The local construction economy: A tale of two markets

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            Signs of thriving economy offset by indications of stress, especially among middle-sized contractors

By Mark Buckshon

Ottawa Construction News staff writer

Building permit data, Ottawa Construction Association (OCA)  membership statistics, and conversations with several local general contractors suggest that the Ottawa-area construction industry is encountering a split personality – some businesses and contractors are thriving, while several are suffering.

For example, the number of building permits issued in 2013 – a precursor for actual construction activity – reached a record high of $2.39 billion, the OCA reported in its annual report. The total “was the highest total ever recorded in the city and nearly 17 per cent better than the previous record total of $2.05 billion set in 2012.”

“When you think of all the major projects currently underway in the city – the Confederation Line, Lansdowne Park, the Parliamentary Precinct – in addition to the usual volume of work from the municipal, federal and provincial governments and other public and private-sector owners (to say nothing of the heavy civil work being built in the city, for which building permits are not needed), it’s easy to see how the perfect storm of building activity blew into town.”

However, the OCA report says things are more uncertain for 2014.  “Experts suggest that the second half of the year will be strong, but that activity in the first part of the year could be much slower.  Perhaps the perfect storm of construction activity that below into town in 2013 will blow out of town just as quickly in 2014. Let’s hope not.”

Several Ottawa-area general contractors, in informal conversations at the General Contractors Association of Ottawa (GCAO) Integrity and Ethics Awards in late February described a truly challenging business environment. While the bigger projects are under-way, there are fewer opportunities for the middle-sized contractors, and there is intense competition for the work that is available.

The possible problems in the local construction economy also are indicated in the OCA’s own membership statistics.  After continuous growth for the past 15 years, the OCA reported a seven-member decline in 2013, to 1,095 members.

This decline is despite the record number of projects posted to the association’s plansroom.  “Last year’s total of 2,326 projects was nearly 14 per cent higher than 2012’s total – and a clear indication that buyers appreciate the reach and influence of OCA in the local construction community.

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