national painting contractors profile 0
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U N D E R S T A N D I N G
C A P A C I T Y
NatioNalPainting Contractors Profile
CONTRACTOR
About the CSC
The Construction Sector Council (CSC) is a national industry-led organization committed to the development of a highly skilled workforce that will support the future needs of Canada’s construction industry.
This document is available in both official languages and can be obtained electronically at www.csc-ca.org.
For more information, contact
The Construction Sector CouncilPhone: 613-569-5552Fax: 613-569-1220E-mail: [email protected]
(October 2011)
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CONTeNTs1. iNtRoDUCtioN ..............................................................................2
2. PRofile highlights ....................................................................3
2.1 general profile ................................................................................................. 3
2.2 capacity profile ................................................................................................ 3
2.2.1 concentration of sales and employment ................................................... 3
2.2.2 specialization, scope and mobility ........................................................... 4
2.2.3 factors impacting bidding and building .................................................... 4
2.2.4 structural change .................................................................................. 4
2.2.5 growth plans ........................................................................................ 5
2.2.6 analyzing capacity ................................................................................. 5
3. aNalysis of CoNtRaCtoR CaPaCity ............................................7
3.1 general profile ................................................................................................. 7
3.1.1 scope of work ....................................................................................... 9
3.1.2 credit ratings ........................................................................................ 9
3.2 capacity profile .............................................................................................. 10
3.2.1 concentration of sales and employment ................................................. 10
3.2.2 specialization, scope and mobility ......................................................... 10
3.2.3 factors impacting bidding and building .................................................. 12
3.2.4 structural change ................................................................................ 16
3.2.5 growth plans ...................................................................................... 16
4. CoNClUsioNs aND imPliCatioNs foR bUilDiNg PaiNtiNg CoNtRaCtoR CaPaCity ...............................18
4.1 capacity additions and the available workforce .................................................. 18
4.2 other factors impacting capacity ...................................................................... 21
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1. INTRODUCTION
The Construction Sector Council recently conducted research to develop an approach for describing and assessing the capacity of contractors to respond to changes in the industry (see the document Understanding Contractor Capacity, available on the Construction Sector Council’s (CSC) website, www.csc-ca.org). With this project, a new tool has been developed to help owners, contractors, labour, government, and education and training institutions plan for the addition of new capacity. Five contractor sectors and regions were chosen for the initial round of capacity profiles:
•Alberta mechanical contractors
•Manitoba home builders
•National painting contractors
•Ontario electrical contractors
•Ontario general contractors
The other profiles are available on the CSC’s website, www.csc-ca.org.
Each profile is divided into three parts:
General profile – describes the population of busi-nesses in the sector. InfoUSA and related statistics are the main data sources for the general profile.
CSC contractor capacity profile – reports on the survey/interview results for a group of businesses in the sector. While the businesses in each profile do not represent a statistically significant sample, the profiles report a strong consistency around many detailed business practices and features impacting expansion.
Analyzing capacity – provides a preliminary assessment of the sector’s capacity for adapting to future conditions. This section – tied to the forecast scenario developed in the CSC’s 2011 Construction Looking Forward reports – covers detailed projections of construction activity in each sector and tracks labour markets for key occupations. The 2011 forecast scenarios set up overall rates of growth needed to meet expected industry expansion as well as describing shifts in activity across markets and regions. Cyclical and structural features of the scenarios can be related back to the contractor profiles and focus atten-tion on groups of contractors or business features that will be important as the industry adapts in the future. This third section in each profile is a preliminary view only. Results are intended to suggest to the reader how the profiles can be used to assess contractor capacity in the context of the scenarios.
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2.1 geNeRal PRofile
•There are between 4,000 and 5,000 establishments working as painting contractors in Canada.
• Sales and employment are widely spread across many small businesses.
•Total national revenues for painting contractors are more than $2.2 billion.
|| More than 3,500 (90%) small owner/operators, with sales of less than $1 million, supply half the market.
|| More than 400 (10%) mid-sized and larger firms have sales more than $1 million; this smaller group supplies the other half of sales (more than $1 billion).
•Painting contractor establishments employ between 15,000 and 30,000 people.
|| This represents two-thirds to three-quarters of all painters and decorators working in Canada.
|| One-quarter to one-third of Canada’s painters and decorators work for businesses other than painting contractors.
|| Small owner/operators, employing between one and four people, employ half of the workforce.
|| The larger establishments employ from five to more than 100 people.
•One-third of the establishments report “painting contractor” as their primary and only line of business.
|| The remaining 2,600 establishments report secondary businesses in building remodel-ling and repair, home improvement, interior decoration, sandblasting and drywall contractors, etc.
|| Many other businesses in these industries do painting, but do not list it as their primary business.
•Credit ratings rise dramatically from the smaller to the larger establishments with more than 400 employees.
•The general profile suggests that businesses out-side of painting contractors control an important share of painting and decorating work.
2.2 CaPaCity PRofile
2.2.1 Concentration of sales and employment
• Seventy painting contractors in Canada were surveyed and interviewed.
|| Seventy-eight percent (78%) of the sample is non-unionized.
•The CSC sample includes slightly larger businesses than the general profile, with 66% of respon-dents reporting sales of less than $1 million and 33% with sales more than $1 million.
• Seventy percent (70%) of the firms in the sample employ up to nine workers.
2 . PROFIlE hIGhlIGhTS
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2.2.2 Specialization, scope and mobility
•Eighty percent (80%) of the sample operates only as painting contractors, with 20% having secondary businesses.
•Two-thirds of respondents work in or around their city.
•Responding firms operate in multiple markets.
|| Commercial and institutional are the most frequently mentioned types of firms followed by low-rise residential and industrial.
• Firms report that the majority of their work-force is able to work in all markets served.
2.2.3 Factors impacting bidding and building
•half of the contractors in the sample do not bid for work.
•Two factors were consistently cited as impacting bids:
|| the availability of skilled labour, and
|| project specifications.
•Two factors were consistently cited as factors not impacting bids:
|| union and non-union restrictions, and
|| the availability of supervisors, estimators and project managers.
•Pre-qualifications requirements and restricted access to bids impacted a majority of contractors.
•Credit-related factors impacted a majority of contractors, but bonding was more often not a factor.
•Comments about bidding focused on:
|| recruiting challenges, including retirements; and
|| a preference for limited and selective bids in situations where tenders are invited by known general contractors and/or owners.
•The most cited factors impacting building are:
|| the availability of skilled labour, and
|| material and equipment costs, and availability of both.
•The following factors were selected by the majority of contractors as not impacting building:
|| government regulations,
|| availability of supervisors and project managers, and
|| availability or cost of specialized equipment.
•Changes in the environment related to business cycles, regulations and technology affect the factors impacting bidding and building. For exam-ple, leadership in Energy and Environmental Design (lEED) and other environmental prefer-ences introduced water-based and other products that are more difficult to apply.
2.2.4 Structural change
•Painting contractors are divided on the idea that structural change is altering the traditional boundaries between designers, general contrac-tors, trade contractors and specialists, etc.
|| Institutional, commercial and industrial (ICI) contractors report a change and note that:
– work is shifting to specialized sub-contractors;
– painting contractors are vulnerable to scheduling problems, and further specialization adds to these problems;
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– there is added interest and pressure for collaboration, mergers and acquisitions, and pressure and opportunities for other trades to do painting work; and
– pre-finished products are shifting work away from painting contractors.
•Where contractors see structural change, they attribute success to:
|| strong finances,
|| depth of human resources,
|| strong relationships/partners, and
|| facility with new technology, including new equipment, materials and software.
2.2.5 Growth plans
•When asked, “Does your company want or plan to grow?”
|| over one-third of firms answered “no,” and
|| half of the small firms (sales of less than $1 million) said “no.”
•Comments on growth plans included:
|| “Doesn’t want the company to get too big. Wants workers who enjoy what they do and be proud of their work.”
|| “In anticipation of my own retirement, I am already cutting back.”
|| “Maintain partnerships with good general contractors.”
•Actions that would add to their capacity in the short term include:
|| continuing to deliver service and quality;
|| finding ways to lower costs;
|| moving into new markets, for example,
– floor covering, and
– expanding scope of work beyond ICI; and
|| always have something new for the customer.
•long-term actions include:
|| succession planning,
|| retaining employees, and
|| purchasing equipment and software.
2.2.6 Analyzing capacity
The CSC’s forecast scenarios for 2011 to 2019 measure the needed expansion of capacity in the construction sector. The following are some of the market highlights for the coming years as they relate to Canada’s painting contractors.
•Contractors will have opportunities to add capacity.
|| Markets will grow by 17% from their 2008 peak to 2019.
|| New residential construction is the weakest market (up 7%) with residential renovation and maintenance up 13%.
|| New non-residential construction will grow by 25% and non-residential maintenance by 18%.
•Construction Looking Forward considers economic and demographic factors and related labour market conditions. The availability of painters and decorators will be a limited concern in most markets early in the scenario.
|| Weak markets for new housing limit labour requirements.
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|| Retirements will restrict labour availability later in the scenario.
|| Recruiting experienced and fully qualified painters and decorators will be more difficult.
•Painting contractors are not the only source of added capacity.
|| Painting capacity will be added by other contractors, specialists and firms outside construction.
|| There is potential for pre-fabricated products in some markets.
|| There is potential for some small and most large painting contractors to add capacity. Their attention is focused on:
– relationships with existing general contractors and owners, and
– access to skilled, qualified painters and decorators.
•Growth will require some contractors to work outside traditional boundaries by:
|| submitting bids for work,
|| using new technologies and materials, and
|| moving people across markets and regions.
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Contractors included in this profile are special trade contractors in painting and wall cover-ing. The Standard Industrial Classification (SIC)1 describes these businesses as follows:
“Special trade contractors (primarily engaged in painting and paper hanging) may work on subcon-tract from the general contractor, performing only part of the work covered by the general contract, or they may work directly for the owner. Special trade contractors for the most part perform their work at the site of construction, although they also may have shops where they perform work incidental to the job site. This group includes:
• bridge painting – contractors
• electrostatic painting on site (including lockers and fixtures)
• house painting – contractors
• painting of buildings and other structures, except roofs
• paper hanging – contractors
• ship painting – contractors
• traffic lane painting – contractors
•whitewashing – contractors”
The general profile provides the high-level description of all national establishments identified as painting contractors. The painting contractors capacity profile draws on surveys and interviews conducted by the CSC for this report. Finally, the findings are assessed in the context of the CSC fore-cast scenarios for the markets and employment.
3.1 geNeRal PRofile
Between 4,000 and 5,000 establishments across Canada identify themselves as painting contrac-tors.2,3 The primary source of data for the general profile, InfoUSA, shows 4,000 painting contractors in Canada with 90% of these in small establishments with sales of less than $1 million. Alternative sources measuring the total popula-tion of painting contractors report just over 5,000 establishments with a higher proportion of mid-sized firms.4 Estimates derived from InfoUSA suggest that total sales for the establish-ments total more than $2.1 billion.5
Figure 1 divides the market into two groups. The first group includes more than 3,500 estab-lishments, each with less than $1 million in sales. The second group consists of more than 400 firms with sales greater than $1 million.
1 U.S. Department of labor. Standard Industrial Classification. Retrieved from http://www.osha.gov/pls/imis/sic_manual.display?id=12&tab=group.
2 Results in this section of the report cover all the national painting contractors reported in the InfoUSA database.3 Establishments are smaller units of business than corporations. The SIC code offers this explanation: “If a company has more than
one relatively fixed place of business from which it undertakes or manages construction activities and for which separate data on the number of employees, payroll, receipts, and other establishment-type records are maintained, each such place of business is considered a separate construction establishment.” See United States Department of labor, Standard Industrial Classification.
4 These alternative sources include the Statistics Canada Business Register (for establishments reporting employment) and 411. ca – Yellow Pages listings for painting contractors in Canada.
5 These calculations can be compared with data on total Canadian paint sales of $3 billion reported by the Canadian Paint and Coating Association. Just under one-third of this total is allocated to the automotive sector; work not connected to contractors.
3 . ANAlYSIS OF CONTRACTOR CAPACITY
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The smaller firms in the sample all employ nine or fewer people and work in a local community. The larger firms have average sales close to $2.5 million and employ an average of as many as 20 people. Most of the workforce in these businesses works as painters, with some devoted to management and other office functions.
The CSC estimates that painting contractors employ more than 30,000 workers, or between four and seven workers in each establishment. These estimates can be combined with other
findings to identify employers for 46,000 painters and decorators employed in Canada. Figure 2 uses Statistics Canada’s 2006 Census to allocate the workforce. These estimates suggest that about one-third of painting work done in Canada is outside the painting contractor community. Work done by other businesses is divided among firms outside construction altogether (e.g., maintenance businesses and in-house work), construction busi-nesses in home building and renovation, and other trade contractors (e.g., drywall contractors and other interior finishing businesses).
Source: InfoUSA list of Canadian construction firms, 2009
FIGURE 1
DISTRIBUTION OF TOTAL SALES BY ESTABLISHMENT SIZE
# of establishments
Bill
ions
Less than$1 million
Greater than$1 million
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
� 3,570 � 424
n=46,235 *construction sector council estimate
Sources: Statistics Canada, 2006 Census, Construction Sector Council estimates
FIGURE 2
EMPLOYMENT OF PAINTERS AND DECORATORS
14%
11%
10%
65%
� Outside construction
� Painting contractors*
� Other trade contractors*
� Other construction
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3.1.1 Scope of work
This distribution of painting work across various industries is also reflected in the secondary businesses reported by the painting contractors themselves. Just over 800 painting contractors included in the general profile report work in a secondary market. Figure 3 reports the top 10 areas.
3.1.2 Credit ratings
Painting contractors are labour-intensive busi-nesses with capital requirements related to equipment, materials and working capital. These requirements rise as firms expand and add new capacity. One measure of a contractor’s capacity to expand is available in the breakdown of credit ratings. These credit ratings, ranging from good to excellent, are generated by InfoUSA.6 Clearly, firm size is a key determinant of credit risk in the InfoUSA measure as only 16% of the smaller firms have an “excellent” or “very good” rating while 91% of the largest firms have an “excellent” or “very good” rating (Figure 4, page 10).
FIGURE 3
SECONDARY SCOPE OF WORK, TOP 10 AREAS
25%
13%
13%
13%
7%
5% 3% 2% 2%
17%
� 1. Remodeling and repairing building contractors
� 2. Home improvements
� 3. General contractors
� 4. Interior decorators
� 5. Sandblasting
� 6. Drywall contractors
� 7. Pointing – brick, stone, etc.
� 8. Parking area/lots maintenance and marking
� 9. Paint – retail
� 10. Floor laying refinishing and resurfacing
n=820
Source: InfoUSA list of Canadian construction firms, 2009
6 InfoUSA describes this credit ranking as based on a combination of firm characteristics, and notes that the rating is used by many clients in specific applications. Clients who subscribe to InfoUSA’s credit rating ranking include leasing services, insur-ance companies, collection agencies and banks, among others.
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3.2 CaPaCity PRofile
3.2.1 Concentration of sales and employment
To add detail to the general profile, the CSC interviewed and surveyed 70 national painting contractors.7 Figure 5 reports the distribution of the responding firms by size, finding the same dominant pattern of more than two-thirds of contractor businesses with sales of less than $1 million.
Figure 6 shows the division of the sample by employ-ment size, duplicating the findings in the general profile and estimated in the national population. The smaller firms employ nine or fewer people.
3.2.2 Specialization, scope and mobility
The geographic range of each establishment is another measure of capacity. Figure 7 (page 12)shows the scope of businesses in the sample. The smaller firms in the sample are limited in their geographic scope of work to the local community, while the larger firms work across Canada and in the United States. This pattern reinforces the dominant role of small local firms.
Figure 8 (page 13) shows the range of work for painting contractors across markets. Respondents were asked to identify their markets and to indi-cate whether each was a primary or secondary focus. Most contractors in the sample work
FIGURE 4
DISTRIBUTION OF FIRMS BY CREDIT RATINGS
4%4%4%
68%
16% 16% 0%
88%
� Excellent
� Very good
� Good
� Unknown
Small establishments*Sales less than $1 million
Large establishments**Sales greater than $1 million
*n=3,570 **n=424
Source: InfoUSA list of Canadian construction firms, 2009
7 Seventy firms responding to interviews and the survey indicated “painting contractor” as best describing their scope of business.
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in several markets. The most common focus of business was commercial and institutional followed by residential markets, including low- and high-rise housing, as well as renovation and maintenance. Findings point to a roughly equal division between residential and non-residential and a broad diversification across many markets.
The capacity of the firms to work in different markets depends on the mobility of their resources. The CSC survey/interview process asked about the mobility of the workforce across markets.
Painting contractors serving many markets reported that virtually all of their workforce is either “somewhat mobile” or “mobile” across all their markets. Trades and occupations working on the sites were slightly less mobile (Figure 9, page 13).
This finding seems to broaden the capacity of the painting contractors, with the wide mobility of their workforce allowing them to adapt to shifting market conditions.
n=66
Source: Construction Sector Council Survey of Canadian Contractors, 2010
FIGURE 5
DISTRIBUTION OF FIRMS BY REVENUE
3%1%
67%
14%
7%
8%
� Under $1 million
� $1 – $2.5 million
� $2.6 – $4.9 million
� $5 – $9.9 million
� $10 – $19.9 million
� Over $50 million
n=54
Source: Construction Sector Council Survey of Canadian Contractors, 2010
FIGURE 6
DISTRIBUTION OF FIRMS BY TOTAL EMPLOYEES
6% 2%
70%
18%
4%
� 1–9
� 10–19
� 20–49
� 50–99
� 100–249
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Seventy-eight percent (78%) of the national painting contractors in the CSC sample are not unionized.
3.2.3 Factors impacting bidding and building
Responding painting contractors were asked to identify factors impacting their ability to bid and build. Both the survey and the interview results were highlighted by a positive and confident atti-tude, with contractors reporting their strengths and their capacity to carry out work. This positive
attitude included identifying relatively few factors that would limit their capacity to bid and build and an emphasis on many factors that do not impact businesses because the firm has managed these areas well. Respondents sometimes noted that their competitors may face a disadvantage in these areas.
half of the responding firms reported that they do not bid for work.
Firms were asked to identify the factors that were most likely to impact their decision to bid on work. Each potential factor was ranked according to four choices:
• regular and important impact
• likely to impact
• not likely to impact
• no impact
Figure 10 (page 14) lists the factors impacting bidding mentioned by respondents. Factors are ranked in terms of the frequency with which they were mentioned. Responses were grouped into two broad categories combining “not likely” and “no impact” and contrasting this to “regular and important” and “likely impact.” The most often mentioned factor was the availability of skilled trades and this was mentioned more than 26 times by the 35 respondents.
These rankings reveal both positive and nega-tive implications. Many contractors noted that these factors can be a key competitive advantage for firms who are experienced, secure or strong in the factors noted. Alternatively, respondents might regard these factors as negative where they have limited competitive advantages.
n=70
Source: Construction Sector Council Survey of Canadian Contractors, 2010
FIGURE 7
DISTRIBUTION OF FIRMS BY GEOGRAPHIC OPERATIONS
4%
66%
20%
10%
� Home city and commuting area
� Home city and other parts of the province
� Multiple provinces
� United States and rest of the world
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FIGURE 8
TOP MARKETS SERVED
Institutional and commercial
Pipelines (large diameter)
Industrial maintenance
Institutional maintenance
Residential, renovation and maintenance
Low-rise (single-family) residential
Industrial
Commercial building services
Other engineering construction
High-rise (multi-family) residential
All civil engineering
0 5 10 15 20 25 30 35 40 45
Number
FIGURE 9
LABOUR MOBILITY REPORTED BY TYPE OF WORK
Engineering, project management, estimating, design
Site supervision
Senior management
Site trades and occupations
� Mobile � Somewhat Mobile
0% 20% 40% 60% 80% 100%
n=47
Source: Construction Sector Council Survey of Canadian Contractors, 2010
n=50
Source: Construction Sector Council Survey of Canadian Contractors, 2010
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A few more noteworthy points include:
•Two factors were consistently cited as factors impacting bids:
|| availability of skilled labour, and
|| project specifications.
•Two factors were consistently cited as factors not impacting bids:
|| union and non-union restrictions, and
|| availability of supervisors, estimators and project managers.
•Pre-qualifications requirements and restricted access to bids impacted a majority of contrac-tors submitting bids.
•Credit-related factors impacted a majority of contractors, but bonding was more often not a factor.
•Pre-qualifications requirements and restricting bidding to specific contractors/owners ranked second.
•Comments on pre-qualification and bid restric-tions focused on:
|| a preference for limited and selective bids in situations where tenders are invited by known general contractors and/or owners: “Pre-qualification is an advantage as it restricts the number of competitors;”
n=35
Source: Construction Sector Council Survey of Canadian Contractors, 2010
FIGURE 10
FACTORS IMPACTING CAPACITY TO BID
Availability of skilled trades
Pre-qualification requirements
Materials, suppliesOnly bids from specific companies
are accepted by ownersCredit to fund construction
Availability of qualified supervisors
Bonding, other insurance required in bidding
Qualified estimators
Union or non-union restrictions
Availability of senior management time
Policies and expectations of lenders
Availability of qualified project managers
Specialized equipment
Availability of qualified designers or engineers
0 5 10 15 20 25 30
� Regular andimportant impact or likelyto impact
� No impact ornot likely toimpact
Number of mentions
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FIGURE 11
FACTORS IMPACTING CAPACITY TO BUILD
Availability of skilled trades
Price variability for key materials, supplies
Project specifications
Credit to fund construction
Government regulations (i.e., building permits)
Availability of supervisors
Time available from designers or engineers
Bonding, other insurance required in bidding
Policies and expectations of lenders
Availability or cost of specialized equipment
Availability of project managers
Expertise available from designers or engineers
Access to specialized partners
Available land
0 10 20 30 40 50 60
Number of mentions
� Regular andimportant impact orlikely to impact
� No impact ornot likely toimpact
n=58
Source: Construction Sector Council Survey of Canadian Contractors, 2010
|| “if there are more than five other bidders the company will not bid;”
|| a preference for general contractors with good payment terms and records; and,
|| an aversion to poorly written specifications.
•Other comments focused on scheduling, noting that painters are vulnerable to delays and the impact on planning.
Respondents were asked to describe the impact of a similar list of factors on building (Figure 11). Some different factors emerge here as conditions shift to the job site.
Respondents were divided about the impact of many factors on the site. The most cited factors impacting building include:
• the availability of skilled labour, and
•material and equipment costs and the availability of both.
Several factors were selected by the majority of contractors as not impacting building:
• government regulations,
• availability of supervisors and project managers, and
• availability or cost of specialized equipment.
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Respondents were clearer about factors that do not impact work on the site. Painting contractors do not share the concerns of other contractors around working with designers and other special-ized partners. Similarly, there are fewer concerns about the availability of the more senior occupa-tions such as managers, engineers and supervisors. Many of the issues mentioned under bidding came up here as well. Scheduling was a common topic, with concerns about general contractors manag-ing the timing of trades, site cleaning, weather and pressure on painters to make up lost time.
Respondents were asked to comment on the impact of changing business and other conditions on these factors. Several noted weak demand in the private sector and associated downward pressure on prices. Others noted the impact of changing technology adding to the need for skilled workers.
3.2.4 Structural change
Respondents were asked if structural change in the industry was altering the division of work among owners, designers, and general and trade contractors. Only a few contactors responded to this question. Several structural changes were identified as shifting work among players. One comment focused on specialization and related scheduling problems. Another noted an increase in work lost to pre-finished products and painting work moved in-house. Just one comment referred to design-build type projects and noted the importance of partnering with known, successful companies in this situation.
When asked what characteristics best prepare a firm for success in this environment of structural change, respondents commented:
• the key role of “competent” and “high quality” people,
• good relations with banks and bonding companies, and
• access to and experience with partnering and collaborating with other firms in the design-build chain.
3.2.5 Growth plans
Finally, the respondents were asked about their growth plans and strategies (Figure 12). To start, each firm was asked the question, “Does your company want or plan to grow?” Over the entire sample of 70 businesses, 38% answered “no.” This proportion rises to more than 50% for the smaller firms (sales less than $1 million).
When asked about their plans to grow, respon-dents mentioned the following initiatives:
• hiring/finding more qualified employees,
• bidding/finding more work,
• succession planning,
• investing in new technology, and
• advertising and more publicity.
These initiatives were identified with both short- and long-term plans.
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Interviews gathered more detailed comments. Specifically, firms with no interest in growing offered their thoughts. One contractor noted that he “doesn’t want the firm to get too big. Wants the workers to enjoy what they do and to be proud of their work.” Another noted that he is already cutting back in anticipation of his retirement.
Firms anticipating growth mentioned succes-sion planning that focuses on specific senior personnel additions such as new partners, adding family members in management, and hiring sales managers. Finally, firms mentioned relationships with clients and general contractors: “always have something new for the clients and keep up with technology” and “maintaining partnerships with the good general contractors.”
It is possible that growth will not be concentrated in the contractor community. Insights offered during the interviews referred to competition and chang-ing conditions that are shifting painting and covering work away from the contractors. The potential loss of work or the tendency for new work to be done outside the contractor community can be attributed to several distinct factors. First, the profiles identi-fied maintenance and related businesses outside of construction that did painting work. Second, employers referred to painting being done by other trades or specialists with more limited training and experience. Third, respondents mentioned the growing use of pre-fabricated or panelized products where painting is done off site as part of the manu-facturing process. Growth may be concentrated in any of these alternative supplier groups.
*n=44 **n=25
Source: Construction Sector Council Survey of Canadian Contractors, 2010
FIGURE 12
PLANS TO GROW
16%0%
46%
2%
52%
84%
Firms with revenue less than $1 million*
Firms with revenue greater than $1 million**
� No
� Yes
� Not sure
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The themes noted in the painting contractors capacity profile can be considered through the lens of the CSC’s 2011 forecast scenarios. The detailed construction and maintenance market projections provided in those scenarios set out the extent of the needed expansion to painting and related services. Further, the focus on skilled trades and labour markets is addressed in labour market assessments for painters and decorators, supervi-sors and other occupations. The scenarios also cover other factors impacting business prospects.
The national scenario indicates that the market for painting and related services will grow 17% by 2019 from the 2008 peak.8 Opportunities will be shifting across several markets.
•Ontario is the strongest construction market in Canada across the decade.
•National gains in new non-residential construction (25%) will be just ahead of maintenance (18%).
•New residential construction (7%) is among the weaker markets with renovations and residential maintenance (up 13%) stronger.
4.1 CaPaCity aDDitioNs aND the available woRkfoRCe
Additions to capacity at the anticipated pace are not unprecedented. But the availability of both human resources and capital will be limited by new circumstances that will hinder contractors.
Demographics will limit the availability of skilled trades, supervisors and other key personnel through:
• retirements
|| reduce the workforce of experienced and skilled painters
|| reduce the pool of experienced supervisors, estimators, managers
|| reduce the pool of equity capital
|| focus attention on succession planning in family business
|| reduce industry appetite for risk
• limited pool of youth, which will reduce the ranks of junior Canadian managers
• new managers who have less incentive to seek and invest in equity
The CSC forecast scenario tracks markets for painters and decorators, and for supervisors, estimators and managers. Tables 1 and 2 summa-rize findings and labour market assessments for key occupations.
4 . CONClUSIONS AND IMPlICATIONS FOR BUIlDING PAINTING CONTRACTOR CAPACITY
8 Construction Sector Council. 2011. Construction Looking Forward. Retrieved from http://www.csc-ca.org/en/products/national-summary-2011-report-and-highlights. The measure used here is the projected growth in national employment for painters and decorators from 2010 to 2019.
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Market rankings
Workers meeting employer qualifications are available in local markets to meet an increase in demand at the current offered rate of compensation and other current working conditions. excess supply is apparent and there is a risk of losing workers to other markets.
Workers meeting employer qualifications are available in local or adjacent markets to meet an increase in demand at the current offered rate of compensation and other working conditions.
the availability of workers meeting employer qualifications in the local market may be limited by large projects, plant shut-downs or other short-term increases in demand. similar or weaker conditions exist in adjacent markets so that mobility is an option. employers may need to compete to attract needed workers. established patterns of recruiting and mobility are sufficient to meet job requirements.
Workers meeting employer qualifications are generally not available in local and adjacent markets to meet any increase. employers will need to compete to attract additional workers. recruiting and mobility may extend beyond traditional sources and practices.
needed workers meeting employer qualifications are not available in local or adjacent markets to meet current demand so that projects or production may be delayed or deferred. there is excess demand, competition is intense and recruiting reaches to remote markets.
1
2
3
4
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table 1
Labour Market rankings for Painters and decorators, canada
region 2011 2012 2013 2014 2015 2016 2017 2018 2019
newfoundland and labrador 2 2 2 2 3 3 2 3 2
nova scotia 3 3 3 3 3 3 3 3 3
prince edward island 3 3 3 3 3 3 3 3 3
new Brunswick 2 2 3 3 3 3 3 3 3
Quebec 3 2 3 3 3 3 3 3 3
ontario 3 3 3 3 3 3 3 3 3
central ontario 3 3 3 3 3 3 3 3 3
eastern ontario 3 3 3 3 3 3 3 3 3
greater toronto area (gta) 3 3 3 3 3 3 3 3 3
northern ontario 3 3 4 4 3 3 3 3 3
southwest ontario 3 3 3 2 3 3 3 3 3
Manitoba 3 3 3 3 3 3 3 3 3
saskatchewan 3 3 3 3 2 2 2 3 3
alberta 2 3 4 3 3 3 3 3 3
British columbia 3 3 3 3 3 3 3 3 3
Source: Construction Sector Council, Construction looking Forward, 2011
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table 2
Labour Market rankings for contractors and suPervisors, canada
region 2011 2012 2013 2014 2015 2016 2017 2018 2019
newfoundland and labrador 4 3 4 3 3 2 2 2 2
nova scotia 3 3 3 3 3 3 3 4 4
prince edward island 4 4 2 3 3 3 3 3 3
new Brunswick 3 3 2 2 3 3 4 4 4
Quebec 3 3 3 3 3 3 3 3 3
ontario 3 3 3 3 4 4 4 4 4
central ontario 3 3 4 4 4 4 4 4 4
eastern ontario 3 3 2 3 3 3 3 3 3
greater toronto area (gta) 3 4 4 4 4 4 4 4 4
northern ontario 4 4 4 4 3 2 3 3 3
southwest ontario 4 3 3 2 3 3 3 3 3
Manitoba 3 3 3 3 3 3 3 3 3
saskatchewan 4 3 2 1 1 1 2 3 3
alberta 3 3 3 3 3 3 3 3 3
British columbia 3 4 3 4 4 3 3 3 3
Source: Construction Sector Council, Construction looking Forward, 2011
These rankings, and similar rankings for estima-tors and managers, point to an ongoing shortage of management and supervision and supply constraints during peak times for painters and decorators. In the near term, some labour markets will be weak for painters and decorators. This is usually related to the limited prospects for new housing.
Conditions driving these market assessments are outlined in detail in the CSC forecast scenario. Demographic conditions and the age profile of the workforce are generally expected to limit the availability of painters and decorators,
supervisors, estimators, site managers and other key occupations. One likely supply-side reso-lution is through in-migration. This solution, however, is not optimal for building long-term contractor capacity. Arriving migrants, especially supervisors, estimators and project managers are not likely to bring the experience and access to capital that is lost as the current contractors and managers retire.
The concerns about human resources revealed in the CSC contractor survey are well-placed given the analysis cited here.
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4.2 otheR faCtoRs imPaCtiNg CaPaCity
As the market for painting and decorating services grows, opportunities will emerge for all the current suppliers. Painting contractors profiled here are not the only suppliers and may face a challenge in retaining their share of the growing market.
The general profile estimates that one-quarter to one-third of painters and decorators work outside of painting contracting. Painting work is done by other contractor groups and a further undetermined amount of work is done outside construction. Contractors noted, for example, the potential for pre-fabricated products in some markets. Others noted competition from special-ized workers with more limited skills. Competitive forces will shift market share among painting contractors and these other groups. Indeed, some portion of the added capacity to provide painting services may rest outside of construction altogether.
To the extent that capacity will be added in the contractor community profiled here, atten-tion will focus on the contractors who are growth-oriented. This includes half of the small contractors and most of the group of the more than 400 large contractors. These firms will have the advantage of access to the needed skilled
trades and the apprenticeship and other training systems that will expand their numbers. Their attention will turn to the opportunities emerg-ing through repeat business with known owner/clients and general contractors. Their focus is on growing these traditional, strong relationships. Many firms in the profile do not bid for work now, but may need to compete through bidding as they seek new markets.
The CSC forecast scenario anticipates that opportu-nities will shift across markets (e.g., from low-rise residential to commercial) and the reported mobil-ity of the workforce will support this adaptation. Where opportunities move across geographic boundaries, there may be more limits to adapting capacity for many contactors.
Opportunities will also focus the contactors on environmental regulations, customer preferences and new materials. The associated investments in training, software and equipment may be a chal-lenge for smaller businesses where older owners are preparing for retirement.
There are, in fact, many alternative paths and players who might be involved in the growth of painting contractor capacity.
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Funded by the Government of Canada’s Sector Council Program
The opinions and interpretations in this publication are those of the author and do not necessarily reflect those of the Government of Canada.