It’s been a turbulent couple of pandemic years for many in the Northern construction industry and the future is offers varying degrees of promise, depending on who you ask.
For Joe Lavoie, part-owner of Home Hardware in Inuvik, there was some temporary upside after Covid-19 emerged. Homeowners in the Beaufort-Delta invested money in home improvements that would have normally went into travel, recreation and other pastimes.
But Lavoie is seeing that trend fading and not much on the horizon to replace it.
“It’s been relatively quiet this new year,” he said in mid-April. “I think people have done a lot of the work (around their homes) that they planned on doing … and it possibly could be due to the fact that you have materials going up in cost substantially.”
Although the price of lumber skyrocketed for a while and then came back down to a degree, Lavoie noted that gasoline prices have climbed steadily, resulting in a considerable price spike in transportation costs for those ordering construction materials.
“For us, bringing up a truckload of lumber, you’re looking at an additional $16,000 to $17,000,” he said. “That is a huge difference.”
Even if the private sector is trimming budgets, there are government projects that still must be completed. However, even those are fewer than in the past and there’s no guarantee of a winning bid in a competitive process, noted Lavoie, who has been doing business in Inuvik for 30 years.
“It’s quieter than it’s been in the last two to three years,” he said, adding that he provides work for 15 to 20 people through his store.
And yet his overhead has risen too following a winter with long stretches of bitterly cold weather. He said his heating and electrical bills were inflated because of it.
“There was six weeks of maybe 40 (C) below,” he said. “The heat is very expensive. It averages 10 times what you pay down south.”
‘More strain’ to come
In Nunavut, one of the hardships that construction contractors are facing is procurement time in the face of ongoing supply chain issues, particularly when so much has to be coordinated to arrive on a limited number of sealift vessels.
“A lot of businesses are really worried about that,” said Clarence Synard, president and CEO of NCC Investment Group, which has a construction division.
He gave an example of a three-month delay — not only can that create complications for other projects, there are potentially issues revolving around additional financing costs and extra insurance payments. In addition, interest rates are moving upwards.
“The numbers just keep mounting,” said Synard. “There don’t seem to be a lot of support systems out there for those types of scenarios … it’s a really tough time.”
With some construction materials costing three to four times as much as they did prior to the pandemic, it doesn’t bode well for a territory that is already facing a housing crisis, according to Synard, who is also president of the Baffin Regional Chamber of Commerce.
“One large contributing factor to the housing crisis that we find ourselves in in the territory is the high cost of construction,” he said. “To see a market that’s already strained, I think it’s going to feel more strain, I really do.”
On the bright side, volumes of work and opportunities are increasing significantly. But finding specialized labour is another major challenge, particularly in the North “when you have so many competing sectors out fighting for that same labour pool,” Synard added.
‘Adapt to the environment’
In Yellowknife, Trevor Kasteel, president of Kasteel Construction and Coatings, has persevered through a difficult couple of years. At one point, he candidly addressed his staff of close to 50 during a meeting, informing them that the company was behind the previous year’s pace by $711,000. He refused to lay off anybody because they’re like family, and they helped the company to rally.
“When times get tough, you don’t simply discard people,” he said. “But then I said (to the staff), ‘We’ve taken care of everybody but my God I need your help getting out of this hole.’ We ended up being in the positive at the end of the year.
“As a business, you need to adapt to the environment,” he said. “It’s also your positivity as a company and the relationships that you’re building.”
Kasteel has formed partnerships with other Northern companies to address labour shortages by agreeing to borrow and lend employees for projects as circumstances warrant. He looks to the southern labour market as a last resort. He also aims to train local people.
“There’s a lot of people hurting out there, a lot of people having tough times,” he said. “It’s just showing compassion and helping people to grow. It doesn’t all need to be about ourselves. It’s just being thoughtful and kind and opening a door for others.”
He acknowledges the obstacles posed by supply chain issues and the challenges of bidding on projects where construction won’t begin for another year — therefore rising costs in the interim are ones his company has to absorb later.
“You’ve just have to be careful. You’ve got to be on top of everything. I think you’ve really got to provide good, clear leadership, strong leadership, positive leadership, communicate extremely well,” he said. “Everybody has to do their best … stay positive, stay humble and stay thoughtful.”