Saskatchewan’s construction industry is experiencing a crisis — a combination of declining work and increased regulatory burden/costs — that have resulted in 14,000 lost construction jobs in the past three years. There is debate about whether new construction lien legislation to encourage prompt payment will help solve the problems.
This is the story reported by the Canadian Broadcasting Corporation (CBC), starting with an interview with a contractor who worked on a project with billings of more than a million dollars — only to not receive a cent, when the British Columbia real estate company that ordered the work sought creditor protection.
Trevor Stein told CBC his Stein Electric company spent nearly a year wiring new apartment complexes in Saskatoon’s Stonebridge neighbourhood for the owner, “Block 1.”
“Not one penny,” Stein said, after the courts finished sorting out Block 1’s failure. “All our liens got ripped out and tossed out.”
Stein said the problems are compounded because it has become much more competitive to find work for his company’s 60 employees.
Compare this environment to 2015, a record year in the province, as contractors worked on Regina’s new football stadium and the Children’s Hospital in Saskatoon, along with new hospitals in Moose Jaw and North Battleford.
“Where you used to have three or four companies that used to compete for a job, now there are 20,” Saskatchewan Construction Association (SCA) president Mark Cooper told CBC. “There’s just less work.”
He said since 2015, 14,000 jobs have disappeared from the province’s construction industry.
“What we do need is a return of confidence to the economy at both the consumer level and the investor level,” Cooper said. “People are holding onto their money.”
Saskatchewan has weathered downturns before, said Stu Niebergall, president of the Regina and Region Home Builders’ Association. “What’s different this time is that governments have chosen to increase regulations, increase fees and at the federal level, make it more difficult to buy a home,” Niebergall said in the broadcast report.
The changes include
- Increasing Saskatchewan’s sales tax to six per cent, and applying it to residential construction work;
- American tariffs on drywall and steel making materials more expensive;
- All mortgages in Canada are now subject to stress tests after Ottawa tightened lending rules;
- Municipalities have tightened building codes and energy-efficiency standards for builders; and
- Last month, the province also introduced legislation updating Saskatchewan’s Builders’ Lien Act, which is supposed to ensure contractors receive payments within 28 days of an invoice.
Cooper from the SCA says it’s “now an average of 70 to 90 days for a contractor to be paid for work that’s already been completed.”
The changes to the construction lien legislation, following Ontario’s lead, will introduce a new prompt payment and adjudication provisions to the industry, something subtrades are seeking, but which others believe will not really address the underlying problems.
“This is not going to be the silver bullet that fixes issues,” said Chris Guérette, the president of the Saskatoon and Region Home Builders’ Association.
“It takes away some of the freedom that businesses have to work things out on what would be best suited for that relationship between two companies,” he said.
For his part, Trevor Stein told CBC that the law may help contractors like him collect money owed, but he warned the changes are also likely to make money for lawyers.
“Every court case we’ve had, even if we win, we’ve got to spend more money to get money,” Stein said.
He said a more effective way of keeping local construction companies afloat could include the province putting out-of-province builders’ funds into a trust, until the job is complete. “Out-of-province people are the ones who seem to leave quickly,” Stein said.
He said basic electrical and plumbing work will always be in demand, but Saskatchewan’s construction industry feels increasingly unpredictable.
“My receivables are crazy,” he said. “You just don’t know when you’re going to get paid.”