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  • Why aren't we building more in Saskatchewan?

    Note... the opinions expressed in this blog are those of the author and do not necessarily reflect the opinions of the SCA.

    May 3, 2018

    Why aren't we building more in

    Saskatchewan?


    There’s a question that’s been haunting me recently. I don’t have an answer. Not a good one anyway.
     
    But for the past year we’ve been trying to figure out why Saskatchewan is not seeing greater private sector investment and construction. Without improved private sector investment, the construction sector will remain stuck in first gear. The solution is to get people spending and building again.
     
    Last year’s provincial budget didn’t help. Increased PST, including expansion to previously exempt construction services and restaurant meals, drove up costs for companies and consumers at the expense of discretionary spending and confidence. It was an unhelpful policy initiated at the wrong time. Nonetheless, the provincial economy muddled along, experiencing mild growth by year’s end.
     
    Additionally, global commodity prices have been hard on Saskatchewan in recent years. This led many private companies to stockpile both inventory and capital while waiting for more favourable demand and price curves for their products. As stockpiles grew, production requirements slowed and layoffs ensued. Positive economic indicators aside, resource concerns have a broad and problematic impact on consumer and business confidence, driving more cautious spending and investment practices.
     
    Challenging global and national political environments pose another set of serious problems for Saskatchewan’s international trade based resource economy. Our neighbour to the south is prone to inconsistency and focused on domestic economic stimulus, even at the expense of close trading partners. Meanwhile, our provincial governments are squabbling over petty politics. Combined, it makes Canada a tough place to consider for major, long-term infrastructure investment. For Saskatchewan, this creates unnecessary uncertainty about our ability to deliver products – oil, potash, uranium, crops – to market in a timely manner. Any perceived inability to transport product is a recipe for trade disaster. Investors must have confidence that their product can reach markets.
     
    So, the last year-and-a-half has definitely seen our economy encounter some headwinds that have slowed any potential recovery. As construction is at the front end of translating investment into productivity, our companies are highly sensitive to the changing winds of consumer and investor confidence.
     
    This year, all economic indicators point to a good year for growth in Saskatchewan. All estimates say we should be second amongst provinces in growth this year, and begin to see a moderate economic rebound. Yet when I talk to our member companies on the ground, the message is different. We continually hear that things are slow. Very slow.
     
    Whenever we’re out talking to groups in the province we remind them that now is a perfect time to build in Saskatchewan. Pricing is competitive, labour is abundant, and project scheduling is efficient. If you’ve got any appetite to invest in Saskatchewan over the next decade, you should be building now. People intuitively understand this message, but are still reluctant to commit to spending. What I can’t figure out is why the uncertainty exists.
     
    I’m hopeful that the last provincial budget will help. It didn’t bring much good news, but it stayed away from any more bad news, and that was an important step. Essentially, the government chose to stay out of the way of private sector investors while they recover their confidence.
     
    I do worry that the interprovincial squabbles and the slow-moving pace of our federal government may be contributing to this uncertainty among investors. I also worry that we, as a whole in Saskatchewan, may not be doing enough to promote the advantages and opportunities that are here for investors.
     
    This is something I’d like to see the province take a more vocal and leading role in. How do we attract investment into Saskatchewan while supporting reinvestment for those that are already here? How do we tell the Saskatchewan story more effectively and make sure that we’re delivering the message to a ready audience?
     
    Saskatchewan should see growth this year and that should mean some recovery for a construction industry that has been hard hit by slow years. I hate relying on “shoulds” to get us through though. I hope the government and private sector associations (the SCA and others), will take a more active role in encouraging investors to build in Saskatchewan and to build now.


    Mark Cooper, MBA, PMP

    President and CEO
    Saskatchewan Construction Association

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