Ontario Construction Report staff writer
Ontario Construction News invited former Ontario General Contractors’ Association (OGCA) president Clive Thurston to offer his insights about how the COVID-19 pandemic has affected – and will continue to impact – the province’s contractors.
Here are his observations.
I’ve been talking to a few industry people in regards to your questions and am afraid the picture is still rather murky. I’ve been involved in calls with the Canadian Construction Association (CCA), getting updates on what the feds are doing and I’m still getting updates from my other associates, including members of the Construction Design Alliance of Ontario (CDAO).
There still is no clearly defined relief plan either federally or provincially for the construction industry. The pipelines that have been announced are old pipelines and nothing new has been forthcoming.
At the federal level there is still no appetite for COVID-19 support for the construction industry and there are strings being attached to the federal pipeline projects; these involve community benefits and green building requirements.
The industry is not opposed to working on those initiatives. In fact we been long-time supporters of both these types of endeavours, but feel that at this time attaching those kinds of strings to the projects hamper the ability to get them out as without proper review and believe that these initiatives can become simply an impediment to projects getting started and moving forward.
Today’s projects are already being designed to the highest potential environmental limits and more importantly, as you know, we are searching high and low to hire new workers and bring them on board. But tying up projects with red tape and unworkable bureaucratic nonsense is not going to help — instead projects are delayed and costs increase.
Another important consideration that I’ve heard from my contacts very clearly is that money is running out from pre-COVID budgets. Municipalities are closing down or not moving forward on a number of projects because they don’t have the funding due to the money they spent on COVID-19 measures.
As I’ve written earlier, we have seen attempts by owners to impose new contract terms even on existing contracts, thus requiring even greater review of contracts and resulting in increasing prices.
Material shortages are of concern. Certainly the wood shortage is well known though it is impacting residential more than that is impacting ICI simply because of the different methods used in construction. However there is no doubt that the long-term impact will be felt.
We are very concerned in regards to financing and support. While bonding companies are doing their best to step up, the government needs to take action to ensure that affordable loans and backing are provided by the banks and that the surety’s can continue to provide support to the industry so that the industry can continue to operate fully.
While the larger companies may be weathering this better, they are not unscathed and the small to midsize companies will face liquidity issues very shortly and that will be felt throughout the industry, including the subtrades and suppliers.
From talking to my counterparts, I’m told that the real impact will begin to be felt between late September and the end of October.
There is a great fear that a large number of firms may not be able to continue unless relief is provided in some tangible way. Not just money, because owners need to have affordable loan rates and so on, so they continue with their projects.
We need a clearly defined pipeline of projects that is far more aggressive than the current one. We need to remove any impediment to moving these projects forward, with fair contract requirements of course (as the industry is not asking for carte blanche).
We are aware for instance that the Ontario provincial government has been in receipt for some time of an urgent report that was created by the firm of Singleton Reynolds and Vogel, pointing out key areas in the industry that needed to be addressed so that the industry could continue to work effectively and be the relief agent that every politician says we are being counted on to be.
Though we have not seen the report, we do know that some of our key issues that we have been talking about, for many years now, such as the exclusionary/reprisal clause in contracts, a clear force majeure definition and development of recognition of pandemics and their impact on not just our industry but on all industries.
The CDAO and others have made recommendations in regards to these very issues with slow response. We are concerned that the report is now languishing behind closed doors and has not been released. More importantly the report has not been acted on – and these issues need addressing now.
Updates to the Construction Act are vital and submissions are being made by leading construction associations and the Ontario Construction Bar urging that the necessary changes be made to ensure the industry remains stable and not mired in a legal quagmire.
At the federal level, the government is now paying attention to these issues and I understand from the CCA the discussions are taking place in regards to the very highly-charged but necessary changes that must be made.
Québec and Manitoba outlawed exclusionary/reprisal clauses. What is taking Ontario so long? The feds are now recognizing the problem and the unfairness of this. Again the industry is asking: “What is taking Ontario’s so long to make these necessary and vital changes?”
Right now the picture is not as dark as mud, but certainly is cloudy. Action is needed, not words.
If the industry is truly going to be the economy’s saviour as both the federal and provincial governments across the country are saying, they need to untie our hands, they need to listen to us, they need to provide the support we are asking for and they need to act now as further delay will only increase the pain and make it impossible for the industry to help the overall economy.
Especially, as we see the COVID-19 numbers going up and governments talking and acting to reinstate restrictions. If the second wave continues to grow, what will be the impact on the construction industry already struggling to not just recover – but which is looked upon as the only engine that can restore our economies?
Clive Thurston is the OGCA’s former president.