An industry forecast predicts the Gulf Coast region will pose the highest threat of labor constraints of any region in the country during 2016 and 2017.
“In 2010, we were sitting at a little over $100 billion in projects that were started in the U.S.,” Industrial Info Resources (IIR) Executive Vice President Michael Bergen said. “Fast forward to 2015, and we were at $177 billion. We grew 62 percent on value and 82 percent on the number of projects that were being executed.”
These numbers are expected to triple over the course of 2016, depending on the size and schedule of the project, Bergen added.
The southwest region of Louisiana and Texas is “the elephant in the room,” Bergen said, addressing delegates at the Energy Construction Forum held recently in Galveston, Texas. “That is really where our concentration lies with some of the constraints in the market.”
Bergen anticipates it will take at least two years to build up labor to efficiently execute these big projects.
“All of this is coming together to create a perfect storm for the labor constraints that we’re seeing today,” he said. “The types of crafts that are in demand are escalating because we are getting into a process-intensive industry. When I translate projects into hours that are in demand, we have gone from a little over 200 million hours up to 400 million hours in 2015 being required for skilled crafts. That tells you right there: If we were having labor issues back in 2010, we certainly are today.”
Bergen said he believes labor constraints will extend well into 2020.
“I say that because we have some other sectors that are building up,” he said. “There are 21 other countries in this world that are building import terminals that will take some of the LNG capacity that is out there right now, so that will create another bubble of LNG that we will see in the next decade.”
IIR Labor Research Manager Chris Smith agrees with Bergen the industry will be faced with labor challenges for years to come.
“It is going to take time for young trainees to graduate once these training programs do get started and are in full effect. It is not a two-year process. It is more of a four- or five-year process,” he said.
Smith also stressed the importance and necessity of mentorship and on-the-job training by older, more experienced workers to enhance younger workers’ classroom educations.
Jeff Gill, vice president of human resources for Sasol, challenged industry leaders to encourage students to stay in the hard sciences “and to get into this industry, whether it’s on the construction side or the owner/operator side.”
Smith noted money is a significant motivator in attracting young workers to the industry.
“Going to college and getting those degrees is great, but there are a lot of people out there with degrees who are unemployed or they’re not making the money that they could be making,” he said. “You can start making $30,000 a year after you’ve spent four years in college, whereas you can do almost the same and make that good money straight out of high school when you go into the construction industry.”
Dr. Brett Richard, manager of Sasol’s human resources and organizational effectiveness, U.S. Mega Projects, stressed the importance of communicating workforce needs to community colleges, educational institutions and the community in general to better determine the number of available graduates and how industry can access them.
“As long as we have the right training in place, we can hire a significant amount of trainees,” he said. “We can get them to where they need to be, get them involved in procedure writing and the commissioning side, and ultimately keep ourselves from being in a pinch.”
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