August 09, 2022
Real Estate News
RYPM
In Ontario, concrete dominates the construction industry,
but these days, there isn’t enough of it to go around.
In an E-Blast from July, Concrete Ontario outlined some of
the factors driving the current concrete shortfall.
“Ontario’s ready mixed concrete industry has been
experiencing unprecedented challenges regarding the supply of raw materials
required to produce concrete in 2022. The demand for construction materials
remains at an all-time high, both in Ontario and in the adjacent provinces and
states that we border, and global supply chain issues, combined with equipment
and labour shortages, are having a very detrimental impact on our industry’s
ability to meet all the concrete needs in the Ontario marketplace,” it reads.
“These issues are further compounded by three of the five cement plants in
Ontario having significant equipment break-downs that have required emergency
repairs… it is expected that raw material supply constraints may continue
throughout the remainder of 2022.”
Richard Lyall is the president of Residential Construction Council
of Ontario (RESCON). He has seen many of these setbacks play out in
real-time, and has a few more to add to the equation.
For residential builders, the pandemic thinned out labour,
but demand for building services intensified amid low
interest rates, creating a backlog that many builders have yet to catch up
with. And then, in March, hundreds of aggregate haulers went on strike, protesting for rate increases. This disrupted the transportation
of aggregate from quarries to concrete plants, where ready mix concrete is
produced.
“It’s like a giant game of dominoes,” he says. An
interconnected operation, with each individual component affecting the
stability of the whole. “You delay one thing and it delays everything else.”
For Ontario’s humble share of cement plants, getting back on
track following things like kiln and gas pipe repairs and site closures will
take time.
“I’ve talked to the concrete people and they’ve had some
real challenges. They want to serve the industry and serve our market. They’re
not intentionally out there trying to piss people off,” says Lyall. “When
you’re going at full capacity and you shut down for a while, you can’t make up
for lost time. It’s just that simple. Of course, these things do balance out.
All markets work in cycles and we’re just at a very difficult part of the cycle
with a lot of risks baked in to the system and a lot of uncertainty.”
Jeremiah Shamess is the Senior Vice President of the Private
Capital Investment Group at Colliers International. His work involves selling land to property
developers, which has made him privy to the inner workings of the construction
sector.
In Shamess’ view, the current concrete shortage has been
years in the making, with many of the problems at play systemic in
nature.
“These forming companies, there aren’t a lot of them and
they’re all dealing with labor shortages. Because of that, you’re seeing a
major shortage of concrete forming companies being able to put people on site,”
he says. “Once they get booked up, there’s no one left to actually do the work.
So then projects get delayed. And when they’re bidding for the next project,
they can bid a higher cost because they’re consistently in demand.”
Although concrete shortages aren’t limited to Ontario — BC
and Alberta have faced similar challenges in the past months — Ontario’s
dependence on concrete is unrivalled.
“Almost all of our construction typology is based on form
and pour concrete,” says Shamess. “We don’t do a lot of steel construction
work. If you go to New York or Chicago, you see a lot of their rail decks and
elevated highways and subways are built with steel. Whereas you look at the
Gardiner, it’s entirely built out of concrete.”
In part, this boils down to Ontario’s makeup of skilled
labour. Although Shamess says he is aware of developers who are trying to bring
steel fabrication to the province, steelworkers are hard to come by. Meanwhile,
concrete is pretty much ingrained.
In the 1960s, Greenwin — an Ontario-based property management and
development firm — created a high-rise building method called “flying form,”
which streamlined the building process. With flying form, a preassembled mould
is used to form concrete level by level. Once the concrete on one level is
poured and settled, the same form is raised to form concrete on the consecutive
levels.
Because of its efficiency, this method is still in use
today, but it’s far from the only driving force behind concrete construction in
Ontario. Lyall says that our proclivity for concrete has a lot to do with our
immigrant population.
In the 50s and 60s, Toronto saw an influx of Italian
immigrants. This group largely ended up in residential construction.
“Italy is where concrete was actually originally invented.
The first use of concrete was in the Colosseum in Rome,” he says. “So, we have
a lot of people that really know how to build with concrete. Once you have an
industry that knows how to build concrete, is used to building concrete and so
on, it’s very hard to change that.”
These days, concrete is in line with so many widespread
market demands that it’s hard to imagine using another material. Concrete is
necessary when working with rebar and building stick-framed houses. Meanwhile,
cement — the base ingredient in concrete — is used to make mortar, which is
crucial to masonry work.
“It’s very hard to break into the market with something
new,” says Lyall. “You don’t have the economies of scale, which is important
for costs. The more volume you have, arguably, the less expensive it should be
to do that.”
But with concrete supply expected to remain tight for the
rest of the year, Lyall and Shamess both agree that now is a good time to
address some of the underlying things that have left Ontario’s construction
sector in such a pinch in the first place.
“You know the old saying, ‘you never let a good crisis go to
waste?’ Well, I think this now opens the door for us to really get serious and
fix some of these problems that we have with our system,” says Lyall. “We’re
also looking at alternative materials. With respect to mass timber buildings,
that’s an up-and-coming situation — but again, our regulatory system was slow
to respond to that and approve it. We’ve got too much red tape here.”
That said, they have responded.
“As of July 1, several new pro-home ownership regulations
and red-tape reduction measures took effect across Ontario, including
amendments to Ontario’s Building Code that will allow for mass
timber construction up to 12 storeys,” Tim Hudak, CEO of the Ontario Real
Estate Association, said in a press release. “This change will bring Ontario in alignment
with other provinces, such as BC and Quebec, and lead to more affordable units
while creating jobs and supporting Ontario’s forestry sector.”
Of course, working with wood has its own set of challenges,
but Ontario has skilled labour associated with mass timber construction and
many timber projects in the pipeline. On top of that, using
wood in bigger ways and more regularly will allow the opportunity to streamline
and innovate timber building practices, much like what has been done very
effectively with concrete.
While Ontario will probably always be, largely, a concrete
jungle, there is plenty of room to expand construction methods — so the sector
has something to fall back on if concrete is scarce — while introducing new
procedures to help get projects up and running faster.
“Productivity is not measured well in our industry, but
there are productive improvements that are happening,” says Lyall. “For
example, we’re promoting digitizing the approvals process, where it’s all
paperless. And then, on the design [side], we’re promoting Building Information
Modeling, which is a whole other story and an interesting one. So we’re driving
innovation too.”
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