March 19, 2010

FEATURE | General & trades contracting

Role of general contractor has evolved over the years

BRIAN MARTIN

correspondent

The last 30 years has been a whirlwind of change and evolution for general contractors in the construction industry. The way they do their work, especially in Vancouver, has changed significantly. Three now-retired industry veterans shared their thoughts on the matter.

Dolph Hoffman formerly with AIM Steel and Western Canada Steel; Al Webster former head of Stuart Olson Construction in Vancouver and before that Cana Construction, and Ray Marquis, an active consultant, who was with both Dawson and Hall Construction and was western vice-president of the Foundation Company of Canada, witnessed the changes.

All three were chairmen of the Amalgamated Construction Association, which later became the Vancouver Regional Construction Association.

They agree that the ground began to move under the Vancouver construction industry in the early 1980s.

The reason was the shift from union to open shop construction.

Before then, construction in downtown Vancouver was strictly union.

Open shop firms were restricted to the suburbs and largely to residential. Then a few companies, made their move into the city.

Their move coincided with the construction of Expo 86 and with a generally fractious labour period.

When the dust had settled, open shop general contractors and open shop trade contractors had won the war.

Unionized general contractors had to deal with losing their ability to be cost competitive.

Prior to change, it was common for generals to maintain large labour forces of their own.

They only turned to sub-contractors for electrical and mechanical work or large excavation jobs.

However, things had to change.

Webster is keenly aware of the changes. It was during that time Stuart Olson, an Alberta company, sent him from Calgary to Vancouver to launch their B.C. presence.

His company was one of those traditional firms that had always maintained its own workforce.

“In B.C. everything was different,” he said.

Although they tried to keep their own employees, they found it impossible.

Before long they joined other general contractors in subbing out nearly everything.

All sorts of innovative methods were found by general contractors to get around the grip of the unionized trades belonging to the B.C. and Yukon Trades Council.

Among them was employee membership in “alternate unions”.

They are sometimes called “non-union unions” and the Trades Council simply referred to them as “rat unions”.

In only a few years the industry went from 75 per cent union and 25 per cent open shop to exactly the opposite.

Along the way, many of those people employed by major construction companies vanished into the world of trade contractors.

Hundreds, if not thousands, of trades people stuck their union cards in their back pockets and went off to work for open shop trade contractors.

In only a few years, it reached the point where it is now – most commonly a general contractor will have only a handful of employees on even a major job.

All the rest is subbed out to trade contractors.

Unionized and open shop trades people now commonly work side-by-side.

That was unthinkable 20 years ago.

Today, the lines that separate a general contractor from a pure construction management company have become so fuzzy that they are almost invisible.

“That is the way it is now and it troubles me to a degree,” said Hoffman.

“I wonder how much of their job is just being a gatekeeper. How much responsibility do they really have for the expertise on the project?”

He gave the example of a well-known mid-sized contractor, who regularly had between 50 and 60 of his own people on a job.

Now, he usually has five or six.

While recognizing the same evolution over the years, Marquis said he is now seeing the tide changing.

More companies – particularly the large ones – are starting to go back to building up their in-house labour pools.

“I think about two years ago the sub trade prices were heading for the stratosphere,” he said.

“Forming contractors were coming in between $12 and $16 a square foot. General contractors knew they could do it at the time for $9 to $12. Some of the largest contractors – given the volume of work they had – questioned why they were giving the subs three or four dollars a square foot when they could do it themselves.”

It appears that the same overly aggressive pricing that drove the unionized sub trades into the hands of the open shop forces, may now drive work away from trade contractors back into the arms of the generals.

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