The effects of inflation have permeated across the Canadian economy, and the construction industry is no exception.
According to data from Statistics Canada, the cost of construction for residential buildings in the first quarter of 2022 has increased 25 per cent compared to the same time last year. For non-residential buildings, the year-over-year increase in costs has been 13 per cent in Q1 2022.
Chris Gower, who is the chief operating officer of buildings for PCL Construction, says these cost increases are putting serious pressure on the construction industry.
“Some of these increases are making projects too expensive. We’re seeing projects deferred or cancelled. And in some cases, that means that projects aren’t coming to market like in the residential, where the needs are, or in hospitals,” he told CTV’s Your Morning on Monday.
The costs of raw materials, such as lumber and steel, are down from their 2021 peaks, but they’ve been steadily rising since late last year. According to data from Trading Economics, steel has gone up nearly 15 per cent while the price of lumber has doubled since November.
With fear of shortages and price fluctuations, Gower said the construction industry has had to rely more on stockpiling supply rather than just-in-time delivery.
On top of that, the high price of fuel driven by the pandemic and Russia’s invasion of Ukraine has also increased costs for shipping. That’s pushed some construction companies to buy products locally, Grower said.
“We’re having to be creative and find alternative solutions,” he said.
Workers in the construction industry have also been fighting for higher pay to meet the inflationary pressures on their living expenses, even initiating job action. The Carpenters’ District Council of Ontario began a province-wide strike on Monday after 75 per cent of its members voted to reject a contract proposal.
“Carpenters, like other construction workers, kept working on job sites to build critical infrastructure all the way through the COVID crisis,” union president Mike Yorke said in a news release on Thursday. “Their work was seen as essential during the pandemic and because of this, and because of the spiralling cost of living increases, our Union and our members believe that wages now have to be increased.”
And last week, crane operators in the province represented by the International Union of Operating Engineers Local 793 walked off the job. Thousands of residential construction workers represented by LiUNA Local 183 also began a strike last week, although some bargaining units have since returned to work.
In the meantime, Gower said the industry expects to see more delays, higher costs and less predictability in the future.
“We will work through those price increases. There will be solutions and I suspect that’s a short-term issue. Hopefully many people can look long-term for the opportunities in the marketplace,” he said.