1. CONSTRUCTION LOOKING FORWARD An Assessment of Construction Labour Markets from 2012 to 2020 ALBERTA

2. Construction Looking Forward Alberta Contents Highlights and Introduction Economic Assumptions Investment Outlook: Building Trends and Major Projects Construction Labour Requirements The Available Workforce Market Rankings and Mobility Conclusion Note: Definitions, methodology and detailed tables are available at www.constructionforecasts.ca www.constructionforecasts.ca

3. Construction Looking Forward 2012 Reports on the state of construction labour markets in Alberta from 2012 to 2020 are based on: a current macroeconomic and demographic scenario a current inventory of major construction projects the views and input of provincial LMI committees Introduction

4. Highlights Construction Looking Forward for 2012 provides an assessment of labour markets from 2012 to 2020. Albertas construction industry returns to the record high peak levels of activity reached between 2006 and 2008, surpassing previous peak employment requirements by 2015. Meeting near-term labour requirements depends on the industry's ability to draw in an equivalent number of out-of-province workers to replace the number that exited during the 2009 recession. The expansion that begins in 2015, however, will once again test the capacity of the industrys workforce, as growing residential and non-residential building construction requirements stack on top of a second wave of major natural resource-related engineering projects.

5. Highlights Over the long term, sustaining capital projects and shutdown/ turnaround work will play a more important role, as all the new facilities being built will need to be maintained. The ability of Albertas construction industry to recruit for the oil sands, pipelines, utilities and other industrial projects depends on the mobility of key trades and on competing demands from other major resource-based projects across Canada.

6. Economic Environment It is assumed that the federal and provincial governments will begin to reduce both current and capital expenditures in an effort to eliminate deficits. The short- to medium-term outlook for major trading partners is weaker. In the long-term, economic growth strengthens in both major trading partners and Canada, as deficits and debt come under control. Canadian output growth will average around 2 percent across the 2012–2020 period. In the medium term, inflation and interest rates remain low, but rise in the long term as growth strengthens. The Canada-U.S. exchange rate remains strong in the short term, but falls toward its underlying value over the scenario period.

7. Economic Environment Commodity prices Oil prices recovered in 2010 and into 2011, but are expected to weaken somewhat in 2012 and 2013 in line with weaker world growth, and then recover thereafter in line with stronger economic growth. Natural gas prices remain weak because of expected increases in shale gas and then start to strengthen after 2015. Agricultural prices continue upward over the scenario period reflecting a tightening of these markets. Metals and mineral prices continue to trend upward, reflecting the growth of the world economy driven to a large extent by China and Asia.

8. Construction by sector Residential investment experiences an extended period of rapid growth from 2012 to 2017 driven by rising housing starts. By 2014, investment reaches historical peak levels experienced in 2007. Commercial building construction grows in line with business activity and population growth across the scenario period. Institutional and government investment picks up later in the scenario period following a period of deficit elimination induced by fiscal restraint. Oil sands investment continues to rise slowly to 2014 and then accelerates over the latter half of the scenario period. Investment Outlook for Alberta

9. Residential Construction Investment ($2002 millions)

10. Housing Starts and Household Formation (000s)

11. Non-residential Construction ($2002 millions)

12. Investment Outlook Alberta: selected major projects The CSC tracks major projects underway or planned for construction in the province. While there are too many to list here, following are a few examples: oil sands and related projects pipelines (Northern Gateway, Woodland extension, etc.) transmission lines (ATCO Power and AltaLink) Quest Carbon Capture and Storage (CCS) Project Bow City Powers 1000MW coal-fired power plant Maxim Powers 500MW generation plant transportation projects (light rail, airport developments, etc.)

13. Building Construction ($2002 millions) ($2002 millions)

14. Engineering Construction ($2002 millions)

15. Construction Labour Requirements The outlook for Albertas construction industry can be characterized as a volatile and extended period of expansion as the province continues to develop its natural resources. Construction employment recovered some of the losses from the 2009 recession by 2012, restoring more normal levels of unemployment and balanced labour market conditions for most trades. The current cycle of major resource-based engineering projects sustains moderate employment growth to 2013, tightening labour markets for some specialized trades and occupations. Expansion resumes from 2015 with a second wave of oil sands-related engineering investment. Rising demands from non-residential building and new housing construction further limit the local pool of labour to meet demands.

16. Construction Employment in Alberta

17. Construction Labour Requirements Residential cycle A housing boom from 1999 to 2007 carried housing starts over household formations. Economic conditions weakened in 2008 and 2009. Housing starts fell from 48,000 units in 2007 to approximately 20,000 in 2009. Conditions improved in 2010 as both housing starts and total residential investment increased. Activity slowed in 2011 and then resumes across the remainder of the outlook scenario. New residential and renovation investment increases steadily between 2012 and 2018. Employment increases by 17 percent between 2012 and 2020.

18. Residential Construction Employment Index for Selected Trades in Alberta

19. Construction Labour Requirements Non-residential activity Strong gains from 2010 to 2011 improved employment conditions, but employment remained below the 2008 peak. Non-residential construction labour requirements continue to rise steadily from current high levels, surpassing the 2008 peak by 2016. Labour requirements are driven by rising oil sands investment and increased activity in electric utility, transmission, pipeline and other industrial construction. Distinct changes in sub-sectors will shift labour requirements. Non-residential construction employment rises 20 percent from 2012 to 2020.

20. Non-residential Construction Employment Index for Selected Trades in Alberta

23. The Available Workforce Supply-side adjustments – unemployment Unemployment hit all-time lows in 2007 and 2008, far below the long-term trend value. The 2009 recession more than tripled the unemployment rate. A strong recovery in 2010 quickly returned unemployment to more normal levels. Moderate employment growth from 2012 to 2014 will hold unemployment near 2011 levels. From 2015 to 2018, the labour force will struggle to keep up with sustained employment growth. Expansion demands combine with demographics to move unemployment steadily lower. The mobility of the provincial workforce to meet demand requirements will not provide the needed workers.

24. The Available Workforce Supply-side adjustments Supply side, 2012 to 2020: labour force requirements rise by 37,500 in response to expansion demand estimated retirements total 34,000 estimated new entrants into the construction workforce total 27,000 (comprises local residents aged 30 and younger) net in-mobility rises by 44,000 to balance labour force requirements

25. Change in Construction Labour Force in Alberta

26. Market conditions are assessed by combining four measures into a ranking: excess supply (unemployment) annual change in employment net in-mobility as a percent of the labour force industry consultations Rankings describe conditions on a scale from 1 to 5. Labour Market Rankings

27. 5 Qualified workers are not available in local or adjacent markets. Competition is intense. 4 Qualified workers are generally not available in local and adjacent markets. Recruiting may extend beyond traditional sources and practices. 3 Qualified workers in the local market may be limited by short-term increases in demand. Established patterns of recruiting are sufficient. 2 Qualified workers are available in local or adjacent markets. 1 Qualified workers are available in local markets. Excess supply is apparent. Workers may move to other markets.

28. Labour Market Rankings Trades and occupations 2011201220132014201520162017201820192020 Boilermakers5433444443 Bricklayers3433343333 Carpenters4444344433 Concrete finishers3333333433 Construction estimators3333344433 Construction managers3433333333 Construction millwrights and industrial mechanics5432334433 Contractors and supervisors3333334333 Crane operators4333444333 Drillers and blasters4333334333 Electricians (including industrial and power systems) 4433444443 Elevator constructors and mechanics3333334433 Floor covering installers3333333333 Gasfitters3443444333 Glaziers3333333443 Heavy equipment operators (except crane)3332333444 Heavy-duty equipment mechanics3332334433

29. Labour Market Rankings Trades and occupations 2011201220132014201520162017201820192020 Industrial instrument technicians and mechanics4333333333 Insulators3333444433 Ironworkers & structural metal fabricators & fitters4333445433 Painters and decorators3333333333 Plasterers, drywall installers and finishers, and lathers 3433334443 Plumbers4433334433 Refrigeration and air conditioning mechanics3333334433 Residential and commercial installers and servicers 3333333333 Residential home builders and renovators3434333333 Roofers and shinglers3433334443 Sheet metal workers4333444433 Steamfitters, pipefitters and sprinkler system installers 4333444443 Tilesetters3333333333 Trades helpers and labourers3433334443 Truck drivers3333334443 Welders and related machine operators4333444433

30. Labour Market Rankings and Mobility Rankings in Alberta and other markets suggest the potential for mobility across: sectors industries regions

31. Potential for mobility by region Utility, mining and other resource projects are planned for several regions and will draw key trades out of Alberta to (for example): Newfoundland and Labrador: 2012–2014 Northern Ontario: 2012–2014 Ontario (GTA): 2013–2018 Manitoba: 2012–2015 Saskatchewan: 2012–2013 Labour Market Rankings and Mobility

32. Labour Market Hot Spots

33. Conclusions Strong employment growth Increased construction activity in other provinces could make recruiting more challenging than in the past. The continuing growth and refinement of the supporting systems will help to match the local workforce to emerging requirements. Emphasis on recruiting youth, women, Aboriginal workers and immigrants will continue to be a priority.

34. Our Thanks To... The production of Construction Looking Forward 20122020 would not have been possible without the partnership between the CSC and the Construction Owners Association of Alberta (COAA) and the valuable input from the following organizations: Alberta Advanced Education and Technology Alberta Construction Association Alberta Employment and Immigration Alberta Finance and Enterprise Alberta Roadbuilders and Heavy Construction Association Building Trades of Alberta Canada Mortgage and Housing Corporation Canadian Home Builders' Association – Alberta Christian Labour Association of Canada Construction Labour Relations – Alberta Enbridge Inc. Merit Contractors Association Nexen Inc. Progressive Contractors Association of Canada Service Canada Syncrude Canada Ltd.

35. About the CSC The Construction Sector Council (CSC) is a national industry-led organization committed to the development of a highly skilled workforce that will support the future needs of Canadas construction industry. This report is part of the CSCs Labour Market Information Program. It is available in both official languages and can be obtained electronically at www.constructionforecasts.ca and www.csc-ca.org.www.constructionforecasts.cawww.csc-ca.org Timely construction forecast data is also available online at www.constructionforecasts.ca. Create customized reports on a broad range of selected categories within sector, trade or province covering up to 10 years. www.constructionforecasts.ca

36. For more information contact: Construction Sector Council Phone: 613-569-5552 Fax: 613-569-1220 info@csc-ca.org March 2012