CONTINUING ECONOMIC WOES CLAIM CONSTRUCTION GIANT
‘We don’t really see a recovery’ says Keystone Excavating’s top executive
In business for 35 years, Keystone Excavating Ltd. has worked on major infrastructure initiatives across the province, from the Anthony Henday Drive project in Edmonton to Calgary’s south hospital.
But in the midst of a construction slump, the privately owned company recently made a difficult decision to close at the end of March.
Chief executive Sandip Lalli says Keystone Excavating saw a 22 per cent drop in revenues in 2016 and the outlook for this year wasn’t much better.
“2016 was the worst year we’ve had in 35 years,” she said in an interview. “We concluded that the market is not going to turn around here in 2017, probably (not) until the summer to fall of ’18.”
Like many Alberta companies, Keystone Excavating reduced its expenditures in response to the recession.
Its staff count dropped from a high of 150 to fewer than 50 employees recently.
Yet, with less residential, commercial and infrastructure work on the horizon, 2017 was shaping up as another down year.
“This is our decision to close,” Lalli said. “We don’t see a recovery and really for us, it was anchored in the fact there are no good infrastructure projects (ahead).
“All those infrastructure projects are discussed, but ... none of that has come into play to put people to work.”
Questions about government infrastructure spending come at a difficult time for much of Alberta’s construction sector, given the impact of the two-year recession.
Provincial data shows that building permits dropped by 37 per cent in November to $1.1 billion.
A new report by BuildForce Canada, a national construction industry group, forecasts that with the completion of several larger projects this year, the sector in Alberta will “likely see a second wave of job losses before recovery.”
It forecasts that between 2017 and 2026, total construction employment will fall by an additional 11,000 jobs.
Meanwhile, those in Alberta’s construction industry complain about the lack of significant progress being made on much-touted government projects, such as hospitals and highways.
Paul Verhesen, past-chairman of the Alberta Construction Association and the president of Clark Builders, said feelings of “frustration” are common across the sector.
The Trudeau and Notley governments have promised billions of dollars in spending for Alberta, yet not enough has led to contracts being finalized and dirt actually moving.
Verhesen said part of the issue around the pace of government spending is tied to the lengthy procurement process, while funding delays, red tape and slow department approvals are also problematic.
“There have been lots of promises about infrastructure spending ... but none of it has hit the ground yet,” he said.
Alberta Infrastructure Minister Brian Mason acknowledges there have been delays in getting projects built under the New Building Canada Fund due to the program’s complexities.
More generally, a wet construction season and the spring wildfires have also affected Alberta capital projects.
Last week, Mason ordered a provincial review of the government’s procurement process to make sure it’s being done as efficiently as possible.