For several years now, there has been a continuous concern by construction owners and contractors in the Gulf Coast about the need for skilled construction professionals.
For example, a recent Reuters article highlighted the concerns of U.S. refiners that severe labor shortages will hamper their ability to conduct needed and critical maintenance to their facilities. Much of this concern is fueled by simple supply and demand, as the Gulf Coast is and will be the epicenter for large industrial construction projects requiring thousands of skilled craft professionals.
Between 2013 and 2016, per Industrial Info Resources (IIR), 1,206 capital projects -- with a combined value of $145 billion -- broke ground in the Gulf Coast region. Comparably, from 2009-2012, only 902 capital projects were undertaken, with a value of $59 billion. Looking to 2017, IIR's early analysis projects another $30.8 billion in construction starts, representing over 400 capital projects.
The time has arrived for the construction and owner community to re-examine its contracting and labor strategies.
On the other hand, one of the major culprits behind the workforce challenges facing the Gulf Coast region is the general economics of the construction industry, especially when it comes to wages and benefits.
Nationally, average wages in the U.S. construction industry have taken a dramatic plunge since the 1970s. In the latter part of the 1970s, the average wage for a construction craft professional, adjusted for inflation, was over $30 per hour. Today, it's less than $25 an hour. And rather than raise the base wage and benefit package to a level that would attract high-quality individuals to the industry and to the Gulf Coast market in particular, contractors in this region have embraced the practice of offering "per diem" incentives.
In Texas, the Workers Defense Fund (WDF) has studied the local construction labor market with unprecedented depth. In a study titled "The Failed Promise of the Texas Miracle," WDF concludes that "Texas has prioritized investment in businesses that can promise large numbers of jobs, [but] the state has failed to invest in the education and job training programs necessary to ensure that Texans can actually obtain those jobs."
But has the industry overlooked the efforts of some to provide this training to the market?
The Houston Gulf Coast Building and Construction Trades Council and its partner contractors contribute their share by maintaining 250 modern craft training centers, encompassing a capacity of 35,000 training slots, 900 welding booths and 50 mobile training centers, all of which are privately funded. Apprentices in these programs "earn while they learn" craft skills and life skills to become career professionals. However, many of these programs operate well below their capacities, because the building trades and their participating contractors are not afforded opportunities to qualify and bid on projects in the region even as union and nonunion wages have reached parity.
The time has arrived for the construction and owner community to re-examine its contracting and labor strategies, widen its pools of qualified contractors in the Gulf Coast region and re-engage in a conversation with the building trades about integrated solutions to workforce shortages. The union labor paradigms of the past need to be changed in this industry. Union and nonunion wages have reached parity in the Gulf Coast, and union wages are less than competing lower-skilled nonunion wages in many cases. Houston Gulf Coast Building and Construction Trades Council contractors have no strike clauses in their contracts, will not recognize labor pickets and will cross pickets to work. In addition, there are no separate facilities required, as union contractors are working side by side with open-shop contractors on many industrial construction projects in the Gulf Coast.
As the labor pool gets shallow, projects are being staffed with more underqualified, untrained workers and supervision, leading to safety, quality, cost and schedule issues. If construction owners and contractors are truly serious about solving the skilled craft workforce challenges in this region, then we need to gain a better understanding of the economics of our own industry and engage in a broader conversation, inclusive of all groups that bring knowledge and resources to the table and are truly committed to finding a long-term solution.
For more information, visit www. magnus-us.com or call (936) 588-0886.
