COVID-19 turned 2020 into a year of uncertainty, and it seems like it’s extending to 2021. Don’t get us wrong, 2021 promises a lot, especially with the upcoming vaccine. However, no one can be sure about what’s coming for all sectors.
Thankfully, not all sectors are going through the same hardships. For instance, The industrial sector hasn’t been doing half as bad as you’d think. That’s not to say that it hasn’t faced any hardships. However, its performance has proven that it’ll take a lot to bring it down.
It’s been a tough road
We don’t want to come off as too optimistic. Last year, the manufacturing industry experienced considerable losses. As the CBC reports, over 30,000 jobs made it to the Ontario casualty list for the first quarter of 2020.
Of course, the article is quite dated, being from June 2020. However, the insight is still crucial to understand where the sector is going,
On the other hand, Quebec experienced only 1,200 jobs lost in the same industry and period. Cash flow and supply chain disruptions also made it difficult for more vital industries, like food production.
It’s not just because the pandemic
Some of you might have noticed that the pandemic was still away from a global crisis during March. Therefore, can we attribute all those lost jobs to the pandemic? The CBC article mentions that the industry has been declining steadily.
Revenue in the sector had been falling for the months leading to that report. The pandemic essentially acted as a catalyst for this decline. The demand decrease ensured recovery would be problematic. However, it seems like experts overestimated the crisis’ impact on the industry sector.
The future might be promising
The report also mentioned that the sector would change considerably in the future. Now that we’re in that “future,” we can say it’s proving to be true. However, it doesn’t have to mean something negative.
The pandemic has provided vital insight regarding the flaws in many sectors. Manufacturing isn't the exception. It's led different regions to adapt their industries to make up for the pandemic's needs.
Additionally, several practices—like remote work for departments that don’t require office space—have streamlined many operations.
The second wave has been surprisingly optimist
Those aren't the only good news. The industrial sector has proven to be incredibly resilient during the pandemic’s second wave. Real GDP saw a 0.7% increase in November, and roughly the same held for December. While 2020 still saw the toughest real GDP hit in years, the damage seems lower than expected.
It’s worth noting that November’s rise nearly doubled previous predictions. The general financial landscape has been surviving quite comfortably amid the crisis. Several official measures and private sector adaptation have been crucial for these results.
November brought significant strength
November was the most important highlight of 2020’s last quarter. According to the linked report, nearly 75% of the industrial sectors experienced output increases. Industries producing goods saw 1.2% growth, and it was 0.5% for services.
Mining, gas, and oil were the most important contributors to that gain, with a 3.9% boost. Energy prices have gone through continuous rebounds, and natural resource sectors are likely to keep growing. Manufacturing was a surprising highlight with 1.7% growth.
Short-term predictions are still somewhat weak, with unemployment still being an issue.
2021 starts slow but shows promise
That said, the long-term outlook is a different story. The pandemic's second wave has been a setback for 2021. GDP projections for the first quarter are relatively pessimistic, but the economy overall still promises growth for this year and 2022 as well.
The main advantage this year is the upcoming vaccine, arriving earlier than many expected. However, securing this treatment is another challenge. Canada has experienced delivery difficulties regarding the vaccine. However, most experts agree that recovery should pick up noticeably once the vaccines arrive.
However, commercial construction still shows uncertainty
According to ConstructConnect, the commercial construction sector has been experiencing activity recovery. However, that doesn’t mean that uncertainty isn’t a problem anymore. Project delays and deferrals translated into prominent dips for the sector.
The forecasts for the 2021-2030 period are still waiting for release in March. However, the article goes through several factors that can aid experts in predicting what could happen next. For now, it seems as if commercial construction demand might need years to recover completely.
Just like other markets, the construction sector has moved to modern solutions to fight this decline. For instance, Procore enables your company to manage construction projects remotely.
Engineering construction offsetting declines
One of the article's essential points is how engineering construction could be a significant driver behind the sector's revenue. There's a long project list for non-residential construction, and that could become the most robust uptick for Ontario's industry.
It’s worth noting that engineering construction had been driving investment before the pandemic. Utility upgrades, public transit expansions, and mining commanded for engineering projects. The pandemic didn’t slow down these operations as noticeably as other sectors.
Regarding ICI constructions, healthcare seems to be the most significant driver behind it. 2021 shows promise for both institutional and industrial construction as the economy starts to reopen.
Employment issues
After the economy's reopening post-spring, employment saw a significant boost. However, it's still far from pre-pandemic levels. All provinces underwent significant impacts, with over 90,000 jobs lost between March and April alone.
The unemployment rate has been decreasing, yet it’s been challenging to recover from a 14% spike. Interestingly, the article also mentions that employment has been slightly outgrowing the labor force. That’s another factor to consider when it comes to analyzing unemployment statistics.
The challenge of worker mobility
Movement flexibility for workers is another obstacle across multiple regions. Moving resources from one province to another amid health regulations is cumbersome, to say the least. These setbacks are essential factors at play for 2021 and 2022.
That’s why moving toward remote collaboration platforms has been a lifesaver for countless companies. Office 365 is an excellent example of accessible administration software that enables resources to work seamlessly without moving to an office.
There haven't been too many changes for current projects. Most implications are related to scheduling, with various projects under proposals. The milestone isn't to find the workforce but to encourage final investments to get the projects going.
Is Sault Ste. Marie an exception?
One of the most exciting reports from this year is how Sault Ste. Marie has fared during the year’s end. The city amassed over $90 million in permit levels for more than 1,500 buildings.
It’s somewhat less than 2019, but not for much. The construction industry has been exceptional during the pandemic in Sault Ste. Marie. However, we’re not here to talk about the construction industry again. What matters here is what has allowed for that growth.
The importance of province collaboration with companies
One of the most critical points made by The Sault Star in its report is that government restrictions were minimal for construction. It allowed project completion as long as they abided by some regulations. The city's administration was crucial for this performance.
Other housing projects are also waiting to begin, including recent approvals, like the Trinity Towers. Even more, projects are under review. Renovation permits also experienced a massive boost during the pandemic, with over $20 million in renovation-related permits.
Even the commercial sector experienced significant issues for new projects and renovations, totalling over $20 million. However, the industrial sector only accumulated $12.2 million in construction.
Saskatoon: an impressive defiant to the pandemic
When it comes to industrial sector resiliency, Saskatoon is one of the best examples. Industrial vacancies saw noticeable declines during 2020's last quarter. The industrial market has recently driven investor interest, making it a significant exception amid the general landscape.
Saskatoon has proven to be a promising commercial real estate sector for retail, office, and industrial investment. The vacancy rates are even expected to break under the 5% mark during 2021. If it does, it would be the first time in a decade.
The only risk would be an increase in spec building, which could slow down market demand while it absorbs the new supply. Overall, Saskatchewan's economy offers a promising outlook for growth in 2021 and 2022.
The RBC predicts the province's GDP to climb to 4.7% this year, virtually a double increase from the -4.7% from 2020. Unemployment is also expected to drop from 7.8% to 5.9% by 2022, surprisingly close to levels from 2019.