Construction boom to soar in ’05

Thursday, December 23rd, 2004

Non-residential construction in B.C. expected to reach a record $9.7 billion, Credit Union Central says

Derrick Penner

Non-residential construction in British Columbia will hit a record $9.7 billion in 2005, outpacing the province’s overall economic growth, the Credit Union Central B.C. said Wednesday.

The financial organization, in its forecast for non-residential construction, predicted that spending in the sector will surge six to eight per cent after languishing since its last peak of $7.8 billion in 2001.

The $9.7 billion total will be driven by big gains in infrastructure spending on items such as roads, rapid transit and pipelines and will beat the last record set in 1981.

“There has been some improvement in some of the resource industries and some of the [infrastructure] construction is related to that, pipeline activity and the like,” Helmut Pastrick, chief economist of the Credit Union Central, said in an interview.

“Some of the increase is in government infrastructure, though there is more to come.”

However, Pastrick said he does not anticipate much of an increase in construction on non-residential buildings.

Pastrick predicts commercial building construction to edge up to $1.8 billion in 2005 from $1.75 billion this year.

Industrial construction, boosted by forest-sector investments, such as the start of an oriented-strand-board mill in Fort St. John, could rise about $55 million to $375 million.

Government-related construction, however, is expected to recede to $750 million in 2005 from $825 million in 2004.

Pastrick said he expects government spending to pick up again in 2006.

He added that construction activity, both non-residential and residential, will comprise a large component of B.C.’s economic growth, offsetting at least some of the losses the province will experience in its export economy because of the higher Canadian dollar.

“It’s this kind of activity on the domestic side that we need to offset some of that weakness,” Pastrick said.

Jock Finlayson, executive vice-president of the Business Council of B.C., said the picture Pastrick has presented is sustainable into the near future, particularly considering the number of public construction projects on the books.

“There is quite a backlog of major projects when you consider the RAV line, the Vancouver trade and convention centre, Highway 1 and other roads, to say nothing of the Olympics,” Finlayson said.

He added that building and infrastructure investment is also the first part improving productivity.

He is looking for business spending on machinery and equipment to also increase, which is the other factor in the productivity equation.

“Capital investment drives productivity,” Finlayson said, and productivity is crucial in pushing up average wages.

Manley McLachlan, president of the B.C. Construction Association, said his organization has tracked the number of major construction projects on the books and agrees that the boom is “not just a glitch. There is a long-term element to 2010 and beyond. I’m quite confident this boom is going to increase.”

McLachlan said it makes the picture “a good news-bad news scenario.”

“The good news is that construction is staying strong and the industry is growing,” McLachlan said.

That growth, however, is going to be squeezed by the availability of skilled labour and access to building material such as steel, which has been in short supply.

© The Vancouver Sun 2004

Comments are closed.