Covestro, Tesoro and BP weigh in
As if prompted by the arrival of winter, the Gulf Coast labor market has cooled and may continue to cool for a while. The market may heat up again next year, but how does a cooling labor market impact ownersâ decisions whether to modularize or not?
Rick Rashall, group head of construction for Covestro, advises never to let cost and schedule determine whether to modularize or not.
âItâs more difficult all the time to get good, skilled labor, so more consideration has to go into modularization,â Rashall said, speaking on a panel at the recent Refining Engineering & Construction event in Houston. âBut you have to choose whatâs right for your site when youâre looking at that labor market and what that availability is.â
Rashall believes the labor market is an issue whether a project is stick-built or modularized.
âBut at least when youâre pushing it into the shop,â he reasoned, âyouâve got a more controlled environment with a more continuous labor market than you have in the field with a stick build.â
Justin Shapiro, senior project engineer for Tesoro, offered the cooling of the labor market affords the construction industry the opportunity to bring what he calls âThe A Teamâ versus âThe C Teamâ into plants.
âThe thought process is that in the fabrication shops and modularization shops, they have that continuity of crafts that they always have: âThe A Teamâ is available,â he said. âSo with the cooling labor market, I can see that weâd be inclined to more stickbuilt construction.â
Shapiro noted thereâs âa very strong labor union representationâ in most of Tesoroâs plants on the West Coast.
âThe labor rates are negotiated on a biannual basis where we are locked in, whether the market is hot or not,â he said. âSo ideally, in a lighter market, we can get cheaper labor rates, so we donât usually put that into our considerations when weâre looking at modularization options. There are no bargains, whether youâre buying food or milk or anything else out there.â
Considering the pros and cons of offshore modularization, Utpala Dubey, project services and global project solutions manager at BP, observed one of the major factors that drives the modularization decision is the size of the module.
âSize is restricted by the barge sizes and the lifting capacity of the cranes,â she said. âHowever, having said that, offshore requires that there be a lot more skilled labor than onshore. All things being equal, if you are looking for value preservation, narrowing the uncertainty around the module gives you much better options. It gives you a lot of leeway, and it is the biggest growth that we have.â
Regarding whether the outcome of the recent U.S. presidential election will change ownersâ appetites for overseas modules due to the proposed raising of import taxes, Shapiro said the current expectation is âsteady as she goes.â
âWorking with downstream modularization, weâre looking at smaller modules, so weâve been targeting more local fabrication shops,â he said. âWe havenât really been looking at the international module shops, at least not from the downstream side. We left those to the big boys, like the upstream groups in the heavy industries and larger shops.
âWe have a plant in South Dakota, and we looked exclusively at four or five shops that were within about 200 miles of that plant. Thatâs kind of a change in focus in how we do modularization, trying to build up these local shops to support us. I think thatâs probably the opportunity weâre going to have to explore the most in order to really make modularization a standard in downstream.â
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