If they plan to build it, will the workforce come?
That is the question for many as the construction industry—along with owners, educators and economic boosters—scramble to meet current and projected staffing needs for skilled craft, technical, engineering and project-management employees in the wake of what could be an unprecedented petrochemical and energy project boom in North America, particularly along the U.S. Gulf Coast.
The surge, driven by low natural-gas prices, may involve as much as $100 billion in planned projects, according to estimates.
While numerous factors will determine if projects become a reality, workforce supply and cost issues likely will be high on the list, participants say.
One chemical industry estimate says 50,000 craft workers will be needed when the shale boom peaks in 2014-15; other projections go higher. [PDF Map: Where are the Gulf Coast Megaprojects?]
"This is totally unprecedented," says Robert Clouatre, education director for the Associated Builders and Contractors chapter in Baton Rouge, La. "The only thing that even comes close is the period of plant building that occurred in the 1960s, but we've never seen anything like this."
Some liken the current surge to past pre-recession booms the industry has weathered, but others see it as larger and more accelerated—and further exacerbated by changing demographics as workers age out and millennials choose other career paths.
Owner group The Construction Users Round Table (CURT) predicts a two-million-person national workforce shortage by 2017, compounded by an aging worker population that will see 17% of existing craft workers retire in a decade.
A workforce report earlier this year by OilCareers.com, an international jobs board, and Air Energi, an energy-sector staffing firm, says nearly a third of respondents cite the skills shortage as the sector's biggest threat, while 20% see a lack of skilled trainers around the world.
Other research points to shortfalls in project engineering positions and in "middle skills," which don't require a four-year degree but mandate training beyond high school, says research firm Manpower Inc. The firm attributes the gap to too few relevant community-college or trade-school programs.
Owners are well aware of the trends.
Peter Cella, CEO of Chevron Phillips Chemical, told one chemical-sector publication in June that the industry demand for welders, pipefitters, operators and maintenance staff "could be more than the demographic profile of the U.S. can provide." He called for project "timing and pacing to ensure that we don't get stuck in a situation where we can't get the labor needed to complete the project safely, successfully and on time."
Peter Voser, CEO of Royal Dutch Shell, told analysts in late October that, even if the company had the financials to proceed immediately with projects it is mulling over in Louisiana, Pennsylvania and Canada, "I am not sure we have the engineers and the project managers to do so." Pennsylvania officials had provided it $2 billion in tax incentives to proceed, according to one report.
"Owners recognize it's a problem, but they're looking to the contractors to solve it," says John Dalton, executive vice president of Houston contractor Wood Group Mustang. "Some are more proactive in funding training, but they are looking to contractors to figure out how they will deliver the project."
Another contractor says, "They want to know you can staff the job. Nothing about turnover or stabilizing the workforce—they are silent on this issue." He also wants more states to tie training investment to tax credits for new plants, as Louisiana has done.
Sasol North America, whose announced investment plans in that state total more than $25 billion, anticipates a 5,600-person total construction workforce for its planned ethane cracker and gas-to-liquids plant, said Nancy Tower, manager of workforce development at Sasol, at a Louisiana economic development conference last month.
Published reports say the firm will receive about $1 billion in tax credits, but a firm spokesman declined to share specifics on the firm's project strategy, including workforce issues.
Cajun Industries LLC reported contract awards from Chevron, Valero, Marathon, Honeywell, Phillips 66 and Entergy in 2013. Dale LeBlanc, a senior project manager, says the firm has not been affected by labor shortages yet but is starting to prepare.
"Between the Sasol project and the [$12.5 billion] Shell gas-to-liquids plant, there could be some pressure on the crafts," he says.
Cajun sees the need for 2,500 construction workers to relocate two Methanex Corp. chemical plants to Geismar, La., from Chile by 2016. The owner is receiving $5 million in state aid to offset costs.
Chevron Phillips last month announced final investment decisions on a 1.5-million-ton-per-year (tpy) ethane cracker in Baytown, Texas, with an engineer-procure-construct award to a Fluor Corp.-JGC joint venture. It also will proceed on two 500,000-tpy ethylene production plants, to be built by a Technip-Zachry team. The projects, set to start construction in early 2014, will create about 400 long-term direct jobs and 10,000 engineering and construction jobs, Chevron Phillips said.
"We feel pretty good about our ability to scale up the craft resources and to get the people we need to be successful," Fluor CEO David Seaton told investors earlier this month.