Representing Canada's largest regional construction industry
The Ontario government’s infrastructure investment plan, which has been pushing dollars into the province for almost five year, is coming to an end in March 2011. The date looms over Toronto’s construction industry, which has weathered the recession of 2008/09 very well.
John G. Mollenhauer, President of the Toronto Construction Association (TCA), explained in a recent interview that the Toronto construction industry has fared very well considering the level of the recession in North America. However, there are concerns about what happens when government spending runs out.
Toronto’s residential, commercial and industrial sectors have all been active this past year despite the economic crisis. Residential building saw the biggest impact, with a slow-down that couldn’t have been predicted. Mollenhauer says that “industrial and commercial haven’t exactly followed suit,” and that companies working in these sectors have done well.
Mollenhauer, who’s been in the construction industry for the major part of his career, says that “had it not been for infrastructure work, it would have been very difficult for our members to have survived as well as they have.”
The TCA membership is an impressive one, well representing the industry in Toronto. The TCA is North America’s largest construction association, with 2200 members, and offers a variety of benefits to its network. TCA launched its electronic newsletter, e-Connect, in April 2009 to communicate more effectively with members. Each month, members get a copy of the e-newsletter which features news, events and industry highlights, as well as happenings within the association.
TCA also offers the Advantage Club Program to members, who can access discounts with major retail partners. Principals at TCA automatically become Platinum Advantage Card holders with TCA membership, providing benefits with many major organizations and companies.
Mollenhauer explains that essentially, the industrial, commercial and institutional (ICI) sectors of the industry “have been on life support” through the recession. However, it hasn’t been all bad news. According to the TCA, 2009 was a fairly steady year, with $9.7 billion in building permits being issued in Ontario.
Because the U.S. was affected by the recession first, the Canadian construction industry was able to “batten down the hatches,” according to Mollenhauer. “Industrial was down about 13 per cent, and commercial almost as much, but the institutional sector was only down about seven per cent,” he adds.
By comparison, 2008 rates were much worse, declines reaching more than 10 per cent in most of Canada, save for the GTA. During the last recession in Canada, the ICI sector was down a whopping 43 per cent, says Mollenhauer.
“We were in much better shape in Canada, and Ontario specifically, then we were last time around—this again was largely the result of the huge volume of infrastructure work,” he says.
Now, it’s a waiting game as federal and provincial money stops flowing in. After governments decided that there was an infrastructure deficit five years ago, activity in infrastructure has skyrocketed. This greatly improved the scenario for construction companies. “The government is talking about a 10 year, $60-billion infrastructure plan but it hasn’t been approved yet. We’ll have to wait until next year,” Mollenhauer says.
Overall, the Canadian construction industry did $168 billion worth of work last year, but the sentiment in the industry, especially in Toronto, is that this “is still a pretty good number, all things considered.”
For now, the TCA’s greatest concern is watching to see how quickly the private sector comes back, and making sure companies can get financing for projects. According to Mollenhauer, banks will for some time be “more rigorous about ensuring that they have adequate covenant for companies that are borrowing money.”
“The good news is that the banks are willing and able to lend, they’re just being very careful to cross their Ts and dot their Is.” It is with this in mind that TCA is communicating regularly to its members to make sure they can understand changes happening in the industry.
In addition, the TCA is continuing to boost education initiatives in the construction sector, and dealing with the issues at hand when it comes to building in Toronto, and nation-wide. Another piece of positive news—the TCA’s membership has stayed strong since its inception in 1867, through every Canadian recession. “Our membership stayed strong,” Mollenhauer comments, noting that TCA kept its 2,200 members throughout the downturn, and TCA continues to represent a growing almost 300,000 local construction industry practitioners.
For more information on the TCA, visit www.tcaconnect.com.