June 20, 2008

Aecon keeps focus on Canada’s transportation infrastructure market

Firm sees long-term growth in road-building sector

PATRICIA WILLIAMS

staff writer

Given the state of Canada’s aging civil infrastructure, transportation projects in both Ontario and Alberta are a key area of focus for construction giant Aecon Group Inc.

“Renewing and expanding Canada’s transportation infrastructure is a large market with long-term growth,” said chair and chief executive officer John Beck. His company is a dominant road builder in Ontario and has an expanding presence in Alberta.

Data indicates that in 2007, Canada’s $170 billion worth of highways and roads were past the mid-point of their expected average life. As a group, Canada’s $24 billion worth of bridges are at approximately 57 per cent of their expected life.

“As the world’s second-largest country by geography, Canada’s economic prosperity is directly tied to the capacity and efficiency of our transportation infrastructure,” Beck told the company’s annual general meeting.

In Ontario, the province plans to increase its spending on highway construction by 10 per cent in the current fiscal year from a record $1.35 billion spent in 2007.

“Road building is a business that Aecon knows very, very well,” said president Scott Balfour.

“It is also the part of our business where we have achieved the deepest range of vertical integration.”

While the Ontario Ministry of Transportation is one of Aecon’s most important customers, “it is not the only transportation infrastructure game” in the province, Balfour said.

Plans are well advanced for the new Detroit-Windsor crossing “and we plan to be there.”

The province has also earmarked $17.5 billion for public transit systems in the Greater Toronto and Hamilton areas.

In Ontario, Balfour said the challenge is about “urban and suburban gridlock,” compounded by concerns about fuel costs and the environmental impact of too many cars trying to use too few roads.

But in Alberta, it’s about meeting the demands of urban and suburban growth as well as the “unprecedented demand” for transportation infrastructure to service the once-isolated north.

“The two-lane highway into Fort McMurray now seems as congested as the highways of Edmonton and Calgary.”

Transportation infrastructure needs are “just as urgent” in southern Alberta, Balfour said.

Last year, Aecon was retained to build two overpasses on the Calgary ring road.

The company also is under contract to build sections of the new $675 million light-rail transit extension in Edmonton. For the 12 months that ended Dec. 31, 2007, Aecon reported revenues of $1.49 billion, a 34 per cent increase from the previous year. Revenue from the infrastructure segment totaled $689 million. That category includes all aspects of civil construction.

Transportation infrastructure is one of four key market segments earmarked by Aecon, Canada’s largest publicly traded construction and infrastructure development company.

Other priority sectors are:

• Industrial fabrication, module assembly and construction in the oilsands of northern Alberta and Saskatchewan.

• Education and healthcare facilities.

• Ontario power generating facilities.

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