May 19, 2006

$120B in construction for Alberta

ROXANNE HOOPER

staff writer

EDMONTON

An estimated $120 billion in major construction projects are on the books for Alberta during the next decade, a quarter of which will go up in and around Edmonton.

This forecasted building boom ensures the economic future for Edmonton and region remains bright, said Jong Huang, chief economist for the City of Edmonton.

Factoring in regional, national and global contributors, Huang painted a picture of what lies ahead for the city in his newly released 46-page bi-annual report examining Edmonton’s socio-economic outlook.

Jong Huang

“The Edmonton Census Metropolitan Area has been one of the fastest growing economies in Canada over the past several years, due largely to strong infrastructure and institutional investments, and most importantly, a surge in energy investment, particularly in oil sands development in northern Alberta,” he said.

As for the future, he said, it’s only going to get better.

In the report, Huang predicted the region’s population will climb 65,000 to 1.02 million in the next five years — mainly due to a migration from eastern Canada.

“We expect to see more people moving to Edmonton in the next several years from eastern Canada, where the high Canadian dollar has had detrimental impacts on the manufacturing industries in Ontario,” he said.

Likewise, the city is expecting a three per cent increase in economic growth propelled primarily by the increased investment in energy related projects in northern Alberta.

Huang pointed to the oil sands investment in Alberta, noting it has increased from $1.3 billion in 1996 to an estimated $8.5 billion last year, with little sign of slowing down for years to come.

He also listed more than $34 billion in oil, gas and oil sands projects on the books, another $830 million in commercial or multi-family residential projects, more than a billion in infrastructure, and $1.14 billion in institutional expected to have a significant impact on the Edmonton economy in the next five years.

While the city’s economic future looks strong, Huang noted a lack of skilled labour and higher material costs (steel and concrete) are expected to force up the price of non-residential construction in Edmonton, causing some unwanted delays and possibly even prompting some project cancellations.

“The labour shortage will continue to be a main challenge for the industry and others,” Huang said. “The labour shortage is expected to push back some of the construction projects.”

However, he forecasted that a softening of residential construction in the next few years will see a transfer of skilled labour to the non-residential sector, alleviating some of the contractors’ current woes.

Despite the region’s present and future economic boom, Edmonton actually reported a drop in employment growth during 2005, down 8,000 people last year. That’s due, in part, to people moving to better paid industries and regions such as Fort McMurray or younger people going back to school (many for trades training), which Huang described as a mixed blessing.

That said, Huang predicted the city’s employment numbers will rebound up again this year by 1.5 per cent and continue at about 1.2 per cent for the subsequent four years.

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