all requiring more aggregate.
Cheesman says higher interest rates may slow construction in the first half of 2023, which will impact aggregate production, and municipalities may temper their project work due to depleted municipal coffers.
“However, over the longer term, there is no question that the province has not made up for the infrastructure deficit that has occurred for the past two decades,” he notes.
Both material and labour shortages remain a concern for the industry. Equipment cannot be repaired when parts are not available, and contractors may not be able to bid on projects if they don’t have the workers.
The rise of NIMBY groups is also a concern, says Cheesman, as the municipal elections in 2022 provided opportunities to spread misinformation and made it difficult for politicians to support the aggregate industry.
“We see this problem as continuing as local groups continue to make delegations to councils in an effort to put a hold on new applications. The industry has responded by issuing op-eds and emails to local councillors explaining the importance of close-to-market aggregate and the fact that our industry maintains environmentally sustainable practices in an effort to meet and exceed regulatory requirements.”
The Quebec Construction Commission (QCC) is forecasting that overall building activity will be five-per-cent lower than in 2022. However, the outlook for the road construction sector appears brighter. The volume of work in the civil engineering and roads sector in 2022 was expected to come in two per cent higher than in 2021.
Gisèle Bourque, CEO of the Quebec Road Builders and Heavy Construction Association (QRBHCA), says there are a number of large projects in progress or about to get started that will bolster the industry in the coming year.
Those projects include the Réseau express métropolitain (REM) project in Montreal, the Louis-Hippolyte Lafontaine Tunnel under the Saint Lawrence River, the Ile d’Orléans bridge, and numerous Hydro-Québec projects, such as roads for the construction of power transmission lines, as well as municipal infrastructure works, the deconstruction of the Champlain Bridge, and Québec City Tramway.
However, labour is a continuing challenge for the industry.
“Several efforts are being made by our industry to attract labour, knowing of course that several other sectors of the economy are in competition to grab the available labour,” says Bourque.
The QRBHCA and board of directors of the QCC have implemented several measures aimed at countering the effects of the scarcity of labour, she says. “The objective is to facilitate attractiveness, integration and retention of the workforce.”
Indeed, the challenges for 2023 are mainly related to the environment.
The QRBHCA also worked with the Conseil du patronat to directly target young people with a campaign on TikToc.
“The scarcity of labour generates multiple negative consequences for businesses,” Bourque explains. “Everything must be done to encourage hiring in the industry because employers have been hampered in the development of their businesses over the last few years.”
In 2023, the QRBHCA will also be focused on how to increase the amount of recycled materials used by the industry.
“For the next few years, clients must consider increasing the use of these materials,” says Bourque. “Indeed, the challenges for 2023 are mainly related to the environment.”
Although a recession could be in the cards in 2023, road builders and aggregate producers in British Columbia are expecting a good year due to holdover ventures from 2022 and continued build of many large projects.
“We are up against, we believe, a recession,” says Dani Miller, president of the B.C. Stone, Sand and Gravel Association. “However, there are a few things that are easing that for us, like mega-projects such as Site C, Coastal GasLink and the Trans Mountain Pipeline. Those are going steady.
“Government spending on transportation and infrastructure is, relatively speaking, quite steady and it’s steady looking forward to 2025. I don’t want to say that this is a recession-proof industry, but we have some things that cushion the blow for us.”
The industry also has a backlog of work from 2022 and the Ministry of Energy, Mines and Low Carbon Innovation has rolled out policy changes that will clean up delays in mine permitting, and continues to work on permitting efficiencies which will help deliver gravel faster, with less travel and less carbon to communities, says Miller.
A renewed emphasis by the province on reducing red tape and building more new homes also bodes well for the aggregates industry. Kelly Scott, president of the B.C. Road Builders and Heavy Construction Association, says the industry is still catching up on the work tendered in 2022, and with the addition of road and highway repair work already planned for 2023, it makes for a busy year ahead.
“The emergency repairs were done in 2022, and now it’s more the permanent repairs, the permanent jobs that need to be done,” he says. “Those are being tendered and contractors are working on those, so that work continues as well as all the other work that the government had planned to do in infrastructure investment.”
A year ago, the worry was that government was going to use funding earmarked for traditional infrastructure work for the emergency repairs, but the federal government came through with funding.
According to Kelly, labour, the cost of fuel and supply chain shortages are hampering the industry and making it difficult for contractors to bid on projects. Stakeholders are bending over backwards to encourage youth and people from underrepresented groups to pursue a career in the industry and the association is encouraging the government to change the immigration system, for example, to allow more truck drivers into the province.
Chris Lorenc, president of the Manitoba Heavy Construction Association, is optimistic about the industry’s outlook for 2023, due in part to improved relations between the province and City of Winnipeg.
“I am very optimistic with the new mayor, very optimistic with the collaborative process that he has already started, which is an extension of his personality and the way he leads and marshals support for forward, progressive direction,” he says. “There’s a palpable breath of fresh air and so we are optimistic that the city will begin, as a matter of civic policy and political priority, to focus its programs and harness them as investments in economic growth which then enables the city to do the things that it needs to do.”
We’re also more optimistic about private sector investments in this province which augers well for the vertical and horizontal construction industries in this province.
Winnipeg Mayor Scott Gillingham and Premier Heather Stefanson have made a number of positive announcements that positively influence the direction of the province and the city, according to Lorenc, so there’s an apparent and visible willingness to collaborate and look at ways and means to move forward.
“That is a mindset and relationship change that has been long, long overdue and we are very optimistic that it will continue with positive results. They may have differences of opinion, which is fine, but they come to the discussion with open minds and that is absolutely critical to get meaningful collaboration.”
Lorenc is expecting that the provincial highways capital program will be more robust in 2023 than it was last year and Winnipeg’s local and regional streets program will also be stronger.
“We’re also more optimistic about private sector investments in this province which augers well for the vertical and horizontal construction industries in this province,” says Lorenc.
The industry in Alberta is expecting to see some improvement in work over 2022.
Rob Fragoso, executive director of the Alberta Sand and Gravel Association, says there are 16 projects valued between $100 million and $1 billion under construction in the commercial, infrastructure and residential sectors in the province, and 139 projects overall, if those valued at $5 million or more are included.
In November, the value of new projects increased to $13.7 billion – up from $12.1 billion at the same time in 2021. The biggest jump was in infrastructure projects, which climbed to $10.1 billion from $8.8 billion.
“This isn’t a major spike, but the industry outlook for 2023 appears to show small growth,” notes Fragoso.
There is some uncertainty about the future, however, due to political precariousness.
The ruling United Conservative Party is set to release a budget in February and a provincial election is set to be held in May.
Regardless of the party that wins the election, Fragoso expects some disruption due to shifting portfolios and perhaps consolidation of some, which may have policy implications for the aggregates industry.
On a good note, he says, the City of Edmonton announced in November a $68-million surplus, which may have some positive implications for the industry on expenditure plans. Calgary, meanwhile, plans to spend $18 million over the next three years to expand and maintain roads and sidewalks, $150 million to develop a 600-acre industrial park and $110 million for downtown revitalization and improvement.
“This is not huge in terms of development, but certainly not austere either,” says Fragoso.
Shantel Lipp, president of the Saskatchewan Heavy Construction Association (SHCA), says she is proud of what was accomplished in 2022 and is looking forward to making more progress in the upcoming year.
“This year, I recognized we need to continue to help others fully understand our industry,” she said in a year-end message posted on the SHCA website that spoke to the challenges ahead. “Those we work with need to continuously hear from us to better understand our members, the contributions you make and the challenges you face.”
For example, she noted, the City of Regina put forward a motion about local procurement and economic recovery.
In the motion was a fair wage policy for all construction, maintenance and service contracts. Lipp explained the implications and asked questions that showed the challenges it would create.
“Knowing how we attract and compensate employees, the qualifications of those employed in the industry, as well as how our members work with a general contractor, were just some of the points I made in my submission. In the end, the motion was defeated, but I recognize it was a good opportunity to help a level of government understand what businesses like ours need to be successful working with them.”
When we can help others recognize the significance of the work being done by our industry, we can not only benefit our members, but we can also improve what is possible in our province and country.
On a broader scale, Lipp states that the SHCA is working with other heavy construction associations in Western Canada to draw attention to the need for the country to invest in its trade infrastructure and was involved in the release of a report, From Shovel Ready to Shovel Worthy, produced by the Canada West Foundation.
“That report encourages both the federal and provincial governments to plan their investment more strategically in infrastructure that supports the movement of goods and people through and far beyond our country.”
Lipp says it is important that the association continues to raise the profile of the industry by explaining the work that it does, how that work gets completed, and how it contributes to improving the province and country.
“When we can help others recognize the significance of the work being done by our industry, we can not only benefit our members, but we can also improve what is possible in our province and country.”
There appears to be plenty of industry work on tap in the Atlantic provinces. Grant Feltmate, executive director of the Nova Scotia Road Builders Association (NSRBA), says the outlook is generally positive for the province.
“This is based on indications that the provincial highway budget will remain at least at a stable, sustainable level.”
Twinning of Highway 104, which connects the province to New Brunswick and the mainland to Cape Breton Island, is expected to continue and be completed in 2023.
We have begun entry-level training courses to attract new employees and this has been an effective help.
Meanwhile, a few smaller, but significant 100-series highway projects, also will be completed or substantially moved forward in the coming year, Feltmate says the labour shortage remains the big challenge this year, and the NSRBA is taking action.
“We have begun entry-level training courses to attract new employees and this has been an effective help. This will continue to be an issue going forward due to several factors, including age demographics of our employees.”
Tom McGinn, executive director of the New Brunswick Road Builders, says he expects 2023 to be much the same as 2022 but getting enough workers into the field is still an issue.
Contractors did not have as many crews as they had in the past in 2022 and, therefore, could not take on as many projects, he says, which led to delays.
To get youth interested in the industry, road builders are renovating a 53-foot trailer into a mobile training classroom, which will be equipped with heavy equipment simulators.
It will go into service in February.
“The trailer will visit high schools in our province, exposing students to our industry,” says McGinn. “We are working with the department of education on this.”
Material shortages are also a concern and road builders are working with the provincial department of transportation to plan better and order supplies in advance to reduce delays and costs, he says.
“Industry and government need to keep communications open to make sure jobs get completed on time and on budget.”
In Newfoundland, several road and highway projects are slated for 2023.
Work is expected to begin soon on a new interchange on the Trans-Canada Highway at Exit 41 near Galway. A $10.3-million contract has been awarded to Farrell’s Excavating Ltd. to build an underpass as well as ramps and a roundabout on the western side of the highway. Construction will be completed in 2024.
The federal and provincial governments are also looking into the possibility of building a road connecting the existing Trans-Labrador Highway to communities in northern Labrador. A feasibility study is under way.
The road would start in the vicinity of the town of Happy Valley-Goose Bay or the Lake Melville area and extend as far north as the Inuit communities of Rigolet, Postville, Makkovik, Hopedale, and Nain, and the Innu community of Natuashish.
In Prince Edward Island, meanwhile, close to 99 kilometres of roads are slated to be repaved over the next year. The federal and provincial governments are each contributing $6.6 million to the project. The repaving will extend the lifespan of the roads by about 15 to 20 years.
The project builds on the Atlantic Growth Strategy, a project launched in 2016 with the goal of strengthening the economy in Atlantic Canada.
In Nunavut, the Kitikmeot Inuit Association (KIA) must resubmit a project proposal to the Nunavut Impact Review Board for the construction of a 227-kilometre, all-season gravel road that would connect the northern terminus of the Tibbitt-Contwoyto Winter Road to a deep-water port at Grays Bay.
The board wants an updated scope of the project in order for an assessment to continue.
The Grays Bay Road and Port Project is a transportation system that, once completed, will connect the rich mineral resources of Canada’s Slave Geological Province, which straddles Nunavut and the Northwest Territories, to Arctic shipping routes.
The KIA has indicated it intends to submit a new proposal.
In the Yukon, work has begun on building a new Nisutlin Bay Bridge. Graham Infrastructure LP was awarded the $160-million project. It is the largest capital project in Yukon’s history.
Originally designed in 1953, the bridge is nearing the end of its lifespan and needs to be replaced. It will be a critical transportation link along the Alaska Highway and is expected to be completed in 2026.
The new bridge was designed with input from the community and in collaboration with the Teslin Tlingit Council.
The project will create many local and First Nations jobs over the coming years.
In the Northwest Territories, the government is seeking input from community residents on the proposed Mackenzie Valley Highway (MVH) between Wrigley and Norman Wells.
When completed, the MVH will be a two-lane, gravel highway between the two communities, approximately 321 kilometres in length.
Once input is received from the community, the results will be summarized into a report that will be submitted to the Mackenzie Valley Environmental Impact Review Board as part of the environmental assessment.
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