Table of Contents
Executive Summary 3
1. Introduction 8
1.1 Mandate 8
1.2 Summary of Findings 8
1.3 Report Structure 8
2. The HVACR Sector 10
2.1 Products and Services 10
2.2 Employers 11
2.3 The Workforce 14
2.4 Training and Certification 16
2.4.1 Private and Union Programs 24
2.5 Regulations 27
3. Labour Markets 29
3.1 Assessing Labour Market Conditions 29
3.2 Projections for Employment and Market Conditions 30
4. Conclusions 40
Appendix A 41
Selected Occupations by Education, Canada, 2011 41
Selected Occupations by Industry, Canada, 2011 42
Appendix B: Details from the BuildForce LMI System 43
Appendix C – Wanted Analytics: Detailed Findings 61
Executive Summary
The HVACR Workforce Development Foundation (WDF) has initiated research into labour market conditions for the industry. Concerns have been raised that skill shortages are a growing problem that threaten the development of HVACR businesses. The WDF is considering an industry wide effort to promote training, careers and skill development in response to these threats. Research prepared here is intended to inform and guide these efforts.
Research will span the United States and Canada. This review of the HVACR workforce in Canada has been prepared as a companion study to similar analysis in the United States. Independent analysis for Canada starts with a labour market review prepared by HRAI and the Construction Sector Council (now BuildForce) in 2007.[1]
This report then, updates the original 2007 research for Canada, adding new features and references that connect the findings to the current U.S. research. The intention is to highlight the extent and sources of skill shortages across the HVACR workforce.
Evidence for Canada indicates that there are skills shortages in some markets now and these might be expected to grow more acute if conditions unfold as projected in the current BuildForce scenarios for labour markets. However, findings highlight a relative easing of tight labour market conditions as well as the expansion and addition of training programs since the 2007 study. While some of the cyclical and structural issues that limit the development of needed skills remain in 2015, conditions have improved.
Prism's earlier research identified several areas linked to the labour shortages. These can be grouped together into eight contributing factors:
- Labour market cycles and competition from other industries
- Shifting demographics—fewer young people and more retirements
- New technologies
- Staff turnover
- Regulation and inconsistent enforcement
- Weaknesses in training, college programs and apprenticeship
- Conflicting systems of certification and licences
- Limits to mobility across firms, sectors, industries and regions
Each of these eight contributing factors is linked to key characteristics of the industry. The report begins with a short description of these characteristics for products and services, employers, the workforce and regulations. While some of these observations are taken from the 2007 report, they are still relevant in 2015.
Key Industry Characteristics
Market growth, new products and technological innovation are encouraged by rising energy prices, global environmental concerns and related government policies. While these changes have been impacting the HVACR industry for many years, the pace of change has accelerated. The original HVAC technologies created separate systems, businesses and workforces for each of the four elements – heating, ventilation, air conditioning and refrigeration. New technologies have eroded these divisions and firms now work with products and systems that combine these elements. However, traditional definitions, training and certification for occupations and trades often reflect the earlier industry structure.
HVACR employers serve several markets (e.g., repair, new construction), sectors (e.g., industrial and high rise residential), specialities (e.g., oil heating, refrigeration) and regions (e.g., rural, urban, provinces). Working in each of these dimensions requires special equipment and skills. The extent to which employers are specialized in a few of these markets or serve a wide range will impact their human resource needs and their experience of current labour market conditions.
There are several occupations in the workforce. Research findings suggest that key technical skills are found in a core group of workers:
· HVACR technicians
· Refrigeration and air conditioning mechanics (RACM)
· Sheet metal workers
· Gas fitters or gas technicians
· Electricians
· Plumbers and pipe/steamfitters
· Oil burner mechanics
With the possible exception of HVACR technicians and RACM, these trades and occupations are employed across many industries and their training and certification is not uniquely targeted to the needs of HVACR employers. This situation is a legacy of long-standing and established trades training and certification systems.
Research reveals wide differences in the qualifications for these occupations. The six trades are recognized in the formal provincial apprenticeship systems while HVACR technicians are trained in the mechanical engineering programs in the college system. This implies some homogeneity across the qualifications of journeypersons in each province. These trades are also part of the Red Seal program that promotes conformity in qualifications across provinces. However, the research reveals important differences across provincial programs and college training that suggest inconsistencies, overlapping competencies across the trades and gaps in skills. The apprenticeship system is a key institutional vehicle for training, certifying and recognizing HVACR workers.
Census data, set out in Appendix A, reveals that the majority of workers listed above are trained outside the apprenticeship system. Findings identify a long list of certificate and diploma courses and programs offered in community colleges and private training facilities. These programs range from pre-apprenticeship programs all the way to advanced engineering programs available to industry managers and executives.
Some of these programs are responding to training requirements related to government regulations. Other programs define industry standards for consistent, high-quality and widely recognized occupational achievement.
Indeed, evidence suggests that community colleges across Canada have assumed some leadership in providing more HVACR specific training since the publication of the 2007 report. Added programs and rising enrollment have increased the supply of specialized and qualified workers. While there have been a few added programs in the apprenticeship system, these changes are not nearly as large as additions in the college system.
Finally, the industry can be characterized by the regulatory requirements imposed by government. Most of these have either direct or indirect implications for the skills and competencies of the workforce. Regulations are required by all levels of government (federal, provincial and local) and cover many areas. The regulations themselves are a well-established and accepted part of doing business in the HVACR industry. Disruptive impacts on workforce skills, recruiting and retention are related to changes in regulations and inconsistent enforcement.
This description of products and technology, firm characteristics, the workforce, training and certification and regulation anticipates the complexity of human resource management in HVACR firms and the challenge to create an industry-wide labour strategy. These challenges remain largely unchanged since the 2007 report was published.
Labour Market Conditions
The first two factors identified in the Introduction that are contributing to the labour shortage are:
· Labour market cycles and competition from other industries
· Shifting demographics—a shortage of youth, rising number of retirements, and evidence of their relative importance as a cause of skill shortages, recruiting and retention problems
BuildForce has developed a Labour Market Information (LMI) system that assesses conditions for most of the trades and occupations described above. The system covers 34 trades and occupations and tracks employment, unemployment, age profiles and patterns of mobility. Each year, BuildForce prepares long-term projections for 34 trades and occupations in 14 regions across Canada.
Forecasts of overall economic conditions and expected levels of construction drive the system by sector and province. Labour requirements for construction and maintenance are linked to projected building activity and the system matches demand with the available supply of labour.
BuildForce LMI results provide market assessments of six HVACR trades in each province. Results for the HVACR trades and occupations in the immediate future (2015–2017) reveal mixed labour market conditions across regions. In the short run, markets are generally expected to be tighter in the western provinces with the exception of Alberta where the decline in oil prices has slowed the province’s economic growth. Alberta has been a source of strong employment growth for all the key HVACR trades for several years and the current shift to weaker markets is a notable change. Labour markets in the other Western Provinces will show moderate growth and some tightness.
Ontario and Nova Scotia are expected to experience a balanced market while the conditions are tight in New Brunswick and Prince Edward Island for many HVACR trades. Projections for Newfoundland and Labrador shows a peak in activity in 2015 related to resources development and construction projects. The market is however, anticipated to loosen as major projects wind down from 2016 to 2018.
The BuildForce LMI system also tracks the age profile and growing replacement demand for HVACR trades related to retiring baby boomers. Demographic trends remain a challenge; rising retirements and limited growth in the youth population restrict recruiting options. All construction trades share the challenge of replacing the Baby Boom generation who are retiring in large numbers over the projection period. This implies the priority for attracting new entrants even for occupations with younger age profiles.
On balance, then, labour markets for the key HVACR trades will generally be balanced in 2015 and 2016 and there is a risk that resource developments and related cycles will raise demands later in the forecast period. Shortages will emerge across the trades in most markets at some point over the 2017 to 2024 period. Long term demographic trends will drive up retirements and mortality and this will limit the local supply of skilled trades; shifting recruiting priorities to immigration.
Evidence on the last six contributing factors was collected from employer interviews in the 2007 report. These findings remain accurate in 2015 and are summarized here.
All the employers interviewed confirmed that they face delays and difficulties related to skill shortages, recruiting and retention. When asked to describe the general factors driving these problems, the most common references were to the age profile of their workforce, retirement and competition from other labour markets. These findings are consistent with the BuildForce LMI market assessments described above.
The evidence suggests that a lack of familiarity with new products and technologies is one of the causes of skill shortages. Employers commented that there are not enough skilled and qualified workers available, and these comments generally linked back to the training and certification system.
Just half of the respondents indicated that staff turnover was increasing and the most common reason offered was the age profile of the workforce and retirement. Employers noted that some aspects of the work are demanding and work pressures can lead to exits. Competition from other industries was also cited as a reason for quits.
Familiarity with codes and related regulations ranked equally with new products and technologies as a problem in recruiting. Employers were more likely to mention inconsistent enforcement as a problem than excessive regulations. Inconsistent enforcement of trade certification and environmental protection regulations were often cited as contributing to skills, training and related human resource challenges.
Respondents focused on the apprenticeship system as an important contributor to labour problems. The most frequent references were to restrictions created by mandatory ratios of journeypersons to apprentices in small firms. These requirements were mentioned as restricting the capacity of the industry to add apprentices. Respondents also mentioned the lack of available seats for in-school training, employers holding apprentices back from in-school classes, instructors not teaching current material and employers not assigning journeypersons to apprentices for on-the-job training. In contrast, employers expressed less concern about examinations and Red Seal certification processes.
There were relatively few comments on mobility. Half of responding employers reported that they recruit from out of province and two-thirds or more of these are familiar with and/or require a Red Seal in the recruiting process. The implication here is that barriers to mobility are not a problem in themselves, but that related concerns with examinations and inconsistent standards among provinces may create barriers to mobility.
Findings from the BuildForce analysis and the observations by industry leaders confirm that each of the eight contributing factors are real impediments to recruiting and retention and to broadening and deepening the skills of the HVACR workforce. These factors, however, do not seem to apply equally in all markets. Labour market conditions and age profiles differ significantly across regions. Industry respondents often described apprenticeship and certification problems as imposing specific problems in residential markets. Other problems with apprenticeship, including the lack of seats and the management of new trades programs, apply to different situations in most provinces.
Prism Economics and Analysis / HVACR - HR Challenges / 80- Introduction
1.1 Mandate
The HVACR Workforce Development Foundation (WDF) has funded research into labour market conditions for the industry. Concerns have been raised that skill shortages are a growing problem that threatens the development of HVACR businesses. The WDF is considering an industry wide effort to promote training, careers and skill development in response to these threats. Research prepared here is intended to inform and guide these efforts.
Research will span the United States and Canada. This review of the HVACR workforce in Canada has been prepared as a companion study to similar analysis in the United States. Independent analysis for Canada starts with a labour market review prepared by HRAI and the Construction Sector Council (now BuildForce) in 2007.[2]
This report then, updates the original 2007 research for Canada, adding new features and references that connect the findings to the current U.S. research. The intention is to highlight the extent and sources of skill shortages across the HVACR workforce.
1.2 Summary of Findings
A number of factors have strong implications for employers in the HVACR sector. Economic cycles, coupled with technological changes, and a major shift in demographics all drive the labour market conditions in the sector. This report reviews various dimensions of HVACR sector conditions considering factors such as:
· Labour market cycles and competition from other industries