October 5, 2011

Infrastructure investment, contract bundling among Ontario election issues for Toronto Construction Association

KELLY LAPOINTE

staff writer

With the highest population density in the province, the Greater Toronto Area (GTA) construction industry faces some challenges it wants addressed in tomorrow’s election.

Toronto Construction Association President John Mollenhauer said consumers are torn between a sense of urgency to eliminate deficit and having enough in reserve to stimulate the economy.

“The average voter is saying that the provincial government should be turning their attention to eliminating deficit. And there’s an argument another way, which has a cost,” he noted.

“The government ought to continue to spend some money to keep stimulating the economy until we’re out of the woods, and we’re not out of the woods yet,” Mollenhauer said, adding that the Liberals and Conservatives have very different views on the subject.

The federal government’s plan was made crystal clear, he said, when Jim Flaherty announced before the federal election that the priority is eliminating deficit. “And the Conservatives managed a majority. So obviously they were, at that time, attaching enormous importance [to it].”

He said continuing to invest heavily in transit, roads, hospitals and schools is an important election issue. Skills training swiftly became a hot-button issue in this year’s election as many said there weren’t enough people to fill a skilled labour shortage.

“In real terms, we have not had a labour shortage in Ontario in any recent years, but we know that for both skilled labour and the white collar folks that support these projects, we are going to have a considerable shortage and that’s imminent,” he said.

Mollenhauer added that much more attention needs to be paid to attracting people to the industry and to better training.

He said training is “woefully” inadequate at the moment and there just isn’t enough.

“It’s about having it subsidized, it’s about attaching enough importance to it. It’s about recognizing that if we don’t do it, we’re going to have skilled labour that isn’t properly trained, that leads to more accidents,” he said.

The shrinking manufacturing industry provides a major opportunity right now with people moving into construction from other sectors, added Mollenhauer.

About five years ago, there were about three times as many people in the manufacturing sector compared to construction.

“Now it’s more like one and a half times as many in that sector. What a great opportunity, if that sector’s shrinking, to transition people into construction and we’ve got to provide more and better training.”

Another important issue to the GTA is the bundling of projects that has been proposed by the current government, which Mollenhauer said, can be both good news and bad news.

He said bundling is good if it makes sense because there are economies of scale, efficiencies, financing economies, discounts related to finance because a few things are aggregated.

But he said that often projects are bundled just for the sake of bundling.

“The economies are better by not bundling because the smaller firms that bid these projects are hungry. They think they’re saving money by bundling but they are not compared to if they left it as several small projects,” said Mollenhauer.

“They would get more competitive pricing because the folks that are pricing those jobs aren’t as busy and they’re more aggressive because they need to work,” he added.

“We challenge the government to think and rethink the whole notion of bundling week in and week out,” he explained.

“There are times when it makes sense, more often than not these days, the notion of bundling is abused and they’re not getting savings at all.”

The Toronto Construction Association represents more than 2,200 member companies representing over 300, 000 local construction industry practitioners.

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