March 4, 2013

Foreign and public competition are big issues facing the industry

KELLY LAPOINTE

DCN staff writer

Outgoing Canadian Construction Association (CCA) chair John Schubert identified competition from public entities and international firms as changes that are impacting the national construction landscape.

The CCA has become very concerned about the spread of public entity competition with the private sector in construction.

“I’m travelling across the country and talking and finding out it’s not as unique as they thought it was,” Schubert told the audience at the recent Ontario Road Builders’ Association (ORBA) annual meeting. This address was one of his last as CCA chair.

He pointed to the City of Edmonton, which bought a tunnel boring machine and is now competing in Saskatoon and Vancouver.

“I understand they’ve actually asked to pre-qualify for some of the tunneling work that’s going to happen here in Toronto. There’s a public entity that’s now taking some equipment that they acquired and wrote off and now want to compete with us in terms of doing the very work that we’re used to doing.”

As a first step, the CCA is developing a report to assist its partner associations in explaining to elected officials and the media the long-term cost implications for taxpayers of such practices.

Schubert said the report should be available shortly.

“This will be a checklist that you can use if you find a municipal government in your area or provincial governments are going to venture into competition. You will be able to take your checklist and have the answers to questions. It should prove that it’s not effective,” Schubert explained.

He said that one of the issues is accurate price comparisons.

He predicted that this will be an area that more governments will be venturing into as they increasingly need to find alternative sources of revenue and use the equipment they have already purchased.

If the practice continues to spread, additional steps may include broader media strategies, though no decisions on these additional measures are likely until this fall.

Schubert said the national construction market landscape has changed and it is getting more difficult to identify foreign competitors as they have been merging with and acquiring Canadian firms.

He said it is concerning that international competitors bring international design expertise and international procurement.

“We hire local people, we buy from local manufacturers and we create multiple jobs in our environment.” he said.

“Governments have to remember that one dollar spent in construction often translates to 3.25 to five times the investment in the local economy. We have to be vigilant that we continue to push that.”

He noted that international competition has driven many domestic companies to become bigger.

“Probably the positive side of the foreign competition has been the growth of companies like EllisDon, PCL, Graham, Ledcor, etc., who have responded to the challenge of international firms and have grown themselves to the point that we’re now competing internationally.”

Recent highlights for the CCA include legislation making the $2 billion Gas Tax Fund permanent; co-ordinating its partner association in the federal long-term infrastructure plan consultations; participating in the National Infrastructure Summit; the release of the first Canadian Infrastructure report card; and the release of the Canada West Foundation report linking adequate infrastructure investment in infrastructure and economic growth.

“It is our hope that it will help influence the government<0x2026> now is the right time to make those economic decisions,” said Schubert.

The CCA was also pleased with legislative and regulation changes from the federal government, such as the amendment of the Canadian Environment Assessment Act in keeping with CCA’s recommendations for a “one project, one assessment” approach; reforms to the Temporary Foreign Worker Program and the introduction of a new Federal Skilled Trades Immigration Program.

The federal government also announced its intentions to introduce a Canadian Expression of Interest system by 2014, which would essentially match prospective immigrants and employers.

In the area of standard documents and practices, the CCA’s top priority is the release of new CCDC Standard Design-Build Contract Forms, CCDC 14 and 15.

The CCA plans to run a series of country-wide seminars in conjunction with its partner associations once these new documents are released.

Other standard documents expected soon are a new CCDC Guide to Prequalification and updated versions of CCDC 3, the Standard Cost Plus Contract and CCDC 21 A Guide to Construction Insurance.

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