Why is Everyone So Calm? (The pessimistic view)

Geoff Smith Portrait

BY Geoff Smith

POSTED ON NOVEMBER 12, 2011

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Everywhere I go, I don’t see construction people running around in a blind panic. I don't see them jumping out of buildings. Are all these people crazy?

OK, it’s been fifteen years since the last construction downturn …… ended. Twenty years since it began. But surely that’s no reason to just assume that everything is going to keep turning out just dandy, is it? I keep asking people why they aren’t terrified, they keep replying ‘Can you just putt already?’ Here are five reasons you might want to stock up on Jack Daniels;

  • The private sector is pretty much dead, and any upturn is going to be very gradual. In some provinces, like Alberta, the public sector is very quiet as well. In others, like Ontario, the social infrastructure boom is quickly coming to an end.
  • The international markets are in even worse shape, and because Canada is seen as ‘booming’, our markets are being flooded with international competitors. These companies are being actively recruited by our own provincial governments, so that now there is a huge glut of construction capacity in the marketplace. -These companies are coming in entirely non-union, because provincial statutes afflict only domestic construction companies, and the governments will never take on the unions.
  • If you are a subcontractor, don’t get complacent. In the emerging market place, led by our global friends, subs prices will be respected only after the tender has closed. They will price all the disciplines themselves, break them down and parcel them out in pieces. Everyone needs to think carefully about how this will play out.
  • The unions refuse to acknowledge this lethal threat, even with their disastrous experience in BC still a very recent memory. They are addicted to government protection, and the governments are addicted to their support. (If you are a union leader offended by this, call me, day or night – I’m dying for someone to talk to.)

Far too many companies are chasing far too little work. The traditional business model of every single company in this industry is under lethal threat, possibly doomed. If you have union affiliations, the threat is more serious, unless and until they embrace dramatic and painful reform.

If any of this is keeping you awake all night, just give me a call. I’m not getting much sleep either.