ICI Construction Update – October 2022 Turnarounds
October 28, 2022
Recent labour studies conducted by Oakbridges have indicated that we are experiencing a very tight labour supply across Canada. The impact of COVID-19 which seemed to accelerate early retirements and encourage others to leave the sector has resulted in shortages on the supply side. In addition, there has been a significant surge in demand in 2021-22 as a result of improved commodity prices, increased global demand for oil and gas and increased investment in sustaining capital and maintenance turnaround projects.
Labour Demand is particularly high in B.C. because of two mega-projects, B.C. Hydro’s Site C and LNG Canada’s new facility, coupled with increased expenditure on infrastructure in the lower mainland. In Ontario demand is robust driven by the extensive refurbishment work going on at both Bruce Power and OPG. In addition, while we have not yet seen a return to the level of investment once anticipated in Alberta we are told that with sustaining capital and maintenance work at a high-level, Alberta employers are experiencing difficulty attracting enough people.
Currently the national labour supply situation is having a direct adverse effect on work in Sarnia. Employers are running across shortages for people in many trades. We have been working with the Insulators as an example to find solutions to meet the immediate shortfall in supply as projects in that area are winding up and are at the stage where demand for insulators is at a peak. We are told that one factor making this issue more acute is the late start some client organizations had in their winterization programs due in part to delays experienced for turnaround activities due to the strikes in the ICI sector earlier in 2022.
These real time experiences are a repeat of what we were facing in 2007-08 before oil prices plummeted and we saw a massive decline in demand for labour in the ICI sector. Predictably, because the problem disappeared for the short-term there was no collective effort to take action to prevent the inevitable future problem from occurring. Now that the problem is upon us, we recommend to any organization involved in a project of any size in the ICI sector or contemplating one, to do the following to help mitigate against the real risks of a labour shortage:
1. Maintain an open site. Some work in Sarnia is governed by Project Labour Agreements that restrict the use of workers to only those who are members of the Building Trade Unions. This monopoly on work reduces the client’s access to workers who may be available but are non-union or are employed by contractors who are signatory to non-BTU alternative unions. Even more troubling, some non union contractors refuse or are reluctant to work on such sites as they can experience harassment.
2. Conduct and publish weekly look ahead projections for labour demand by trade for a period of time of no less than 6 weeks so contractors can work with Hiring Halls or with other labour representatives to identify pinch points and discuss potential solutions.
3. Conduct an annual labour study to ensure key project people understand the supply and demand issues, are aware of some of the industry trends and can be part of the solutions. Also ensure project people are maintaining relationships with local labour leaders and are able to have a continuous dialogue regarding how immediate and short term pain can be addressed.
4. As part of an annual look at the supply and demand issues ensure you also have up-to-date information regarding how the market is being impacted. Project managers will want to ensure they have good intel with respect to wage settlements and escalations. As well, the better informed participants are regarding market conditions the more productive collective bargaining will be. We currently have far too many open (past expiry and no negotiated settlement) Building Trade Union contracts in Alberta and Saskatchewan, for example, and these need to settle in order to ensure market stability.
Anyone wanting further information regarding the Construction Labour Market or who has an interest in discussing mitigating strategies should contact us at the numbers below.
Hugh Secord 416 432 5546 | Hugh@oakbridges.ca
Sue Mackintosh 416 899 9122 | Sue@oakbridges.ca