The construction industry in Canada is at a pivotal juncture, grappling with a persistent shortage of skilled labor while simultaneously embracing technological advancements that are reshaping its landscape. The latest survey from KPMG in Canada, conducted in collaboration with the Canadian Construction Association, reveals a sector in transition, where digital innovation is becoming a lifeline amidst a growing labor crisis.
The survey, which polled 265 construction companies across Canada, underscores a significant shift in procurement processes, with nearly 80% of respondents indicating a move towards encouraging innovation and digital adoption. This shift is crucial as the industry faces the dual challenges of replacing retiring workers and meeting the rising demand for homes. The Canadian Home Builders’ Association estimates that 22% of residential construction workers are set to retire over the next decade, and the sector will need more than one million additional workers to meet the Canada Mortgage and Housing Corp.’s target of boosting home construction by 3.5 million units by 2030.
The labor shortage is palpable, with 78% of companies reporting a shortage of skilled workers, down from 90% in 2023. This decline, while modest, reflects a growing reliance on technology to bridge the gap. Seven-in-10 companies reported that the labor crunch is affecting their ability to bid on projects and meet deadlines, a decrease from 86% in 2023. This trend suggests that technological investments are beginning to mitigate some of the challenges posed by the labor shortage. Around 81% of respondents said that labor productivity and efficiency have improved thanks to recent investments in technology.
The survey highlights a clear trend towards adopting technologies that enhance efficiency and effectiveness. Nearly 60% of companies are prioritizing technologies that support a demand-driven supply chain, while 53% are investing in artificial intelligence and AI-driven software. The integration of AI and analytics is seen as a game-changer, with 90% of respondents believing that better tools can boost efficiency and labor effectiveness.
The adoption of new technologies is not just about efficiency; it’s about reimagining construction processes. Drones for site surveys, robotic bricklaying, and modular or prefabricated construction are becoming more common. These technologies not only reduce labor requirements but also accelerate construction timelines and improve safety. Prime Minister Mark Carney’s emphasis on scaling up prefabricated home construction, with a $26 billion financing pledge, underscores the government’s recognition of the potential of these technologies to address housing affordability and construction timelines.
However, the path to a fully digitized and efficient construction sector is fraught with challenges. Rodrigue Gilbert, president of the Canadian Construction Association, highlights the need for procurement reforms that prioritize long-term value over lowest price. “Too often, the system prioritizes lowest price over long-term value, which prohibits investment in innovation,” Gilbert stated. “If we want a modern, productive construction sector, governments must reform procurement to foster collaboration, ensure fair risk-sharing, and create the confidence companies need to invest and grow.”
The survey’s findings underscore a critical need for a holistic approach to addressing the labor shortage and technological adoption. While technological investments are showing promise, the industry must also focus on attracting and retaining a skilled workforce. This includes investing in training programs, promoting apprenticeships, and creating pathways for young people to enter the industry.
Moreover, the construction sector must advocate for policy changes that support innovation and digital adoption. This includes advocating for government-backed initiatives that incentivize the use of advanced technologies and sustainable practices. The industry must also foster a culture of continuous learning and adaptation, encouraging companies to stay abreast of the latest technological developments and industry trends.
The construction industry in Canada is on the cusp of a digital revolution, driven by necessity and opportunity. As the sector continues to grapple with labor shortages, technological advancements offer a pathway to increased efficiency, productivity, and sustainability. However, realizing this potential requires a concerted effort from industry leaders, policymakers, and stakeholders to create an environment that fosters innovation, collaboration, and long-term growth.