PENSION PLANNING: AS BABY BOOMERS RETIRE, PENSION DISCUSSIONS ARE FRONT AND CENTRE
A FORUM ON OPEN SHOP CONSTRUCTION
Volume 19 • Issue 1 • Spring 2011
Merit Canada finds its national voice BUILD A STRATEGIC PLAN: unleash your company’s potential Publications Mail Agreement #40020055 Non-deliverable mail to Circulation Department 10259-105 Street Edmonton, AB T5J 1E3
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Contents Volume 19 • Issue 1 • Spring 2011
12 5 Executive editor’s column
38 Unleash the Potential
By Stephen Kushner
Chart your company’s path to success with the help of a strategic plan By Lawrence Beaudry
6
Silver Memories
The construction industry has been revolutionized since Merit’s beginning in 1986 – just 25 years ago By Anna Ravlikovska
12 Open for Business
ON THE COVER 25 Years of Merit History Illustration by Maxwell Holyoke-Hirsch
With a newly opened national office in Ottawa, Merit Canada is taking another step forward as the national voice for open shop contractors By Bill Stewart
40 Apprenticeship by the Numbers Almost 70,000 apprentices are moving through the system in Alberta, working to meet the surge in demand for trades By Steve Penner
16 Freedom 55? As more of the workforce approaches retirement age, pension concerns are looming large for both employers and employees By Joel Thompson
22 After the Storm Leaders are spending more and more time working on day to-day tactical areas of the business. Forgetting about the people in the organization is a tactical error that has long-term ramifications By Gregg M. Schoppman
28 Rectifying an Imbalance 46
It is time to free workers from being compelled to financially support the political ambitions of union leaders By Bill Stewart
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28 46 More Power Modified tools may give you more power on the worksite but they can also bring greater liability in the court room By Shilo Neveu
50 Building a Better Alberta The 2011 Contractor of the Year awards honour the best of the construction industry By Geoff Morgan and Cailynn Klingbeil
54 By the Numbers The latest Canadian construction stats OPENMIND SPRING 2011
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Executive Editor’s Column
Volume 19 • Issue 1 • Spring 2011 Publisher
Ruth Kelly
Executive Editor
Stephen Kushner
Associate Editor
Anna Ravlikovska
Editor, Contract Magazines
Cailynn Klingbeil
Copy Chief
Kim Tannas
Art Director
Charles Burke
Assistant Art Director
Colin Spence
Production Manager
Vanlee Robblee
Production Co-ordinator
Betty-Lou Smith
Circulation Manager
Nick Jamison
Vice-President Sales
Anita McGillis
Advertising Representative Diane Toomey
Sales Assistants Julia Ehli, Karen Crane
Contributing Writers Lawrence Beaudry, Cailynn Klingbeil, Geoff Morgan, Steve Penner, Anna Ravlikovska, Gregg M. Schoppman, Bill Stewart, Joel Thompson
Contributing Illustrators and Photographers 3TEN, Jen Hsieh, Isabelle Cardinal, Maxwell Holyoke-Hirsch Heff O’Reilly, Sonia Roy Open Mind is published two times per year by Venture Publishing Inc. for Merit Contractors Association. Venture Publishing Inc. 10259-105 Street, Edmonton, Alberta T5J 1E3 Tel.: (780) 990-0839 Fax: (780) 425-4921 admin@venturepublishing.ca www.venturepublishing.ca Merit Contractors Association 103-13025 St. Albert Trail, Edmonton, Alberta T5L 5G4 Tel.: (780) 455-5999 or 1-888-816-9991 Fax: (780) 455-2109 meritedm@meritalberta.com www.meritalberta.com Merit Contractors Association is a non-profit organization that offers human resource services to the open shop construction industry. Printed in Canada by McCallum Printing The opinions conveyed by contributors to Open Mind magazine may not be indicative of the views of Venture Publishing Inc. or Merit Contractors Association. While every effort is made to ensure accuracy, neither Venture Publishing Inc. or Merit Contractors Association assume any responsibility or liability for errors or omissions. Canadian Publications Mail Product Agreement #40020055 Copyright © 2011 by Merit Contractors Association No part of this publication should be reproduced without express permission of Merit Contractors Association.
On behalf of Merit Contractors Association, welcome to the 2011 edition of Open Mind magazine. This is a landmark edition for us as Merit
Contractors Association celebrates its 25 year anniversary in 2011. Open Mind has been published for the last 19 of these 25 years and has always focused on the unique issues affecting the open shop construction industry, with the aim of promoting the free enterprise principle that construction work, and the employment and compensation of personnel, should be awarded based on merit regardless of employee labour affiliation. Since its inception, Open Mind has always dealt with a range of topics and this issue continues that tradition. In honour of the 25 year anniversary issue, we have included a fascinating overview of the last 25 years of Merit, from its beginnings to the now thriving organization that advocates on behalf of the open shop sector. In this edition of Open Mind, we also examine a number of other topics that will provide contractors with a better understanding of industry trends and developments. A soon to be opened national office in Ottawa will facilitate further growth of Merit Canada and solidify the organization as the national voice of open shop construction. A discussion on the emerging issue of many baby-boomers retiring in the next decade provides insight into pension concerns for both employees and employers. There are helpful suggestions about developing a strategic plan as well as discussions about readying a firm for growth after several years of retrenchment. Not being shy to discuss employment topics, we examine the matter of compulsory union dues and review the manpower challenges ahead as they relate to apprenticeship. We are also very excited to announce the finalists and award winners of the inaugural Contractor of the Year Awards presented by Merit and Alberta Venture magazine. Our goal as publishers of Open Mind magazine is to provide you with timely, useful, and relevant information. Please don’t hesitate to contact us with any suggestions or thoughts you may have for topics in upcoming editions. We really do want to hear them so we can make the magazine an even more useful resource of information in the future. We hope you enjoy the 2011 issue of Open Mind, Canada’s open shop magazine dedicated to insightful construction industry news and topics.
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Stephen Kushner PRESIDENT MERIT CONTRACTORS ASSOCIATION OPENMIND SPRING 2011
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The construction industry has been revolutionized since Merit’s beginning in 1986 – just 25 years ago. To understand how Merit and open shop became what it is today, we look back at its history. by anna raVliKoVsKa
n 1975, as Alberta began to make its presence known on the global energy scene, the province’s construction volume was approximately $3.25 billion. Open shop work accounted for approximately 15 to 20 per cent of the non-residential construction activity. Although a relatively small share of the market, historically it had always been a healthy one. By 1981, the volume of total construction activity more than tripled to $10.63 billion – an average compounded annual increase of about 22 per cent – with no end in sight to the boom. The industry geared up rapidly and was sustaining an employed workforce of 122,000 compared to 64,000 just six years earlier. Alberta Construction Association reports indicated the capacity build-up would require an annual volume of $15 billion to $16 billion by fall of 1983 to sustain the workforce. The next year, volume declined only marginally due to the huge carryover from 1981. But in 1983 and 1984, with the energy sector shaken to its core by the National Energy Policy, volume slumped by $4.4 billion and topped out at 60 per cent of the 1981 peak. During the boom build-up, open shop construction not only maintained, but also steadily increased its market share. Open shop capacity build-up paralleled what was occurring in the unionized sector of the industry.
openMind spring 2011
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Silver Memories
By the time the bubble burst in 1982, bid depository and building permit surveys indicated union construction still held about 76 per cent of the market share, notwithstanding the near-dominance of open shop in gas plant construction, which at that time was a minor part of the industrial market. Collective bargaining settlements, 68 days of sequential strikes, and wage increases of $4.50 to $5.00 per hour over the 1982-84 period, combined with a steady nosedive in construction activity over that period, catapulted open shop into the forefront of industry activity. By the fall of 1983, market share for unionized construction versus open shop construction had reversed itself. “Union free” contractors, who over the preceding 10 years kept their wage rates fairly parallel to those of union wage rates, did not pick up the increased costs union contractors had bargained in 1982. As a result, the initial $1 to $2 gap in wage rates gradually grew to $5 to $7 by the end of 1983; all of this happening at a time when trades people – first civil trades, then mechanical, electrical and other finishing trades – were being released to the market. By the fall of 1982, the increase of open shop successfully bidding publicly-tendered projects was staggering: • two $40 million gas plans were being built open shop; • five regional hospitals with an aggregate value of $75 million were awarded open shop over a two month period; • the contract with a unionized contractor for construction of the Turbo refinery outside of Calgary was cancelled and the project was completed open shop; • unionized low-bidders were passed over on commercial projects to ensure uninterrupted completion; and, • energy projects in the $120 million to $150 million range were already scheduled for nonunion tender. This was still only the tip of the iceberg. Leading unionized contractors were forced to downsize their executive, management, and supervisory positions. Many of these individuals were subsequently employed by the successful open shop bidders, transferring a significant amount of technology and expertise to the open shop sector. By the end of 1987, open shop accounted 8
openMind spring 2011
for more than 90 per cent of Alberta’s construction activity, compared to just 15 to 20 per cent 12 years earlier. Commercial, institutional and industrial projects valued in excess of $100 million were routinely awarded open shop, signifying that open shop was here to stay. Two key factors, among many, combined with a severe downturn propelled the rapid shift. First, many industrial purchasers of construction services became wary of the risk associated with jurisdictional squabbling and potential delayed completion of projects
of 1982, union work rapidly began drying up as fewer and fewer unionized contractors were successful in securing competitivelybid work. Most unionized trades people were quick to realize that a job at going-market rates was far better than no job at union rates. THE EMERGENCE OF MERIT CONTACTORS ASSOCIATION Three decades of relegating responsibility to the construction craft unions for managing the industry’s human resources including
a nuMber of forward-ThinKing conTracTors saw These depressed condiTions as a window of opporTuniTy To reassuMe ToTal responsibiliTy for ManageMenT of The huMan resource funcTion, a responsibiliTy ThaT should neVer haVe been relegaTed To The unions To begin wiTh. because of work stoppages. Many were still feeling the sting of excessive costs relating to non-productive time such as the $45 million to $50 million travel time and transportation tab during the construction of a refinery less than 30 miles from downtown Edmonton. Construction purchasers realized that open shop contractors possessed the competence, bonding capacity, and financial backing to undertake the most demanding of projects and the purchasers were willing and prepared to invite this new breed of contractor to bid on their jobs. Secondly, the instinct for survival awoke in many union members when, in the latter half
recruiting, dispatching, disciplining, and setting wage and fringe benefit packages, created a vacuum that left most construction companies behind in managing their personnel. Many responsible, leading contractors realized they were ill-equipped to cope with human resource management issues in a marketplace that featured severe downward pressures on wages and working conditions. The exodus of skilled tradespeople and the wide-spread disinterest in apprenticeship training were seen as a surefire way for a return to union monopoly control of the workforce when construction volumes would once again increase.
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Silver Memories
The construction industry began heating up in 1998 and Merit experienced particularly strong growth with 28 members joining in just 30 days. A total of 25 per cent growth was reported for the year. A number of forward-thinking contractors saw these depressed conditions as a window of opportunity to reassume total responsibility for management of the human resource function, a responsibility that should never have been relegated to the unions to begin with. The goal was to bring their policies and practices in line with those adopted by progressive “union-free” employers in other sectors of the economy. This set the stage for the establishment of Merit Contractors Association in early 1986, which began filling the need for open shop human resource services. In the beginning, 15 contractors came together to form an industry-wide, portable benefit plan for open shop workers. Many people viewed open shop as a temporary phenomenon to be replaced by closed union shop practices once the economy improved in the late 1980s. Instead, to this day, open shop dominates the market place across Alberta and Canada. 1986 – 1990 By 1989 the number of member contractors grew to 75. Merit introduced many management education seminars and 200 individuals had taken the Supervisor Training Program offered by the Association. Recognizing the significance of open shop, the Canadian Construction Association set up a non-union sector within its organization. In 1990, the first Canadian Open Shop Conference laid the ground work for Merit Canada. 1991 - 1995 By 1991, there were almost 150 Merit members and the number of participants in the Retirement Program doubled to 7,000. Seven Construction Skills Training (CST) courses were offered to more than 162 people that year. The number of CST courses 10
OPENMIND SPRING 2011
grew to 10 in 1992 and 75 participants graduated the Supervisor Training Program. With Merit’s lobbying, Bill II, the Manpower Development Act, was changed signif icantly to provide for flexibility in the optional trades. These amendments have served the industry well
over the years. In the 1990s, NDP governments in BC, Manitoba and Saskatchewan were attacking open shop in Canada, favouring the building trades, but Merit continued to grow, surviving government attacks, a declining industry and many other challenges. Ontario, Manitoba and Nova Scotia also joined the benefit plan during that time. Some of the programs and services added by 1995 included the prescription club program, optional life insurance, out of country medical, group home and auto insurance as well as group mortgage discounts. 1996 – 2000 Merit and its B.C. counterpart ICBA hosted the f irst Inter nationa l Open Shop Conference in Vancouver in 1996. The conference boasted more than 300 attendees. By this point, more than 700 students had taken the Supervisor Training Program and almost 800 students had gone through one or more of the 12 CST courses offered. On the political front, the Construction Labourer Application was approved by government and a Merit member was appointed to the Apprenticeship Board. Merit came to be recognized as a significant, credible, and representative voice for the construction industry and the government began asking Merit for its input. By 1997, there were more than 250 members, with 15,000 employees in the benefit program and 8,000 participants in the Retirement Program. The construction industry began heating up in 1998 and Merit experienced particularly strong growth with 28 members joining in just 30 days. A total of 25 per cent growth was reported for the year. In 1999, the Alberta construction work-
force increased by 20,000 workers and membership expanded to almost 500 companies. Merit began refunding apprenticeship tuition fees in 1998 and in the year 2000 alone, 660 apprentices received tuition refunds through Merit. 2001 – 2005 With the construction industry still holding strong, Merit membership quickly grew to 700 members by 2002. In just 10 years, 2,161 individuals completed one or more of the CST courses. A survey conducted in 2002 indicated that 98 per cent of members were satisfied with Merit’s services and would renew their membership. In 2001, Merit, as part of the Coalition of Canadian Open Shop Associations, won a Supreme Court of Canada decision clarifying that the constitutional right to associate also includes the right NOT to associate. Merit also continued to work on prohibiting MERFing and SALTing. Newfoundland and Labrador as well as New Brunswick established Merit organizations in 2002. In 2002, more than 1,050 tuitions were refunded to apprentices through Merit’s Tuition Refund program, totaling almost half of a million dollars. 2006- PRESENT Today, Merit Alberta has more than 1,300 member firms. In 2011 significant changes were accomplished in increasing apprentice participation in the workforce through greater ratio flexibility. To unify the voice of open shop construction and provide a platform for delivering human resource programs across Canada, the provincial open shop construction associations joined together to establish Merit Canada in 2008. Merit Canada member associations administer the largest, single multi-employer benefit plan in Canada’s construction industry, with more than 45,000 employees in benefit. Also in 2008, Alberta became the first jurisdiction in North America to pass legislation dealing with MERFing and SALTing. The historical aspect of this article was derived from a speech given by George Durocher at Merit’s 10th Annual General Meeting. George Durocher was the Association’s first president (1986-88) and worked relentlessly to help construction companies achieve their full human resource potential.
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OPENMIND SPRING 2011
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F
orty years ago, Canada’s construction industry was mostly
unionized. Approximately 75 per cent of Canada’s construction workforce worked for companies that bargained collectively with American-based craft union affiliates of the AFL-CIO. Now, seven out of 10, or more than 700,000 Canadian construction workers, deal directly with their employers. Massive changes transformed the construction industry beginning in the late ’50s and early ’60s in the USA and the late ’70s and early ’80s in Canada. These changes came about because escalating labour costs, poor productivity, and excessive work disruptions by the building trade unions were strangling the industry. The transition to open shop contracting was facilitated by improved management skills, increased capacity, and sophistication of contractors and their employees to safely execute projects on-time and on-budget. It also provided open shop contractors a voice for their issues in the political arena.
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Open For Business
From a Movement to a Business While the Associated Builders and Contractors (ABC) formed in the USA in 1950 to help open shop contractors counteract aggressive building trade union tactics, no comparable organization existed in Canada until 1975. It was in that year in Trail, British Columbia that the Independent Contractors and Businesses Association (ICBA) formed in an effort to lobby the provincial NDP government to open up public work bids to non-union contractors. Believing that open shop approaches were simply a better way to do construction, the ICBA leaders recognized the need to go beyond being a political movement to address human resource issues within their sector of the industry. They introduced the Construction Industry Benefit Plan to B.C.’s construction market place along with a suite of services for member companies and their employees. Alberta and Saskatchewan were similar to other provinces in the dominance of their construction industr ies by cra ft unions. During t he energ y f ue l le d ’ 70 s a nd ’8 0 s , bot h provinces experienced excessive labour strife and inf lat iona r y pressures. The economic collapse that followed the introduction of the National Energy Policy in 1982 put an end to those excesses. In Alberta for example, construction employment went from a peak of 120,000 in 1982 to 65,000 in 1984. This period unleashed competitive forces, spurring a reversal in market share which saw open shop contractors completing 80 per cent of
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OPENMIND SPRING 2011
the work. Recognizing the need to develop and sustain this new workforce, open shop contractors developed programs in tune with the new employer-employee relations dynamic. In Alberta, construction contractors formed the Merit Contractors Association in 1986. The first program they introduced was an hourbank benefit plan that covered all employees as opposed to separate plans according to each craft. The second was a supervisory training program to give front line lead hands and supervisors training in how to manage and deploy construction personnel on an open shop job site. To take advantage of the economies of scale that are derived from nationally available benefits and training programs, open shop organizations quickly formed and flourished in Ontario, Saskatchewan, Nova Scotia, Manitoba, New Brunswick and Newfoundland and Labrador. Part of the national growth in other provinces is attributable to the series of national and international open shop conferences that the associations began holding in 1990. These conferences served as a starting point for open shop contractors to explore common issues, strategies and program sharing. This forum led to the formation of the Canadian Coalition of Open Shop Construction Associations, the f irst pan-Canadian effort to bring together the independent provincial associations. This coalition initially came together in 1999 to intervene in Supreme Court of Canada hearings challenging mandatory union membership requirements to work in Quebec’s construction industry. The landmark R. vs. Advanced Cutting and Coring case was the first ruling to affirm that Canadian workers were generally free from compelled association with certain union activities.
Merit Canada Takes its Place Merit Canada was federally incorporated in 2008 and is comprised of eight independent member construction associations operating across Canada (except in P.E.I. and Quebec where it remains illegal to work in the construction industry on an open shop basis). These associations currently represent approximately 4,000 construction companies. Part of the launch of Merit Canada included the formation of the Merit College of Construction. There was also an accompanying national advertising campaign, a national toll free number and a Merit Canada website (www.meritcanada. ca ) that not only provided portal access to each member association’s website, but to Canada’s largest construction based recruitment website that is free for employers and employees to use (www. constructionjobstores.com ). Visitors to the site can also access MeritPerks (www. meritperks.com ) which provides a variety of regional and national discount offers to employers and employees.
“Get Into Politics or Get out of Business” Fuelled with immense financial resources from union dues and a plethora of checkoff funds, labour leaders have wielded tremendous political power throughout North America. In the U.S.A., the overt efforts of construction union leaders to eliminate competition prompted ABC’s 1976 national president Joe Rodgers to
formulate the slogan, “Get into politics or get out of business”. Canadian open shop contractors particularly in British Columbia, Saskatchewan and Manitoba under successive NDP governments and in Ontario under the union friendly Liberals have been forced to get into the business of politics because of unioninspired challenges to their way of doing business. Most human resource issues affecting contractors such as unionization election rules, apprenticeship, and public works procurement policies are provincially regulated. This has caused open shop associations to focus their attention on provincial issues. For example, the ICBA has effectively dealt with uniononly procurement, wage regulation and apprenticeship issues in British Columbia. In 2008, Merit Alberta successfully convinced the provincial government to amend labour legislation to address union “salting” and job-targeting funds. Merit Saskatchewan also achieved success in having the Crown Construction Tendering Agreement and abandonment g u id e l i ne prov i sion s included in recent legislat ive a mend ments affecting the construction industry in 2009. On a nationa l level, open shop contractors may be affected by federal government programs or policies when the federal government is directly or indirectly involved in funding. There are also programs and policies in place nationally within the exclusive jurisdictional domain of the federal government. Cont r a c tor s work i ng on publ ic construction projects are subject to wage regulations that don’t exist for any other industry. The federal government
also contributes federal tax dollars to construction projects that contract solely with unionized contractors at the expense of open shop contractors. T he fe der a l gover n ment i s a l so responsible for immigration, employment insurance, the Construction Sector Council, and Canada’s competition laws. Merit Canada now provides the vehicle by which the open shop construction sector can now hold discussions with federal officials to ensure that programs and policies reflect a more balanced approach reflective of the composition of Canada’s construction industry. In 2010, following the 6th International Open Shop Conference, Merit Canada’s board of directors adopted the first national budget for the organization which took effect in 2011. Staff are being recruited and a soon to be opened national office in Ottawa will be co-located with the Merit Open Shop Contractors Association of Ontario. Ottawa will also be the host city for the 7th International Open Shop Conference in 2012. With Merit Canada now fully open for business, the future of Canada’s open shop movement on a national level looks bright.
OPENMIND SPRING 2011
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As more of the workforce approaches retirement age, pension concerns are looming large for both employers and employees by Joel thompson
s the baby boom generation approaches retirement, pensions have taken
ILLUSTRATION BY: JEN HSIEH
centre stage in the news. A large segment of the Canadian population has begun to examine its retirement income and ask questions about whether it will be adequate. This growing discussion has brought renewed examination of the Canada Pension Plan. While the CPP’s balance sheet has been effectively repaired in the past few years, there has been growing acknowledgement by both government and the public that CPP offers no more than a retirement supplement and even when combined with Old Age Security, few Canadians will be able to depend on it to fully fund their retirement. This recognition was highlighted recently by the federal government’s proposal to establish multi-employer pension plans for the benefit of small business and the selfemployed. The construction industry employs a large contingent of baby boomers and the retirement income discussion is important for our industry. In addition to its concern for retiring workers, the industry has to consider its need to attract new recruits in the coming years. Offering new entrants a decent retirement plan will be essential in competing with other industries for labour and the construction industry does not have a particularly good record in this area. Pensions have always played a significant role in construction industry labour relations.
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Freedom 55?
For many construction workers who were once union members, their dissatisfaction with union pension schemes was one of the prime factors that caused them to embrace the open shop movement. Google the phrase “Union Pension Scandal” and you will be confronted with a voluminous history of operational difficulties with union pension plans across North America. Some of these episodes are the result of criminal acts (and in the American cases, often linked to organized crime), some to negligence or incompetent management, and some to difficult economic conditions exposing an inappropriate plan design or one with unrealistic investment or actuarial assumptions. The most spectacular meltdowns have occurred in the U.S.A., which are relevant here because virtually all Canadian building trade unions are affiliated with American parents. Organized crime involvement with American union pensions has almost become a cliché and cases of Congressional enquiries leading
to racketeering charges are an oft-repeated scenario. Some of the larger unions involved include the Plumbers and Pipefitters who ousted former President Martin Maddaloni over charges of mismanagement of pension funds and fraudulent conduct involving real-estate deals in Florida. Robert Georgine,
former head of the Laborers’ Union and the AFL-CIO’s Building and Construction Trades Department, became embroiled in a stock trading scandal at ULLICO, an insurer owned by union pension funds. His appearance before a Congressional Committee was highlighted by Fifth Amendment pleas. Jake
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Despite the gravity of their responsibility in safeguarding the retirement income of their members, union pension trustees have often show no better discretion than gullible members of the general public. West, the former head of the Ironworkers Union, was sentenced to three years in prison for embezzling union pension money. While the pension funds of the Canadian locals of the International Building Trade Unions are generally segregated from their American parents, the history of pension fund management there causes mistrust among current and former union members. Many loyal Canadian union members resent any transfer of funds from Canadian locals to their American parents and the pension scandals serve to heighten that resentment. Unfortunately, the Canadian branches of the International Building Trade Unions have not been immune to pension scandals. One of the most notable Alberta examples involved the Edmonton Pipe Industry Pension Trust Fund. Because of industrial activity in Edmonton and Fort McMurray, the northern Alberta local of the Plumbers and Pipefitters usually ranks as the international union’s largest local. In 2001, the news media reported on a government-ordered audit that uncovered what the auditor termed “lack of due diligence” and of being “indifferent” to complying with the law. The investigation revealed that the pension fund administrator was the CEO of three golf courses the fund had purchased in North Carolina. Several of the trustees were also on the board of directors of the golf courses. Some of the trustees had purchased first class airline tickets at plan expense to visit these “investments” and had exchanged the first class tickets for two tourist class tickets so spouses could accompany them on these inspection tours. In October 2009, the fund settled a $49 million lawsuit brought by disgruntled plan participants. In the explanation for the settlement contained in the fund’s annual report, an estimate was given that prolonging the litigation could result in a cost to the fund in excess of $1.2 million. The situation at the Edmonton pipefitters pension fund was eventually cleaned up but remains a cautionary case history. Other instances also include allegations of illegal
activity but more often the funds incur serious losses or fail to meet investment return expectations due to lack of professional management. If one of the largest construction union locals in the country can run into serious difficulties in managing its pension plan, it is not surprising that some of the smaller unions also fail in the responsibility to manage the monies their members have entrusted to them. There is a separate union for nearly every construction trade and this fragmentation has resulted in some pension funds representing very small groups of employees. This results in administrative expenses eating up an inordinate amount of funds and makes it difficult to establish the professional management required to pro-
000OM.ReedConst_1-3S.indd 1
vide the required rate of return from secure and safe investments. Despite the gravity of their responsibility in safeguarding the retirement income of their members, union pension trustees have often show no better discretion than gullible members of the general public in handing over large sums of money to what are later to be revealed to be no more than snake-oil salesmen. More frequently, those directing fund trusts have been lured into making big bets on investments such as commercial real estate rather than hiring professional money managers to oversee an investment plan with strict parameters. As a result, the balance sheets of most Canadian construction union pension plans show unfunded liabilities. A Toronto Star expose of the activities of the fund managing money for the United Food and Commercial Workers (one of the largest multi-employer funds in the country) revealed that current union members would
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Freedom 55?
be assessed significantly increased premiums to make up the plan’s shortfall. The article noted that millions of pension dollars had been lost in questionable investments in Caribbean hotel and resort developments. The situation was exacerbated by the global financial crisis which saw even some of the best managed of pension funds incur substantial losses. Recovery in investment markets and strong construction activity bringing increased pension contributions from a larger workforce have helped some funds regain lost ground. Those unions which lost most of their market share to open shop competition may have little hope of having their pension funds meet their future obligations for payouts to retirees. Trying to repair pension fund balance sheets has caused problems for the whole union When open shop employers began to organize to sector. Hefty pension contribution requirements by cooperatively deliver services to employees, they employers ($5 per hour recognized that retirement programs needed to for many trades) creates a substantial gap in gross be part of the package. wage packages between union and non-union ment plans and that contributions are inademployers in a very competitive market- to invest as they chose. place. This cost differential has been one While philosophically this may have been equate. The most common reasons are that of the main reasons that in most regions, the best fit with the wants of employees, in many construction employers consider union contractors are unable to compete in practice, it is unclear whether it will meet their operations too small to be able to offer the commercial market. the ultimate goal of providing an adequate a retirement plan and that a high employer Those on the non-union side of the con- retirement income. Too many employees contribution will erode their competitive struction industry may tend to gloat when- show little inclination to make the com- position and the ability to win work in a ever a new story of union pensions gone mitment to the disciplined savings required bid market. Regardless of your perspective on the bad materializes, but the open shop sector to accumulate retirement funds. In this, has not necessarily solved the retirement they are no different than the rest of the pension issue, it remains extremely imporissue for their workforce. When open shop Canadian public which has a dismayingly tant for the whole industry, both union and employers began to organize to coopera- low participation in RRSP investments and open shop. While severe construction labour tively deliver services to employees, they rec- an even lower number making maximum shortages have eased, few would argue with the prediction that we will soon be facing ognized that retirement programs needed annual contributions. to be part of the package. Many of them Most employers acknowledge these short- even greater difficulties in meeting demands had workforces that had formerly been comings but are reluctant to take back the for labour. A recovering economy, growing union members and a substantial number control over retirement funds that they construction markets and the depletion of those were embittered by their experience promised to employees. The fact remains of existing forces through retirement dicwith union pensions. Given those feelings, that the group RRSP route provides no tate the industry will again be scrambling it was no surprise that open shop employers guarantees that every employee will enter to hire and train enough new recruits. chose RRSPs as the most appropriate vehicle retirement with the assurance of an ade- Construction will not be the only industry for employee pensions. To counter the quate retirement income. Much remains to facing this problem and Canada will not be distrust many employees felt, employers be done to educate employees and persuade the only country looking for talent outside setting up company RRSPs made pledges them to take personal responsibility for its borders. If the industry is to attract the type of people it needs, it needs to be able to to employees that there would be immedi- retirement planning. ate vesting of all funds and they would be A case can also be made that not enough offer a viable means of providing adequate under total control of individual employees open shop employers have instituted retire- retirement income. 20
OPENMIND SPRING 2011
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OPENMIND SPRING 2011
Leaders are spending more and more time working on day-to-day tactical areas of the business. Forgetting about the people in the organization is a tactical error that has long-term ramifications BY GREGG M. SCHOPPMAN
ILLUSTRATION BY: ISABELLE CARDINAL
T
he time of unbridled expectations of prosperity has passed.
Everyone in the country looks to the news channels to provide some glimmer of recovery. What was once an industry characterized by gaudy backlogs and personnel shortages is now comprised of leaner and hungrier organizations. Companies now struggle with the challenge of maintaining a positive message for their people while faced with the negativity of a bottomless sea of despair. What will drive the industry forward? Will it ever return to the levels of the last decade? What great paradigm is the “next big thing�? History tells us that for every economic downturn, there has been a subsequent righting of the ship. While there is no mystic able to read the tea leaves or tarot cards, it is still necessary for business leaders to begin to prepare for the future. No one can deny the importance of dealing with present-day issues. However, myopic and reactive management is not enough for long-term organization continuity. Strategizing for the future begins now.
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After The Storm
Take Stock and Evaluate Businesses need to have an unvarnished evaluation in much the same way people need an annual physical. On the surface, the organization may appear to be performing acceptably, but through a deeper investigation, one may find systemic issues that left unchecked could lead to complications. More importantly, organizations need to examine the way they operate and decide if this is truly the model that makes sense for the future. Most organizations anticipated, carefully situated their business and braced themselves for the downturn. Lesser talent was culled, and the organization’s efforts were refocused in the short term to generate cash flow. With this new organizational face, the effectiveness of the changes to structure, process and procedure need evaluation. Put another way, is everything working the way it was expected to work and is this the right way to move forward? Some of the areas that require evaluation include:
on all facets of the business is imperative for improvement. High-performing organizations routinely take an introspective approach to their business that enables them to continue to be truly high performers.
Don’t Panic! Science fiction lovers will recall the exploits of Arthur Dent in Douglas Adams’ The Hitchhiker’s Guide to the Galaxy. As the earth is destroyed and his entire reality is shaken to its core, Arthur receives a copy of the Guide. On the back of the electronic tome is the inscription, “Don’t panic.” Examining the behavior of some contractors would give one the impression that the shortage of projects demands drastic action. These firms then grasp at any semblance of a project to “keep people busy and keep the iron moving.” It is important to avoid confusing business ignorance for aggressive businessdevelopment tactics. Ignorance might be defined as removing all margins or removing
Unsuccessful bids should garner a serious investigation and autopsy in much the same fashion a firm would analyze a project at its completion. Questions to reflect upon might include: • What alternative crew compositions could we have used? • Is there a different piece of equipment we could have used? • Could we have supervised or managed the project with different resources? • Is there something we are self-performing that we could have subcontracted or vice versa? • Did we not receive pricing from a trade contractor our competition is using? Notice there is little to no discussion about the profit margin in the reflection above. So much is made of the actual margin assigned that firms rarely investigate the true cost on the project. Squabbling about pennies is a fruitless exercise when productivity rates and efficiencies make up the lion share
• CUSTOMERS: Are we truly valued by our customers or are we just a number? • MARKETS: Is this market a long-term solution or short-term prospect? • EXECUTION: Are we best of class or operating with some level of inefficiency? • PEOPLE: Are we developing our people or have we reverted to a model of complacency?
WITH EVERYONE CAUGHT UP IN THE DAY-TODAY GRIND, IT IS EASY TO LOSE SIGHT OF THE PEOPLE THAT MAKE THE ENGINE MOVE, THOSE WHO ARE NOT THE SQUEAKY WHEELS.
• FINANCE: Are we in a strong cash position or simply making it month to month? • STRATEGY: Do we have a mechanism that looks at the business five to 10 years out, or are we only dealing with day-to-day tactical issues? • SUCCESSION: Do we have depth in the organization at all levels, or are we one step away from liquidating the business in the event of an unforeseen loss of a key individual? Great leaders regularly reflect on these areas without bias or prejudice. Feedback 24
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major cost centers in an effort to land the job, while being aggressive involves seriously examining cost centers and applying tactical reductions with careful consideration by all stakeholders. To complicate this further, contractors are employing the aforementioned tactics in new uncharted markets. The first step is to understand the true costs of the work. There will always be plenty of firms that will make bad decisions on bid day. However, there are firms that are simply better or more efficient than others are.
of the dollars on a project. Investigate and take actionable steps to level the playing field. Making excuses and lamenting about the one that got away is no substitute for action.
You’re Right-Sized – Now What? The organization is leaner and streamlined. It is now comprised of high performers. Senior leaders have made a commitment to this team. The question now is “How should they be developed?” It is easy to forsake training and development when times are tough. However, ignoring the people in an organi-
zation not only fails to perpetuate growth of an important asset but also may demotivate talent in an already bleak environment. The industry is blanketed with educational events ranging from green buildings to conflict resolution, all incredibly important. However, development is much more comprehensive than educational events. Development means spending time with your people. With everyone caught up in the day-to-day grind, it is easy to lose sight of the people that make the engine move, those who are not the squeaky wheels. Develop an annual plan that is less about a “performance evaluation” and more about an action plan for the future. The other challenge is keeping personnel motivated in a difficult environment. Leaders need to continue to invigorate and challenge their teams to stretch. Some ideas include: • ORGANIZATIONAL CONNECTIONS : Often, the senior leader in the firm is the
liaison between professional, civic and philanthropic organizations. Spread the responsibilities across the managers in the firm and empower them to create relationships and connections. • • TRAINING: Utilize internal resources to become subject matter experts. For example, general contracting firms can assign trades to internal champions. It becomes their task to become educated and in turn educate the masses. Spending the time and investment on training one person via “train-the-trainer” training enables the organizations to develop other employees internally. • • KEEP IT FUN: Find a way to use inexpensive or free diversions to occupy your team’s time. For instance, fantasy sports leagues are excellent for building camaraderie as well as providing some distraction
to the inundation of negativism. Channeling the competitive spirit in one’s own virtual football team provides some water cooler chatter that has a significantly more upbeat tone. The goal is not to ignore the financial pressures of today but to use the tools available to create an air of optimism for the future. Leaders are spending more and more time working on day-to-day tactical areas of the business. Forgetting about the people in the organization is a tactical error that has long-term ramifications.
You Learned Cash Is King – Don’t Forget It! A dangerous cycle was unleashed as cash collections became more constrained. Collection figures hovered precipitously close to the edge of becoming bad debts. Unfortunately, payroll, materials invoices and utility expenses still require attention. The organi-
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After The Storm
zation begins to take on ill-advised projects with questionable customers in an effort to generate cash flow. Many organizations are finally moving through the collection nightmare with one lesson learned. Cash is king! As trite as the phrase may be, these three words should become the mantra of any business organization, in good times or bad. Many contractors accept mediocre payment terms and lack proactive measures to ensure that customers are at least held to some reasonable standard. There are some simple lessons to apply to the business in both good times and bad:
Fine-Tuning the Execution
• FORECAST: Managers should be required to forecast accurately the cash flow based on the billings of their project. More importantly, the difference between forecasts and actuals can be used to expose production anomalies or customer challenges.
With backlogs small and margins even smaller, flawless execution is imperative. While the planning aspects of execution set the tone for a successful project, creating a sound understanding of the organization’s direct costs should become a priority for management. With project awards at low levels and bidder lists at historic highs, management should conduct a routine inspection of their processes as part of an annual evaluation of the business. Equipped with a strong “toolbox” of written processes and procedures, managers can re-evaluate production rates and other direct costs. Many organizations do not capture production information during the project or at the project’s conclusion but competiveness begins with an understanding of the company’s true costs. Consider the following tactics to improve execution:
• CROSS FUNCTIONALITY: Organizations that involve managers in the collections process are more successful than those that simply leave the function to accounting and finance.
• ESTIMATING WITH OPERATIONS: With added bench strength, best-of-class firms are involving project managers and superintendents in the estimating process to provide constructability review.
• PROCESS: Billings and collection departments should have a strict process that begins with evaluation of creditworthiness of customers and projects, and then deals with how pay applications are processed and, more importantly, the steps of following up.
• TRADE CONTRACTOR FEEDBACK: If project costs are primarily trade-contractor-related, review their specific unit costs and develop a historical unit cost database. Trending individual activities such as mechanical (dollars/ton), drywall (dollars/linear feet of wall type) and concrete (dollars/cubic yards of foundation) helps pre-construction groups through conceptual estimating.
• COMMUNICATION: Establish a process that designates someone to communicate with the customer early in the process. This not only makes the connection, but also flushes out an errant invoice early rather than on the day payment is supposed to be remitted. Contractors may have been lulled to sleep by years of prosperity. Customers and general contractors may be less quick to release payment in these turbulent times. Avoiding selfinflected wounds, such as errors on invoices and the proverbial lost invoice, will at least keep an organization’s days sales outstanding at a lower level and more cash in the coffers than its peers. 26
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• POST-JOB REVIEW AUDITS: Identify four to five specific cost areas at the beginning of the project during a pre-job planning meeting. During the project, management tracks daily production and provides a summary for estimating to adjust for future projects. With a refocused effort on processes and procedures, management can examine the composition of its costs. More importantly, managers can develop and refine the correct margin-enhancing behaviors now to ensure the organization is situated appropriately for
the future. Lastly, getting project management and field supervision to use job-cost feedback correctly reinforces the efficiency message regardless of the economic state of the industry.
Finding the Next Big Thing – Make the Investment Awaken the crystal balls! Start researching and make an investment to explore new markets. Being pioneers in a sector, niche or market allows firms to command higher margins. These pioneering roles help companies avoid commodity classification. One must exploit a marketplace as long as possible before saturation occurs. As one contractor finds a profitable niche, the competition will not be far behind. Consider the green movement. As contractors become accredited LEED professionals, they should be asking themselves, “Is this what will separate us from our competition, or will this simply get us to the dance?” Investigating new markets and niches is hard work. Becoming a sales-centric organization is a characteristic that will define successful businesses in the future. Being a reactionary order taker requires little skill and tends to yield low percentages when the competition is proactively seeking the same work in the market. Organizations must continually reflect on the short term business development cycle and the long term.
Act Now for Tomorrow Dealing with prosperity is much easier and more fun than coping with an economic collapse. Contractors now make life-altering decisions daily, all with the aim of survival.
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Making payroll is often elevated high on the to-do list, while finding the “next big thing” is relegated to the bottom of the list. Despite all this, leaders must still lead and be forwardthinking. An analogy come to mind when examining the efforts of construction firms in today’s tumultuous environment; that of two tennis champions volleying, unable to break the other’s serve. As one player becomes tired and weak, serves are returned with only survival in mind. The stronger player attacks, pounding the ball backhanded to the weaker player who moves around the court in exhaustion. Once again, the weaker player simply attempts to protect his or her position and strikes the ball with a protectionist mind-set. Finally, the aggressive player pounces and slices the ball to a spot on the court where the opponent cannot return. The lesson is twofold. The stronger player wore down the competition by a relentless attack, finishing the opponent with a shot that did not require energy but simply played on his or her off balance and exhaustion. Secondly, the weaker player was always one step behind the competition in that he or she was focused on returning and defending, rather than positioning for the future. Yes, making payroll is important. Estimating is important. Managing projects is important. But focusing on day-to-day tactical details is the equivalent of having an efficient engine room with no one in the wheelhouse of the ship as it hits an iceberg. Game, set, match. Reprinted with permission from FMI Corporation, (919)787-8400. For more information, visit www. fminet.com or call Sarah Vizard at (919)785-9221.
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A CONSTRUCTION FEAT: The Horizon Oil Sands project north of Fort McMurray employed more than 800 contractors during Phase 1 of construction.
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ying f i t c e R an e c n a l a b Im It is time to free workers from being compelled to financially support the political ambitions of union leaders BY BILL STEWART
ILLUSTRATION BY: SONIA ROY
O
n October 6, 2011, Ontarians will head to the polls to elect a new provincial government. The run up to election day may not be shaped by policy debates between politicians vying for election. Rather, the tone may be set by third-party advertisers. As early as November 2010, the Provincial Building and Construction Trades Council of Ontario had “decided to start priming its pumps to support the Working Families Coalition (WFC) in order to combat Ontario’s ‘Regressive Conservatives’.” The millions of dollars the coalition will pour into attack ads will come at the expense of workers in unionized settings who are required to pay dues to unions in order to keep their jobs. It’s time that Canadian legislators changed this. While unions have long been politically active, a major change in approach came during the Ontario provincial election in 2003 when five construction union affiliates of the Building and Construction Trades Council of Ontario joined three other unions to form the Working Families Coalition. This group used compulsory dues to finance a costly U.S.-style political attack ad campaigns – without the same kinds of check and balance rules that exist in the United States.
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Rectifying an Imbalance
The $5 million, negative attack ad campaign that was run in 2003 helped bring down the ruling Conservative government. Ontario’s construction industry paid heavily. Early in their new mandate, the Liberal government removed the right of construction industry employees to a secret ballot vote in unionization elections. All other industry sectors retained secret ballot voting. A similar $5 million amount was reportedly spent to help the Liberals gain re-election in 2007. And for the 2011 election, one Ontario MPP has speculated that WFC could spend in excess of $10 million. Elsewhere, in 2007, affiliates of the Alberta Building Trades Council helped organize, and were the major financiers behind the Albertans for Change coalition. Emulating the campaigns in Ontario, the coalition spent more than $2 million on advertising which slammed Premier Stelmach and his Progressive Conservative government before, and during, the 2008 Alberta provincial election. This was more than the three opposition parties spent on advertising and even included spots that ran during the Super Bowl. The enormity of these campaigns and the influence they have on the election process has prompted considerable discussion in legal, political and journalistic circles, think-tank research institutes and various advocacy organizations. Nation-wide surveys conducted by Nanos Research in 2003 and 2008 found that over three-quarters of unionized workers opposed having their union dues go to fund political parties, political advocacy or attack style advertising. A similar number of Canadians felt the same way. A majority of respondents also liked the idea that unionized workers 30
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should be able to pay lower dues to cover the costs of collective bargaining but not be forced to pay additional dues for political related activities. The Ontario division of the Canadian Federation of Independent Business (CFIB) released the results of a survey it had conducted in 2009 that found that 84 per cent of small business owners agreed that non-union employees in a unionized workplace should have the right to opt-out of paying dues. According to the CFIB, “these views are consistent with the views of most Canadians who favour an employee choice approach to union dues and suggest that it’s time to consider reforms to laws that govern labour relations in Canada.” In 2010, the Ottawa-based Canadian Centre for Policy Studies issued a blue paper titled “Balancing Workers’ Rights and Union Privileges in a Mandatory Dues Environment.” After noting that, “Canada is the only country in the world where a majority of workers at a particular place of employment are able to compel the remaining minority to pay, against their will, full dues to a union to which they may not belong” the authors concluded that “Trade unions enjoy extraordinary powers as a result of this mandatory relationship including the power in
practice to tax those who do not wish to be members. Modernizing legislation in order to protect workers from potential abuse at the hands of their unions from these powers is both sensible and long overdue.” The current union dues collection framework dates back to a 1946 arbitration decision by Justice Ivan Rand. In what is known as the “Rand formula,” he ruled that the best way to settle a long strike at Ford of Canada was to have employees pay union dues, regardless of whether they were union members or not. This was predicated on the assumption that all employees, regardless of their union membership status, benefited from having a union negotiate and administer collective bargaining agreements on their behalf. Designed to prevent “free-riders,” from receiving the benefits of collective bargaining without having to pay anything, a compulsory dues check-off mechanism ensured all bargaining unit employees paid the same for these services. Ultimately, the federal and six provincial governments incorporated these principles into their labour laws. Unfortunately, they set few boundaries beyond internal union self-regulation as to how the dues should be spent. This provides Canadian union leaders with vast resources to pursue political agendas. Concern over this was taken to the Supreme Court of Canada in 1991. Merv Lavigne was an Ontario college teacher who complained that his union dues were directed to campaigns and organizations he disagreed
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Rectifying an Imbalance
with. Lavigne argued that this violated his “freedom of association” rights under Canada’s Charter of Rights and Freedoms because he was being forced to conform to the underlying ideology behind the causes he was ultimately contributing to. The Supreme Court narrowly ruled against him. Union leaders have long since argued that this decision is the final word on the issue. For instance, during Alberta’s 2008 election, the Merit Contractors Association and the National Citizens Coalition joined together to publicly challenge organized labour’s use of compulsory union dues to finance pre-election attack ads. Alberta Federation of Labour President Gil McGowan responded by saying the critical organizations were, “simply trying to put a coat of fresh paint on old, tired argument.” and noted that in reaching the decision it did in Lavigne, the Supreme Court of Canada “ruled that unions have a democratic right to use their members’ dues for political purposes.” However, Canada’s political, legal and economic landscape has dramatically changed since Lavigne’s 1985 court challenge. Moreover, the assertion that the
association. Later decisions have also determined that governments are not constitutionally bound to provide unions with the most favourable mechanism to collect and use dues as set out in the Rand Formula. Current Canadian labour laws are among the most archaic in the industrialized world. While other countries are reforming their legislation and rules, Canadian laws and jurisprudence stand out in terms of how they force members and non-members to pay union dues that are often used for political purposes. This could be challenged in a case currently making its way through Alberta’s courts. For 30 years, Old Dutch Foods negotiated numerous collective agreements that included an open shop arrangement, allowing employees to choose whether they would join the union. Employees choosing not to join the union were not required to pay dues. While this type of arrangement is unusual in Canadian unionized settings, Alberta’s Labour Code allows union security clauses to be settled at the bargaining table. When the employer
HERE TRY IN THE WORLD W N U CO LY N O E TH IS F “CANADA PARTICULAR PLACE O A AT S ER RK O W F O A MAJORITY L THE REMAINING PE M CO TO E BL A RE A EMPLOYMENT UES TO ST THEIR WILL, FULL D IN A G A Y, PA TO TY RI MINO NOT BELONG.” AY M EY TH H IC H W TO A UNION Supreme Court’s decision gives unions unfettered authority to spend dues on activities unrelated to collective bargaining and that federal and provincial governments are precluded from rebalancing individual rights against the political goals of union leaders is simplistic. Indeed, key principles contained in strongly worded dissenting opinions in Lavigne were critical to the landmark R. v. Advance Cutting and Coring case in 2001. In this case, the Supreme Court ruled that “freedom of association” also included, within limits, being free from compelled 32
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refused to agree to include a requirement for all employees to pay dues, the ALRB ruled that Old Dutch was bargaining in bad faith. Moreover, the ruling declared that Alberta’s labour code was unconstitutional because it did not “mandate a minimum union security provision” (i.e. a Rand Formula) to help finance the union. A group of 21 employees that have never been union members or been required to pay union dues is in the process of appealing the decision. It’s disturbing that these employees have had to incur
the trouble and expense of taking legal action when all of the other industrialized countries that Canada competes with globally have labour relations regimes that democratize the collection of union dues and the distribution of monies for political purposes. Unionized employees in the 47-nation Council of Europe have a choice regarding union membership. Following a 2007 landmark Court of Human Rights ruling, it is now illegal for European unions to use unionized non-members’ dues for political activities. In the USA, unions may use dues for political purposes but non-members are not compelled to support these activities. Various formulas exist across many states that allow non-members to opt out of contributing to non-collective bargaining activities but pay a “fair share” of costs associated with core workplace-related union activities. The principle is simple. Union members that want their union to engage in political activities are free to make their contribution. Those employees who do not wish to do so can opt out. There is no reason that similar structures could not be established in Canada. While it may be argued that at one time unions were justified in spending dues for political campaigns, the magnitude of recent union-financed political advertising campaigns is reaching epic proportions. The time is ripe for elected legislators to bring Canadian labour laws in line with the rest of the industrialized world and establish a framework that respects the democratic rights of individual working people, as opposed to the political ambitions of labour leaders.
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POTENTIAL Chart your company’s path to success with the help of a strategic plan BY LAWRENCE BEAUDRY
O
ver the past 10 years, the construction industry environment in Alberta has been characterized by dramatic swings in demand as the global and provincial economies have undergone periods of rapid expansion and contraction. These boom and bust cycles have placed significant pressures on construction companies and contractors. They have had to adjust quickly to periods where attracting and retaining the skilled workforce required to meet the high demand for quality services is the major challenge, and periods when contraction in the economy significantly decreases demand, increases competition, forces downsizing and shrinks profit margins.
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Unleash the Potential
Navigating these choppy waters requires vision, clear focus, and the ability to anticipate and deal proactively with emerging trends impacting the business environment. Those companies that built a sound business strategy are much better positioned to identify and capitalize on growth opportunities and weather the storms created by downturns in the economy. Effective strategic planning unites people in pursuit of a common vision and focuses energy and resources on those things most critical to success. It helps to ensure the organization does the right things well and at the right time. When both management and staff understand where the company is headed and see themselves as contributing to a successful journey, motivation, productivity and accountability increase. The strategic planning process usually includes a shor t v ision development exercise designed to reach agreement on the preferred future to which the company aspires. It describes the broad targets the company would like to achieve relative to such key elements as company growth, financial condition, geographic markets served, people the company attracts and retains, and profile in the marketplace. (See Figure 1) Having a clear sense of where management wants the company to be in 10 years and beyond is an important first step in the planning process. To quote Lewis Carroll’s famous line: “If you don’t know where you are going, any road will take you there.” The va lues a re statements of the company’s core beliefs; they establish the moral and ethical framework that
guides the organization’s activities. The principles establish the parameters within which company leadership and employees are expected to operate. The values and principles taken together define what the company and the people in it stand for. When a company consistently operates in accordance with clearly defined values and principles, customers know what to expect in their dealings with the organization and positive long-term business relationships result. The mission describes the core business of the organization and who it serves. Discussions related to mission often include an assessment of the core products and services the company provides, the geographic markets it serves, and its targeted client base.
Effective strategic planning unites people in pursuit of a common vision and focuses energy and resources on those things most critical to success.
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The scan of the operating environment includes an assessment of internal company strengths and weakness, major trends and developments in the external business environment that may impact the company’s business, and an analysis of the competition. This environmental scan is used to identify high potential opportunities the company should be exploring, and any threats to the company that should be mitigated. The top half of Figure 1 can be viewed as the database used to bring the strategic priorities the company must address over the next three years into sharp focus to move toward achieving its vision. Experience tells us that usually 80 per cent of the
FIGURE 1
STRATEGIC PLANNING PROCESS VISION/VALUE/PRINCIPLES For what do we stand?
MISSION/MANDATE Why do we exist?
OPERATING ENVIRONMENT SWOT Analysis
STRATEGIC PRIORITIES
What are the four to six areas that need attention?
KEY RESULTS
What do we want to achieve?
STRATEGIES
How do we go about it?
ACTION AND IMPLEMENTATION PLANS Doing it.
REGULAR REVIEWS Is it getting done?
THANK YOU! Merit Contractors Association extends its thanks to our program partner, Alberta Venture, our sponsors, the Alberta Construction Safety Association, Canadian Western Bank and Lenmak Interior Innovations Inc., as well as everyone who attended the awards for making the inaugural gala a great success. presented By:
Visit www.albertaventure.com/contractor-of-the-year/ to view exclusive web coverage of the awards, including:
- A full listing of this year’s winners - The official Construction Person of the Year tribute video honouring Roger Dootson, Vice President, PCL Construction Management Inc.
sponsored By:
- Candid photos from the gala - A video series of the awards presentations and acceptance speeches
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Unleash the Potential
benefits to an organization come from 20 per cent of the effort. One of the important outcomes of an effective strategic business planning process is that energy and resources are focused on those things most critical to success. Once agreement is reached on a manageable number of strategic priorities, they become the pillars upon which the strategic plan is built. For each strategic priority, key results and strategies are developed. Key results are measurable statements of the specific outcomes the organization wishes to achieve relative to each strategic priority.
SAMPLE STRATEGIC PLANNING WORK PLAN 1 Clarify Objectives and Approach: Meet with the CEO to establish objectives, approach and timelines. 2 Establish Planning Team: Create a strategic planning team including the CEO, senior executive and other selected representatives. If the organization has a board of directors, then members should be actively engaged early in the strategic planning process.
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• Review the core lines of business and reach agre ement on any changes in focus; e.g., new products and services, new markets, changes to existing products and services; • Reach agreement on the top four or five strategic priorities for the organization; • Reach agreement on the key results desired relative to these priorities; and • Develop strategies designed to achieve the desired key results 5 Draft Strategic Plan: Document the results from the planning sessions in the form of a draft strategic plan.
3 Current Situation Review: Review relevant documents and reports, financial data, market trends, etc. and document in the form of briefing materials to support the work of the planning team.
6 Implementation Planning: Meet with the executive team to refine the strategies, estimate resource requirements, and establish lead implementation roles and timelines.
4 Conduct Planning Meeting(s): Conduct planning session(s)with the strategic planning team to: • Develop the organization’s vision, values and operating principles;
7 Finalize Plan: Review the draft plan and resource requirements with the CEO/board; make any required modifications and get approvals.
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8 Implementation and Monitoring: Establish procedures for quarterly reviews of progress on the implementation of strategies and make changes and course corrections as required as a result of these reviews. 9 Annual Update: Complete a comprehensive review and update of the plan to ensure its continued relevancy.
They are supported by specific performance measures and targets. Strategies are statements of how the company will deploy its resources to achieve the desired results. Detailed action plans are developed for each strategy, providing the tactical, more granular steps that need to be taken to implement the strategy.
and ref lects emerging issues, challenges and opportunities. The primary responsibility for developing the strategic business plan rests with the chief executive officer and the senior management team (SMT). Some companies form a strategic planning team comprising the SMT, supported by an
An effective strategic plan creates a shared vision, values and culture which increases commitment to the company and builds a strong sense of team. The development of strategies and action plans also includes an estimate of the resources required to implement the strategy, lead role implementation responsibilities, and proposed implementation timelines. This information is used to help inform the development and fi nalization of the company’s annual budget. Many strategic plans are built around a rolling three-year timeframe with provisions for quarterly monitoring of progress to allow for mid-course corrections as a result of unanticipated developments. Mechanisms are also required to update the plan annually to ensure it is current
external facilitator to complete the strategic planning process. Including some front-line supervisors on the strategic planning team provides an opportunity for leadership development, helps to build broader employee ownership in the plan, and contributes to effective implementation. Organizations with a board of directors should ensure the board is appropriately engaged in the development and eventual approval of the strategic plan and budget. The process to develop a strategic plan can usually be completed over a six week period and with minimum impacts on
the workloads of the executive and staff. Engaging an external facilitator to work with the CEO and SMT to develop the process, facilitate meetings and develop drafts of the strategic plan for review may be helpful. Effective strategic planning offers a cost effective and efficient vehicle to position construction compa nies to recognize and capitalize on opportunities, and anticipate and manage risks to their business. It imposes discipline and structures around the company’s business planning processes that increase the likelihood of the company focusing its financial and human capital on the issues and priorities that matter. A n effective strategic pla n creates a shared vision, values and culture which increases commitment to the company and builds a strong sense of team. That, in turn, positions the company to anticipate, manage and shape its future. Lawrence Beaudry is a Director with the Western Management Consultants Alberta practice, specializing in providing strategic and business planning consulting services to private and public sector organizations and has worked with Merit Contractors Association and other construction organizations
KRAWFORD CONSTRUCTION (2011) INC. Construction Managers • General Contractors • Design Builders Specializing in: Commercial Construction • New Buildings & Renovations Industrial Construction Visit our website: www.krawford.com 000OM.Krawford_1-3H.indd 1
4438-97 Street Edmonton, AB T6E 5R9 Phone: 780-436-4381 Fax: 780-437-2766 E-mail: edm@krawford.com Bay #2, 11166-42 Street SE Calgary, AB T2C 0J9 Phone: 403-203-2651 Fax: 403-203-2657 E-mail: cgy@krawford.com
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PHOTOGRAPHY BY 3 TEN
Fourth year apprentice Ryan Watson knows his trade ticket means a successful future
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In Alberta’s version of The Apprentice, job opportunities are plentiful again for individuals with the right attitude and aptitude BY STEVE PENNER
C
anada’s skilled workforce is in decline. While that fact was
widely discussed during the frantic construction years between 2002 and 2007, it fell out of the collective consciousness during the economic downturn. But as activity starts to rebuild in all segments of the economy, the construction industry is once again turning its attention to the future reality of a significant labour shortage. Apprentices are unquestionably the future for the construction sector and Merit members are responding by recruiting new apprentices to the workplace in ever-increasing numbers. The provincial government responded to the anticipated increase in demand for skilled tradespeople in the province by finally answering Merit’s calls for a change in the ratios of the number of apprentices that a journeyperson can train. As of January, 2011 the journeyman to apprentice ratio changed from one-to-one to one-to-two in 37 trades. Construction companies applauded the decision. “The change in ratio will help us hire more starters and get young people into the trades,”
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You’re Hired!
says Kevin Witzke, human resource manager at Muth Electrical Management Inc. “It will open up the door into the industry and address our concerns about retiring workers so the industry doesn’t go through all the ups and downs that we have over the past five years.” The most recent economic up and down, as Witzke refers to it, resulted in a hollowing out of the apprentice ranks. With companies forced to slim down their work force during the slowdown, apprentices took the brunt of the layoffs, both to reflect the decline in work available and because some companies did not have sufficient journeymen to meet the one-to-one ratio. Now Witzke is aggressively recruiting to address that. “We have a little bit of a hole right now when it comes to apprentices,” Witzke says. “We’re going to have to start at the beginning again and find first year apprentices. Right at this time, we don’t have a lot of third and fourth year apprentices. “Since December, I’ve hired quite a few apprentices and starters,” he goes on. “We’re going to start fresh and teach them our systems. The upside is that there are a lot of quality people to be had out there. Everyone’s been put on hold over the last couple years. The ones who have been waiting, who have been patient, they know this is where they want to be. I feel really good about the quality of the current apprentices. They’re sharp and clear and really proud to be working for us.” Muth Electrical currently has about 40 apprentices working with them, about 50 per cent of what they would have had in 2007. Witzke will continue to grow that number, as the company responds to an increasing volume of projects. As a company that works in the multi-residential, commercial and light industrial areas, Muth is seeing opportunity in every sector. “The high-rise inventory is building,” Witzke notes, “and as the price of oil goes up, so does the volume of industrial work.” The challenges of recruiting apprentices have changed in the 10 years that Witzke has been at Muth Electrical. While the system and the processes are not significantly different, the expectation of the apprentice has. “What I find is a different type of worker – younger, more wired, tuned in, more savvy,” 42
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Witzke says. “We as a company have to accommodate that. We have to understand that it is a different day and age. We provide more opportunity for workers to learn about our company through our website and online as well as provide an electronic flow of information from the office to them. “The other thing we notice is that there is definitely more interest in the trades now than there was 10 years ago. What I hear from young people is that going to university is expensive and that finding jobs after can be difficult. They know that wages in the trades have not gone down, and that they can make a very good living with it. A lot of our youth see trades as a better option for themselves because it is stable in Alberta.” Despite the interest, Witzke acknowledges that it is still difficult to find quality
people in the numbers he would like. The skill shortage permeates all the trades but the demand for electricians is particularly high. As with any company in the construction sector, apprentices are the life blood of Muth Electrical. To be efficient and meet the expectations of clients, the company has to have apprentices on board. Beyond that, Witzke is looking at the longer term requirements of Muth Electrical. “Apprentices are our future,” he says. “They are a renewable resource, essential for future of industry. We are accountable as an industry to teach and mentor the young people, to provide the basics of integrity, honesty, accountability and skills. We have to do that to ensure that there is success in the future.” As an open shop company, Witzke’s
“Apprentices are our future, They are a renewable resource, essential for future of industry. We are accountable as an industry to teach and mentor the young people, to provide the basics of integrity, honesty, accountability and skills. We have to do that to ensure that there is success in the future.” Kevin Witzke, human resources, Muth Electrical Management Inc.
recruitment message revolves around the opportunities Muth Electrical can offer apprentices. Along with the variety of work experience the company can provide, Witzke points out that an open shop work environment ensures apprentices are going to be rewarded on a merit model rather than just tenure. “I always tell them that they have an equal opportunity with anyone who has been here for three or four years. We look at performance, honesty, skills, capacity – what do they bring to the company? Everyone at Muth has their future in their own hands. The attitude an employee has is going to dictate their success. We reward people for hard work. “Maybe it’s because of that, but we don’t have a lot of turnover in general. We have about a 90 per cent success rate here. I hire for the long term; I hire to train and to keep the employee.” In return for the hard work, Muth Electrical commits to their apprentices. As Witzke points out, it makes good financial sense to do so. “It takes four years to put apprentices through. It costs a lot of money to bring someone on, to teach and train them so you need to focus on the future to find the value of that investment. You need to think about the value of a quality tradesperson. Once they
CHOOSING THE RIGHT PATH Three years ago, Ryan Watson decided it was time to find a career which he could enjoy and find value in for the rest of his working life. He settled on carpentry. Now 32 years old, Watson has just completed his third year in-school training at NAIT and is about to start the fourth year of his apprenticeship at Krawford Construction Inc. He is more convinced than ever of the correctness of his decision to pursue his carpentry ticket. “I had chased the rigs around for a couple years,” he explains, “and finally realized I wanted something more stable. I have my power engineering ticket but I chose power engineering when I was 19; basically, I looked at the NAIT calendar and picked the trade that had the least school time and the best potential income. It wasn’t really something I enjoyed. “I’ve always liked woodworking. A couple years ago, I started working on a house of my own and realized I didn’t have the skills to do the work. So I started thinking about carpentry and the more I looked into it, the more interested I became.” Watson’s decision to change careers coincided with the downturn in the economy. Despite that, he found a willing employer in Krawford Construction. “Initially it was tough to find somewhere to apprentice with – I applied all over the place. I had to find someone who would take a chance on me because I was a little older than the average apprentice. But I was willing to start again at the bottom of the pay scale because I knew this was what I wanted. I was really lucky to get on with Krawford. “They’re a great company and have treated me really well. They haven’t done any lay-offs and they’re supportive of me going to school. And I really like that they do a wide variety of work. It makes the job that much more interesting when you’re doing different things all the time. “I also like that they have knowledgeable journeymen on the worksite,” he goes on.
“At my stage, you need a workplace that supports you and provides learning experiences or you can’t get the whole scope.” Despite the challenges of returning to school at his age, Watson is reveling in the apprenticeship process. His biggest – and most pleasant – surprise was at the diversity of work within the carpentry field. “When I got into it, I thought it would just be framing and carpentry but it’s much more than that. “I’ve enjoyed the constant learning curve. I believe that if you’re interested in the topic, you’ll excel at it and I’m very interested.” Watson attends NAIT for his schooling and has found that his age is actually an asset in his education. His life experience gives him discipline and determination; his maturity helps him focus on his goal. And since he has found that NAIT sets their students up to succeed, he has enjoyed his classes. While some apprentices find it challenging to manage the school work from a financial perspective, Krawford helps Watson with that as well by deducting money from each pay cheque to put towards tuition. And, as Watson notes: “Being part of Merit helps because we get reimbursed for our tuition at the end of our apprenticeship.” When asked why he decided to pursue his ticket, Watson quickly cites job security and the potential for advancement. “At the end of the day, I will always have my ticket to fall back on.” He also has ambitions beyond journeyman status. “My goal is to be a supervisor. I know I have to work hard to prove myself but Krawford has me on the junior supervisor path right now. I’ll take additional courses if I need to; I know Merit offers those as well.” Pausing to reflect on his current path, Watson offers one final comment. “I am very happy with the way the apprenticeship program is set up in Alberta – the sky is the limit. OPENMIND SPRING 2011
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You’re Hired! get their ticket is when they really get to learn and think on their own. You’ve got to build the confidence in an apprentice. You have to continue to develop your crew and bring in third and fourth year apprentices as well as first years. We can make something from these people but it takes time and patience “It’s all about attitude, the willingness to get in and work hard. It’s exciting to see an apprentice start here and realize that. They suddenly understand that this is an opportunity for them to make their own future.” 4/5/11 2:33:18 PM
APPRENTICESHIPS BY THE NUMBERS (2009)* • 50 designated trades and 8 designated occupations • In 2009, 8,876 individuals certified in the designated trades and occupations and 16,594 new apprentices registered • 69,904 registered apprentices as of December 2009 • More than 800 employers and employ ees were involved in a network of over 165 local and provincial apprenticeship committees and occupational com mittees. All committees are composed of equal numbers of employers and employees • More than 1,700 high school students were registered in the Registered Apprenticeship Program (RAP) • Over 3,300 apprentices who started in RAP are currently continuing in a regular apprenticeship program • A total of 737 scholarships (or $743,000) were awarded to apprentices in 2009 • Applicants in the Registered Apprenticeship Program (RAP) category received 396 scholarships, while 341 went to apprentices in the Apprenticeship and Industry Training (AIT) category • The employment rate for apprentice graduates in the labour force is 92%, based on the results of the 2009 graduate survey • Most common age of Alberta apprentices registered for the first time is 19 • In 2009, 79% of apprentices were trained by employes with fewer than 100 tradespeople
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*Sourced from Apprenticeship and Industry Training Branch of the Government of Alberta
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ILLUSTRATION S BY RODRIGO LÓPEZ OROZCO ILLUSTRATION BY HEFF O’REILLY
Modified tools may give you more power on the worksite but they can also bring greater liability in the court room
BY SHILO NEVEU
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o yo u r e m e m b e r T i m
ILLUSTRATION BY HEFF O’REILLY
“The Tool Man” Taylor, the calamitous handyman from the 1990s TV show Home Improvement? Episode after episode we watched as Tim modified his tools to make them bigger and better. Then, in some haphazard fashion, Tim tested the modified tool, often causing havoc to everything around him. What would happen if this scene was reenacted on a modern day construction worksite? Recently, we came across a very interesting
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matter that could have been taken directly from a Home Improvement episode. An employer required a very specific tool to perform a very specific job. The only way to get this tool was to combine a stock tool with a modification, which according to the supplier, was designed to be used with a variety of different stock tools. As such, it was assumed that the modification was safe to use with the stock tool. This is not an uncommon situation. With the ever-changing nature of construction, employers have to adapt new construc-
tion practices to the day-to-day construction environment. However, an employer must stop and consider what his responsibilities are to his workers to ensure the construction practices are both safe for use and being used safely. In this case, the employer purchased the stock tool from an authorized dealer and had the dealer mount the modification to the stock tool, resulting in a modified stock tool or MST. Once the MST was assembled, it was shipped to the worksite where a worker, who was very familiar with the stock tool and its operation, was required to read the manufacturer’s specifications provided prior to using the MST. After a couple days of using the MST, a tragic incident occurred resulting in fatal injuries to the worker. The investigation that followed concluded that the modification made to the stock tool was too powerful for the tool, which created a fundamental defect in the MST and directly resulted in the fatality. In addition, a contributing factor to the incident was the improper use of the MST by the worker, attributed to his lack of knowledge about the MST. As a result of the incident, the employer was charged with not taking all reasonable precautions necessary to protect the health and safety of the worker and not providing a tool that met manufacturer specifications. The employer felt that had there been a fundamental flaw in the design of the MST, the authorized dealer should have alerted him. The employer wanted to know, “Why me?” Our advice to the employer was very sobering and will likely surprise you. In most jurisdictions in Canada, a supplier of equipment or a tool can be held liable for not supplying something that meets occupational health and safety (OHS) legislation. However, this does not remove the employer’s responsibility under the OHS legislation for their employee. You may be familiar with the term “internal responsibility system” or, as used by Justice Mary L. Hogan in a recent Ontario Superior Court of Justice decision, “belts and braces”. These terms are used to describe the underlying philosophy of the OHS legislation in Canada. Paraphrasing Justice Hogan, the responsibilities under the OHS Act overlap, creating a redundancy which operates to the advantage of workers. This “belt and braces” approach to OHS uses more than one method to ensure workers are protected. If the “belt”
does not work to safeguard a worker, the back-up system of the “braces” might, or vice versa. If all workplace parties are required to exercise due diligence, the failure of one party to exercise the requisite due diligence might be compensated for by the diligence of one of the other workplace parties. The purpose is to leave little to chance and to make protection of workers an overlapping responsibility. Conversely, with overlapping responsibilities comes joint and several liability. That means that everyone responsible for the safety of a worker can be held individually or jointly accountable depending on the facts of the incident. In the end, the Crown prosecutors decide who they will charge and with what charge. Generally, the Crown will go after all parties involved in the incident, as each party has a responsibility to protect the health and safety of the worker. It is safe to assume that if a worker gets hurt on a worksite, all potentially responsible parties are sitting in a “hot seat”, but the employer’s hot seat is generally a little warmer.
How does this apply to our MST? While the manufacturer likely contributed to the cause of incident and potentially could be charged, even if the manufacturer fell down on its responsibilities, a court is going to ask the employer what he did to prevent the incident
In many jurisdictions in Canada, once a tool is modified, the employer who introduces the modified tool to the worksite is responsible for the safety of the tool and ensuring its safe use.
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from occurring. The employer, and similarly other parties, can not point to the manufacturer or any other party for his due diligence. A court will expect all parties to individually demonstrate what they did to prevent the incident from occurring. The employer in this case study assumed, without asking anyone, that the MST was
safe for use by his worker. So, what should our employer have done? In many jurisdictions in Canada, once a tool is modified, the employer who introduces the modified tool to the worksite is responsible for the safety of the tool and ensuring its safe use. This is troublesome because the MST has no complete operator’s manual for its use and no guarantee that it is even safe to be used. Our employer would have one operator’s manual for the stock tool and another for the modification but not one for the MST. The Tool Man once stated that “A real man doesn’t need a manual”. Unfortunately, by law, you do! When a new tool like the MST is intro-
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More Power duced to the worksite, your employee may understand all the individual hazards for the stock tool or the modification. But when you put them together, it’s a different story. How the MST operates and how it behaves in a particular working environment will be different than the stock tool and as such, the MST will have unique hazards that need to be considered and controlled. Lastly, since the modification can be adapted for various stock tools, the manufacturer would have no ability to assess the proper operation of the MST or know the limitations of its use in every circumstance. As such, it is the employer who needs to identify these hazards and associated controls to the worker. This is true for any new process, material or equipment being introduced to the work environment. Its specific use in your working environment needs to be assessed and proper controls put into use by the workers. The employer is the person who carries these responsibilities. When assessing the types of controls which should be in place, the courts have
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When assessing the types of controls which should be in place, the courts have been clear on the issue; the greater the consequences of using a new tool, process, material or equipment, the greater the steps required to ensure the safety of the worker. been clear on the issue; the greater the consequences of using a new tool, process, material or equipment, the greater the steps required to ensure the safety of the worker. Your actions should be proportional to the potential outcome. In the case of the MST, a minimum requirement would have been for the employer to insist on someone “certifying” the MST safe for use and issuing instructions on how to use the MST safely. To get these answers, the employer should have asked the manufacturer of the stock tool, the manufacturer of the modification, the authorized dealer or even better, a certifying engineer. It was the responsibility of the employer to ensure someone gave this direction so it
could be communicated to the worker. Construction is a very dynamic environment with projects continuing to get bigger, more unusual and ultimately more challenging. With this comes major risk for the employer and their workers. Ultimately, new processes, materials, equipment and tools will be introduced to the working environment (cue The Tool Man grunt) but responsibility for ensuring that these construction practices are safe for use and being used safely lies with the employer. Shilo Neveu is an Associate with McLennan Ross LLP, focusing on Occupational Health and Safety and practices in commercial litigation.
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3/17/11 12:45:22 PM
2011 Contractor of the Year Awards honour best of the construction industry
By Geoff Morgan and Cailynn Klingbeil ompanies that build, subcontract and erect structures to house people, businesses and industries are an important part of a resurgent economy. The new Alberta Contactor of the Year Awards, presented by the Merit Contractors Association and Alberta Venture, highlights the industry’s achievements by recognizing companies and individuals whose efforts stand out. Companies were judged in four categories and across various criteria, including safety programs, environmental practices, staff development opportunities and the diversity of their building projects. An individual who has made a significant contribution to the industry is honoured with the prestigious Construction Person of the Year Award. 50
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Under $10 Million Annual Revenue FINALIST: It’s what you don’t see that makes Avalanche Air Systems of Calgary so good at what it does. Avalanche works behind the scenes designing and installing all-important heating and ventilation systems for commercial and industrial buildings. It has built LEED-certified air systems for major retail projects, including CrossIron Mills, Pro Hockey Life, Forever 21, Bed Bath & Beyond and Toys ”R” Us. FINALIST: Bonnyville-based Horizon Mechanical Ltd. is a young company specializing in plumbing, heating and cooling requirements. Since starting as a one-man operation in February 2006, Horizon has grown to a 40-person firm. Its work ranges from residential service calls to multimillion-dollar mechanical
systems, and the company serves both individual customers and big firms like Cenovus Energy and SNC Lavalin. Recent projects include an RBC branch in Cold Lake and a recreation centre at Foster Creek for Encana. WINNER: As an electrical contractor, Alta Pro Electric Ltd. of Edmonton offers more than off-the-shelf solutions with its design-build capability. Their expertise produces cost-effective electrical installations incorporating practical design and leading technology. Among recent projects, Alta Pro provided integrated security systems at the St. Francis Xavier high school field house in Edmonton and co-ordinated separate landlord and tenant systems for a FedEx building in Edmonton.
$10 Million to $30 Million Annual Revenue FINALIST: Camdon Construction of Red Deer has built a reputation as one of central Alberta’s prime general contractors because of its ability to construct buildings for diverse purposes. It has been involved in a wide variety of commercial, agricultural and industrial building projects, ranging from the Brazeau County fire hall in Drayton Valley to the Galloway Riding Academy in Ponoka to the Comfort Inn and Suites in Red Deer to the Packers Plus energy services complex in Red Deer County. FINALIST: Though I.W. Kuhn Environmental Ltd. calls the small town of Acadia Valley home, the company works throughout Alberta, Saskatchewan and Manitoba. I.W. Kuhn specializes in environmental remediation and reclamation solutions for oil
ALTA PRO ELECTRIC: St. Francis Xavier high school field house in Edmonton (top). UNITECH ELECTRICAL CONTRACTING: Alberta Processing Plant (above).
and gas and industrial clients. It has diversified recently to provide services to agricultural and feedlot clients. The company attributes much of its success to its focus on safety. WINNER: Unitech Electrical Contracting Inc. cemented its reputation during 2009’s H1N1 flu pandemic when it was contracted for vaccination clinics in Calgary. The company not only completed electrical and data requirements for the accelerated project, but took care of other details such as carpet installation, painting and ceiling work, often working through the night to meet the hurried opening dates. Among other major projects, Unitech also supplied and installed processing equipment for the Alberta Processing rendering plant. OPENMIND SPRING 2011
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Greater Than $100 Million Annual Revenue FINALIST: Over its 30-year history, Chandos Construction has grown from a regional contractor in northern Alberta to a province-wide giant of the industry, ranking as the 17th largest contractor in Canada, as deemed by Onsite Magazine. Chandos offers services ranging from pre-construction to construction management, design build, general contracting and energy retrofit. The company has completed 15 LEED projects, including the Intact Insurance Building in Edmonton, Red Deer RCMP headquarters and the University of Alberta East Campus Village graduate student housing.
TERRITORIAL ELECTRIC LTD.: Southgate Centre (above). CLARK BUILDERS LTD.: Commonwealth Community Recreation Centre (below left).
30 To $100 Million Annual Revenue FINALIST: Alberta Glass Company views its services and products as an integral part of the complete life cycle of a complex building envelope. Its staff is nimble and responsive to the needs of customers. That’s an important consideration when there is an emergency, such as last summer when the company was on-site repairing a University of Calgary skylight when a record-breaking hailstorm ripped through the city. Other major projects include enclosing the 53-storey tower at Eighth Avenue Place and doing the same at the new Bow building’s atrium using unitized, glazed walls. FINALIST: When the City of Calgary needed a recycling facility for a new residential recycling program, Calgary-based Elan Construction Limited was ready for the challenge. The company, which provides general contracting services to a range of clients in the private and public sector, completed the 100,000square-foot plant and offices on time to receive the first loads from the city’s curbside recycling program. It’s just one of the more than 1,100 projects Elan has completed since its inception in 1978. WINNER: An Edmonton-based commercial electrical company’s commitment to safety, including developing and implementing its own program, keeps it one step ahead of the industry when it comes to workplace safety. That attitude has attracted customers, who turn to Territorial Electric Ltd. because of its safety record. Territorial specializes in fast-track and complex projects. Projects have included the Lois Hole Hospital for Women and Southgate Centre, where it integrated various electrical systems with existing operations at the mall. 52
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FINALIST: A stalwart in the energy sector, Flint Energy Services specializes in construction ranging from well-site preparation, rig moving, pipeline construction and field facilities for both oil and gas. It has 60 branch offices, including 37 located in Canada. Flint recently completed a froth treatment facility and tank farm at the Shell Albian Sands oil sands plant and was recognized for both safety and efficiency of construction. Other recent major projects include Suncor’s Firebag 3 fabrication and field construction and the StatoilHydro Leismer demonstration project. FINALIST: Graham Group Ltd., the fifth-largest construction company in Canada, has 1,100 staff, annual revenues exceeding $1.8 billion and offices throughout North America. The employee-owned organization recently completed the first social infrastructure P3 project in Alberta, which consisted of 18 elementary and junior high schools in Calgary and Edmonton. Other projects include upgrading the Icef ields Parkway Interchange near Lake Louise and renovating a six-storey medical centre into the new University of Calgary downtown campus. WINNER: Clark Builders Ltd., headquartered in Edmonton, has specialized in large-scale infrastructure projects across Alberta for 37 years. Among its recent projects, Clark built the North Central Community Recreation Centre in Edmonton, installed the artificial turf at Commonwealth Stadium, rebuilt the McMahon Stadium players’ facility and constructed the $27-million Alberta Processing rendering operation in Calgary. To develop staff, the company has an extensive internal training program called Clark Builders University, which emphasizes leadership and skills training.
Construction Person of the Year If there were a blueprint for building a leader in the construction industry, it would have to prominently feature vision, innovation, courage, commitment and a desire to bring together best industry practices. The finalists for the first Alberta Construction Person of the Year are the very embodiment of these qualities. FINALIST: Rick Ball, president of Calgary’s Avalanche Air Systems Ltd., is known for taking a hands-on approach to his company’s work and a great deal of pride in its results. Ball believes that giving customers the best and latest technologies, delivering outstanding craftsmanship and quality control are not just important, but essential. His involvement extends to technological innovation, too: he is developing an iPad application for mechanical companies that he hopes will benefit the entire industry. Ball believes it is important to give back to his community. He actively devotes his time and financial resources to many charitable causes, including the Alberta Children’s Hospital, the SPCA, the Alberta Breast Cancer fundraising drive, the Royal Canadian Legion, the Alberta Burn Fund, Kids Up Front, Foothills Hospital, the Calgary Police Big Brothers and Sisters Association, Red Cross relief for Haiti and numerous charity golf tournaments. FINALIST: Louis Ravoy, manager of Alberta Mechanical and Salvaged Recycling Ltd. of Lethbridge, is described by company owner Kathy Van Ryn as an innovator who brings forward new and exciting projects that boost both profits and employee morale. Ravoy displays outstanding leadership and workmanship and has a passion for making things easier for those working in the construction industry. His instant recall of regulations, codes and requirements is encyclopedic. He puts that information to good use, too: one of his crowning achievements was designing and patenting a piece of equipment called the coil cinch, which is useful for hanging coiled materials like wire, chain, tubing and tools. Ravoy also has a personal commitment to recycling construction waste as both an advocate and a strong voice with the Alberta Onsite Wastewater Management Association. W I N N E R : R o g e r D o o t s o n, v ice -president of P C L Construction Management Inc., knows the value of apprenticeships and training. Starting out as a tradesman and now working as a technical construction executive, Dootson celebrates 40 years in the industry this year. He has long been involved with the Merit Contractors Association, Merit Canada and the Alberta Construction Association in various capacities and
ROGER DOOTSON, vice-president of PCL Construction Management Inc.
has served as a provincial advisor on apprenticeship and occupational labour training programs. Dootson has overseen significant projects, such as the Anthony Henday southeast leg ring road, which was Alberta Infrastructure’s first public-private partnership (P3), as well as the Leduc recreation facility and the Edmonton International Airport terminal expansion, among others. His industry work was recognized with the Chairman’s Award of Excellence from the Alberta Apprenticeship and Industry Training Board.
Merit and Alberta Venture thank its adjudication panel for their assistance with the inaugural Contractor of the Year Awards: Robin Kotyk,Alberta Construction Safety Association Bob Mulligan,RBC Dr. Aminah Robinson, University of Alberta Gord Selman, Marsh Canada
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Capital expenditure for construction in 2007 2008 Alberta (in $ millions): 59,767.6 65,155.2
Construction price index for apartment buildings in 2006 Calgary: 131.5 Edmonton: 129.0 % change Calgary: 14.1 % change Edmonton: 12.6
2009 44,707
2007 156.8 152.0 19.2 17.8
2010 p 2011 (est.) 48,604.4 52,526.6
2008 174.4 168.6 11.2 10.9
2009 160.7 148.4 -7.9 -12.0
2010 156.6 150.9 -2.6 1.7
Value of building permits (monthly) Seasonally adjusted (in $ millions) % change in Alberta February January February Jan. 2011 to Feb. 2010 to 2010 666 321.4 987.6
Residential: Non-residential: Alberta Total:
Yearly value of all building permits in Alberta ($ millions)
New housing price index ($ thousands) Calgary: Edmonton:
Wholesale merchants’ sales by industry unadjusted ($ millions) across Canada Building supplies: Metal products: Lumber and millwork: Machinery and equipment:
2011 458.3 238.8 697.1
2011 431.8 1046.1 1478
2006 2007 13,875.7 15,729.7
2006 86.1 75.7
2007 100 100
2006 74,337.1 17,732.5 34,292.0 103,163.5
2007 76,635.5 17,619.4 35,721.0 108,813.6
Feb. 2011 -5.8 338 112
Feb. 2011 -35.2 225.5 49.6
2008 2009 13,142.2 11,276.9
2008 100.6 101
2010 11,425.4
2009 93.9 89.7
2008 2009 77,235.9 67,196.8 18,972.7 13,163.1 34,099.6 32,001.0 115,358.6 103,211.3
2010 95.6 89
2010 74,713.9 15,331.3 35,304.3 110,474.1
Source: Statistics Canada
Number of employees covered under the Merit Hour Bank Benefit Plan:
Total manhours worked under the Merit Hour Bank Benefit Plan:
2005 24,844
2005 2006 51,931,342 58,264,783
2006 28,291
2007 33,875
2008 38,314
2009 38,187
2007 2008 2009 69,743,223 77,595,931 74,140,547
2010 39,371
2010 79,583,013
Source: Merit Contractors Association
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