This is a post from Alex Carrick's blog that covers the Canadian construction industry.

Since 1985, Mr. Carrick has held the position of Canadian Chief Economist with Reed Construction Data's CanaData, the leading supplier of statistics and forecasting information for the Canadian construction industry.

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Construction Industry Forecasts

Notes from Alex Carrick - Sep 01, 2011

Alex Carrick
Regional influences on the Canadian construction outlook

Let’s look at some of the regional influences on the Canadian construction outlook.

Two factors play important roles everywhere: 1) population characteristics (i.e., births, deaths, age distribution, in-migration and out-migration); and 2) the availability of raw materials.

On both counts, the four provinces in Western Canada come out winners. But this isn’t giving enough credit to the provinces in the centre and Atlantic Canada. They have their strengths as well.

In Statistics Canada’s population estimates over the last several years, the quarter-to-quarter growth leader has switched back and forth between Alberta, British Columbia and Saskatchewan.

Manitoba has also had success in attracting both other Canadians and foreigners.

Immigrants have been doing their homework before arriving on Canada’s shores. They know that some of the best jobs available in the country are on resource-project job sites or in regions with ancillary benefits.

Oil Sands investment in Alberta disappeared during the recession, when prices dropped. The world price of oil is now about halfway between its recessionary low and its pre-recession peak.

That’s been enough to entice investment dollars back and some of the current interest has more of an international flavor than in the past. China and other Asian nations are looking to firm up sources of supply.

B.C. is rich in precious and base metals, coal and natural gas. The northeast of the province is set for a mini-boom at least. Development of Site C on the Peace River will supply the electricity.

The port of Prince Rupert is closer to Asia than Los Angeles, giving it a competitive advantage. And in nearby Kitimat, there are the early stages of Rio Tinto Alcan’s major aluminum smelter expansion.

Saskatchewan has so many resources that temporary setbacks in one area (e.g., reduced prospects for uranium as a result of the Fukushima nuclear plant disaster in Japan) can be made up in another. Tight world agricultural markets virtually assure a rosy outlook for potash demand.

Quebec is driven by hydroelectric projects and the aerospace and aluminum industries. Bombardier is fighting to win its share of increasing airplane orders around the world. And, as in B.C., there are plans for major spending on aluminum sector expansions.

Ontario has potential resource projects in the north of the province (e.g., the Ring of Fire mining zone north of Thunder Bay). And population growth in Toronto (+100,000 per year) is an impressive force of nature all on its own.

It implies the need for a multitude of public sector projects, particularly in the transit area. There are also important “one-off” projects, including preparations for the 2015 PanAm Games and Mayor Rob Ford’s plans for the Portlands, which so far include the world’s largest ferris wheel and a signature hotel.

The Atlantic region is being led by Newfoundland and Labrador. The provincial government is earning its first revenue from the Voisey’s Bay mining project and major upcoming projects are planned in offshore oil drilling (Hebron and Hibernia South) and Labrador power generation (Gull Island and Muskrat Falls on the Lower Churchill River).

In residential markets nation-wide, starts are currently being supported by exceptionally high multi-unit activity in Toronto and Vancouver. Once this winds down, the outlook is for a period of stability in starts at levels supported by family formations.

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News. Mr. Carrick also has a lifestyle blog that can be reached by clicking here.


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Read Other Recent Alex Carrick Posts

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