Steel and aluminum tariffs add eight to 12 per cent to bottomline

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Having a solid foundation on which to build is fundamental in the construction industry, something Fortis Group president Max De Angelis said U.S. President Donald Trump’s unpredictable tariff policies has made impossible.

De Angelis said Fortis, like much of the Canadian construction industry, has delayed decisions on some projects and Trump’s doubling of steel and aluminum tariffs to 50 per cent is only exacerbating the economic paralysis setting in.

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“The biggest impact is the fear of the unknown,” said De Angelis, who has helped build the Lakeshore-based firm into one of Canada’s largest construction companies.

“The daily rhetoric and the daily changes to what the Trump administration is throwing out there affects our ability – we’re working with blinders daily.

“It’s a state of chaos and uncertainty. We don’t know what the end game is.

“What it’s done is stalled our local economy.”

De Angelis said for companies the only sensible choice amongst a buffet of bad options is not to make any decisions that you don’t have to. He said it’s a reality that is shared across all economic sectors and the U.S.-Canada border.

“How do you give someone a price,” De Angelis said. “You don’t.

“It’s very difficult, you give someone a price and a week from now a tariff brings something else.

“We’re definitely throttling back in respect to timelines, but that in effect is what the entire country is doing. As we all throttle back, so does the economy.”

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With the industry facing new challenges from every direction, Trump’s whimsical approach to economic policy is forcing contractors to dance to an expensive tune.

The additional 25 per cent hike in tariffs on steel and aluminum will add millions to the bottom line on Fortis Group’s typical projects.

“Let’s say you have a structured steel building, you’re looking $6 to $8 more per square foot just on steel,” De Angelis said.

“Where you really get into a lot of the costs is mechanical, electrical distribution. There’s a lot of aluminum in those products and conductors.

“To the bottom line, we’re seeing eight to 12 per cent increases to the end price. None of this is helping with our affordable housing crisis.”

De Angelis said he hasn’t had to lay off any of Fortis’s 250-plus employees. He credits Ontario’s public infrastructure projects for helping the industry ride through this rough period.

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“Fortunately, the Ford government is really pounding money into public infrastructure projects,” De Angelis said. “That is keeping people employed in the industry.”

De Angelis said he expects Trump’s tariff turbulence will have a lingering effect for 12 to 24 months after any new trade deal is signed.

D’Amore Group president Scott D’Amore, whose company is partnering with Petretta Construction in building the $200 million Shoppes at Heritage project in LaSalle, said they’ve been able to insulate themselves against prohibitive cost increases for that project by using domestic sourcing as much as possible.

“We’ve seen a little effect, but not the chaos others unfortunately have experienced in construction,” D’Amore said.

“We’ve been proactive and assumed tariffs aren’t going away. We’re sourcing as many Canadian suppliers as we can.

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“I think companies are also being proactive in buying materials now, before tariffs or prices get higher, even if they don’t need the supplies right away but will need them down the road.”

Windsor Construction Association president Jim Lyons said it’s difficult to know how much tariffs have increased general costs in the industry, but there’s no doubt those costs are rising.

“It depends on the nature of the project,” Lyons said. “The Banwell overpass is a big job, but my understanding is most of the materials are Canadian, so the impact is less there.

“A lot of companies protect themselves by pricing in extra costs in their bids, especially if they assume the products are already tariffed.”

Lyons said he’s also hearing disturbing stories of Canadian suppliers bumping their prices five to seven per cent.

“One of our vendors asked the supplier why the price was higher when the product was made in Canada and was told because everyone else is going up,” Lyons said.

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“They increased it because they can. Unfortunately, greed is a factor.”

Lyons credited the City of Windsor with creating a process to address the pricing instability for contractors. It allows companies to apply for extra costs directly associated with tariff increases, but it also protects the city’s interest if tariffs go down.

The net result of the uncertainty and cost increases has been some layoffs in the industry and little activity in new home construction.

“Some companies are hanging onto their people while others have let some go,” Lyons said.

“We’ve seen several expansion projects among the local tool and die companies postponed. They’re trying to figure out where they stand or whether they have to relocate (to the U.S.).”

Lyons said the Gordie Howe Bridge and NextStar Battery Plant projects are helping to maintain stability in the local construction industry.

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D’Amore admitted he’s more concerned about the industry’s long-term prospects. He said he’d be hesitant to tackle another condo project, with its heavy reliance on steel, unless the tariff picture changes.

“The short-term solutions of us splitting the pain with sub-contractors and suppliers isn’t sustainable,” D’Amore said.

“You just can’t pass through the costs to the end user either. They’re tapped out too.

“It’s going to be a struggle to get through this. Uncertainty and higher costs are the only certainties looking forward.”

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