Ontario painting contractors thriving despite demographic, environmental challenges

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    OPCA speaks up for quality and sustainable workmanship in $120-million industry

    Ontario Construction Report staff writer

    Times are good, times are challenging for Ontario’s painting and coating contractors.

    High demand for qualified painting contractors in the industrial, commercial and institutional sector is providing plenty of work for contractors with the skilled labour and expertise. This demand is likely to grow – and qualified contractors who are committed to staying in touch with evolving technologies and environmental regulations have a promising future.

    This good-news for the $120 million industry has a flip side, of course – a labour shortage, defying the myth that you don’t need much in the way of skills to be a painter.

    Of course, skill is important. Even straightforward painting work these days needs to take into account safety and environmental regulations, and coating challenges can be especially significant for industrial projects and major infrastructure projects. You wouldn’t want an poorly trained worker coating a nuclear reactor, for example. New paint and coating technologies create many opportunities for long-term cost savings and a truly enhanced environment, but you need to know how to do things properly.

    This work isn’t for amateurs: Ontario Painting Contractors Association (OPCA) members often work on projects with exceptionally challenging safety, technical and scheduling circumstances.

    Much of the OPCA members’ work is in public infrastructure projects, where the challenge is to overcome competitive quality short-cutting that can occur when “lowest price wins the job.” The solution, an increasing number of Infrastructure Ontario Design, Build, Finance, Maintain (DBFM) projects, allows well-capitalized and competent contractors to compete on quality more than price – DBFM projects are concerned with overall life-cycle costs, not just short-term construction savings. Contractors require solid knowledge, capital and skilled labour to win this work, ideal for OPCA members.

    This infrastructure work relates primarily to new projects. However, maintenance issues are increasingly important for existing structures, many of which are reaching critical stages in their service life.

    “The DBFM model is effective for new projects but what is our government going to do with historical assets when there are insufficient funds to cover their remediation?” asks OPCA executive director Andrew Sefton.

    Here, the battle turns to specifications, inspections, warranties, and a slew of quality-related issues. Do institutions and organizations really save money when the contractor, following the specifications literally, cuts corners and uses the cheapest solution possible – requiring almost-immediate expensive maintenance and repainting?

    Murray Heywood, a consultant and principal of Heywood Innovative Solutions Inc., says the picture isn’t very encouraging on projects where public agencies and contractors race to the bottom in “low bid wins the job.”

    “When the low bid wins, the cheating begins,” Heywood said. “They (contractors) are going to make money. If they don’t think they are being watched or monitored, they will take liberties – if they think they can make it look decent with two coats instead of three, they will do it.”

    “In one case, a large hospital project, they specified a particular product type MPI (Master Painters Institute) number 54,” Heywood said. “There are so many products acceptable (within that broad specification), from the very lowest end of paint to the highest range – one is $12 a gallon, to $28 a gallon. They’re giving the contractor the choice – and the cheapest choice often will not hold up under use.”

    The solutions, Heywood says, are more thoughtful specifications before the job starts – and systematic inspection after the work commences.

    “Inspection and professional and specific coating consultation is more important than ever before due to the ever-changing environmental regulations, with all of the new technology and the forever-changing manufacturing landscape,” Heywood said. “With the move to high solids products and water-based technology, the skill set to properly apply the products increases and the surface preparation requirements become increasingly important.

    “In the old days, we painted every difficult and not-so-difficult situation with oil-based paint. These days are gone and we are now moving to much more sophisticated and demanding paint technology.”

    Fortunately, clear standards are available to ensure that projects meet standards for durability and environmental responsibility, as well as cost. The OPCA, for example, has adopted the Master Painters Institute (MPI) architectural painting specification manual and the MPI maintenance repainting manual, along with a corresponding approved products list.

    In July 2012, the OPCA announced that it would “no longer be offering MPI Accredited Quality Assurance Association guarantees as specified in the MPI guide specifications or the APSM guide specifications,” but the association would honour any guarantee certificates.

    “We selected one of the most experienced and certified coating inspection services in Ontario, Heywood Innovative Solutions (heywoodsolutions.com), to continue delivering quality assurance on behalf of the paint industry,” Sefton said. Heywood’s errors and omissions insurance effectively serves as a guarantee for project outcomes.

    On a $500,000 painting or coating project, Heywood’s organization charges two per cent for OPCA members and 2.5 per cent for non-members. As projects grow in size, the percentage rate declines, he said. “We don’t need to be there 400 times during the painting of a hospital,” he said. Instead, Heywood’s team conducts surprise inspections with enough frequency to ensure that the contractor is truly complying with the specifications.

    Heywood says a proper specification and inspection process provides the best warranty possible. While manufacturers, for example, might provide a warranty for their paint, this is of little value if the paint isn’t applied properly – and even if it is, the actual paint costs are only a relatively small part of the total job.

    Still, he says, only about two per cent of Ontario’s projects are being inspected.

    And the costs are huge when things go wrong.

    In one case, Heywood said he is acting as a consultant on a high-profile project that has failed. “A $450,000 project will have to be completely redone,” he said. “That means a total cost of $900,000 to $1 million.”

    “Our costs if we had been called in to inspect the work as it progressed, would have been about three per cent of the project value, or about $12,000 to $13,000.” Now, the cost of lawyers, consultants, and the need to completely redo the project will dwarf the savings from not setting the inspection process into the original specifications, Heywood says.

    Sefton points out the importance of budgeting and allocating enough resources for proper maintenance. “When maintenance is neglected, repairs when they become essential will generally equal five times maintenance costs; if repairs are not made even then, rehabilitation costs will be five times repair costs,” Sefton said, quoting Barry LePatner in Too Big To Fall. “The bottom line of overlooking maintenance on a regular basis makes clear the dramatic compounding consequence of deferring maintenance.”

    What is the cost of a qualified contractor? While initial costs can be higher by 10 to 20 per cent if things are done properly and shortcuts aren’t taken, the lifetime savings costs can be upwards of 70 to 90 per cent, Daniel A. Zarette wrote in the Value of Quality and the QPI Contract; An Owners Perspective. “Reduction in costs comes from reduced premature failures and an apparent increased service life.” The challenge for the painting industry is to work with government and private sector procurement agencies to find ways to improve the quality requirements in initial specifications, resulting in somewhat increased short-term costs, but truly significant long-term savings.

    Labour supply issues, meanwhile, are creating new industry challenges.

    Increasingly sophisticated and challenging requirements for protective coatings and new low VOC paints mean the expertise required for a qualified painter – and painting contractor – is much higher than before.

    Because painting is not a compulsory trade, however, outside of union apprenticeship and training programs and in-house training from larger contractors, it is relatively hard to attract painters interested in long-term careers to build the skills required for advanced painting and coating challenges – and many young people don’t appreciate the trade’s really encouraging career and income opportunities.

    “Right now, it is a struggle, because qualified tradespeople are scarce,” says Hans Mutschel, owner of Dynamic Painting in Thunder Bay. “There’s nothing locally to train and certify painters, so there aren’t opportunities to connect with and attract young people to the field.”

    The OPCA’s Andrew Sefton says contractors are starting to explore the new foreign worker program, designed to make immigration to Canada easier for qualified skilled workers. Otherwise, demographic trends indicate that there will soon be an acute labour shortage.

    Meanwhile, contractors also need to fend off higher environmental costs and Stewardship Ontario regulations requiring them to effectively pay double for paint disposal. While contractors are required to co-ordinate their own hazardous waste disposal costs, they also have to pay a “per can” levy on the paint they purchase, to cover the municipal hazardous and special waste (MHSW) disposal program, which they cannot use, Sefton says.

    Currently the rules allow for an eco-fee exemption on paint cans of 30 litres in size. However “painting contractors typically buy all of their paints in containers 10 litres or less in size in order to minimize repetitive strain injuries associated with continuous movement of heavy paint containers by tradesmen,” Sefton wrote in a letter to Tamara Burns, vice-president of the MHSW program at Stewardship Ontario last year.

    “Accordingly, virtually all paint purchased by painting contractors are subject to eco-fees as passed on by producers on the sale of paint in containers less than 30 litres in size,” Sefton wrote. “These eco-fees are being levied on products supplied to painting contractors notwithstanding that the paint contractors typically generate ore than 100 kg of waste (primarily if not solely paint containers) per month and are not eligible to return these materials to MHSW depots.”

    Sefton suggests in his letter that reducing the container size minimum from 10 to three litres would solve the problem of unfairness. By doing so, the MHSW program will still be able to address small quantity waste from industrial, commercial and institutional businesses while allowing painting contractors to avoid paying twice for their paint disposal.

    The unfair fees remain in place.

    Nevertheless, Sefton is optimistic about the future for the OPCA’s 65 member contractors.

    With increasingly challenging environmental regulations, with higher skills required to handle advanced coating technologies, and with the likely consolidation of work into larger infrastructure projects, the contractors with the capital, skilled labour, and technical competence will likely thrive in the marketplace in upcoming years. And these contractors belong to the OPCA.

    “Companies with young organizations, prepared for growth, the future trend is to their favour,” Sefton said. “The biggest concern for our members is to increase their capacity to deliver – to use their strengths. If they are not prepared to grab the opportunities, there will be a big vacuum in the years ahead. However, they are much better equipped to meet these demands than the contractors not willing to invest time and resources in developing their business and the industry. This is where the OPCA is taking a leadership role.”

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