2 days Ago By By Brent Bellamy
The years following COVID-19 were a chaotic time for the construction industry. Supply chains were broken, inflation and interest rates were skyrocketing, and labour shortages hit every part of the industry. Rising costs were so difficult to control that every project was vulnerable to cancellation or delay.
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99 plus taxes every four weeks you can access your Brandon Sun online and full access to all content as it appears on our website. or call circulation directly at (204) 727-0527. Your pledge helps to ensure we provide the news that matters most to your community! The years following COVID-19 were a chaotic time for the construction industry.
Supply chains were broken, inflation and interest rates were skyrocketing, and labour shortages hit every part of the industry. Rising costs were so difficult to control that every project was vulnerable to cancellation or delay. Read unlimited articles for free today: Already have an account? Opinion The years following COVID-19 were a chaotic time for the construction industry.
Supply chains were broken, inflation and interest rates were skyrocketing, and labour shortages hit every part of the industry. Rising costs were so difficult to control that every project was vulnerable to cancellation or delay. Thankfully, construction and development have stabilized since that turbulent time.
Interest rates are coming back down and building costs have become more predictable. Driven in large part by residential development supported by federal government housing programs, the construction industry has found smooth air once again. It has returned to its place as a major driver of the country’s economy, employing 1.
5 million Canadians, and contributing $140 billion to Canada’s annual GDP. Of course, with the human cyclone that is U.S.
President Donald Trump blowing back on to the world’s stage, that smooth air is quickly becoming a pocket of turbulence that everyone is hoping will not crash the plane. It isn’t COVID-like panic quite yet, but on-and-off tariff threats and a looming trade war have begun to stir new uncertainty in the construction industry, with tariffs on Canadian steel and aluminum being the first impactful salvo that has everyone bracing for what might come next. A construction industry just recovering from the COVID-19 dip is facing turbulence once again — this time from U.
S. President Donald Trump. (Tim Smith/The Brandon Sun files) The fundamental impact on the construction industry that would come out of a North American trade war would reflect the damage it causes to the economy as a whole.
A significant reduction in Canadian exports would certainly slow the economy, increasing unemployment and potentially pushing the country into a recession. This typically has the impact of stifling developer investment in new projects, particularly in the housing sector, that is shaped by consumer confidence and spending. Increased construction costs from a protracted trade war poses another important threat to the industry.
Tariffs on Canadian raw materials like steel and aluminum will increase costs, largely through manufactured goods being imported to Canada that have incurred tariff pricing on the exported Canadian raw materials used to build them. A slower economy could have the compound effect of weakening the Canadian dollar, which would further increase the cost of building supplies and components being imported from the United States. American tariffs on raw materials such as steel and lumber could have the short-term impact of a glut in the local supply, which might temporarily lower costs on those items within Canada.
A reduction in demand from export markets, however, could result in production facilities being downsized or even closed, reducing output capacity and domestic supply that would drive costs higher over time. These impacts from American tariffs will be felt, but the industry’s greater anxiety comes from potential retaliatory tariffs that the Canadian government might impose on goods being imported from the United States during a trade war. A list recently released by the federal government identified potential targets for these tariffs and it included construction materials like steel and aluminum products, lumber, concrete, windows, even hammers, nails, screws, and bolts.
Higher input costs because of these new fees would drive up overall project costs, creating downward economic pressure and risking the viability of new development projects. The uncertainty of a trade war hanging in the air is already causing disruption in the market. Contracts being bid on today have no way to anticipate the tariff situation when materials are later purchased further along in the construction process.
This can lead to future cost increases that prevent owners, developers, and investors from being able to confidently anticipate costs and build a viable financial model before committing to putting shovels in the ground. This can have the impact of lenders and investors moving capital away from new construction and into more secure investments. To combat this uncertainty, it will be important for governments to consult with the major players in the industry to compose retaliatory tariffs that reduce impacts on construction within Canada.
Other strategies such as speeding approval times, lowering development charges, taxes, and interest rates can improve the other ingredients that go into the economic recipe that must come together to make development viable. Contractors and trades can also help by looking to source materials and building components from Canadian manufacturers, whenever possible, but this can add cost, and lead to delivery delays or supply chain disruptions as the market adapts to new procurement and delivery networks. Supporting a robust construction industry through the turbulence of a Trump presidency will be vital to maintaining Canadian employment and economic growth, as well as ensuring that we continue to address the immediate needs of the housing crisis.
In the short term, a trade war with our biggest trade partner could be costly as we form new relationships and connect to different supply chains, but Trump might be providing Canada with an important long-term opportunity to build a stronger, more independent nation. Not long ago, the bricks we used to construct our homes and buildings were produced locally in every Canadian province, including here, just outside of Winnipeg, in Lockport. Today, there are only three brick producers in the entire country and none of them is located west of Toronto.
Manitoba’s closest source for bricks is from a major American manufacturer located in Fargo, only a short drive over that dividing line, but today seemingly a world away. Even the mere threat of a Donald Trump trade war should be viewed as an opportunity to re-establish homegrown supply chains and rebuild manufacturing capacity for things like brick, that support our own construction industries, reducing dependance on foreign markets and the whims of their political leaders, while building a Canadian economy that is diverse, strong, and resilient, long into the future. » Brent Bellamy is senior design architect for Number Ten Architectural Group.
This column was first published in the Winnipeg Free Press. Advertisement Advertisement.
