A Special Report by Engineering News-Record and Power Magazines
The industrys ability to field a skilled craft force traditionally has been challenged by constructions seasonality, cyclicality and hard work. But trying to hit the bulls eye in demand has been made doubly difficult by the swinging and twisting target, put in motion partially by a huge surge in powerplant construction over the past two years and an overall U.S. construction market that has been expanding for a record 10 years. Only recently are there signs that the industry may be in for a breather and a chance to mitigate labor shortages that vary by region and project.
Activity is plateauing at a very high level. Construction slowed in the U.S. for the fifth consecutive month to a seasonally adjusted annual rate of $843.1 billion in September, according to the latest figures available from the U.S. Dept. of Commerce, which measures construction put-in-place. Although construction activity is easing up, it still was expanding in September, at a 3.4% annual rate compared to 6.5% in April.
While not a meltdown by any means, the growth rate for new powerplant construction is expected to cool to the point of recession next year. According to the F.W. Dodge Division of the McGraw Hill Cos., new contract awards will decline 11.4% in 2002, to $15.5 billion from $17.5 billion in 2001. (McGraw-Hill also is the parent of ENR and Power.) However, the U.S. Commerce Dept. predicts 3.1% growth to $20.3 billion for electrical utility work actually put in place in 2002.
There may have been too much of a good thing as power producers and the construction industry tried to meet anticipated electricity shortages. "Talk of capacity shortages has begun to shift toward concern about oversupply given the huge volume of construction under way and reduced demand for power from a faltering economy," says Dodge chief economist Robert A. Murray, Lexington, Mass. Powerplant construction "is projected to retreat 11% as plans for additional powerplants are reconsidered. Transmission lines, which have not shown the same growth as powerplants, appear to be on the verge of greater expansion" to distribute the new power, he says.
The recent boom follows a bust in powerplant activity from 1993 to 1998, when Murray says new contract awards languished at an average of just $3.6 billion a year because of the uncertainty of deregulation. That has posed a problem for the boilermakers union, with about 25,000 high-skilled members, contractors and other sources of labor who have been hard-pressed to keep up with the flip-flopping demand.
"The boiler industry and boiler craft over the last 10 to 15 years had been in repair work mode [with] fewer jobs for fewer people," notes Dale Branscum, director of the construction division of the boilermakers union in Kansas City, Kan. "Labor was migrating to other fields or retiring" when the market was hit with the double-barrel shots of Clean Air Act retrofit deadlines for coal-fired powerplants and new plants ordered by owners to meet the looming energy shortages, says Branscum. "Our manpower is being pulled in two directions," he adds.
Although conditions vary widely, welders often are the craft shortest in supply in powerplant construction. Often treated as a separate craft in the open shop, welders are supplied by several unions in the organized sector, such as the boilermakers, plumbers and pipefitters and ironworkers unions. And among welders, certified boiler-tube welders are "kings" because of the high level of skill, difficult working conditions and tremendous demand at peak times in spring and fall when utilities traditionally shut down plants for maintenance. "Pressure welders are probably the most specialized
and most coveted by contractors," says Branscum. "We focus and pay particular attention to welders" in training and recruitment, he says.
Certification of welders is expedited by the Common Arc program administered by the National Association of Boilermaker Employers, Geneva, Ill. Tests periodically are held in which boilermakers can be assessed by groups of employers, says NACBE Executive Director John F. Erickson. This cuts down on the expense of testing for individual employers and provides workers with greater work opportunities, he notes.
The plumbers and pipefitters union also is beefing up its welding skills. Top- of-the-line welding skills are needed in aging conventional and nuclear plants as they change out generators and other equipment, says union President Martin J. Maddaloni. The union also has niche training aimed at providing work for members in powerplants, such as a valve replacement program for nuclear plants.
But Maddaloni thinks that some of the shortages are man-made, overstated and related to poor project planning. "I honestly believe that the emphasis on labor shortages in construction is played out a little more than it should be," he says. With all of the plants shutting down in the spring and fall, "you kill the person for three months, and as soon as that is over, there is nowhere to go
.You cant put people on the shelf."
Nonetheless, the plumbers and pipefitters union has expanded its membership, from about 286,000 to 320,000 over the past five years. About 35% are employed in powerplant construction. "Contrary to what some may think, the doors are open if people want to come in," Maddaloni says.
The union also has been beefing up its "distance learning" capability to enhance the portability of its members and their ability to train in more remote locations, which often are the homes of new powerplants. "By the middle of 2002, we will have all training centers and local unions connected so that they can do distance learning," says Maddaloni.
"The demise of the steel industry and cutbacks in autos" has made the labor issue in power a little tamer, says Noel Bork, executive vice president of NEAThe Association of Union Constructors, Arlington, Va., and impartial secretary of the National Maintenance Agreements Policy Committee. Those pacts provide uniform working conditions in much the same way as a national project agreement, without the need to negotiate one for each project. Bork notes that power now accounts for 30% of the hours worked under the national agreements, up from a traditional 22%.
Although not maintenance projects, some peaking plants currently are being built entirely under the agreements if the parties all agree. "We promote the agreements as a tool [and] there is a comfort factor with contractors, users and the building trades," Bork says. Adds Branscum: "There is not a lot of opposition to it."
Open shop contractors also report that the craft labor situation is easing because of the severe drop in construction activity in the metals, forest products, petrochemical and other industrial markets, partly caused by the strong U.S. dollar that has made some of those industries noncompetitive with imports. "Outside of power, there is not a lot of demand," says Ted C. Kennedy, chairman of BE&K Inc., Birmingham, Ala.
Still, spot labor shortages are occurring in some areas because of a work force that is increasingly reluctant to travel, says Kennedy. "We have two powerplant projects in northern Alabama with lots of applicants and another in Oklahoma that is going begging," says Kennedy. When the contractor asked the Alabamians if they wanted to go to Oklahoma, they said: "No, we will stay here and wait for a job," Kennedy explains.
BE&K and other big nonunion firms use per diems and other incentives to lure workers to particular projects. While nonunion workers in powerplant and other markets almost always earn less than union workers (see table), incentives can boost their pay considerably.
Contractors are making incentive payments for living expenses, safety, attendance, productivity and other things to attract and keep workers on projects, says Jeffrey M. Robinson, president of Personnel Administration Services, Saline, Mich. A PAS survey of large nonunion contractors in the power market employing over 30,000 craft workers indicated that they pay an average per diem of $44.18 to workers on about half of their shutdown and outage work.
"This adds about $5 an hour" to compensation, but is not included in the official wage-fringe number, says Robinson. "This is an owner-driven thing. They dont want to increase the wages" and want the flexibility to turn the incentive on and off, he says.
Of the contractors paying the incentives, those for safety average 26¢ per hour, attendance 61¢, project completion 71¢ and production 64¢, according to the PAS survey.
Where workers are in short supply, contractors are working with owners and suppliers to plan for more modularization, prefabrication and constructibility to cut down on field work. Even "little things" like having fabricators not paint the ends of steel that needs to be welded makes a big difference, says Kennedy.
BE&K, TIC Holdings Inc., H.B. Zachry Co. and other big nonunion contractors also are cooperating among themselves to keep local skilled craftspersons busy in an area, even though the firms are fierce competitors. All support and use the open-shop, modular training curricula of the National Center for Construction Education and Research, Gainesville, Fla., which also keeps records on what modules workers complete.
"If we have a project going down and BE&K and Zachry have one coming up, the human resources people will work together to move [skilled craft people] over," says H. Dean Risinger, vice president for training and development for TIC, Steamboat Springs, Colo., which currently employs about 3,000 craft workers in the power market and has 15 plants under contract. "We need to keep them working in an area," he says. Adds Kennedy: "It doesnt do any of us any good for people to leave."
"We are not having a lot of difficulty in staffing plants, but there is always a challenge in craft quality," says Risinger. "We are working through NCCER to bring quality up." Kennedy notes that the training records and curricula give the firms a common language and ability to assess training levels.
If shortages appear on power and other projects, a new type of hybrid contractor now is available to provide teams of skilled nonunion journeymen along with helpers and supervision. Not a labor broker, Atlanta-based CraftForce can perform entire civil or mechanical packages under the overall supervision, direction and inspection of the general contractor, says President Steve Greene, former head of craft training and development for Fluor Daniel and Becon Construction. "People work for us and are not leased," he emphasizes. The firm now has a team of 50 working on a cogeneration plant in Dalton, Ga., and has a database of 10,000 workers who have expressed an interest in working for the firm, says Greene.
Notes TICs Risinger: "We are receptive [to the concept] and it is another tool in the toolbox."