Picture the last decade’s financial crisis as a bull. One so ornery and angry had not been seen in nearly a century if at all. While many countries fell off this beast, and fell hard, Canada stayed on, and rode the bull.

A conservative banking system can be credited for this, along with a government stimulus and abundant natural resources. All of which is a boon for the tunnels and underground construction industry.

The Canadian market for tunnelling is strong and growing. Public transit is a significant end sector for the industry. Infrastructure Canada, reports since 2006, the Canadian government has committed close to CAD 5bn (USD 4.87bn) to provinces and municipalities for public transit. As well, ridership on public transport across the nation continues to increase.

Water is another major source of demand as outdated sewers are updated or replaced, and as demand for clean energy hydropower expands.

Austrian contractor Strabag entered in the market in 2005 to work on the 14.4m-diameter, 10.2km-long tunnel at Niagara Falls for Ontario Power Generation.

In August 2011, the Regional Municipality of York awarded a CAD 290M (USD 296M) contract to Strabag to build the Southeast Collector Truck sewer, a 15km-long wastewater tunnel. At the time of the announcement, Strabag CEO Hans Peter Haselsteiner said, "We have spent nearly five years working on a water tunnel at Niagara Falls with the world’s largest hard rock TBM. Now, following completion of the tunnelling works, we can turn to new projects and challenges. I am pleased for our employees who have settled into their new lives in Canada and can now remain there."

Strabag isn’t alone. Spanish companies Obrascon Huarte Lain and FCC Construccion, in a joint venture, secured the CAD 404M (USD 393M) contract for the northern tunnels of the Toronto-York Spadina Subway Extension (TYSSE). Japan’s Obayashi established its presence in the market in 2011, opening a location in Vancouver and acquiring Toronto-based general contractor Kenaidan. There is more than just megaprojects bringing these companies to Canada.

Migration
Samsung C&T, founded and headquartered in Korea, opened its Americas hub in California to expand its brand into both North and South America. The group considers itself to be a leader in alternative delivery methods.

"Canada has a clear and transparent procurement process that makes it a very attractive market," said vice president Michele Nanna, Samsung C&T, Engineering & Construction Americas. "It provides the opportunity for companies like Samsung that have significant global experience and financial stability, to partner with local firms and pursue Canada’s large and complex light rail transit, tunnel and bridge projects."

Gerhard Urschitz, technical director for Strabag’s Canadian arm, agrees that Canada is appealing due to the favourable business climate, the economic strength despite the worldwide crisis and the need to invest in infrastructure.

He adds, "Specifically the tunnelling industry sees a strong recent growth in projects, including hydropower, public transport and services like water and wastewater."

Caterpilar Tunneling (Cat) acquired TBM manufacturer Lovat in 2008. It is the actual acquisition that brought Catepillar to the Canadian market — coinciding with the current hot bed of activity. The timing is right, says Nick Natale, the company’s director of marketing and product support.

"If you see international contractors and their migration to this market it’s purely opportunity-based," he says. "If you see what’s happening in Europe in the way of debt crisis and public funding – a lot of companies with tunnelling expertise and specialisation, for lack of business, are going outside of their home markets or doing an organisational expansion. They gravitate to the areas where opportunity lies and at the moment those projects are in Canada.

"So we are geographically situated in a very good place, and in partnering with successful contractors, whoever wins the project bids."

Looking at international contractors, Walter Trisi, area sales manager for Cat for the North American region, adds, "They are not only chasing the tunnel work, but they are chasing all the infrastructure projects, as well as those that have come about through government stimulus."

Canada is working to improve its roads, bridges and other infrastructure through spending programs such as the Big Move and the Building Canada Fund.

"You look to communities like Toronto that have that visionary planning, laid out, bundled, multiple years of investment that will attract international contractors. They don’t just come over for a project, but set up an office because there is going to be on-going work: project, after project, in a thoughtfully-laid out multi-generation project plan to build infrastructure in a community."

And at the same time it’s an appealing market for everyone, offering a piece of the pie for anyone who is hungry.

"There is work here for the small contractor and for the large conglomerate," he says. "We have small infrastructure, such as 1km long mircotunnelling projects, and we also have the large Evergreen Line, Ottawa light rail, mega projects."

Speaking with Joanna Kervin, TTC’s director for the TYSSE project, she explains how the agency decided to package the six construction contracts for the tunnel and station work. Before packaging the contracts, TTC consulted with the construction industry to find out what kind of contracts would be attractive to contractors in terms of size and scope, for example. "What might provide us with a good competition, bringing people not just from the Toronto area but also attracting North American and possibly even European contractors. We did look at different ways we could package this project so that it would appeal to various sizes and scale of contractors," she says.

"To attract the much larger contractors, indications were that it would have to be in the couple hundred million [dollar] range at least. For it to make any sense for them to set up shop in Toronto"

For example, the two tunnelling contracts are CAD 300M plus and go to certain scale of contractor with the experience. Several advance contracts ranging in the CAD 30M-40M range would appeal to a different size and type of contractor.

Equipment
The overall market value for tunnelling and drilling equipment in Canada peaked at CAD 982.8M (USD 957M) in 2008 during the global financial crisis and dropped to CAD 706.6M (USD 688M) in 2009. Forecasts by market analyst Timetric see the market to continue to increase and even exceed the 2008 value by 2016.

Swedish manufacturer Sandvik has been involved in the Canadian market, mainly for tunnelling in Quebec where it first sold big drills in 2002, and says it expects only a booming future.

The two main reasons for the increase are, according to Ali Pezehski, business line manager, tunneling, Sandvik Construction (Canada), government stimulus plans, and adoption and expansion of the public-private partnership concept for civil projects.

"These reasons have formed a solid basis for initiating the ongoing and planned hydropower projects in Quebec, British Columbia, as well as elsewhere in Canada. Hydropower projects are typically huge in scale, require a whole new fleet due to long construction time and a JV-type of project group."

This activity is booming mostly for environmental reasons as hydropower is considered green energy. "Canada has unlimited resources in this respect, and the US market can consume all that cheap energy.

"Another driving force is mining development, which also needs transportation channels".