Construction and Maintenance Looking Forward Saskatchewan

Transcription

1 Key Highlights Construction and Maintenance Looking Forward Saskatchewan 2015 marks a change for Saskatchewan s construction industry, with residential building declining from historical highs while non-residential activity moves gradually higher to a new peak. By 2021, non-residential increases by almost 4,000 jobs while residential declines by 2,000 jobs marked the peak in overall construction employment at the top of a decade-long expansion. The diverging trends for these two construction sectors are tracked in a new feature of the BuildForce labour market information (LMI) model. For the first time, distinct market measures are available for the residential and nonresidential sectors, and conditions are summarized in new, individual rankings. Non-residential construction growth stalls briefly in 2015, but then resumes a decade-long expansion from 2016 to Growth is driven by major resource and infrastructure projects and by steady gains in maintenance work across the scenario period. Housing starts slowed with a 17 percent drop in 2013, followed by a moderate decline in 2014 and a further drop in Starts are expected to continue falling, with total residential employment declining across the scenario period. New measures tracking labour supply in each sector highlights the role of migration in both markets. Strong residential growth added over 5,400 jobs between 2012 and 2014 and many in the new workforce were drawn from outside Saskatchewan. New housing investment declined in 2015 and is projected to continue a downward trend across the scenario period. This translates to a loss of jobs and will prompt many out-of-province workers to leave or seek opportunities in other sectors or industries. BUILDFORCE S LMI SYSTEM BuildForce Canada uses a scenario-based forecasting system to assess future labour market conditions for both residential and non-residential construction. This LMI system tracks measures for 34 trades and occupations. BuildForce consults with industry, including owners, contractors and labour groups, to validate the scenario assumptions and construction project lists, and seeks input from government on related analysis. Similarly, specialized labour requirements for non-residential projects have been met through an inflow of out-of-province workers. An estimated 6,200 were recruited to work in nonresidential construction from 2012 to 2014 and another 4,000 are needed to meet increased demands from 2016 to 2021, but then employment declines off peak as projects wind down. Overall, there is little change in total construction employment in Saskatchewan by the end of the scenario period in 2025, but this surface stability conceals significant shifts in individual markets. Market changes can be largely accommodated by normal workforce mobility across sectors, provinces and industries, but recruiting may be challenging as conditions change across the period.

2 NON-RESIDENTIAL HIGHLIGHTS (2016 TO 2025) Under the 2016 outlook scenario the strongest phase of the resource expansion in Canada has passed but Saskatchewan s construction expansion still has momentum. After a pause in 2015, non-residential employment will begin a new growth phase in Labour requirements Led by major mining and infrastructure projects, total employment will increase on engineering projects until As projects end after 2021, engineering-related employment declines. Job losses late in the scenario period are partly offset by moderate growth in industrial, commercial and institutional (ICI) building construction. Maintenance work is the only market where job gains are consistent but moderate across the coming decade. At the end of the scenario period, employment in nonresidential construction is relatively unchanged a small gain of 400 non-residential jobs is mostly driven by increased maintenance work. By the end of the scenario period engineering construction jobs are marginally lower than current 2015 levels. Year-to-year changes in employment are generally limited for most of the non-residential trades. Requirements in specialized construction like pipelines and mining may be met from the current workforce that has been built up over the last decade. The only disruption in the markets comes in 2021 as a series of known major projects wind down. Rapid expansion in the Saskatchewan non-residential workforce in the past decade was managed by recruiting from out of the province and a large complement of skilled tradespeople remain in the province to meet anticipated needs to 2021 and then some leave as major projects end. Non-residential construction employment had more than doubled over the decade ending in Further modest gains in this scenario join the larger labour force and, after the next wave of projects end, the province is left with a skilled construction workforce far larger than in the recent past. These gains make construction an employment leader across all Saskatchewan industries. The available workforce Current population trends make adding new workers to an already large and growing workforce a challenge. Even as some construction markets slow, general population trends to slower growth or decline may limit recruiting, training and career promotion. Saskatchewan has encouraged immigration and has successfully recruited from other provinces in very competitive markets. The province s younger age profile and growing population of youth may be enough to keep a constant labour force for the whole economy from 2016 to While Saskatchewan s total labour force remains unchanged, non-residential construction will need to recruit close to 700 new workers; increasing its share of the labour force and drawing from other industries or from out of the province. The BuildForce LMI system tracks supply and accounts for the change in the available labour force, including retirements, new entrants 1 and net in-mobility 2. Retirements measure permanent losses to the workforce, which are offset by the entry of first-time workers aged 30 and younger to the construction labour force. Across the scenario period: The available non-residential workforce expands by a modest 700 workers as more normal unemployment levels are re-established. Nearly 5,800 workers are lost to retirement and must be replaced. An estimated 7,400 new entrants are expected to be recruited from Saskatchewan s local population. Industry must recruit at least its traditional share of the young population. If the local population meets industry s demands, a small contingent of the out-of-province workforce may leave. Changes in the workforce are not spread evenly across the scenario period. A gradual in-migration from 2016 to 2020 is needed to meet the demands for new major projects. Then, in 2021, as the projects end, a portion of this workforce leaves. Figure 1 tracks the annual changes across the scenario period. 1 New entrants are measured by applying the traditional proportion of the provincial workforce that enters the construction industry. The projected estimate across the scenario period assumes that the construction industry is able to recruit this group in competition with other industries. 2 In-mobility refers to the arrival of workers from outside the local construction industry. 2 SASKATCHEWAN CONSTRUCTION AND MAINTENANCE LOOKING FORWARD

3 Figure 1: Annual estimated changes in non-residential supply, Saskatchewan 4, , , , , , , , , Number of workers Forecast Total change in labour force = New entrants + Net in-mobility Retirements Retirements New entrants Net in-mobility Change in labour force Source: BuildForce Canada Non-residential rankings, risks and mobility BuildForce assesses market conditions for 34 construction trades and occupations using a rankings system that combines measures of the change in employment, unemployment, net in-mobility and adjustments based on industry input. The rankings are adapted to specific non-residential market conditions unique to Saskatchewan based on current and proposed construction activity. In addition, assumptions on provincial economic and population growth, new entrants to the labour force and migration patterns (interprovincial and international) are built into the forecast scenario and included in the ranking assessment. The rankings for some trades working in non-residential are suppressed due to the small size of the workforce (<100 workers) and limited statistical reliability when assessing labour market conditions at the sector level. Trades may also be excluded because they typically do not work in the sector being assessed (e.g., home building and renovation managers in non-residential). For Saskatchewan, non-residential rankings are reported for 29 trades and occupations. Table 1 provides non-residential rankings that show largely balanced markets. Aside from brief periods of weakness in 2015 and again in 2021, requirements change gradually and the local workforce is able to meet demands. Balanced markets, signaled by a rank of 3 in the table, require a limited and normal level of workforce mobility. Saskatchewan s construction industry adapted to rising demands in the last decade with recruiting that regularly reached beyond the local market. Under the 2016 scenario, with a few exceptions, changes in the workforce needed to balance the markets is within the boundaries of this normal experience. The number of workers that are needed to meet non-residential demands from 2016 to 2021 is below the estimated level of recruiting that was needed in the period. Some portion of the requirements in non-residential construction may be met by worker mobility across sectors. In the same sense, workers needed in Saskatchewan for projects from 2016 to 2021 may be found as similar projects wind down in other provinces Key Highlights 3

4 Market rankings N/A Workers meeting employer qualifications are available in local markets to meet an increase in demand at the current offered rate of compensation and other current working conditions. Excess supply is apparent and there is a risk of losing workers to other markets. Workers meeting employer qualifications are available in local markets to meet an increase in demand at the current offered rate of compensation and other working conditions. The availability of workers meeting employer qualifications in the local market may be limited by large projects, plant shutdowns or other short-term increases in demand. Employers may need to compete to attract needed workers. Established patterns of recruiting and mobility are sufficient to meet job requirements. Workers meeting employer qualifications are generally not available in local markets to meet any increase. Employers will need to compete to attract additional workers. Recruiting and mobility may extend beyond traditional sources and practices. Needed workers meeting employer qualifications are not available in local markets to meet current demand so that projects or production may be delayed or deferred. There is excess demand, competition is intense and recruiting reaches to remote markets. The labour market assessment for some trades is limited by the small size of the workforce (<100 employed). In consultation with the provincial LMI committee, the rank is suppressed because of limited statistical reliability. Table 1: Rankings for trades and occupations in non-residential construction in Saskatchewan TRADES AND OCCUPATIONS Boilermakers Bricklayers Carpenters Concrete finishers Construction estimators Construction managers Construction millwrights and industrial mechanics Contractors and supervisors Crane operators Electrical power line and cable workers Electricians Elevator constructors and mechanics Floor covering installers Glaziers Heavy equipment operators (except crane) continued on next page 4 SASKATCHEWAN CONSTRUCTION AND MAINTENANCE LOOKING FORWARD

5 TRADES AND OCCUPATIONS Heavy-duty equipment mechanics Insulators Ironworkers and structural metal fabricators and fitters Painters and decorators (except interior decorators) Plasterers, drywall installers and finishers, and lathers Plumbers Refrigeration and air conditioning mechanics Residential and commercial installers and servicers Roofers and shinglers Sheet metal workers Steamfitters, pipefitters and sprinkler system installers Trades helpers and labourers Truck drivers Welders and related machine operators Source: BuildForce Canada RESIDENTIAL HIGHLIGHTS (2016 TO 2025) Led by rising commodity prices, the Saskatchewan economy expanded rapidly over the last decade. Population rose in line with this growth and by 2014 immigration had increased, carrying housing construction and employment to record high levels. Housing starts hit an all-time record of 10,000 units in Since that time, weaker global demand and lower commodity prices have slowed resource developments and this has contributed to a housing downturn that is expected to continue across the scenario period. By the end of the scenario period, the residential workforce is estimated to decline back to the pre-2011 level of 13,000 workers that is consistent with an annual trend of 4,000 housing starts. In addition to labour requirements for new housing construction and renovation, the residential industry faces demands to replace retiring workers. In Saskatchewan, the pattern of economic development and demographic change has created a relatively young residential workforce and estimated retirements are lower than in other provinces, but still represent a large portion of future demand requirements. Labour requirements The new housing down cycle translates into a decline of 3,600 jobs over the scenario period. These losses are only partly offset by a modest gain of 100 jobs in the renovation sector. The relatively new Saskatchewan housing stock drives a smaller maintenance and renovation market than might be found in other provinces. The available workforce Slower population growth and strong labour demands had driven construction unemployment in Saskatchewan to record low levels well below historical norms by Many of the residential workers in new jobs from 2011 to 2014 were brought in from other markets and, at the peak of labour requirements in 2012, residential hiring from out of the province actually exceeded the demands compared to the non-residential sector Key Highlights 5

6 The 2016 BuildForce scenario projects that this pattern will be reversed as new housing slows across the scenario period. Many residential trades and occupations are affected by the decline in new housing, with bigger impacts on trades such as carpenters, labourers and construction managers. BuildForce supply-side analysis can now be applied to both residential and non-residential markets. Looking at the residential market: The labour force declines by 3,800 workers over the scenario period, following the decline in new housing employment demands Replacement demands (retirements) total an estimated 3,000 workers. The estimated 2,900 new entrants offset retirement demands. On balance, 3,700 residential workers are expected to leave the residential workforce a number that is comparable to the arriving workforce during the housing buildup over the last decade. Figure 2 sets out the annual pattern of these changes, showing the steady, regular pattern of expected adjustment. Residential rankings, risks and mobility The rankings for some trades working residential are suppressed due to the small size of the workforce (<100 workers) and limited statistical reliability when assessing labour market conditions at the sector level. Trades may also be excluded because they typically do not work in the sector being assessed (e.g., boilermakers, millwrights, etc. in residential construction). For Saskatchewan, residential rankings are reported for 17 trades and occupations. Low rankings in Table 2 reflect the 2015 decline in housing and the general, continuing declining trend in employment. In some cases the ranks signal the relative importance of new housing in the supply/demand balance for the trades and occupations. Thus, trades such as electricians, labourers and equipment operators who work more intensively in new housing may have limited access to work in renovation and may have brief periods of unemployment and weaker markets. In these cases ranks fall to a 2 in the years when housing starts record large drops. Markets return to balance as workers retire or leave for other opportunities in other sectors, industries or provinces. The number of workers that are expected to leave the housing labour market from 2016 to 2025, in response to lower requirements, is below the estimated arrivals in the shorter period. Figure 2: Annual estimated changes in residential supply, Saskatchewan 3, Number of workers 2, , , , , Forecast Total change in labour force = New entrants + Net in-mobility Retirements Retirements New entrants Net in-mobility Change in labour force Source: BuildForce Canada 6 SASKATCHEWAN CONSTRUCTION AND MAINTENANCE LOOKING FORWARD

7 Table 2: Rankings for trades and occupations in residential construction in Saskatchewan TRADES AND OCCUPATIONS Bricklayers Carpenters Construction estimators N/A Construction managers Contractors and supervisors Electricians Floor covering installers Heavy equipment operators (except crane) Home building and renovation managers Painters and decorators (except interior decorators) Plasterers, drywall installers and finishers, and lathers Plumbers Residential and commercial installers and servicers Roofers and shinglers Sheet metal workers Trades helpers and labourers Truck drivers Source: BuildForce Canada CONCLUSIONS AND IMPLICATIONS Even under a scenario with lower commodity prices and declining investment that reduces long-term labour requirements, there is still momentum in the Saskatchewan construction industry. The Construction and Maintenance Looking Forward scenario anticipates continuing labour market challenges: Slower population growth and the shifting age profile for the workforce will create specific challenges for employers. Recruiting young people into the industry will bring recruiters into competition with other industries drawing from the same, limited population. Cyclical changes in employment may require continuing mobility in the workforce across the residential and nonresidential sectors and among the provinces. Local demographics restrict labour force growth, leaving in-mobility key to recruiting. Changing market conditions could constrain recruiting for even modest increases in demand requirements. The Construction and Maintenance Looking Forward national highlights report expands on the range of worker mobility options and industry implications Key Highlights 7

8 For the most detailed and comprehensive construction labour market data in Canada, visit Developed with industry for industry Customizable tables and graphs available for: Data on more than 30 construction trades and occupations by province looking ahead 10 years Macroeconomic and investment data Key economic indicators, construction investment and labour market conditions by province and/or sector Also check out the Construction Map App for major resource construction projects mapped across Canada. Best viewed on tablets (or computers) Timely construction forecast data is available online at Create customized reports on a broad range of selected categories within sector, trade or province covering up to 10 years. For more information, contact: BuildForce Canada Phone: info@buildforce.ca January 2016 Funded by the Government of Canada s Sectoral Initiatives Program The opinions and interpretations in this publication are those of the author and do not necessarily reflect those of the Government of Canada. 8 SASKATCHEWAN CONSTRUCTION AND MAINTENANCE LOOKING FORWARD