It’s been rightly said that Canada’s housing crisis demands a wartime-like effort to fix, but to accomplish its ambitious mission to build millions of new homes, it will need all the foot soldiers it can muster in the form of drywallers, electricians, bricklayers and plumbers. Today, Matt Lundy delves into why that recruitment process is running into so much trouble.
In the news
- Héroux-Devtek, the Quebec aerospace manufacturer that built landing gear for the Apollo 11 lunar module, has been acquired by a U.S. private equity firm
- EncroChat’s Canadian leader knowingly sold encryption service to criminals, French authorities allege in documents containing new details, including the names of two other EncroChat leaders
- How the “Keystone Killer” from Nebraska who blocked the Keystone XL pipeline learned to love another pipeline for CO2 emissions, even if a leak would choke anyone nearby
Up top
Repairing the green machine
The regulatory reno job at Toronto-Dominion Bank is picking up speed, reports Stefanie Marotta. Canada’s second-largest lender has tapped the regulatory ranks to bolster its compliance team, a week after The Globe and Mail reported TD’s chief compliance officer had left the bank amid a probe of its anti-money laundering controls.
According to an internal memo sent to bank employees, one new hire comes directly from the Financial Transactions and Reports Analysis Centre of Canada while the other formerly worked for the U.S. Department of Homeland Security.
TD has been overhauling its compliance team while it navigates probes by U.S. regulators and the Department of Justice that some analysts estimate could result in monetary penalties of up to US$4-billion. At the same time, Canada’s Office of the Superintendent of Financial Institutions has found gaps in TD’s regulatory compliance management program.
Read more here.
Crews work at a construction site in Ottawa in August 2023.Sean Kilpatrick/The Canadian Press
In Focus
A view to a skills shortage
Canadian politicians have vowed to build a massive number of new homes. But as Globe and Mail economics reporter Matt Lundy reports in his latest feature on Canada’s housing crisis, there’s a big hammer-swinging, drywall-laying, pipe-fitting problem:
As Canada tries to double construction overnight, it raises a simple question that threatens to dash any hopes of an imminent fix: Who is going to build all these homes?
Here are some stark stats that set out what Canada is up against in its home building quest.
By the numbers
- 134,000: The number of construction workers set to retire between now and 2033
- 117,000: The projected number of new workers expected to join the industry over the same time period
- 3.9 million: The goal for how many new homes Canada wants to build by 2031
- 0.6% vs 20%: The change from 2016 to 2021 in the number of working-age people with apprenticeship certificates in construction trades versus working-age people with at least a bachelor’s degree
And yet, there is disagreement about the extent of the labour shortage facing the sector. During his reporting Matt spoke with Kevin Lee, the CEO of the Canadian Home Builders’ Association, who said there are labour shortages “across the board.”
On the other hand, Karen Pullen, an electrician who works for the International Brotherhood of Electrical Workers Local 353 in Oshawa, Ont., told Matt there is no shortage and that union members aren’t getting as many calls to work as they were before.
What gives?
It comes down to a clash between long-term ambitions and short-term economic realities. Here’s how Matt put it to me: “In the present, things have slowed down and tradespeople are complaining about less work, but for the future we need to build way more homes and we likely don’t have enough skilled people to do that.”
Consider how the job picture has evolved in the construction sector over just the last four years. The chart below traces the job vacancy rate in the industry. (The gap is a period during the early months of the COVID-19 pandemic when Statistics Canada didn’t gather such data).
Now put yourself in the shoes of a young person setting out in life and trying to decide what career to pursue – depending on the moment, Canada’s construction labour market looked bountifully tight, or worryingly lacking in opportunities.
Is it any wonder why Canada’s grand housing plan is at risk of falling apart before it really gets started?
Read Matt’s story here.
▶️More on this: Inside the crisis facing Canada’s dysfunctional housing market
Charted
Inflation slayed or stayed?
American consumer price growth slowed in June for the third month in a row, with inflation rising 3 per cent over the year before. Meanwhile on a month-over-month basis, U.S. CPI turned slightly negative. Both inflation measures were below what economists had expected, renewing speculation that the U.S. Federal Reserve will trim interest rates in September. It was enough to make an economist giddy. “Turn up the music, because the Fed’s pivot party looks like it’s about to officially get started,” wrote CIBC Capital Markets economist Ali Jaffery. On the other hand, the U.S. has been here before after CPI slowed to 3 per cent last year before bouncing along sideways for a year.
The outlook
On our radar and reading list
Zoom in: Several U.S. banks are reporting earnings today, including Bank of New York Mellon, Citigroup and JP Morgan Chase.
Zoom out: Statistics Canada will release building permit data for May and we’ll get a preliminary update on U.S. consumer sentiment for July.
Bigly business: Donald Trump’s Republicans are divided over whether they should do everything they can to help big business, or burn it to the ground.
Cell scandal: Up top we told you about new allegations against EncroChat’s Canadian leader. If you missed it, here’s a great deep dive from last month into how the case against Paul Krusky came together.
Markets this morning
Global markets were mixed in skittish trading after softer-than-expected U.S. inflation numbers boosted hopes of a Federal Reserve interest rate cut as early as September, but also pointed to underlying weakness in one of the world’s biggest economies.
Wall Street futures were mixed as investors assessed big bank earnings. TSX futures were in positive territory after yesterday’s record close.
Overseas, the pan-European STOXX 600 was 0.39 per cent higher in morning trading. Britain’s FTSE 100 rose 0.27 per cent, Germany’s DAX added 0.41 per cent and France’s CAC 40 rose 0.73 per cent.
In Asia, Japan’s Nikkei closed down 2.45 per cent, while Hong Kong’s Hang Seng advanced 2.59 per cent.
The Canadian dollar traded at 73.42 U.S. cents.