By Ted McIntyre
COVID-19 has forced industry members to navigate uncharted waters, but there is light on the horizon
As the saying goes, diamonds are formed under pressure. Although the past few months have been challenging for everyone, and devastating for some, there are often opportunities even in the darkest of times.
“During the Great Depression, companies such as DuPont, General Electric, IBM and Procter & Gamble defied the odds, churning out profits and growth while competitors went under,” notes the Ivey Business Journal. Consider IBM, which “accelerated the development of a new, state-of-the-art accounting machine, launching it in 1930. Starting in 1932, IBM committed 6% of total revenue to R&D and built America’s first corporate research laboratory. During the 1930s, IBM launched three times as many products as it had in the previous decade.”
And consider Kellogg during the same period. According to a New Yorker story, “Post did the predictable thing: it reined in expenses and cut back on advertising. But Kellogg doubled its ad budget, (expanded) advertising, and heavily pushed its new cereal, Rice Krispies. By 1933, even as the economy cratered, Kellogg’s profits had risen almost 30% and it had become the industry’s dominant player.”
Even though the COVID-19 pandemic has been a gut punch for award-winning Amsted Design-Build in Ottawa—all 62 employees were shut down for the best part of a month and sales dropped roughly 25% in March and close to 40% in the two months that followed—Amsted is pushing forward through the storm.
“What’s the saying? ‘Don’t waste a good crisis?’” offers Steve Barkhouse.It’s dark humour from Amsted’s president, but it’s a matter of trying to position his Ottawa-based company as best he can for when it emerges from the pandemic.
“We’re investing in our future, buying a local business that’s closing down and purchasing another about an hour away and we’re investing heavily in marketing,” Barkhouse says. “I don’t think our market share will shrink, but the market itself will. So we’re all in. And if it doesn’t turn around, we’ll be all out.”
The strategy has also involved streamlining the company. “We’ve had to restructure our business, which has meant role elimination and job elimination,” Barkhouse laments. “And we’ve had some people off on medical leave that probably wouldn’t have been had it not been for COVID. There are a lot of mental health challenges coming up. I talked to a great young carpenter on my team who is off now but was making $35 an hour. He said he’s doing ok, but his rent is $1,800 a month, he has car payments and gets $2,000 from the government. So there’s nothing left for food. That’s tough on people with tons of time to sit at home and think about it.”
And it’s not easy for business owners either. “Yes, it’s very burdensome,” Barkhouse shares. “These people are family.”
Amsted, which, as of the end of May did not qualify for the federal government’s $40,000 emergency loan, is also feeling the pinch of the required protocols. “Every jobsite is sealed off and people have to sign in,” Barkhouse says. “We’re wiping down tools and not sharing, and only one person per storey, per job. So we have two on a site instead of five. It’s slowing the jobs, which means we can’t do as many. I know of many folks who are just hoping to get through this first wave, but that if there’s a second wave, they won’t even bother trying.
“Sometimes you need a recession to make you leaner,” Barkhouse says. “But it’s also driving a lot of my competition underground. I know a guy who has a decision to make—he can get every job visited by the Ministry of Labour and have every protocol perfect, but have the odd project shut down because someone didn’t wash their hands perfectly. Or he can go underground, make another 30% because he’s not paying taxes and WSIB. To be honest, we looked at it, but it doesn’t fit with our values.”
No one has been spared. In Toronto, BILD reported that April housing sales were down 80% over April 2019. And in early May, real estate research firm Urbanation reported that more than half of Toronto’s spring condo launches would be delayed until fall. That news ironically followed the announcement that sales in the first quarter of the year were the second-best on record. But now, “similar to the Q1 and Q2 periods of 2009 following the onset of the Great Recession, new launches are expected to become very limited over the next six months, which should help keep absorption levels high and inventories low,” Urbanation noted.
The Bank of Canada is doing what it can to encourage sales, slashing interest rates to a historic 0.25%. According to a detailed report released last month entitled Canadian Real Estate: Closed Until Further Notice, BMO Senior Economist Robert Kavcic noted that the central bank is not expected to raise the rate for two years. Currently, five-year fixed-rate mortgages, in the 2.5% to 3% range among the five major banks, are almost 50 points lower than last year’s already low rates.
The timing of the pandemic was both good and bad for Mississauga’s Phantom Screens. “About two years ago we invested in a cloud-based CRM (customer relationship management) system,” explains Phantom’s general manager Stephen Attfield. “Then at the end of February, we upgraded our server and moved our email to Microsoft’s Cloud Exchange. Part of that package is a service called Teams. It was a great way for us to share documents, text each other and it even includes video calling. It allowed us to set up teams by department. You can have a document open and we can all edit it at once and see who’s made changes.
“When COVID hit, we closed the office and had to lay off all our field staff and a good majority of our customer service staff,” Attfield says. “But we did have a few who continued to work from home. Our phones have the ability to twin each person’s desktop, so when I ring someone’s extension, it also rings to them at home. It’s so seamless that even we’re not sure whether someone’s here or at home.”
While installations within a customer’s residence were still off limits as of the end of May, “the real problem is that we’re seasonal,” Attfield explains. “We usually bring on seasonal employees who need training and support in the early stages. But that’s a big challenge to do remotely. Even if orders come in later this summer, we’ll have to go with the staff we presently have.”
And don’t customers prefer to see the product in person? “Yes, and it’s important to get these sales,” Attfield says. “But your employees have to feel safe and comfortable and know that you’re doing what you can for them.”
LEADING BY EXAMPLE
The Ontario Home Builders’ Association has also been doing what it can for builders and renovators, notes Chuck McShane, executive officer of the Niagara Home Builders’ Association. “OHBA worked very hard with other industry stakeholders to make sure we could keep working, and a big part of it was due to the safety protocols that the organization put into play.”
The reality is that productivity has been slowed to roughly 65%, McShane estimates. “I think we’ve added at least a month to building a home. We’re going to see deals lost—maybe 5% that will go back into inventory.”
While the slowdown means deadlines are being missed, “this provincial government has been very receptive and understands the importance of this industry and putting people in homes,” McShane says. “And Tarion has been fabulous with the delays.”
While OHBA was paving the way for future construction, Mattamy Homes was taking proactive steps of its own. When the Provincial government declared a state of emergency on March 17, the company temporarily suspended all its customer-facing and site-based operations.
“We began an orderly wind-down of all activities and the leadership team began engaging management in daily calls,” recalls Michael Dauncey, Mattamy’s Director of Health & Safety. “Employees who could work from home were encouraged to do so. We established a COVID hotline to answer any questions our staff had. We also publicized our existing Employee Assistance Program that is made available to employees and families 24/7 in case they needed help during this stressful time.”
During the two-week suspension, CEO Brad Carr organized teams to work on policies and protocols for a safe return to work. “This was not just for our own staff, but our subtrades and our homeowners,” Dauncey says. “It was a very complex undertaking.”
On April 1, Mattamy began a phased-in re-opening, with staff trained in the new protocols and sites prepared, with orientation for subtrades following the week after. “We also had a team whose sole task was to procure supplies—hundreds of thousands of dollars of masks, sanitizer, signage, wash stations, entrance checkpoints, thermal guns…”
On April 6, the company began to reintroduce trades to their sites. “Every employee and trade worker was issued a COVID-19 hard-hat sticker to easily identify if they had received our orientation,” Dauncey notes. “And every person on site is screened and tracked.”
The Ministry of Labour has been impressed. “On May 13, the IHSA in consultation with the MOL visited our Mount Pleasant North-Brampton project as part of their outreach program,” Dauncey relates. “They commented that we ‘exceeded all government recommendations related to the prevention of illnesses due to COVID-19.’ And they have used many of our protocols in some of the documents they’ve put out for broader absorption.”
And what about the homeowner? “They get a checklist, an email or phone call from us,” says Dauncey, whose company has hired multiple professional cleaning companies to augment their own busy rituals. “Our sites are cleaned three, four times a day.”
For all the protocols companies have enacted, there has to be buy-in from every worker on site, notes Bruce Bolduc, president of Construction Workplace Safety Training Ltd.
“In many cases, it’s as if nothing has changed on the jobsite,” says a frustrated Bolduc, who has helped develop protocols and best practices as part of OHBA’s COVID-19 team. “I was doing a site audit north of Toronto, and the company was making sure they were doing all the steps they needed to in order to protect their people. But as I’m standing around, a van pulls up and six guys jump out, and none of them are wearing hardhats or work boots. And I asked the foreman, ‘Do you guys all live under one roof?’ He said, ‘No, I pick them up on the way to work in the morning.’ And they’re all smoking in the truck and no one wearing masks. I said, ‘What about your families?’ And he said, ‘Well, we’re okay.’ And I said, ‘You don’t know that!’
“It’s indicative of residential construction,” Bolduc says. “I’ve been on three sites in the last two weeks and have watched guys hand off materials person-to-person, no masks. And then a few pile into a truck and go to lunch, no masks.”
As of early May, there had already been 28 stop-work orders issued by the Ministry of Labour, Bolduc notes. And even if a worker tests positive, who’s to know where they contracted the virus? “They can leave the site and go to the gas station or the grocery store. And they go home, and their kids have been interacting with other kids in the neighbourhood and maybe they bring it home.
“I follow a number of law firms on social media and everybody’s doing webinars on COVID and a lot of what they’re saying is, ‘Is this compensable to WSIB?’ The lawyers are going to have a field day with this,” Bolduc says.
“A lot of these laws are already there, though. In the Ontario’s Occupational Health & Safety Act, there’s already an overarching (duty) of constructors for being basically responsible for everyone on their project—any potential physical or environmental hazard. COVID-19 falls under that definition,” Bolduc reminds.
But if employers are looking for a playbook, “the Canadian Construction Association (CCA) has come up with a great, encompassing document,” he says. “They’re not difficult processes, but documenting it is critical to the constructor/builder/renovator so that you can show you’re doing everything you’re aware of to protect people. For example, if you have a suspected positive, let’s look at the CCA document, and say, ‘All right, we know that person worked for XYZ subtrade. Whom did they contact? Where did they work? What do we need to do? If they only worked in lots 43, 50 and 51, well, who else was in those areas?’ So company XYZ employees are all in quarantine.
“Communication and documentation is more important now than it has ever been,” Bolduc notes. “Because to shut down one small group is inconvenient, but it’s not catastrophic to a major build. Whereas, if you have someone wandering through a jobsite of a multi-storey condo, that worker might have ridden on the same lift with every other trade and walked around in close contact with hundreds of people. And now what?”
As far as procedure goes, “have your supervisors and your subtrades sign off or say they’ve interviewed all the participants coming in today and that they’re symptom-free,” Bolduc says. “And do it by email, so that you have a time and date stamp, and put it in your file so you have a record of following protocols without people having to come in and sign a piece of paper.
If you start with the constructor, how are they protecting the site? And how many subtrades are there for any given project? And what are each of those companies doing in this pyramid to make sure everyone is protected?”
And remind workers that they are also are responsible for any potential hazards they’re aware of. “It’s already in the ‘Green Book,’” Bolduc says.
And don’t miss the little things. “Hand sanitizer is 80%+ alcohol, which is also flammable,” Bolduc notes. “You should have seen the faces on a couple supers today when I asked, ‘Do you have an SDS (Safety Data Sheet) on your sanitizer products?’”
If there’s something good to come out of the pandemic for the home building and renovation industry, it’s that potential customers will not, for the foreseeable future, be spending their disposable income on travel or entertainment.
“I think a lot of people will stay more local and make their home and backyard more of an oasis,” suggests Phantom’s Attfield.
“We’re focusing heavily on what I think will be the first wave to come back: small jobs,” adds Amsted’s Barkhouse, whose company includes a Home Care division that specializes in maintenance and small upgrades. “People aren’t going to travel this year, so they might have $5,000 to $20,000 to spend on home offices, repairs around the house, painting, trim, maybe get the roof done now.”
OHBA Director of Policy Michael Collins-Williams even sees the potential for a changing mindset from a planning standpoint. “There may be a greater discussion on how we move through cities and urban spaces, with more emphasis on active transportation,” he says. “Major cities in Europe have already added hundreds of kilometres of cycling lanes and prohibited vehicles from their downtown cores so that people can move around and restaurants can have patios and spread tables out.
“And this might accelerate the movement toward digitization of planning and permit processes for more municipalities, with more cloud computing circulation and review to create efficiencies and hopefully more creativity,” Collins-Williams notes. “And people’s relationship with their yard and plants might also change after this.”
“I think you’ll see the approvals processes get changed and some red tape reduced,” McShane predicts. “I think the economic value of the home building industry, not only to the province but local municipalities, will be understood a lot better. And I think this has helped build bridges with building officials and municipalities. The (Niagara) clerks’ office has been fabulous.
“I know the slogan through the pandemic has been, ‘We’re all in this together.’ But we’re a very tight industry—we’ve always all been in this together,” McShane says. “We’ll get through this as a team. We’ll come out stronger and better.”
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