Michael Lewis
Special to Ontario Construction Report
It’s a time of year when the sewer and watermain construction sector should be bustling. But this spring, contractors in the GTA are grappling with a shortage of work and tradespeople are sitting idle due to factors including the uncertainty fuelled by Donald Trump’s trade war.
Despite massive infrastructure backlogs, very few municipal water infrastructure projects have been tendered in the region, said Patrick McManus, executive director of the Greater Toronto Sewer and Watermain Contractors’ Association. He said President Trump’s tariffs and their impact of pricing and supply chains are the proverbial last straw on top of existing market challenges that have projects languishing in the pipeline.
The GTA chapter is a member of the Ontario Sewer and Watermain Contractors’ Association, which represents about 750 companies including contractors, manufacturers, distributors, and consulting engineers. The companies account for capital projects that aim to ensure clean, safe drinking water and environmentally responsible wastewater treatment and disposal.
During an event in February, municipalities in the Greater Toronto Area identified billions worth of sewer and watermain construction and reconstruction in this year’s pipeline, “but we’re seeing next to nothing getting pushed into market,” McManus said.
“There’s not a lack of work out there that needs to get done but we’re not doing it this year. Money is still being collected building reserves but it’s an issue of uncertainty, about being unsure about prices in the market and what all of those things are going to look like.
“We’re already dealing with the fact that the housing market is way down but the thing that has pushed all of this over the edge is all of the noise out the United States that seems to have really ground to a halt all construction work.”
He said the U.S. tariffs coupled with inflated financing and operating costs across the building sector undermine the sustainability of a watermain and sewer industry that had allowed contractors to offer a steady paycheque to tens of thousands of unionized tradespeople.
“We’ve had steady work for a long time and built up a workforce to match but the concern now is that workers will move elsewhere so when this work does inevitably come rolling back will the people still be here to do the work?
“Historically, we’ve had sustainable work in this sector because water has its own revenue stream at the municipal level. The whole idea is that it is supposed to be effectively recession proof because people are always using water and there are always municipal water infrastructure projects even if the private side doesn’t pan out.”
But this year, the sector is on the verge of a lost spring, McManus told Ontario Construction News, though he said municipal procurement officials say water infrastructure work will proceed at some point.
Toronto alone has approved $17.6 billion in capital spending on waterworks, a 28 per cent increase over the previous budget and part of a record $60 billion 10-year capital plan. Fifty-four per cent of the budget targets the city’s state of good repair maintenance backlog.
The Financial Accountability office of Ontario estimates the current municipal infrastructure backlog at $52 billion although the condition of many municipal assets is unclear. It says Ontario’s municipal water infrastructure has a replacement value of $229 billion.
“Nobody in the industry thinks this will last, “McManus said, “but we’re missing the prime months for doing this work. People will bide their time, but some companies are laying off core people that they kept on all through the winter.”
He said the employment situation is worsening across the water and sewer sector, even with carry over and private work. Companies that usually would be hiring are letting go, with some bidding on projects outside of the GTA. He said projects in communities such as Sarnia and Windsor that would normally attract five or six bidders and now seeing 20.
McManus applauded municipalities including Toronto for looking at ways to streamline construction procurement, but said substantial benefits will likely be realized in future years.
Early this month, Toronto published results of a KPMG study of its capital delivery focused on construction, with recommendations for how to decrease delays in project starts, improve transparency, reduce barriers for local companies, and improve standardized practices.
Among the recommendations is the elimination of redundant steps causing delays in project execution and higher administrative costs, with the Toronto Bid Award Panel that reviews and approves the awarding of contracts for open competitive solicitations singled out.
But while it will take time for the city to implement changes, it could, in the meantime, tender the projects that have been scheduled, McManus said. “It doesn’t have to be full slate. If there is concern over pricing hold back 10 per cent. The longer you wait more it will cost.”