'Hollowing Out' in the Construction Industry: Is it Here?

Geoff Smith Portrait

BY Geoff Smith

POSTED ON NOVEMBER 12, 2011

SHARE

To be honest, I thought consolidation would hit our sector years ago. Instead, we saw it hit the design and engineering side, while the (highly fragmented) building industry continued blithely on.

Well that appears to be done. Construction companies are getting sold almost every week, negotiations are rumoured behind every closed door, but here’s the difference. On the consulting side, the consolidators have tended to be Canadian (Stantec, SNC, etc.), but on the construction side, the big buyers prowling around and making moves these days are almost always the international firms. Wherever you happen to stand on this complex issue of public policy, on thing is clear: Canada’s strong, home grown and internationally respected construction expertise is on the block. As are the top jobs, management control, profits and tax revenues they have provided. Without a whimper, it would seem.

Life goes on, nothing is forever, but my wholly biased view is that it’s a bit tragic. It should have been a strong, exportable expertise, a way for Canada to move out into a globalized world. Of course, construction leaders are to blame for not leading, for taking the easy (read: $$$) way out. But where other governments enable their construction companies in the world markets (with liquid performance guarantees, for example) and make it tough for others to penetrate their markets, our governments have been inclined to do the opposite: travel the world, imploring these large firms to invade. Instead of building on our strength, we all capitulate together. It’s perhaps worth a moment’s reflection.

(As for EllisDon – alas, I hear the rumours – but you can ignore them. We are employee owned, globally ambitious, and very proud of our unique culture and values. We will be buyers, we will not be selling. Employee ownership is the strongest possible model, and we have no intention of messing with that. You’d pretty much have to kill me first.)

But this is going to be interesting, and there is much at risk, for everyone involved, I think. How can we be so lacking in confidence? Why don’t we build something strong together, instead of collectively selling out?