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January 17, 2007
$4B Boom Just Tip of Iceberg
Martin Cash, Winnipeg Free Press, January 17, 2007
Manitoba is in the middle of a $4-billion construction boom and that is likely only the tip of the iceberg.
Another $6 billion has been committed to upgrading roads and bridges in the city and across the province over the next 10 years and Manitoba Hydro has said it is committed to building the Conawapa generating station that will likely cost more than $5 billion when all is said and done. Construction projects are coming fast and furious and some companies are so swamped they are not even trying to win work on some of the province's biggest projects.
For instance bidding closed recently on the $352 million James Armstrong Richardson International Airport terminal with only two companies competing for the prestigious project.
It was the same scenario on a couple of the larger bridge works that are part of the $665 million Manitoba Floodway Authority's floodway expansion project. Industry officials said that project owners like to see at least three bids to ensure they are paying the best price.
Ron Hambley of the Winnipeg Construction Association said in the past, projects of that size typically would attract more bidders from outside the province. But the booming economies of western Canada have kept some of those companies at home.
The same dynamic is holding true for Manitoba construction firms as well. In the past they would have to travel further afield to keep their workforce busy, but not anymore.
Gord Lee, president of Nelson River Construction said that a concrete paving job in Fort McMurray, Alta., was the only one the firm took in 2006 that wasn't in Manitoba.
"In prior years we spent a lot more time outside the province," said Lee, whose staff has grown by about 33 per cent over the past couple of years to about 200 people. "But there is so much work at home we are more able to pick and choose."
In November, annual building permits of $1.2 billion broke the previous full-year record with more than a month to go in 2006 and housing starts in '06 also set a new record.
The activity is becoming so strong and obvious that multi-billion global companies like Volvo Construction Equipment are starting to take notice.
Volvo is in the process of looking for the right franchisee to open its first Manitoba equipment leasing and rental operation.
"We have been attracted to Winnipeg by the pace of growth there," said Nick Mavrick, Volvo rental operation's vice-president of global strategy and marketing. "Recent public announcements about infrastructure growth validated our thinking. We want to be in the path of growth."
When the fourth largest construction equipment manufacturer in the world is attracted to a market it's a pretty good bet they know what they are doing.
"The encouraging thing is that the level of investment in construction activity is just beginning," said Chris Lorenc, president of the Manitoba Heavy Construction Association.
He and others have been hounding governments for the past decade to spend more money on fixing the crumbling roadways and infrastructure in the province and the purse strings are starting to loosen.
"(Roads and highways) are the platform for our quality of life, providing us with the economic ability to grow and compete," he said. "That is finally being recognized by government."
The robust construction activity would seem to support the premise of the "Making Manitoba a Have Province" campaign launched this week by the Manitoba Chamber of Commerce.
The grass-roots public awareness drive is an effort to figure out what the average person thinks about the province and what it would take to make it better.
But even though construction work is an undeniable generator of economic growth employing about 30,000 people in the province, some analysts continue to be concerned about the balance between public and private sector investment.
"Our economy is skewed to government consumption," said Peter Holle, president of the Winnipeg-based Frontier Centre for Public Policy. "Private capital is shunning Manitoba for a number of reasons like the taxation levels and regulations."
Of the $10 billion in construction projects underway or on the books for the future the only true private sector spending was the $750 million spent on residential housing construction last year. And while Manitoba may be hot, Saskatchewan is arguably more so. Building permit values in Manitoba grew by 24 per cent in 2006 but they grew by 32 per cent in Saskatchewan.
According to recent statistics compiled by the Frontier Centre, in 2005 Saskatchewan benefited from per capita private capital expenditures of $6,700, third highest in the country, while Manitoba was dead last at $4,500.
The Frontier Centre for Public Policy
is an independent public policy think tank whose mission is "to broaden the debate on our future through public policy research and education and to explore positive changes within our public institutions that support economic growth and opportunity."