We say, if the earth moved, it was us. This statement helps those not in the industry understand the work done by members of the Saskatchewan Heavy Construction Association.
When there is movement on an issue affecting those members, President Shantel Lipp, along with SHCA staff and the board, represent, advocate and serve all SHCA members.
Understanding the work Lipp and the others do can best be understood by reviewing the progress made on recent issues. A look back on last year shows some of the issues pertinent to the industry which evolved in 2022, and others that built up over years.
The work done by Lipp, the staff and the board on the following has benefited members by leading to thoughtful improvements and holding others to account.
Improving members’ cash flow
One word kept popping up again and again during 2022: inflation.
An economic impact analysis done for the SHCA found that the industry was expected to face a further $426.7 million in new costs. Given that the industry typically profits $670 million per year on sales of $9 billion, those additional costs would reduce profits to $243.4 million – more than half – which would make it difficult for many companies in the industry to survive, and would cut the number of jobs by more than half.
One of the costs members faced was the increased price of diesel, which was estimated to have climbed 69 per cent from the time the contracts with the Ministry of Highways were signed, making it a crucial issue for the association to resolve.
The situation was not sustainable for the industry, and the future of many members depended on the climbing diesel costs being addressed by government.
In the beginning of the year, the Ministry reviewed prices and policy and explored options for updating the policy and the budget impacts of possible updates. A standard practice bulletin was posted in late March that directed interim diesel fuel adjustments be calculated and applied monthly.
Midway through the year, industry was invited to review options for updating and expanding the diesel fuel adjustment. The Ministry of Highways presented SHCA with some proposed adjustments to the fuel escalation clause, including expanding the scope to include additional types of work.
The Ministry also looked at the consumption rate and applying the existing consumption rates more broadly in some areas of work and better options to address fuel consumption for haul.
There was also the issue of payment. The Ministry is now using a monthly adjustment to apply interim adjustments in advance of a final calculation.
Lipp and the board provided the Ministry figures and examples of how the industry has been impacted by the escalation in diesel fuel. They also asked for compensation for members who provide asphalt concrete products that go into making the binder materials for crushing, micro-surfacing, paving and more.
There were other types of work that consume diesel fuel that the Ministry didn’t include in its presentation, such as rock excavation and hauling used for dirt excavation. Lipp and the board brought these to the Ministry’s attention. Finally, they worked with the Ministry to revise the industry consumption rates to reflect more realistic figures – the aim was to be reasonable and fair to both industry and government.
Numerous changes were made to help members with their cash flow. There were updates included in fall tenders – specifications for bid requirements and conditions, measurement and payment (which includes details on payment for extra work, partial payments, final payments and diesel fuel adjustments) and site occupancy, which were incorporated into all contracts with a tender close date of Sept. 19, 2022, or later.
The payment schedule was also changed to monthly instead of at the completion of each phase of the project. Lastly, a dating error was corrected in the Weekly Diesel Fuel Prices document.
“All members benefit from this greatly,” said Allan Barilla of Morsky Construction, a director on SHCA’s board. “It needed to be updated because it hasn’t been updated for 20 years.”
All costs are increasing for members and Barilla knows members are looking for ways to relieve that pressure. To address the issue, Barilla says it was important that the association commit to the work necessary to help members looking for ways to manage their fuel costs in an industry that uses significant amounts of fuel.
Trevor Nabe, a previous board director of SHCA, appreciates that the changes were applied retroactively to existing contracts, (a move that is not often made by government). The existing contracts created a risk for members – the changes rebalanced the risk, which Nabe says is good for members, but also government because it relies on members to provide it services.
Pushing for long-term investment
SHCA closely monitors government spending on infrastructure, such as roads and highways ready to be built. This spending is a reaction to SHCA championing investment in infrastructure that supports trade.
Investment brings business opportunities to Saskatchewan and requires thoughtful planning. This investment would provide a return on spending by improving Canada’s supply chain competitiveness.
Released last year, a report by Canada West Foundation drives this message home. The report, From Shovel Ready to Shovel Worthy: The Path to a National Trade Infrastructure Plan for the Next Generation of Economic Growth, pulled together compelling data to prove the case for long-term investment.
SHCA joined several industry and trade groups across the country and in Saskatchewan and they all shared why that report matters to Canada’s future. Though the WCR&HCA helped initiate the report, a number of associations and organizations and numerous stakeholders were involved in preparing and releasing the study. These stakeholders include Saskatchewan Trade and Export Partnership, Business Council of Canada, Canadian Chamber of Commerce, Canadian Construction Association (CCA) and Export Development Canada.
Relationships with other industry associations play a big part in how these reports are produced and promoted. Reports such as these create the narrative for industries like ours to have a conversation with elected officials and industry leaders at all levels about working together to capitalize investment into trade corridors.
The WCR&HCA has been working with CWF and the CCA to get the report considered by the federal and provincial governments. They want governments to know that shovel-worthy projects – those that make Canada more competitive – belong in a national plan that has a long-term view and is continuously updated. With such a plan, Canada could return to its place in the top ten of global trade infrastructure rankings and could restore the confidence of the country’s trade customers.
While the CWF report proposes a national plan for trade infrastructure, Lipp continues to remind the provincial government of the need to invest in Saskatchewan’s infrastructure and the commitments it has made. The contents of the report will be discussed at meetings with Saskatchewan’s new Minister of Highways, Jeremy Cockrill, as well as the Chief of Staff, Brayden Fox.
If you can’t move it, you can’t sell it; that’s a message that resonates with everyone. Saskatchewan is being asked to produce even more. Two of the world’s largest agricultural producers are at war, potash producers are ramping up production to meet the needs of agricultural producers, oil and gas production is affected by the conflict and Saskatchewan saw greater interest in drilling here after the 2021 April auction for drilling rights bringing in 10 times the revenue generated in the previous year.
The most recent provincial budget again referenced the Saskatchewan government’s 10-year Growth Plan, which came out in late 2019 and covers the decade between 2020 and 2030. One of the goals the plan detailed is to build and upgrade 10,000 kilometres of highways.
During the 2020 construction season, more than 1,030 km of improvements were made. During the second year, more than 1,350 km of improvements were made. (In the 2021 Fall Tender Plan, $157.3 million was budgeted for new highway projects. The 2021 Spring Tender schedule outlined new projects with an estimated value of $85.4 million.)
With nothing new last spring, the provincial government has to average near 1,300 km a year during the remaining six years in the plan to meet its target. Lipp recognizes the industry has the capacity complete the work, but she is putting pressure on the province to ensure that level of investment occurs.
Nabe is pleased the association is pushing for more sustainable and predictable investment in the province’s highways, noting that it is important to remind government that the work of the heavy construction industry supports the transfer of goods through the economy. Our support of other sectors helps strengthen the overall economy.
Inconsistent and uncertain funding burdens the industry, which Lipp is bringing to the government’s attention. Inconsistency makes it difficult for members to prepare for the future when, from one year to the next, the amount of capital investment can swing up and down by tens of millions of dollars. Unreliable investment expectations also make decisions about investing in equipment difficult and affects employers’ ability to create jobs and retain employees in the industry.
Explaining and encouraging employment
Finding employees was a challenge in 2022, and Lipp worked to help members employ workers they needed for their businesses. For example, she has been working with the Ukrainian Canadian Congress, Employer Services and others connecting Ukrainian immigrants to companies for employment opportunities.
SHCA has worked with Andrii Stakhov, employment liaison with the Saskatchewan Provincial Council of the Ukrainian Canadian Congress (the Council). The Council has an employment form on its website where employers can post jobs to support those displaced by the war in Ukraine. Stakhov reviews the applications and identifies what kind of employment is most suitable for each candidate, depending on their backgrounds and credentials, including their ability to speak English.
During 2022, it also became necessary to explain more about heavy construction employment to the City of Regina, when a motion about local procurement and economic recovery came up for debate by Regina City Council. In that motion was a call for a fair wage policy for all construction, maintenance and service contracts.
SHCA took the position that a fair wage policy should not be implemented at this time. Through a submission to council, Lipp explained competition for labour was extremely tight, so employers recognized they needed to pay their people well.
Second, contracts awarded by the City of Regina are usually with a general contractor (GC), who enlist sub-contractors. A GC would have difficulty providing wage information for employees of sub-trades.
Third, a mandatory apprenticeship requirement could not be applied to the industry because heavy civil construction does not have apprenticeship or journeyman designations for occupations outside of the heavy equipment mechanic positions.
Lastly, she explained how employees in the industry are compensated, which is based on skill, training, experience and the type of work they are undertaking, and that these factors are also weighed against what the market will bear.
Council voted on the motion that would bring about a fair wage policy on Aug. 17, 2022. The vote was split 5-5, meaning it was defeated. Mayor Sandra Masters was quoted in the media: “the information that was shared with council is that we are providing a solution for a problem that may not quite exist right now.”
Backing industry’s responsibility for safety
Year after year, safety continues to be important to the members of SHCA. That dedication is clear to Thomas Archer, CEO of the Heavy Construction Safety Association of Saskatchewan (HCSAS).
HCSAS has a strong connection to industry because of how the association is structured. It, like all the safety associations in Saskatchewan, is a not-for-profit organization, governed by a board comprised of workers and employers who are in Class R, known as Road Construction.
Board members approve HCSAS’ strategic plan and budget, as well as associated grant requests. They oversee operational activities, evaluate the effectiveness of the association’s programs and initiatives and are 100 per cent accountable to their association’s membership.
HCSAS is funded through premiums paid by those in Class R. The premiums are paid to the Workers’ Compensation Board (WCB) and are used to form a grant provided by the WCB to the HCSAS.
A change proposed by the WCB in 2021 would have blurred the lines between its role and the role of the safety association’s board. Unfortunately, industry was not provided an opportunity to consult or collaborate on it.
The change was to the funding agreement and reporting requirements between safety associations and the WCB. It would expand the WCB’s control and management of the safety associations’ operating budgets, strategic plans and operational workplans. The new agreement would make safety associations accountable to the WCB – not the industries funding them.
“That would essentially put all control of the safety associations in the hands of the WCB when it was supposed to only administer the funding,” said Barilla.
Barilla encourages members to pay attention to this ongoing situation to understand the implications of it going unresolved.
Lipp has been working with safety associations in Saskatchewan to address this concern, as industry is most qualified to identify current hazards in workplaces that could lead to injuries and to determine best practices to prevent injuries.
Workplaces are supported by safety associations. These associations develop and deliver practical and relevant training for industry, as well as provide advice and support. Safety associations engage members of industry to develop their training and services.
A member of SHCA’s board was able to convince the minister responsible for the WCB, Don Morgan, to agree to an independent mediator to intervene. There will continue to be meetings between the safety associations, SHCA and the WCB with the mediator to resolve this issue.
Additionally, the safety associations were able to negotiate their most current funding agreements. Meanwhile, SHCA keeps a close eye on safety training being developed and delivered in the province to determine if it is relevant to industry’s needs.
Strengthening the industry
The work done to build and maintain relationships can help members feel confident in the strength of the industry and their place in it. It takes a stream of meetings with officials and representatives to work through the issues presented in this year’s review.
SHCA also works to nurture partnerships and stay in close contact with members. Events held each year – such as the annual SHCA convention and the MLA reception – allow members to connect with one another as well as those in office to make themselves, their concerns and their successes known.
Taking part in these types of events and having conversations with ministers and MLAs who attend them is an opportunity that Barilla believes should not be taken for granted. He reminds members how fortunate they are to be in a province with a government whose ministers are willing to meet and hear from industry.
“You have to realize the access we have here [to] all ministers of the provincial government compared to other provinces, like Manitoba and B.C., where that is never going to happen,” said Barilla.
On a daily basis, SHCA staff members assist association members with claims, serve as Commissioners of Oath to sign documents for them, act as retailers for Standard Construction Documents for the Canadian Construction Documents Committee (CDCC), participate in debrief sessions with government and join them in other meetings to signal the strength of the industry.
All of this work helps to strengthen the heavy construction industry, which serves an important role in Saskatchewan’s economy.