What s Next for Canada s Construction Industry,

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Ariel Daniels
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1 What s Next for Canada s Construction Industry, New Brunswick Building Trades March 23, 216

Finding the balance between the sustainable skilled workforce and meeting peak demands.

2 Tracking conditions by province... How are investments and labour demands stacking up or changing? What are the trends telling us expansion / demographics? Where are the potential opportunities / challenges? Finding the balance between the sustainable skilled workforce and meeting peak demands. Scenario analysis relies on input from Provincial LMI Committees released January 216; based on general economic indicators, commodity prices and construction investment assumptions as defined November 215.

cancellations slower growth Impacts in oil sensitive regions such as Alberta, Saskatchewan and Newfoundland and Labrador Impact

3 Construction and Maintenance Looking Forward Tracking key macroeconomic drivers: global markets commodity prices Canadian dollar (low.7 USD) Economic news in 215 was mostly negative: price of oil continued to fall (WTI ~ 3 USD) project delays and cancellations slower growth Impacts in oil sensitive regions such as Alberta, Saskatchewan and Newfoundland and Labrador Impact on government revenues and expenditures; business confidence Uncertainty, changing major project schedules Federal infrastructure spending? 3

4 Construction Labour Market Trends Employment, Canada 1,6 1,4 1,2 1, s : Employment increased by 9%; brief downturn in 29 Forecast 1,37, : Slower growth , 4 2 Emp Emp (BF) Source: Statistics Canada, Labour Force Survey; BuildForce Canada 4

5 Provincial Labour Market Highlights

6 Non-residential construction British Columbia Potential up cycle?? Tracking major engineering project requirements: LNG ~$26 billion (4 projects 2 major facilities) Pipelines ~$14 billion (5 projects) Mining ~$12 billion (6 projects) Utilities ~$11 billion (5 projects) Transportation systems and container terminals ~$1 billion (7 projects) Highways and bridges ~$5 billion (4 projects) Total non-residential employment expected to rise: increase by more than 2 percent or 17, workers between 216 and 219 Much depends on major project schedules!

7 British Columbia NonRes construction employment Non-Res Market Conditions: 1, 9, # of Workers WEAK Forecast TIGHT revised schedules 8, 7, 6, 5, 4, 3, 2, 1, Non-residential Employment driven by proposed major LNG, pipeline, utilities, mining, transportation and other infrastructure projects. Source: BuildForce Canada 7

8 Non-residential construction Alberta As oil prices fell in 214 and 215 the impacts were felt across the economy. New oil sands investment declined as new projects were postponed or cancelled. Weaker price of oil expected to prevail over the medium term and no new major large projects are scheduled to start as current projects wind down. Biggest impact is on the out of province workforce; a large proportion of this group has left or leaving.

9 Alberta NonRes construction employment Non-Res Market Conditions: 14, # of Workers WEAK TIGHT Forecast 12, 1, 8, 6, 4, 2, Oil sands investment declines; employment impacts spread across all markets Non-residential Source: BuildForce Canada 9

10 Alberta Oil Sands Investment* 16, $27 Millions (adjusted for inflation) 14, Forecast 12, 1, Significant decline in new capital 8, 6, 4, 2, * Includes construction and machinery & equipment New Source: BuildForce Canada 1

construction and machinery & equipment Sustaining capital refers to the periodic addition (or

11 Alberta Oil Sands Investment* 25, 2, $27 Millions (adjusted for inflation) Sustaining capital partially offsets new capital decline Forecast 15, 1, 5, Sustaining capital New * Includes construction and machinery & equipment Sustaining capital refers to the periodic addition (or replacement) of capital, which is required to maintain operations at existing levels. Source: BuildForce Canada 11

Alberta oil & gas maintenance and repair expenditures* (preliminary) 9, $27 Millions (adjusted for inflation) 8, Forecast 7, 6, 5, 4, 3, 2, 1, * Includes construction and machinery & equipment

12 Alberta oil & gas maintenance and repair expenditures* (preliminary) 9, $27 Millions (adjusted for inflation) 8, Forecast 7, 6, 5, 4, 3, 2, 1, * Includes construction and machinery & equipment Maintenance refers to the process of maintaining equipment including: routine or on-stream work that typically does not require operations/production to shut down; and turnarounds, shutdowns or outages in which the operating unit is taken out of production. Source: Statistics Canada and BuildForce 12

13 Union maintenance work hours Alberta 1,2, Man-hours 1,, 8, 6, Seasonal peaks create challenges 4, 2, Boilermakers Linear (Boilermakers) Source: General Presidents Maintenance Committee for Canada; National Maintenance Council for Canada 13

14 Source: ACTIMS, ROSE, BuildForce Canada Near Term Maintenance Requirements... Select Alberta owners/projects 12, 1, 8, Significant rise in Spring 216 maintenance demand: - boilermakers - electricians - insulators - pipefitters - scaffolders 6, 4, 2, Labour Requirements (Preliminary)

3, 25, 2, 15, 1, 5, Following a period of slower growth; new proposed resource development and pipeline

15 Saskatchewan NonRes construction employment Non-Res Market Conditions: # of Workers 4, 35, WEAK TIGHT Forecast delays? 3, 25, 2, 15, 1, 5, Following a period of slower growth; new proposed resource development and pipeline projects are scheduled over the medium term; non-residential employment expected to peak in Non-residential Source: BuildForce Canada 15

Manitoba NonRes construction employment Non-Res Market Conditions: 3, # of Workers WEAK Forecast TIGHT 25, 2, 15, 1, 5, Near term growth driven by major power generation and

16 Manitoba NonRes construction employment Non-Res Market Conditions: 3, # of Workers WEAK Forecast TIGHT 25, 2, 15, 1, 5, Near term growth driven by major power generation and transmission projects; as projects wind down overall employment remains above historic levels Non-residential Source: BuildForce Canada 16

17 Ontario NonRes construction employment Non-Res Market Conditions: # of Workers 2, 18, 16, 14, 12, 1, 8, WEAK TIGHT Forecast 6, 4, 2, Moderate expansion driven by proposed nuclear refurbishment, transportation, mining and other infrastructure projects. Conditions can vary significantly by region Non-residential Source: BuildForce Canada 17

18 Quebec NonRes construction employment Non-Res Market Conditions: # of Workers WEAK TIGHT 14, 12, Forecast 1, 8, 6, 4, 2, Following modest declines, recovery expected to start in 217 driven by proposed pipeline, infrastructure and resource development projects Non-residential Source: BuildForce Canada 18

Nova Scotia NonRes construction employment Non-Res Market Conditions: # of Workers 18, 16, 14, 12, 1, 8, WEAK TIGHT Forecast 6, 4, 2, Modest rise in ICI construction across

19 Nova Scotia NonRes construction employment Non-Res Market Conditions: # of Workers 18, 16, 14, 12, 1, 8, WEAK TIGHT Forecast 6, 4, 2, Modest rise in ICI construction across the outlook period, no significant major project announcements. LNGs?? Non-residential Source: BuildForce Canada 19

20 Prince Edward Island NonRes construction employment. Non-Res Market Conditions: # of Workers 4, 3,5 WEAK TIGHT Forecast 3, 2,5 2, 1,5 1, 5 Steady but moderate investment gains lead by commercial construction, no significant major projects Non-residential Source: BuildForce Canada 2

1, 8, 6, 4, 2, Major resource development projects (offshore platforms, nickel smelter, hydroelectric and

21 Newfoundland and Labrador NonRes construction employment Non-Res Market Conditions: # of Workers 18, 16, WEAK TIGHT Forecast 14, 12, delays? 1, 8, 6, 4, 2, Major resource development projects (offshore platforms, nickel smelter, hydroelectric and transmission) are peaking and winding down. Second investment (offshore and mining) wave anticipated over the long run Non-residential Source: BuildForce Canada 21

22 New Brunswick NonRes construction employment Non-Res Market Conditions: 18, 16, 14, 12, 1, 8, # of Workers WEAK TIGHT Forecast revised schedules 6, 4, 2, Proposed pipeline, marine terminal, and mine developments expected to increase investment over the medium term, ; investment cycles down in 22 as some projects wind down Non-Residential Source: BuildForce Canada 22

workforce) are expected to retire over the next decade Atlantic Canada:

23 Demographic trends. Canada-wide, an estimated 25, construction workers (21% of current workforce) are expected to retire over the next decade Atlantic Canada: 24, (25% of LF) Significant loss of skilled workers: need to transfer knowledge to less experienced workers Source: BuildForce Canada 23

24 Replacement demand. Next Decade: Cumulative Retirements as a % of 215 Labour Force CA 21.3% (25,) NB 27.2% (7,9) PE 27.% (1,7) NS 24.5% (8,5) QC BC 22.8% 22.5% (48,) (39,) NL 22.4% (6,) ON 21.2% (86,) MB 2.5% (8,2) AB 18.1% (36,) SK 17.6% (8,7) 1% 12% 14% 16% 18% 2% 22% 24% 26% 28% 3% Source: BuildForce Canada 24

25 Population age shares, New Brunswick (%) Forecast Source: Statistics Canada and BuildForce (fall 215) 25

26 Converging Challenges 26

27 Will we be ready for the next up-cycle? Replenish the aging workforce Develop innovative approaches to apprenticeship to support employers hiring, training, and retaining apprentices. Facilitate and promote mobility Intra-provincial Inter-provincial Measure and improve productivity 27

28 Looking forward... Slower growth... Key macroeconomic assumptions: commodity prices, exchange rate, interest rates, global markets, etc. Changing major project schedules: postponed / canceled Infrastructure stimulus: what, when, where? Business confidence... 28

29 Questions?

30 For more information, contact: BuildForce Canada Phone:

NEW ENTRANTS 300 (6.8%) EMPLOYMENT CHANGE

NEW ENTRANTS 300 (6.8%) EMPLOYMENT CHANGE CONSTRUCTION & MAINTENANCE LOOKING FORWARD Prince Edward Island Steady non-residential growth follows the residential boom HIGHLIGHTS 2018 2027 Prince Edward Island s construction labour market has been