Derrick Penner
Sun
Construction in the industrial, commercial and institutional sectors will pack an ever bigger economic wallop in the coming years totalling $17.3 billion in 2008, up from $11.4 billion in 2005, according to Credit Union Central B.C.
Credit Union Central economist David Hobden said the boom is being driven by factors including the province’s strong economic growth, consumer spending and disposable income growth.
And while 25 per cent of the estimated spending will be on public-sector infrastructure, 75 per cent will come out of private-sector pockets for development of B.C.’s oil-and-gas sector, pipeline construction and independent power projects.
“Government spending was growing a little faster [than private sector spending] over the past three years,” Hobden said. “The need for more commercial and industrial buildings hadn’t really shown up yet.
“Now, we’re at a point where vacancies in the business sector is pretty well used up, and that’s the real growth emphasis now.”
The Credit Union Central forecast is based on measures of gross-domestic-product growth, which is expected to remain strong, and lists of possible projects, such as the provincial government’s major projects inventory, which now stands at $110 billion worth of potential work over the next several years.
Jock Finlayson, executive vice-president of the Business Council of B.C., said the Credit Union Central forecast is on fairly solid ground, based on projects that are underway, such as Olympic venues and the Canada Line rapid transit. Many other projects, from ski resorts and hotels to mines, have already been committed.
“[Construction] is the biggest growth engine in the B.C. economy at the moment, and that’ll certainly continue probably through the rest of the decade,” Finlayson said. James Brander, an economics professor in the Sauder School of Business at the
University of B.C., said construction, traditionally, is not a stable component of the economy, because “it can go south in a hurry.”
Brander said that, if energy prices were to suddenly drop or the economy were to turn sharply hurting commodity prices, then many of B.C.’s big projects would likely be delayed or shelved.
Currently, however, energy and commodities continue to boom and “my best guess is that the chance of a real downturn in the next two or three years is pretty low.”
Finlayson said the bigger issue is whether the construction sector will have enough capacity and enough workers to build projects on time and on budget.
BUILDING BOOM
Non-residential construction, already at a high level, is set to soar to an even higher one, according to Credit Union Central B.C.
Spending
2005 $11.4 billon
2006 $13 billion*
2007 $15.4 billion**
2008 $17.3 billion**
* Estimate
** Forecast
© The Vancouver Sun 2006
