Construction and Maintenance Looking Forward Manitoba

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1 Key Highlights Construction and Maintenance Looking Forward Manitoba New hydro development, transmission lines, pipelines and infrastructure projects will boost employment over the next few years, stretching a 10-year construction expansion to a new peak in At the same time, Manitoba s economy continues to diversify activities. An expansion in industrial building activity began in 2010 and, aided by the lower Canadian dollar, will continue to Commercial and institutional building construction are also rising on a more gradual but sustainable path that will add new jobs in almost every year across the new forecast scenario. These steady gains in non-residential building construction combine with the peak in resource and civil projects to sustain overall non-residential employment at record levels. A very modest housing cycle raises total employment to a peak in 2018, but then subsides to 2025, leaving residential employment near current levels at the end of the scenario period. Altogether, the growth in construction markets combines with rising retirements to consistently add to job opportunities across the scenario period. In 2015, unemployment was already very close to its record low level. The largest challenges will emerge in the next few years as current large major projects peak. Keeping pace with requirements adds to potential recruiting challenges, as long-term slowing population growth may limit the available workforce. Market conditions are often different across construction markets. The 2016 BuildForce labour market information (LMI) system has been improved by the addition of a complete supply-side analysis for each of the residential and non-residential markets. This groundbreaking work provides the first-ever analysis of separate conditions in both markets. 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. NON-RESIDENTIAL HIGHLIGHTS (2016 TO 2025) While the strongest phase of the resource cycle in Canada has passed, the Manitoba construction expansion still has momentum. Non-residential construction employment has grown each year since 2002 in a remarkable expansion that rivals the parallel gains in other provinces. But Manitoba s gains have not been as dependent on oil and gas development and this is proving to be an advantage across the first half of the scenario period.

2 Labour requirements Manitoba s current growth in non-residential construction is concentrated in electrical generation and transmission projects. The province s vast hydroelectric potential is one of the largest renewable energy resources in North America. Overall, large engineering and civil projects will add an estimated 1,100 jobs in the next few years and then shed 800 jobs as projects wind down. By 2025, engineering markets have added an estimated 300 jobs compared to current employment levels. Labour requirements for the big electrical generation and transmission projects have distinct skill and trade profiles. A specialized workforce, including electricians, electrical power line workers, crane and equipment operators, ironworkers and concrete finishers, will all be in short supply as projects begin in the coming two years. Market conditions then ease as projects are completed later in the scenario period. Pipeline construction, like the electrical generation and transmission projects, engages specialized trades working at remote work sites. Key trades include heavy equipment operators and mechanics, pressure welders and pipefitters with specific skills and experience. Some of the workforce on these projects may be recruited from highly mobile specialized crews from outside the provinces. Industrial building has been on an upward trend since the end of the 2009 recession. By 2015, employment will regain high levels previously reached in 2007 and continue to grow to a new record level by Commercial and institutional building activity adds more jobs and, by the end of the scenario period, total non-residential building construction will add more than 1,200 jobs. Maintenance-related employment is a growing market for the construction workforce and nearly 700 jobs are added in steady and moderate growth across the scenario period. At the end of the 10-year scenario, total employment in nonresidential building and engineering, including maintenance, is expected to rise by 2,200 jobs above 2015 levels. The available workforce While growth in the construction workforce from 2016 to 2025 is not large by historical standards, changing demographics may make recruiting new workers a challenge. General population trends to slower growth may create some recruitment barriers. Manitoba s population has a younger age profile than some other provinces and will sustain a natural increase across the scenario, as births exceed deaths. Still, the pool of youth entering the workforce is declining while retirements rise. These challenges are not new, but may be complicated by the modest growth in construction. The BuildForce LMI system tracks supply and accounts for the change in the available labour force, including retirements, new entrants and net in-mobility 1. Retirements measure permanent losses to the workforce, which might be offset by the entry of first-time workers aged 30 and younger from the local population. Across the decade: The available non-residential workforce expands by 2,200 workers as unemployment levels are driven below historical levels. An estimated 4,900 workers are lost to retirement and must be replaced. Manitoba may be able to draw 5,800 first-time new entrants to meet these demands. 2 Meeting overall labour requirements will require hiring 1,300 workers from outside the local market. Labour requirements are not distributed evenly across the years or regions. Key changes are concentrated in 2016 and 2017, and the most intense recruiting may focus on specialized crews in remote locations. By 2018, the projects wind down and a portion of this workforce leaves. Figure 1 tracks the annual changes across the scenario. 1 In-mobility refers to the arrival of workers from outside the local construction industry. 2 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 MANITOBA CONSTRUCTION AND MAINTENANCE LOOKING FORWARD

3 Figure 1: Annual estimated changes in non-residential supply, Manitoba 2, , , , , , 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 ranking 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 Manitoba 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 the nonresidential sector 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 nonresidential). For Manitoba, non-residential rankings are reported for 28 trades and occupations. Table 1 (page 4) provides non-residential rankings, showing tightening conditions in 2016 and 2017, followed by mostly balanced markets after 2018, with some 2s as selected trades come off historical high employment peak levels 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 Manitoba 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 N/A N/A N/A N/A N/A N/A N/A N/A Electricians Floor covering installers Glaziers Heavy equipment operators (except crane) Heavy-duty equipment mechanics continued on next page 4 MANITOBA CONSTRUCTION AND MAINTENANCE LOOKING FORWARD

5 TRADES AND OCCUPATIONS 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) Manitoba has been the destination for a growing number of international immigrants over the past decade and these new arrivals have driven new housing activity higher. This activity slowed during 2015, but resumes growth from 2016 to Levels are sustained to 2020, when a slow drop in housing starts begins, following slower population growth and household formation 3. Manitoba has an older housing stock that is serviced by a large and slowly expanding renovation and maintenance sector. Labour requirements The new housing down cycle adds 1,500 jobs from 2016 to 2018 and then slows, losing almost 1,500 jobs to A small net loss remains at the end of the scenario period. A large renovation market adds 500 jobs with modest gains across the period, while maintenance work adds another 300. The residential maintenance and renovation workforce consists of similar trades and occupations as those working in new housing, but this group is distinguished by some degree of specialization and unique job experience. The available workforce In addition to meeting demands in the changing markets, residential construction employers also need to replace a growing number of retirements. BuildForce supply-side accounting can now be applied to both residential and non-residential markets. Looking at the residential market: The labour force rises by 600 jobs across the scenario period, following a long-term trend to lower unemployment. Replacement demands (retirements) total an estimated 3,300 workers. The estimated 3,200 new entrants offset retirement demands. 3 Household formation refers to the change in the number of households (persons living under one roof or occupying a separate housing unit) from one year to the next. It is the means by which population growth is transformed into demand for new housing Key Highlights 5

6 On balance, local residential employers will need to draw in 700 new workers to meet total requirements for new housing, renovation and retirements, but much will depend on successful recruiting of the province s youth. Figure 2 sets out the annual changes in the labour force, showing the modest buildup in recruiting as new housing improves to 2018 and then settles back to current levels. Estimated annual retirements represent a major industry challenge for the coming decade, as this reflects a significant loss of skilled workers. Residential rankings, risks and mobility The rankings for some trades working in the residential sector 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 and millwrights in residential construction). For Manitoba, residential rankings are reported for 17 trades and occupations. Low rankings in Table 2 reflect the 2015 decline in new housing. As the cycle turns up, the ranks signal the added demands of new housing in the supply-demand balance for trades and occupations. Balanced markets, signalled by a rank of 3 in the table, require a limited and normal level of workforce mobility. Stronger housing markets early in the scenario period, with a rank of 4, will need to recruit from other markets and provinces. Figure 2: Annual estimated changes in residential supply, Manitoba 1, , , , , 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 6 MANITOBA CONSTRUCTION AND MAINTENANCE LOOKING FORWARD

7 Table 2: Rankings for trades and occupations in residential construction in Manitoba TRADES AND OCCUPATIONS Bricklayers Carpenters Concrete finishers Construction estimators Construction managers Contractors and supervisors Electricians Floor covering installers 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 After a strong expansion in construction employment from 2002 to 2013 there is still momentum in the Manitoba construction industry. The Construction and Maintenance Looking Forward scenario anticipates above-average labour requirements relative to other provinces. Cyclical changes in employment may require mobility in the workforce across the residential and non-residential sectors and the provinces. There are both limitations and opportunities where mobility might be expected to help balance labour markets. For example, the new housing cycle will draw in new workers from 2016 to 2018 as it grows and then employment will fall as the cycle declines. This ebb and flow may encourage workers to move into and out of the more stable renovation and maintenance markets. But this mobility is limited by employer expectations for unique skills and experience in each market. Similarly there is potential for mobility across nonresidential markets as the big engineering projects ramp up and then wind down. Movement into and out of the more stable commercial and institutional markets might offer recruiting opportunities for the big engineering projects. But the remote location and specialized skills needed for some of this work might limit mobility. Filling industry needs early in the scenario period and replacement demands later in the period will likely create labour market challenges: Slower population growth and an aging workforce combine to create specific challenges for employers Key Highlights 7

8 Recruiting young people, immigrants and out-ofprovince workers, including some returning to Manitoba, will bring construction in competition with other industries facing similar demographic challenges, which will be drawing from the same, limited local population. Cyclical changes in employment may require mobility in the workforce across the residential and non-residential sectors and among the provinces. Local demographics restrict labour force growth, leaving in-mobility key to recruiting. The Construction and Maintenance Looking Forward national highlights report expands on the range of worker mobility options and industry implications. 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 MANITOBA CONSTRUCTION AND MAINTENANCE LOOKING FORWARD