To plan for the year ahead, you need to know what challenges and opportunities you can expect to face in the construction industry in 2016. What impact will volatile commodity prices have? What are the predictions for the Canadian housing market?
On-Site, a Canadian construction magazine, recently published their industry forecast for 2016.
We’ve highlighted some key points to help you plan for 2016:
The biggest challenge will continue to be declining oil prices. Although experts predict crude will make a moderate recovery in 2016, it will not be a complete “V-shaped” rebound. Rest assured that every cloud has a silver lining. Low oil prices coupled with a depressed Canadian dollar offer opportunities for domestic manufacturers and exporters to gain a competitive edge. A strengthened manufacturing sector ultimately means more industrial construction projects for contractors.
There is optimism surrounding the new federal government, which promised investments in infrastructure and a willingness to run deficits to make those happen. During their campaign, the Liberals committed to doubling current federal infrastructure investments to $20 billion over the next two fiscal years. Investing in infrastructure also enjoys popular support as a way to help boost a stagnant economy.
For Canadian companies exporting construction services to the U.S. and other international markets, impending international trade agreements are encouraging. The Trans-Pacific Partnership (TPP) is currently under review by the new Liberal government. For the Canadian construction industry, the TTP would eliminate barriers to better facilitate agreements with partners around the world, including Asia. It would also make smaller P3 deals ($50 to $100 million) more feasible.
After years of record growth, the Canadian housing market is expected to slow in 2016 and 2017. The Canada Mortgage and Housing Corporation (CMHC) expects the number of new units that were built in 2015 to range from 162,000 to 212,000. In 2016 that is predicted to drop to between 153,000 and 203,000, and it will decrease again in 2017 to between 149,000 and 199,000. The good news is that non-residential and engineering construction projects show no sign of slowing down, as they remain keystones of provincial and federal governments’ ten year plans.
One continuing challenge will be a familiar one: recruiting. Looming retirements could open up as many as 250,000 jobs by 2019. Buildforce cautions that it will not be enough to simply attract Canadian youth to the construction industry. It expects approximately 100,000 new workers from outside construction – and Canada – will be required to fill gaps.
Measured Optimism for 2016
2016 is stacking up to be a good year for the construction industry in Canada. Michael Atkinson, President of the Canadian Construction Industry, expects modest growth, but emphasizes that it will be important to remain cautious and ready to respond to changes as they occur.
Kooy Brothers has been serving contractors in the construction industry since 1985. Let us help you find the right equipment to get the job done. Contact us today to learn more about our products and services.
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