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AEM SURVEY: SUPPLY CHAIN ISSUES STILL REMAIN, BUT HOPE REMAINS HIGH FOR RECOVERY

The equipment manufacturing industry is still recovering from the impacts of the COVID-19 pandemic. With that in mind, AEM regularly surveys its members regarding their thoughts on various economic trends and how they are affecting business efforts, both within the U.S. and abroad. In the latest survey, most respondents stated that they are still experiencing supply chain issues, with many saying that conditions continue to worsen. The challenges of high interest rates, as well as energy and material prices, have plagued the industry, but there is hope for these issues to eventually be resolved.

These are some of the driving forces and key points from AEM’s Q1 webinar. Danny Richards, lead economist, construction, at Global Data presented the data:

Global construction output growth slowed in 2022 and will remain sluggish in 2023. Interest rates remain high and could rise further in the first half of this year before central banks bring to an end this tightening cycle, assuming of course that inflation starts to fall. Energy and construction material prices also remain high, although some fell from the peaks of the second quarter of last year.

Investment in infrastructure, as well as in energy and utilities, will be driving forces for growth.

Investment in infrastructure will continue to be a driving force for growth, especially as the Investment Infrastructure and Jobs Act in the U.S. gathers momentum. Energy and utilities will also provide a boost to overall construction activity, with renewable energy projects remaining a key investment focus.

The industry is optimistic as it tracks $3.6 billion in projects across multiple sectors. Despite a relatively weak short-term outlook for construction output, there is still a sizable pipeline of opportunities on the horizon over the next several years.

The decline in construction output is expected to slow in 2023. The U.S. was among the few markets to register positive growth in 2020 and 2021. However, driven largely by intense inflationary pressure and a slowing residential sector, output dropped sharply in 2022. Despite the deeper-thanexpected decline in the residential market remaining a risk to overall growth, there has been an improvement in nonresidential sectors.

The findings of the annual BC Construction Association (BCCA) Industry Survey highlight the operational stresses facing construction employers across B.C. The results, taken from over 1,300 respondents, paint a picture of concern and stress. The demand is high for construction services, but labour supply, costs, and faltering public sector standards and systems around permits, contracts, procurement, and payments are undermining development and putting B.C.’s builders in a tough spot.

The survey reveals that over 80 percent of contractors, regardless of size, were paid late for their substantially completed work at least once this past year. Nearly half of the large contractors (100 employees plus) report being paid late at least 25 percent of the time, and 30 percent of small contractors (20 employees or less) report the same. With the cost of borrowing skyrocketing, financing projects for owners is a burden most businesses cannot afford.

Contract disputes related to costs are a common occurrence, with 44 percent of small contractors saying they’ve filed a fixed price contract dispute in the last 12 months, compared to 31 percent of medium contractors and 28 percent of large. Interest in public sector projects has waned, with only 45 percent of large contractors saying they’re “very likely” to bid, versus less than 20 percent of small contractors. Reasons given for lack of interest include “don’t need the work,” “contracts favour the owner,” “process favours larger companies,” and “same companies win every time.”

These and other pressures are squeezing the small contractors, 61 percent of whom report thinking about leaving the industry. The average company size has decreased 11 percent over the last three years to an average of 6.24 workers. Approximately 92 percent of companies in the industry employ 10 workers or fewer.

On the workforce side, labourers and skilled workers are reaping the benefits of short supply. The job market remains highly competitive, driving annual earnings up 22 percent in the last five years to an average of $70,088. Most workers are working full-time and earning overtime, and roughly 45 percent of respondents reported changing employers within the journeypersons, are equally likely to hold an academic degree (seven percent), and 48 percent of apprentices owe more than $10,000 in academic student loan debt.

One of the most disappointing trends this year is the 21 percent decrease in tradeswomen, a sharp reversal after several years of solid gains. Women comprise only 4.5 percent of the 163,900 skilled tradespeople in B.C.’s construction industry, down from 6 percent in 2020.

The number of employees in the industry has grown a sizable 17 percent year-over-year, and six percent over pre-pandemic levels, although the skilled trades workforce has decreased four percent year-over-year and 9 percent over pre-pandemic levels. This de-skilling of the overall workforce reflects that it takes four years to complete an apprenticeship and may be fuelling an increasing concern about safety on the worksite from survey respondents.

The construction industry’s contribution to B.C.’s GDP is up four percent over last year, and it remains the highest employer in B.C.’s goods sector, with 251,100 British Columbians relying directly on construction for a paycheque.

BCCA is advocating for three changes that it says will address the challenges facing B.C.’s builders as well as the owners who need the work to be done on budget and on time. They are:

Introduce prompt payment legislation to normalize standard, reasonable payment terms of 30 days, ensure proper invoices are paid, and give clear rights to lien holdback monies.

Make public sector projects more attractive to the industry by having fair, open, and transparent procurement processes and reasonable contract conditions.

Speed up the permit process with the authorities having jurisdiction, including municipalities and BC Hydro.

CONEXPO-CON/AGG NAMES 2026 SHOW CHAIR

CONEXPO-CON/AGG has named Link-Belt Excavator Company President and CEO Eric Sauvage as the chair of the 2026 show. Sauvage has been an active participant in AEM leadership for many years as part of the association’s boards and committees.

Sauvage became CEO of LBX Company in 2014 after joining the company in 2008. Before that, he spent more than 20 years with CNH Industrial. In addition to his role as chair of CONEXPO-CON/ AGG 2026, he serves as vice chair of the Association of Equipment Manufacturers’ (AEM) Construction Equipment Sector Board.

Sullair Changes Name To Hitachi Global Air Power

Hitachi Industrial Equipment Systems Co., Ltd. (HIES) has established Hitachi Global Air Power, a new company bringing together its global compressed air business. As part of the new company, Sullair will change its company name and operate under Hitachi Global Air Power.

Sullair was founded in 1965, and became a wholly-owned subsidiary of Hitachi, Ltd. in 2017.

While Sullair will change its corporate name, the branding will remain intact on its products, including Sullair, Champion, and Air-One.

TWO CANADIAN DEALERS NAMED TO BOBCAT’S 2023 DEALER LEADERSHIP GROUP

Bobcat Company has appointed its 2023 Dealer Leadership Group. Canadian dealers Bobcat of Brandon and Bobcat of Brantford were included among the 16 dealerships. These dealerships will function as the “voice” for the dealer network and meet with Bobcat throughout the year to provide insights and feedback.

Elvaan Equipment Solutions Is New Develon Dealership

Elvaan Equipment Solutions – which operates in Ontario and the Greater Toronto Area – now offers the full line of DEVELON heavy and compact construction equipment at its dealership in Mississauga, Ontario.

The dealership will sell the full line of DEVELON log loaders, wheel loaders, articulated dump trucks, dozers, crawlers, wheeled and mini excavators, and the soon-to-be-launched compact track loaders. The company’s parts and service departments are close to Toronto Pearson International Airport, and will provide support to the DEVELON equipment users.