The outgoing chief executive of one of Canada’s largest construction services companies says his priority during his tenure was hunting for clients, but that his successor will have a different mission: finding workers.

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Geoff Smith, the son of company co-founder Don Smith, joined EllisDon in 1981 and has held the role of president and CEO since 1996. He’s set to step down from the top job in June, when he’ll be replaced by current chief operating officer of construction, Kieran Hawe.

“As CEO I used to spend all my time looking for work, like 80 per cent of (it),” Smith said in an interview. “The new CEO is going to have to spend all his time looking for people and trying to be a leader in creating new and sustainable methods for construction and material science.”

Smith will remain at the company started by his father and uncle as chair of the board of directors. He will also retain responsibility for digital and data strategy and execution, as well as for EllisDon’s Windjammer Landing Resort in Saint Lucia.

Smith said the COVID-19 pandemic and post-pandemic period have been among the toughest the construction industry has faced in the decades he’s run EllisDon.

First, COVID-19 snarled vital supply chains globally, which drove up costs for builders. When that strain eased as economies re-opened, inflation hit. Just last year, Smith said construction inflation reached about 15 per cent year over year, “which is terrible.” While he doesn’t think prices will go down this year, he said he expects that rate of inflation to eventually slow and stop.

“The big shocks that hit our industry last year are behind us but it’s still pretty expensive to build out there because of the (labour) shortages,” Smith said. “The supply chain stuff has now been solved and has been worked out just like it has been in other industries. It’s the labour and services shortage that’s not going away.”

BuildForce Canada, a national industry-led organization that provides labour market information on the construction sector, released an outlook report on the construction labour market in early May, noting the additional challenge of recruiting from a shrinking labour force after the COVID-19 pandemic.

It said the inability of the labour force to grow as quickly as employment helped to bring the construction industry’s average unemployment rate down from six per cent in 2021 to 4.7 per cent in 2022. National construction unemployment reached a low of 2.4 per cent in July 2022, its lowest-recorded rate since 1976, the report said.

In nearly all provinces, a rapid rise in construction demands created tighter labour market conditions for most of the year.

That sluggish labour force growth, along with supply chain disruptions, contributed to recruiting challenges for the red-hot sector, which had led some builders to defer or even cancel projects as they sought to fill record-high job vacancies. And the situation has yet to improve, Smith said.

“There’s a profound shortage of trained tradespeople,” he said, adding that there are not enough people, including superintendents, project managers and estimators, for the amount of work that’s available.

There's a profound shortage of trained tradespeople

Geoff Smith

And attracting workers will become a bigger part of the CEO job than before. “All of that stuff is going to take up a far greater proportion of (Hawe’s) time than it ever took up for me,” he said.

According to BuildForce’s report, elevated investment levels in new-home construction, public-sector institutional buildings and public-transit systems drove the increase in total construction industry employment in 2022.

EllisDon has seen its business mix shift several times in recent years to match those trends.

“COVID changed everything,” Smith said, noting that before the pandemic, the company used to build a lot of office and dedicated retail buildings, but now is not building any. EllisDon had to pivot pretty quickly into building high-rise mixed use residential, or condos and apartment buildings, during the crisis.

More recently, high interest rates have continued to make conditions difficult for developers as less private investment comes in, slowing the tide of investment in high-rise mixed-use residential buildings, Smith said. And so they’ve had to pivot again, this time toward the public sector and building social infrastructure such as hospitals, transit and other big civil infrastructure.

“So there’s still good work, it’s just completely different kinds of work and a heavy reliance these days on public sector work while we wait for the private sector to come back,” he said.

Public construction project investment has increased dramatically since the pandemic, BuildForce said, with governments at all levels investing heavily in infrastructure as a tool to stimulate the economy. It said tighter labour market conditions have particularly impacted provinces such as Ontario, British Columbia, Quebec, Nova Scotia and Prince Edward Island as investment levels were high in both residential and non-residential construction segments.

Smith said his successor will have to deal with this ever-changing demand profile, too.

“One year it’s offices and next year it’s high rise residential, the next year is hospitals,” he said. “The new CEO, Kieran Hawe, will have to be very agile. Whatever happened yesterday doesn’t matter. Let’s figure out what’s happening today and tomorrow and next week.”

One thing the company plans to do is keep putting its employees first.

Shortly after Don Smith’s seven children purchased the company from him in 1996, they began the process of opening 50 per cent of the company’s equity to its employees.

In March 2020, Geoff Smith, as chief executive, spearheaded an agreement that will see EllisDon gradually buy out the Smith family’s remaining 50 per cent stake in the company while the employees’ ownership will steadily increase to 100 per cent over several years, making the company entirely employee-owned.

“EllisDon’s share structure and independent governance will ensure that we continue to strive together for complete fairness in equity of ownership across all employees, both present and future,” said Smith.

• Email: dpaglinawan@postmedia.com | Twitter: denisepglnwn