Construction generates a lot of buzz, especially when talking about the jobs created by new oil & gas projects. Here, we take a deeper dive into the sector as a follow-on from our recent report, “What’s Fuelling BC’s Economy?”
Are construction jobs the missing link?
In BC, the construction sector – building everything from houses to roadways – is responsible for 7% of our GDP and almost one in ten jobs. It’s also one of our province’s fastest-growing sectors. But how does it break down, and what are some of the factors that keep the construction sector booming?
What fuels construction?
The construction sector is one of the primary drivers of our provincial economy. It’s a $15 billion dollar industry in BC – and over the past decade, has consistently been one of the fastest growing sectors.
So where is this growth coming from? Just over half of the GDP from BC’s construction sector comes from retail and commercial building construction and another 16% comes from repairs. Finally, the remaining 31% is from industrial projects, everything from roadways to hydroelectric dams [source: BC economic accounts – download].
The housing market boom of the past decade has been a clear factor in the sector’s consistently strong growth, and this isn’t expected to change in the future given BC’s growing (and aging) population – new homes and renovations of existing homes are expected to be consistent trends. Jobs in the sector closely follow this pattern – most construction jobs in BC are linked to housing, followed by civil engineering projects and repairs to existing infrastructure.
[click for larger infographic]
Where do oil and gas projects fit in?
Energy projects, including oil and gas pipelines and hydro-electric dams, are a subset of industrial construction projects. Although a detailed breakdown isn’t available for BC, across Canada about a third of engineering construction relates to oil and gas pipelines. If the same percentage holds true for BC, around 10% of the province’s construction sector GDP is driven by oil and gas projects. This translates to roughly 0.7% of BC’s total GDP [source: Statistics Canada CANSIM table 379-0031].
What about the jobs created from new energy projects?
While big infrastructure projects like oil pipelines undoubtedly create construction jobs, they may not be the jobs we need. We simply don’t have the workforce to staff big projects that need hundreds or even thousands of workers all at once for a short time period. Instead, those projects are often staffed by people outside BC, including temporary foreign workers. Kinder Morgan, for example, expects that if the Trans Mountain Expansion Project goes forward, it will have a 4,500-person construction workforce during its peak month, but only 500 or so will be “local hires”.
In addition, construction jobs are generally short-term – the lifespan of a pipeline is anywhere from 40-60+ years, but the construction phase lasts 18 months at most. Optimistic predictions of hundreds of thousands of future construction jobs created by oil and gas pipelines ignore the high level of risk inherent in these sectors.
Even the biggest LNG proponents agree that there is a lot of uncertainty behind the province’s ambitious goals of financing and building several new LNG facilities over the next few years. At the risk of overusing a tired pun, our government’s pipeline plans may be nothing more than a pipe dream, if only because global prices for natural gas aren’t high enough to make 5 new LNG terminals economically feasible.
Where does this leave us?
In the end, British Columbians need stable jobs distributed throughout towns and cities across the province – ongoing employment that pays living wages, not short-term, risky jobs that can perpetuate local boom and bust economies. Given these needs, huge infrastructure projects may not be the best kind of job creator, considering that the projects are often short-term and mainly staffed by temporary foreign workers.
Luckily, most of BC’s construction jobs are in housing, building repair and small infrastructure projects. Although individual projects are short-term, ongoing building repairs, infrastructure upgrades and new housing starts create a consistent demand for workers in the sector – all in less risky areas than oil and gas.
Some other sectors that also might deliver on this promise include high tech – one of our fastest-growing and best compensated sectors, with huge potential for virtual and distributed working outside economic hubs like Vancouver and Victoria – health care, retails sales, tourism and other service-based businesses.