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The Engineer: Summer storms

As we enjoy the warm weather of a Canadian summer I thought I’d take the opportunity this month to write about a few hot topics that have been on my mind inside and outside the workplace. Here they are in no particular order: inflation, recession, shortages and regathering.

First, let’s address the elephant in the room: inflation. In the past few months we’ve gone from 5.1 percent to 6.7 to 7.7 percent and who knows what’s next. The Associated General Contractors of America has issued a construction inflation alert that the change in price for new non-residential construction inputs went up 21 percent and bid prices went up 17 percent from September 2020 to February 2022. We should pay attention.  We’ve all seen the dramatic rises in glass prices announced in early July. I won’t claim to have the answers to this dilemma but we should all be aware of the economic times we find ourselves in.  It’s a bit of a rollercoaster right now, with more up then down and it’s not likely to calm down any time soon. We know what happens when prices go up: they go down very slowly if at all. My guess is we are all going to have to plan for higher costs as part of our business models going forward.

That leads to the next topic: the R word. For those who want the formal definition, a recession occurs when real GDP growth is negative for two successive quarters. We are not there yet – we haven’t even had one quarter of negative growth – but some are saying it may be on the horizon. Others claim we are still in a period of bounce-back growth after the pandemic with unemployment at an all-time low; which are not typical signs of a coming recession. Either way, it’s still fair to ask whether or not your business is ready when the next recession comes. How resilient are you, your team and your client base? While the low unemployment numbers are usually taken to be a good sign for the economy generally, in our industry they have signalled a near-impossibility to find the qualified help we need in order to grow. Companies not growing means economies not growing…which is the definition of recession. We are used to recessions coming from the demand side with customers not wanting to buy enough of what we want to sell, for whatever reason. This situation where there’s lots of demand but we can’t take the work is weird, and I worry that rising prices will soon add a demand problem to the mix. 

Third, let’s talk about shortages. I recently read an article about a distillery in Ottawa reusing maple syrup bottles due to a shortage of glass bottles. For the past two years all of us in the window and glass industry have been trying our best to make do with what we have. Schedule and delivery delays have become regular, and, like this distillery, we have all had to be creative. To me it seems that the pendulum has started to swing back to normal, or maybe we’re just getting used to this reality. 

Finally, the subject of regathering. Recently I was together with over 70 people at a restaurant in Toronto celebrating our colleague’s retirement. There was something about having people together from different cities, different offices, some interacting face-to-face for the first time and others reconnecting after two-and-a-half years apart. Virtual calls are helpful, but the personal interaction can not be replaced. This coming fall as employees return from summer vacations it’s my prediction that socials, outside of the formal nine-to-five office setting, will increase in popularity and importance.

With that I’ll sign off and wish you an enjoyable rest of the summer. These hot topics are going to be with us for the next while, so let me encourage you to unwind and cool off. Enjoy the pool, the beach and a cold beverage. Until next time.

David Heska, P.Eng. is a director with WSP’s building sciences team in southwestern Ontario. david.heska@wsp.com.