Joe Pereira completely understands the Ontario government’s decision to put the brakes on a wide range of commercial and residential construction projects in a bid to curb the spread of COVID-19.
What he can’t begin to grasp is just how long his company will remain in limbo because of the widespread construction shutdown.
“It’s the million-dollar question right now: When can business go back to some level of normalcy?” says Pereira, the general manager of Ottawa home renovation firm Kitchens & Bathrooms First. “It won’t be normal for a while.”
An inside look at Ottawa’s office market trends
With organizations standardizing hybrid work, Real Strategy anticipates this reduction in tenant demand to continue.
How to unlock new revenue in an uncertain economy
Resiliency is the name of the game, but what are the business rules that apply when dealing with great disruption and prolonged uncertainty?
Last Friday, the Ford government ordered all commercial and industrial construction except for critical infrastructure and public works projects such as hospitals and transit lines to be halted indefinitely to try to protect front-line workers on job sites from the novel coronavirus.
Residential developments already in progress such as condos, apartments and office complexes that also include residential units are exempted from the ban, as are home renovation projects that were launched before the new rules took effect last Saturday night.
That means the two jobs Pereira currently has on the go can be completed, but the eight projects he has in the pipeline are now on hold. And that’s left Pereira and his business partners feeling uneasy about the company’s future.
Pereira’s company is just one of many local businesses catering to the construction sector that are feeling the impact of the new restrictions – in ways both good and bad. Another change the Ontario government announced last Friday – limiting hardware and building supply stores to curbside and delivery service only – could pay big dividends for companies catering to the growing demand for online orders.
Kitchens & Bathrooms First has already laid off four office employees and has pared its remaining crews in the field down to one worker per site. If the new rules remain in place for more than three or four weeks, Pereira says, the company could be on shaky ground.
And even once things get back up and running, “It’s not going to be, hit the switch and off you go,” he adds.
Many of his customers are seniors with health concerns who might be wary about allowing tradespeople into their homes if the virus is still circulating in the community, he says. In addition, cash-strapped homeowners hit hard by the downturn may elect to put off discretionary spending on things such as remodelling their kitchens, he adds.
Still, Pereira says he feels “lucky” to still have at least a couple of projects bringing in revenue. Others in the highly competitive industry aren’t so fortunate.
“Some of my competition, they’re completely shut down,” he says.
Dylan Hemmings, vice-president of environmental services at the Ottawa office of engineering consulting firm Stantec, estimates about 90 per cent of the local projects the company is involved in are still going ahead.
Still, about two dozen of the firm’s 300 Ottawa employees are field workers who perform inspections at commercial sites or administer various aspects of those projects. Some will likely be reassigned, Hemmings says, while others could be asked to take banked hours as vacation time or go on unpaid short-term leave if work dries up.
“We’re looking to see how we can keep them busy in other ways,” he says. “If we see a prolonged slowdown, we’ll have to re-evaluate things.”
Just west of downtown, masonry retailer Merkley Supply is still moving plenty of inventory, says president and CEO Robert Merkley.
A large number of residential builds remain in full swing, Merkley notes, because the Ford government is allowing projects that already had construction permits to continue. Industrial customers that are most affected by the new provincial restrictions don’t account for a huge chunk of his business, he adds.
“Construction, especially in Ottawa, is still going reasonably strong,” he says, noting major infrastructure projects such as stage two of light rail are still continuing.
Customers must now place orders online or by phone and pay by credit card in advance because the showroom is no longer open to the public, Merkley says, estimating his overall sales are down 15 to 20 per cent since his storefront closed.
Merkley Supply, which has a workforce of more than 40, likely won’t be turning any “huge profits” this year, he adds, “but at least we’re going to have people employed and people looked after.”
Meanwhile, the founder of Ottawa’s fastest-growing startups expects his company’s rapid ascent to accelerate further after the province announced hardware and home improvement stores will be restricted to curbside pickups and deliveries only.
GoFor’s platform taps a fleet of on-demand drivers to enable building equipment suppliers to fill last-minute orders. The burgeoning company handles all express and same-day deliveries for purchases made on Home Depot’s website throughout Canada, and CEO Brad Rollo says revenues at his 43-person startup are on pace to keep “growing significantly” now that the home improvement giant can no longer serve customers in stores.
“We’ve got the biggest partners in the world that already had e-commerce capabilities who are just pushing more deliveries,” he says. “We’re extremely busy.”
GoFor, which took home a $500,000 investment from Panache Ventures and Capital Angel Network after winning last year’s AccelerateOTT pitch competition, remains on target to hit its goal of 200,000 deliveries in 2020, Rollo says.
“We’re kind of bucking that (downward) trend.”
Still, he notes the company laid off about 20 per cent of its workforce a few weeks ago with an eye toward conserving cash in case the economy goes into a prolonged slump.
“Nobody’s real sure where this is gonna go,” Rollo says. “You plan for the worst and hope for the best.”