Mitigating Skill Shortage Risks for Construction Companies

1. Mitigating Skill Shortage Risks for Construction Companies Brian Clewes, CEO Industry Training Authority May 25, 2006

2. Today’s Presentation • About the ITA • The story behind skills shortages • Training is a human resource strategy • Identify your key positions • Choosing what to bid on • Capitalizing on current labour pool • Expanding the labour pool • The role of productivity • Summary

3. About the ITA • Provincial crown agency, established in 2004 • Responsible for governance, expansion and improvement of BC’s industry training and apprenticeship system

4. A New Direction for Industry Training in BC The ITA is: • Aggressively tackling workforce development needs in BC • Targeting increased trainee and employer participation • Facilitating a fundamental shift in BC’s industry training system • Giving industry the leadership role • Presenting significant opportunities for industry, employers and apprentices • More accessible and relevant training programs • The right supply of skilled workers

5. Progress to Date • 80+% increase in apprentices – to more than 26,500 • 30+% increase in employers offering sponsorship – to more than 8,800 • 250% increase in youth participation – 3,000 students now in high school programs • Many proposals from industry for new or revised programs • Formation of three sector Industry Training Organizations (ITOs) with three more to be established this year

6. The Story Behind BC’s Skills Squeeze and Escalating Construction Costs

7. The Story Behind BC’s Skills Squeeze • Strong economy • Record low unemployment • Highest job growth in Canada • Aging workforce • Trades not a preferred career option among sufficient youth

8. The 2010 Economy Over the next 10 years: 1,000,000+ job openings in BC but only 680,000 graduates

9. BC Leads the Way

10. Construction Employment in BC Expected to Peak at around 195,000 over the next couple of years

11. Retirees Will Out-Number New Entrants BC Stats P.E.O.P.L.E.25

12. The Result • Unprecedented growth in demand for skills • Skill shortages in a number of occupations today • Wages  Productivity  • Continued employment growth to 2010, followed by demographic shift • Continued tight labour market & shortages • Intense demand in Alberta drawing trades people from across Canada and now internationally

13. Current Occupation Shortages • Electrician • Painter • Building envelope • Other trades (e.g. Glazier, Lather) • Labourers • Managers, supervisors • Estimators • Engineers, technologists, technicians • Specialty trades:- Formwork- Framing- Rebar • Carpenter • Drywaller • Plumber • Sheet metal • Heavy Equipment Operators

14. Where Construction Prices are Going and Why

15. Construction GDP Real GDP Growth

16. Construction Wages Real Wages

17. Profit Margin in Canadian Construction Industry

18. Construction Material Costs

19. Labour Productivity

20. Recorded Escalation to 2005

21. Projected Lower Mainland Escalation Rates

22. Vancouver Island Construction Cost Increases

23. Labour Shortage Mitigation Strategies

24. Training as a Human Resource Strategy • Attraction – credential & mobility • Retention – Employees value the investment • Focused investment in skill development to increase productivity – improved skills for employers

25. Retention Strategies • Identify key people • Focus on people you know are absolutely essential for success • Look at strategies employed by other sectors (e.g. software industry) • Know your employee’s intentions • Retention bonuses • Fast track promotion • Equity in company • Location bonuses • Hire locally whenever possible

26. Bidding

27. Choose What to Bid on • Many contractors are now being selective about bids, based on labour risks

28. Accessing the Labour Pool

29. Components of Population Change, 1971/72 to 2030/31 '000 120 Projected 100 80 60 40 20 0 -20 1971- 1976- 1981- 1986- 1991- 1996- 2001- 2006- 2011- 2016- 2021- 2026- 72 77 82 87 92 97 02 07 12 17 22 27 Source: BC Stats Net Interprovincial Net International Natural Increase Future Sources of Labour

30. Capitalizing on Current Labour Pool • Construction generally only accesses about 40% of available labour pool • To access the balance new human resource strategies required

31. The Changing Faces of Labour Aboriginal people and visible minorities: “Together, their population exceeds that of BC and Manitoba combined” (Canadian Business, March 29 - April 11, 2004)

32. Expanding the Labour Pool

33. Expanding Immigration • Immigration • Permanent – PNP • Temporary work visas – Up to two years

34. Percentage Share of Immigrants by Intended Occupation

35. Summary • Skills shortages are here and are likely to be an issue for some time • The BC government is assisting through: • ITA – increased training opportunities, industry leadership, and new programs • Immigration – working with Feds to fast track process • Tax incentives for training – scope to be defined • Federal government has also promised tax incentives

36. Summary • Employers and others can help by: • Training • Retention strategies for key people • Selective bidding • Capitalizing on underutilized portions of current labour pool • Expanding labour pool • Looking at productivity strategies

37. Thank you Brian Clewes, CEO Industry Training Authority 604-214-8706 bclewes@itabc.ca