The Good News? There Isn’t Much of a Labor Shortage. The Bad News? There Isn’t Much Work.
Don Procter / November 2018
Economic times in the Canadian wall and ceiling industry vary as much as the geography. Here’s a look at how a few contractors see things—from Quebec in the east to British Columbia on the west coast.
Construction Integral M.T. Inc.
While business volume in 2017 was “by far the largest” in the seven years that Construction Integral M.T. Inc. has been in business, it was not a profitable year, says David LaSalle, director of operations. It is why the firm chose to “slow down a bit” this year, which has proven to be a smart decision because 2018 is the best year of the past five. Based in Gatineau, Quebec, across the Ottawa River from Ottawa, Canada’s capital, the mid-size contractor expects to do about $11 million this year, primarily in the region.
LaSalle says his company’s improved margins are due partly to a decision to switch to bidding on contract management projects rather than on lump sum jobs. CM jobs typically have fewer bidders (one to three) and better margins.
Another reason margins are up is that most contractors have enough work so they don’t need to chase low-margin contracts. “I think the general consensus around Ottawa with our competitors is that we are coming to a really nice place in the industry where it is very busy and margins should stay up,” LaSalle says.
Construction Integral is unionized, signatory to the Carpenters District Labour Council Local 2041, and operates with about 50 workers. But labor, particularly tapers, is scarce, and LaSalle’s taping crew is old (45 and up). Training opportunities are limited. “There are not enough men for all the work that is coming out,” he explains.
LaSalle says he makes himself accessible to his crew anytime they have a problem—personal or work-related. “You have to treat them fairly if you want them to stay,” he says.
After seeing few material price increases for about 15 years, LaSalle says gypsum board is up 30 percent in the past 12 to 18 months, steel is up more, and tariffs are hiking prices again. “Still,” he says, “if that is my biggest problem, I am not doing badly.”
To increase efficiency, LaSalle might buy a CNC machine to produce gypsum board bulkheads in one piece. At times he prefabricates on site, but “a good stick crew” can be as quick as prefabricating and then adjusting, he says.
Kincaid Interiors Ltd.
Construction in and around Regina, Saskatchewan, has been slow for many wall and ceiling contractors like Kincaid Interiors Ltd., a mid-size commercial drywall contractor in the western province’s capital city. “For the last couple of years we call it, ‘going from hand-to-mouth,’” says Curtis Kincaid, the company’s president, who sees the industry “leveling out lately.”
Margins have slimmed from a few years ago when major residential condos, office towers, several P3 schools and the new stadium for the Canadian Football League’s Regina Roughriders were under construction. “Lately there haven’t been many large commercial projects tendered, and the (winning bid) prices of the two major projects recently wouldn’t have even covered our overhead,” he says. “It seems there are always some companies willing to price projects that they can’t possibly be making any money on.”
The upside to slower times is that skilled labor is plentiful. Still, Kincaid says mobilizing a workforce on short notice for a small fast-track contract can be trying with fewer staff. “We can do it,” he says, “but when we had bigger projects and 50-plus staff a few years ago it was easier to put a few on smaller jobs.” A family business started by Kincaid’s father in 1976, Kincaid Interiors maintains a crew of 20-25 today.
When times pick up Kincaid will hire another estimator and/or a project manager. The contractor has kept several skilled workers on long term and usually picks up a few employees when needed through training at the Saskatchewan Construction Association’s Skills Link program, a 10-week course in which participants spend two weeks in class before heading to work for contractors at entry level wages for eight weeks. “Sometimes it pans out, sometimes it doesn’t,” Kincaid says. “We like supporting these types of training initiatives as it helps introduce young adults into the trades and supports our industry.”
Using estimating software programs for many years (Kincaid was one of the first contractors in Canada to use it), the contractor sends material lists to his suppliers for pricing with dates of starts/finishes, on-site loading requirements and other particulars about jobs. “It lets us do realistic takeoffs and confirm material pricing in volatile times,” he says.
Material tariffs have resulted in higher prices on projects, not accounted for in quotes—even when price guarantees are provided by suppliers, says Kincaid. He adds that he was given two- to four-weeks’ notice by drywall suppliers on price hikes. Because the steel that Kincaid and many Saskatchewan contractors use is made in Canada, he doesn’t see U.S. President Donald Trump’s tariff schedule impacting his supply.
While Kincaid likes some new technologies such as total station layout software, he just can’t justify the price until he has “really large projects to do.”
Prefabrication, which is taking off in some parts of the United States and Canada, is not prime time in Regina, he says, noting the city of 230,000 residents “simply doesn’t have any projects tendered here to make it practical yet.”
Shek Interiors Ltd.
Alberta’s economy is tied to the oil industry—and that economic driver is in slow mode. “There is not much for projects in Alberta right now,” says Kelly Slepicka, co-owner at Shek Interiors Ltd., one of the three largest commercial wall and ceiling contractors in Red Deer, a city of 100,000 residents halfway between Edmonton and Calgary.
Shek carried over one project—a 144-suite assisted living development—from last year. The contractor employs about 18 people now, but that number was 35 during busy times.
Slepicka says margins have been declining for a few years since the oil boom vanished, and competition has increased. Shek and a reputable competitor bid about $1 million on a job recently, but they were beaten by a bid for $250,000 less—an unrealistic number that could see the winning bidder lose money.
Slepicka is optimistic that work will pick up through the fall because his company is bidding on lots of projects. A change in government—both Canadian federal and provincial elections scheduled in 2019—could go further to improving the business climate, he suggests.
Integrated project delivery is a key to future success in the field, he says, noting that Shek is one of the first wall and ceiling contractors in Alberta to take part in IPD. By modeling walls through BIM, the contractor has improved take-off accuracy, eliminated wastage and improved efficiency.
There is a shortage of skilled labor in Red Deer, and most of Shek’s workers are over 40 so new blood is needed. Training is a hurdle for the unionized contractor because the nearest apprenticeship training is at a technical college in Edmonton, 90 miles north.
As the industry increasingly becomes technology driven, he suggests it could draw more young people into the field. “You can make a good living doing tech stuff here … and be part of building something,” he says.
Technical training is priority at Shek, Slepicka says, noting that his foremen carry tablets loaded with integrated software that keep necessary parties in the know in real time.
Another issue is soaring materials prices—steel, for example, was up 35 percent in three months and continues to rise, and another tariff on drywall in western Canada is expected. “It affects the end user,” Slepicka says. “A lot of our projects are government-based, so it comes back to all of us paying more money through taxes.”
Life Drywall Systems Ltd.
As a young man, Chris Sliskovic learned the ropes of the wall and ceiling trade working for some of the largest drywall contractors in the Greater Toronto Area (GTA), and 15 years ago he opened Life Drywall Systems Ltd., a commercial/residential contractor in Oakville, near Toronto. Business was good but started to slide after 2009, when competition grew and margins started shrinking, says the 40-year-old.
The unionized contractor, which had a crew of about 75 last year, now employs about a dozen. Times are tough even though business is brisk in the GTA, says Sliskovic, partly because many inexperienced companies popping up bid too low to make a profit.
Sliskovic says he has no carryover from last year. “Some days it feels like we should charge more to lose less—but it is not that bad.”
Today, he runs a lean operation and takes on small jobs, oftentimes through contacts, without getting into bidding wars, he adds, noting that tapers are in short supply. Life Drywall uses PlanGrid, which keeps the field and the office “in sync.”
Willowbrook Drywall Ltd.
“There is lots of work in Vancouver,” says Harry Ferguson, president of Willowbrook Drywall Ltd., a contractor based downtown near Coal Harbour overlooking North Shore Mountains. Multi-unit residential projects are popping up in the core and Vancouver’s West End as the inner city continues to densify to meet pent-up demand for housing.
But the busy city could be in for a “market correction sooner or later” because of the skyrocketing cost of living, says Ferguson, whose company is focused on the new/renovation commercial sector. And after 54 years in the field, the 72-year-old is thinking of winding down the company. Where once he had a crew size of 125, he now operates with 40-50 workers.
Margins are tight—“considering how busy it is,” he says, adding that the industry is “very competitive.” Contractors didn’t know how good they had it in the city in the 1990s by comparison to profits today.
Material costs are up, but a bigger concern to his bottom line is rising labor costs and a skilled worker shortage, Ferguson says. “If you want the labor, you have to pay more.” Prompt payment has also helped to draw workers to the company. “There are quite a few shysters in the business” who don’t pay on time.
Piecework has been a staple for many contractors in Vancouver for years, Ferguson says, adding that increasingly work is being paid on an hourly basis, “which makes it really difficult to price a job.”
He says production is down from a couple of decades ago, which he attributes in part to a change in family structure where couples often both work but still need to find time to raise a family. “In a lot of ways I think it is good (for the family),” he says, “but it means workers spend less time on the job site.”
To improve efficiencies, Ferguson expects to introduce a new framing system that could cut labor by 40 percent. At press time, the patented system was in the works for delivery possibly later this year.
As he winds down his business, Ferguson shies away from computer software that could help the business. “If I was going to stay in it for a long period, I see the need to turn to software that can help make us more efficient,” Ferguson adds.
Britt Drywall & Acoustics
Let’s end this with some good news. About 50 miles southwest of Toronto in the picturesque historic city of Dundas, Britt Drywall & Acoustics is having its best year in a decade since David Shrubsole took over his father’s company. A small contractor—he employs 7-15 workers, he says margins are up from two years ago.
While he doesn’t have a backlog—“we are not that big,” he says it is still difficult at times to find qualified labor, particularly drywall mechanics. Britt Drywall is not apt “to get over its head” with jobs, however. He would sooner turn down a job than face a crisis of labor.
This article wraps up our look at the economies and status of business in the United States and Canada, a series of articles that began earlier this year. If you’re looking to “import” workers, you may want to see if you can convince some of our friends to the north (Canada) to pay us a visit. And if you want to find work, go to the western United States.
Don Procter is a freelance writer in Ontario, Canada.