Crisis control: How the industry is dealing with Covid-19

As we so fittingly termed it when it broke, the Covid-19 pandemic is the biggest change order the contracting industry has ever faced. 

On our website, we’ve done our best to keep readers abreast of a situation that seemed to switch gears on a daily basis. As a result, much of the front line information we gathered back in March has been rendered completely irrelevant. 

While many of our readers made the prudent choice to cease operations for the safety of their employees and clients, in various regions of the country contractors were deemed essential services and it remained business as usual (or as close to that as possible given the situation). 

Necessity really is the mother of invention, and these special circumstances required some very special solutions in some instances. 

Take Moose Jaw, Saskatchewan-based Amil Construction, for example. Owner Arthur Landry says that because his company does many jobs in smaller communities within the province, accommodations and meals are a problem. 

“We plan to deal with this by using an RV and bringing food along,” he says. Jobs in seniors homes, he says, will have to be put off for the time being. 

There are businesses that have been hit extremely hard, and we can only hope that government packages have helped them in this challenging landscape. Ellen Brightman, owner of Orillia Natural Gas, said her company was only dealing with emergency projects. And even then, she conceded, “We all know there is no guarantee of anyone’s safety.” The company’s business had dropped 95 per cent by early April. “I hope we are still standing after this one,” she said. 

Still others took a more holistic approach to the situation, understanding that industry sacrifices are necessary for the good of mankind as a whole. 

Concord, Ont.-based Viacon Masonry owner Lino Vitorio said it best: “We are not an essential service. We do not have the necessary conditions, facilities and equipment to ensure the safety of construction workers. We are putting them and their families at risk. We are delaying the inevitable if we don’t stop now. Are we waiting until our workers get sick and we have no choice but to shut down? Let’s help flatten the curve and stop now. We must all self isolate. We are running out of time.” 

It’s really difficult to argue against that logic, isn’t it? 

While we solicited opinions of contractors across the country (many of which will be seen online), we’ve focused on four award-winning firms, and provide their valuable input in the pages that follow. 

Ben Polley, president of Evolve Builders Group in Guelph, Ont. 

Canadian Contractor: How is Covid-19 affecting your business? 

Ben Polley: Most of our work-in-progress has been idled while our staff remain home to ensure their safety and to contribute to the societal demand for isolation. Two additional significant projects that were due to start imminently have now been deferred by the clients (regretfully but understandably) indefinitely. We remain actively planning the balance of our committed new work in order to begin as soon as deemed appropriate. 

CC: Did you have to lay off anyone? 

BP: Regretfully, but out of financial necessity, all of our field staff and some of the office support staff are temporarily on layoff. That said, everyone – actively working or not – still join weekly all-hands Skype meetings to remain connected, share personal stories and provide company news updates. With the allowance that those on the CERB program can in addition earn up to $1,000 monthly, we have (or are beginning to) also re-engaged many of these same laid-off staff to work part-time on performance improvement procedures, standardize more construction details, or get ahead in organizing our imminent new work. We are also expecting to begin taking advantage of this time by providing paid upgrader training to many of these same folk. Essentially, we are looking for every opportunity to top up our furloughed workers with as much earnings as permitted. 

CC: What’s changed in the office? 

BP: I am the only person still working from our office of the eight who ordinarily attend this location. 

CC: What are your main concerns right now? 

BP: When we feel it is deemed appropriate to reduce personal isolation and we resume work at our sites, it is my expectation that we will have fewer concurrent projects to return to than our ordinary capacity would allow. This will continue to dog our cash flow which will undoubtedly have medium-term impact on the company, though still does not leave me concerned about its viability. Instead, I expect some of our ordinary competition will not survive and thus the short-term impact of reduced work will very possibly be later offset by greater demand due to less remaining direct competition. 

CC: How has the supply chain been affected? 

BP: Some subcontractors have declined to bid theoretically imminent work while others have declined to remain in consideration for bids they previously provided, all due to uncertainty as to whether they can fully or safely staff the sites. Otherwise, because we are effectively idle on our project sites, we are unaware if there will be material or other supply chain issues when we go forward again. 

CC: How are you handling cash flow? 

BP: We are using our retained earnings from past years to cover current and projected continued monthly operating losses. Because we had a relatively strong balance sheet at the outset of this problem, we are reasonably well positioned to weather it. That said, we will probably exhaust much of our reserves and growth capital before this is done. 

The skinny: We remain confident that this will be a hurt to each of us individually and to the company, but that we will emerge otherwise intact. 

Brendan Charters, development manager at Eurodale Developments, Toronto

CC: How is Covid-19 affecting your business?

Brendan Charters: Since late March, our office staff (design, operations and accounting) has been operating remotely to do our best with respect to physical distancing. Jim (Cunningham) and myself as owners have continued to be the only ones in the office. Our sites had remained operating as an essential service, with additional safety protocols on site including splitting persons working in a site by floor, or focusing on exterior work, when possible. After careful review of the infection rates across Toronto, Ontario and Canada, we decided that effective April 13, all Eurodale project field sites will be suspended until further notice. We are all doing our best to work on the things we always wanted to do, or knew we should do, but don’t necessarily have the time to do (aside from emptying the refrigerator into our bellies).

CC: What are your main concerns right now?

BC: When it’s safe to restart field production and how to make it safer than when we ceased, while maintaining profitability and timeliness.

CC: How has the supply chain been affected?

BC: Products from U.S. are delayed at least twice the normal lead time while local suppliers are closed except for online order and lot pick up, which is challenging and much more time consuming. We order a lot through Pro Desks, but some things are difficult to describe or get right online or through an email. 

CC: Did you have workers choosing to stay home?

BC: We had a couple of people have to stay home due to travel and unrelated illness and some trades express discomfort in working prior to our shut down.

CC: Anything else you can tell us about how you’re dealing with this all?

BC: We are keeping in touch. Communication is key – soft contact with clients, team members, trades, prospects and the office group as well as with our friends and fans through social media. Connection with each other is how we ultimately operate in a normal day-to-day, and while personal face-to-face and handshake connections are severed for the moment, thanks to technology we are able to keep some connection. This is similar to a long distance relationship… not a break up!

CC: What advice do you offer to fellow contractors at this time?

BC: Keep it as regular as you can. Start your day at the time you would regularly start, shower, get dressed and get to your task list, quitting at the time you would typically quit. Discipline in that regard will serve you well as we come out of this as the return to routine will be easier and will keep the business gears lubricated. Take a lunchtime stroll with your family or housemates and cut everyone in your tight knit circle some slack, knowing it’s hard on everyone (cut yourself some slack too). Keep positive, get some exercise, fresh air and watch something that makes you feel good (be it Tiger King or something more enlightening)!

Steve Barkhouse, president of Amsted Design-Build in Ottawa 

In mid-March, Barkhouse offered up a bleak outlook: “I am trying to do the right thing, however, there is a lot of fear in our industry and a lot of misinformation driving that fear. If something is not done immediately, construction will shut down. I have lost 40 per cent of my team in the last 24 hours and we are losing more trades and suppliers every hour.” 

Over a month later, he revisited this, offering: “Much has changed and much has stayed the same. My feeling of trying to do the right thing and not knowing what that is remains. Should we work or should we stay home? I have gone 360 degrees in the past month from thinking we must keep working (for all the right reasons), to shutting down the entire company for two weeks (for all the right reasons), to being back to work but limited by the opportunities. I appreciate that these are unprecedented times and that no one knows what to do. I have seen some leadership from our association and government but no clear direction and certainly no public support. I do feel that we will see some changes (by mid-May). We have proven to the government and community that we can work safely, that we do follow protocols. I have received letters of gratitude from our clients who see how hard we are working to stay safe and to complete their projects. Now is the time for the government to step out and support our industry. Support the fact that we are working safely and are tightly policed by the MOL. Support the fact that we are essential by releasing permits so that we can continue our essential work for those who have committed to us. Support the mental health of an industry of workers who are used to dealing with problems head-on, by getting their hands dirty and overcoming them… not by waiting in front of the TV and listening to the bad news. And support our economy. I know everyone is scared, but now is the time for courage!” 

CC: How is Covid-19 affecting your business? 

SB: I see the mental fatigue on all my staff whether they are laid off or working. We are running out of work quickly because permits are not being issued and there are no new clients calling. We are working twice as hard for half as much accomplished. We are losing about $25,000 per week right now. That said, it is not all bad: I have watched my team support me and each other; we have had core values for 30 years but we are really living them now. We are getting very creative in how to do business. We are learning to communicate differently: we are kinder, gentler, more thoughtful, and more appreciative. Our clients really see what we do for them, that we put them ahead of ourselves, and they appreciate it. We will survive but our business will never be the same. 

CC: What advice do you offer to fellow contractors at this time? 

SB: Survive. Stick to your values. Be a strong leader – we need them. 

Marie Soprovich, founder of Aquarian Renovations in Edmonton

Soprovich is also the current president of CHBA Edmonton, so is in a unique position to offer both personal observations from her business, plus a view of the Edmonton market in general. In late-March, she told us:

“Canadian Home Builders (Association) and Build Alberta have worked to support the idea that construction is an essential service (in Alberta). There are people who have sold their properties and are expecting to move in (to homes under construction),” Soprovich says.

“We recognize this as a privilege and know it is not the case across the country.”

She said that Edmonton was still issuing permits, but everything had to be done online, and while inspectors were still reviewing homes, no one else was allowed to be onsite at the time.

As for Aquarian, most of its staff (designers and estimators) were working from home.

“Confidence has taken a hit. It depends on everyone’s risk tolerance. Nothing has been cancelled (as of March 31), but projects have been postponed and/or put on hold,” Soprovich says. Aquarian had kept its staff of eight to 10 working, but some were getting fewer hours.

CC: How is Covid-19 affecting your business? 

MS: Covid-19 has slowed us down but not stopped our work. We’ve also modified our meetings to online, with virtual tours of designs.

CC: What’s changed on the site? 

MS: Health and safety are primary concerns. Some clients were not comfortable with continuing projects at this time, other clients understand and are comfortable with the physical distancing and safety protocol and were okay letting carpenters continue.

CC: What are your main concerns right now? 

MS: Staying busy and having enough work. Also concerns about work slowdown and the long term impact of economic slowdown. We are not out of the woods on this one.

CC: What income is coming in now? 

MS: Income has slowed as the work has slowed. This really is a little early to know how drastically the income and cash flow will be affected.

CC: What advice do you offer to fellow contractors at this time? 

MS: Preserve as much of your cash as possible. Plan as best you can. If you need to downsize, do it – it may be painful but you will at least save the mothership and when we get back in a new groove you can hire back. Stay brave! Take care of your mental health and be empathetic for those who slide into fear. Your courage and resolve will help others to stay stronger and find their way through. Build relationships with your homebuilders associations – this is a time to belong! This is where you can connect with other builders, renovators, suppliers and trades. We really must pull together, share experiences and what works … we are not alone in this. We will find our way through. Keep learning, use technology effectively (or you will be left behind) and take care of yourself.