CONSTRUCTION WORKER SHORTAGE
We don’t usually hang out with the big builders, construction suppliers and city renovation companies. But this week we went to the Annual Economic Outlook dinner, for BILD Calgary Region members (and some dignitaries). By far, the number one topic of discussion was the shortage of skilled tradespeople: citywide, province-wide, even nation-wide. There was even an anecdotal story about large corporate CEO’s trying to “buy” an entire class from SAIT to train/mentor/hire.
This is not brand new information to anyone in construction and renovation. For example, Mike Holmes and his team have been trying to inspire and educate on this topic for years: https://nationalpost.com/life/homes/mike-holmes-more-tradespeople-wanted-to-fill-looming-shortage.
However, the situation is becoming worse, even with many good people attempting to implement solutions. StatsCan did a broader-based report on labour shortages that was published in November of last year: https://www.statcan.gc.ca/en/subjects-start/labour_/labour-shortage-trends-canada. Of note: recruiting skilled employees is expected to be a problem for 49.5% of businesses in construction! Wages are already increasing as a result of the demand for skilled tradespeople. What this means to real estate investors is that our building and renovation costs are likely to be increasing for the foreseeable future. Here’s a very recent article from the holidays about the challenges for trades and builders in and around Red Deer: https://www.cbc.ca/news/canada/calgary/red-deer-labour-shortage-business-1.6693680. I like how the roofing company in that article is offering incentives to attract AND retain employees – except their goal is only 6 months! I wonder if they’ll grow their program with longer incentives?
Diving deeper into the construction industry numbers is this article from November 29, 2022: https://www.theglobeandmail.com/business/industry-news/property-report/article-canadas-construction-industry-experiences-labour-pains-as-shortage-of/. This article highlights 2 key aspects to the shortage. The first is a plethora of retirements, “BuildForce, a national industry-led organization, estimated 257,100 construction workers will retire by 2029.” As much as our trade schools are trying to keep up, “Canada could be facing a shortage of 100,000 tradespeople by 2029.”
So this labour shortage is likely to drive wages up, and ultimately buyer pricing up; however, the other side of this is longer timelines for builds and renovations. Newer staff build slower, and make more mistakes that will need to be corrected. More experienced staff will need to supervise and mentor, which will also take away from their efficiency.
A lot of great minds are already working on solutions. 3M Canada did a survey to look into attracting new hires to the trades. “While 96 per cent of Canadians agree that the country’s workforce needs more skilled trades workers, 76 per cent say they would never pursue a skilled trade for themselves.” Wait what?
- More than 90% think there are opportunities in the trades
- More than 90% trust trade schools to provide the training they need
- And more than 80% believe they can earn as much money in the trades as they would earn after getting a 4 year university degree.
And yet, … not for me? Well, based on our high school experience, I would say young people receive much more encouragement to pursue careers in the STEM fields. And generationally, Gen Z is very tech savvy. Motivating our young people to do physical labour, and dare I say outside, poses significant challenges.
Despite this, many programs are already in place to attract and retain new trades people. Women and recent immigrants are two high target categories these days. Our local school district has a program to start youth in trades early on: https://www.rockyview.ab.ca/schools/learning/programs_of_choice/building_futures. Building a house in Grade 10? Are you kidding me? How cool is that? Financial barriers are also being addressed with government and industry programs. BILD Alberta has launched an entire scholarship program to assist youth, immigrants, and other motivated and financially challenged people: https://bildalberta.ca/scholarships-for-construction-careers/. They are working closely with SAIT and NAIT to brainstorm even more solutions.
Why would we focus so much on construction in a real estate investor blog? Because when we own real estate, eventually we need a repair, or a renovation, or even a new build. And that entire industry is changing and challenged like never before. Consumers and real estate investors will need to adjust some expectations, and value their tradespeople a little more. Builders and contractors will have no choice other than to participate in the training process, and adjust their prices and timelines accordingly.
