The past three years have presented a number of challenges for Ontario's construction industry, from temporary business closures, to enhanced health and sanitation standards, to supply chain disruptions. We wanted to know how contractors fared. The 2023 Contractor Survey was released as part of the 23rd Annual State of the Industry and Outlook Conference. The industry experts there gave insight into where the construction industry in Ontario is headed in 2023.
Here are what Ontario's contractors had to say:
When asked the question - "Looking forward, how much business do you expect to conduct in 2023 compared to last year?"
- Overall, 32% of contractors expect an increase in work in 2023, while 49% believe they will do the same level of work as in 2022, and 16% expect less compared to 2022.
- Outlook for GTA region is similar to the provincial outlook; 32% anticipate more work, 47% expect the same, and 16% expect less. Both Ontario and GTA expectation are slightly below those of 2022, where 36% believed there would be more business.
- In Southwestern Ontario, 32% of contractors believe there will be more work, 50% think there will be the same, and 18% expect less work. This is similar to 2022 outlook.
- In Eastern Ontario, 30% expect more business, 56% expect the same, and 10% anticipate less. This is less than in 2022, where 38% expected more work.
- In Central Ontario, 27% of contractors expect more work, 52% expect the same, and 17% expect less. This is much lower than was expected in 2022, where 39% of contractors expected more work.
- In Northern Ontario 50% of contractors expect more work, 31% expect the same amount of work, and 19% expect less. This is much more positive than last year, where 30% expected more work.
In the OCS30 Survey, when asked the question - "Thinking about your work picture for 2023, what percentage of your work do you expect will be from each of the following - Maintenance, new construction, Private, bidding, repeat and new customers, inside and outside your region?"
- Last year, 55% of contractors work was expected to be on new construction projects, compared to 45% on maintenance. For 2023, it has shifted back to a more equal balance, with maintenance making up to 50% of the work, and new construction making up to 49% of their anticipated slate of projects.
- Contractors anticipate just over half of their work (54%) will be won privately and 45% will be won through bidding.
- Similar to 2022, 72% of contractors' work will come from repeat customers (73% in 2022), while 28% will be from new customers (27% in 2022).
- 81% had a positive outlook on the Ontario construction industry.
When asked the question - "What are some of your reasons for having a positive outlook on Ontario's construction industry?"
- 35% said it was due to an abundance of work and 10% said increase in construction activity
When asked the question - "Thinking of the year 2023 overall, do you expect the number of people employed by your firm to be higher, lower, or the same compared to 2022?"
- 33% expected more, 59% expected the same, 7% expected less and 1% did not know.
When asked "How much more of an increase in people employed?"
Contractors expect a 10% increase in the number of people that they employ in 2023. This is 2% higher than in 2022.
"What approaches were taken by contractors in the past 12 months to attract or retain skilled labour?
- 67% said they would raise wages
- 56% said to promote employees
- 49% said they would hire more apprentices
- 47% said they would offer better benefits
- 32% said they would offer referral bonuses
- 31% said they would guarantee overtime
- 26% said they would offer hiring/retention bonuses
- 13% said Other
What reasons were given for potential consequences of skilled labour shortages in the past year?
- 63% stated cost increase
- 58% stated project start/completion delay
- 51% stated they use less qualified labour
- 50% stated they had to turn down work
- 37% stated project cancellation
- 29% stated they had to hire from outside region
What other ways did contractors use to combat labour market challenges?
- Being selective on the projects just so that they can utilize their existing man power
- Expanding their time lines for project completion
- Splitting shifts to get the most out of people and perform tasks at the most opportune time. Using different platforms and materials
- Subcontracting out the work to either union-based labour or other general construction companies
- Longer work days and paid overtime
How many contractors employed apprentices in Ontario in the past four years?
- 68% in 2020
- 61% in 2021
- 60% in 2022
- 64% in 2023
Approaches taken by contractors to avoid supply chain disruptions?
- 80% used alternative suppliers
- 72% used alternative materials
- 70% accelerated material purchases
- 66% stockpiled materials
- 10% Other
What other approaches were taken by contractors?
- Going outside of the province to get materials that they had a shortage of
- Offering higher price to suppliers. For instance, if they are not able to provide materials on time, they offered extra money to provide materials to that site
- Qualifications were included in their proposals in order to limit their exposure to both cost increases and material shortages and equipment delivery delays
- Importing some materials because they couldn't find them in Ontario and had to get it in the States
When asked how many projects were cancelled by the owner, they responded?
- 36% of contractors have had projects cancelled by the owner in 2022/2023
- 53% of contractors have had projects delayed by the owner in 2022/2023
Reasons mentioned by contractors as reasons why projects were being cancelled:
- Escalating project costs (40%)
- Difficulty obtaining materials (15%)
- High interest rates
- Lack of funding
- Scope of the work being bigger than anticipated
- Delays due to labour shortages
Ramifications of cancellations:
- Had to scramble to find replacement work in a timely fashion
- Higher costs in being overstaffed for a short period of time until more work has been found or employee layoffs
- Not able to keep their casual staff work, lost income and loss of more opportunities
- Reduction in sales and had to let go and layoff people
- Saw a downturn in volume and profit
The overall outlook for Ontario's construction industry is very positive; there are numerous projects and a strong demand for construction, which is fueled by population growth and the need to update infrastructure.