One of the most brazen thefts from a construction site this summer was of a $50,000 backhoe lifted from a site in North Vancouver, loaded on a flat-bed truck and taken south to Langley.
The story has quickly attained something approaching legendary status in the ranks of contractors and the companies that insure them. It underscores both the fearlessness of the culprits and the growing fearfulness in the industry that a resurgence in building has brought with it an increase in crime. The situation harkens back to the worst times of the mid-2000s when metal theft was common and even the Vancouver Convention Centre expansion project lost 18 pallets of custom-made steel and aluminum components.
Vancouver Police Department (VPD) statistics indicate that there were 30 reported break-and-enters to homes under construction, including garages, in the second quarter of this year. To the end of August, break-ins at residential construction sites had doubled to four this year from two last year. While thefts at commercial development sites decreased by approximately a quarter, thefts of goods valued at more than $5,000 remained steady at three incidents this year and last.
The numbers indicate a shift from the metal thefts of the last decade. According to the VPD, the items stolen this year have been primarily tools, appliances and hardwood flooring while just two thefts involved copper wire or tubing. Moreover, many of the thefts appear to be well-planned operations rather than opportunistic ventures designed to feed a drug habit or other addiction. The items being taken are being sold for reuse by others, not for scrap.
“It appears to be more targeted,” said Gary Friend, president of South Ridge Developments Ltd. in Surrey. “It’s not just taking wire for the heck of the wire, it’s taking stuff they can use on the next project. The market’s very busy, but it’s competitive. And when sub trades get tight prices, unfortunately it seems like some trades tend to steal material to supply the next job. ... They take one thing, and then if you get hit again it’s the next thing in sync – they take the lumber then they take the nails.”
Peter Simpson, president and CEO of the Greater Vancouver Home Builders Association, said it’s easy for those familiar with job sites to blend in, especially when people and trucks are coming and going.
“These guys will actually enter these sites wearing a hard hat and they’ll look for opportunities to steal something that’s unattended,” he said. “They’re very brazen. They’ll walk through with a clipboard and steal something.”
Chris Haag, executive vice-president with Wilson M. Beck Insurance Services Inc. in Burnaby, which insures many of the major builders, agrees that thefts are now planned and organized better.
“Big equipment that gets stolen, like your excavators and backhoes, tend to be stolen by people who know what they want,” he said.
While the backhoe that ended up in South Langley was outfitted with a tracking chip that allowed police to intercept it at its destination before it was damaged, other items aren’t similarly equipped. Tools and materials typically wind up being sold online or to other contractors who think they’re getting a deal.
“These things are sold pennies on the dollar, pawn shops, out of town and through Internet sites that advertise articles for sale,” Simpson said. “What’s the likelihood of a guy getting his chopsaw back through police efforts? Probably nil, unless it just happens to show up somewhere, if they find a houseful of stuff that’s been stolen.”
Cpl. Brenda Gresiuk, media-relations officer with the Burnaby detachment of the Royal Canadian Mounted Police, said law-enforcement officials know material is being sold on Craigslist, Kijiji and through other channels, but it’s difficult to control trafficking of stolen goods without evidence that it’s happening.
“There’s numerous places to sell items, legitimately, and unfortunately the illegitimate thieves are also using those systems to get rid of items. That’s common knowledge,” she said. “You can go on Craigslist at any time and find numerous items for sale. Are they stolen? We don’t know.”
Contractors and clients footing bill for thefts
What the industry does know is that if crime pays, it is contractors and their clients – buyers and tenants – footing the bill. There’s not only the immediate cost of having to replace materials and equipment, and potentially downtime at the job site, but also the cost of prevention and insurance, which rapidly adds up and has to be absorbed somewhere.
“It’s going to be added onto the price,” Simpson said, arguing that construction site theft boosts housing costs and erodes affordability in a region where housing is unaffordable by national measures.
But it’s the small builders that are especially squeezed, caught as they are between the risk of theft, the need for insurance and the need to keep house prices competitive.
Friend said the deductible on his insurance for any given project is typically between $2,500 and $5,000. If the site is hit by thieves, however, the claim is worth it only if it’s significantly higher than the deductible. But then the premium for the next job might be significantly higher.
“My challenge is that my insurance is very expensive in today’s world, my deductible’s very high and should I claim, it just makes my insurance higher. So I’m faced with the threat and reality of theft on job sites, and can’t take advantage of the expensive insurance I’ve paid for because it’ll cost me too much the next time,” he said. “That $5,000 claim could cost me $3,000, $4,000 a house down the road. ... That homeowner is paying the bill for the last one.”
Haag empathizes with Friend and other builders who wrestle with the cost of insurance.
“It’s a direct overhead driver for him,” Haag said of the small contractor.
While insurance is part of a comprehensive risk-management program, many small builders don’t have the systems in place to support its presence. Tools, for example, aren’t rigorously accounted for, meaning their disappearance can’t be documented. Other times, communication breakdowns mean equipment and materials are left unattended.
“The best form of insurance is prevention, rather than insurance itself,” Haag said. “What I would say to the small homebuilder is, put a good site safety together to prevent bad things from happening, and it will make you a better contractor, keep your insurance costs down and actually allow you to grow your business because you’ll be running safe job sites that don’t have these problems.”
Cost of site crime prevention on the rise
But prevention costs add up. On-site security is required for multi-family builders to get insurance, which lenders require before providing financing. Reducing the amount of material on site to prevent losses also costs money, because more deliveries are required – at $200 a trip – to ensure workers have enough of the materials they need, but not too much to make the site a target for thieves.
“The end result of that is that I still have an extra large cost for job site overhead, due to the theft potential,” Friend said. “It costs more to do business, and it’s passed along.”
These costs then hang in the balance against any theft that occurs, leaving builders like Friend wondering whether to make a claim and risk a higher insurance premium. Sometimes swallowing the cost of the crime is a wiser move, but it’s still a cost someone has to pay.
The one payoff builders can hope for from their steadily rising investment in security is to limit risk to a point where thieves move to more vulnerable sites.
“You have to make sure you look as theft-proof as possible,” Friend said.
Or, as Haag puts it: “Make sure your site is so difficult to get into that the bad guy goes to the next site.” •
