Louisiana leads education efforts to meet workforce shortage

Louisiana will face the petrochemical workforce gap full on, with a projected need for additional 86,300 skilled craft job openings to build an estimated $60 billion worth of new plants and plant expansions in the next few years.

Employment in the growing petrochemicals sector in Louisiana is expected to peak at lower levels than forecast before the oil price slump, but the peak is likely to last longer, according to Curt Eysink, executive director of the Louisiana Workforce Commission (LWC).

The LWC’s latest mid-term labor demand projections forecast the spike to arrive towards the end of the 2014-2016 period.
While total employment is projected to remain stable from 2015 to 2016, the need to replace retiring workers will create new job opportunities in 2016 and beyond, according to the LWC.

Without an increase in the available supply, the construction industry in the US will be short of whopping 1.5 million skilled craft professionals in the next five years, some 170,000 of which in industrial projects alone, according to the Construction Labor Market Analyzer (CLMA), an analytics tool that produces real-time craft labor market intelligence based on data from owners and contractors.

Louisiana is one of the US states that will face the workforce gap full on, with a projected need for additional 86,300 skilled craft job openings to build an estimated $60 billion worth of new plants and plant expansions in the next few years, according to the LWC.

Seasonally adjusted employment in the construction sector was around 136,600 in March 2015 compared to 137,300 in February and 138,000 in January, and 134,900 in February 2014, according to the US Bureau of Labor Statistics.

The 2012-2022 long-term projected employment peak for the Louisiana construction industry is 146,742, with a total percentage change of 0.162589, LWC forecasts show.

In March this year, Sasol broke ground on its 1.5 million tonne/year ethane cracker and derivatives mega project near Westlake, a facility that will roughly triple Sasol’s chemical production capacity in the US when it comes on stream in 2018.

The project is expected to create more than 5,000 construction jobs and more than 500 full-time positions, 100 of which have already been filled, according to a company press release.

There are three more ongoing expansions to existing ethane crackers and at least 10 other projects that are in the proposal phase in Louisiana.

Shale drives growth

The workforce shortage is projected to persist in the next few years on the US Gulf Coast as more workers retire and the industry ramps up investment in megaprojects on the back of cheap shale feedstock.

Chemical companies have begun or are planning 223 shale-related projects in the US to date, representing a cumulative investment of $137 billion, according to the American Chemistry Council (ACC).

The current pipeline of ethane-based petrochemical projects alone will add more than 10 million tons/year of new ethylene capacity in the US by 2019, according to Petrochemical Update estimates.

The new chemical projects will create 46,000 permanent chemical industry jobs by 2020 if they are completed, as well as about 264,000 jobs at supporting companies and contractors, according to ACC estimates.

Temporary construction jobs and others tied to the economic impact of the plants would add almost another 1.2 million total jobs by 2020, the ACC estimated.

This estimate does include the projected demand for workers with similar skills in the upstream and midstream oil and gas sectors.

The petrochemical investment will also have a significant impact on the economy at large, as every new job in the petrochemical industry creates 10 jobs elsewhere, according to Peter L. Cella, president and chief executive of Chevron Phillips Chemical.

This demand growth comes in the face of hiking retirement rates. The youngest Baby Boomers are turning 50 this year and the oldest have already begun to retire. All of the Baby Boomers will be over 65 years old in 2030.

Investing in technical education

Even before the current pipeline of petrochemical megaprojects broke ground, the state of Louisiana had begun investing in technical education programs to bring more young workers in computer analytics, information technology and petrochemical plant construction, maintenance and operation.

Louisiana was among the first US states to anticipate the looming shortage of industrial construction workers in the petrochemical and other industries, paving the way for how other state governments, petrochemical manufacturers, EPCs and schools partner to meet an immediate need for thousands of electricians, welders, millwright and other construction personnel to build petrochemical plants across the US Gulf Coast.

Construction demand is a big part of the state’s Rapid Response Fund – a $10 million-a-year program to help the Louisiana Community & Technical College System to meet the needs for high-demand, high-urgency workforce needs, according to Eysink. 

The fund was set up in 2008 following the rebuilding efforts after Hurricane Katrina.

“One of the experiences that we as a state learnt after Hurricane Katrina that it was taking up to 18 months to set classes to train people who could help with the rebuilding. And by that point, that’s way too slow and too late,” Eysink said.

In 2014, the state also created the Workforce and Innovation for a Stronger Economy Fund (WISE), a program to pump $40 million into higher education to better develop students for high-demand jobs.

There are two main hiring categories of jobs for the petrochemical plants, according to Tim Johnson, president of consultancy the TJC Group

One category is the people who work at the plant long term. This includes process operators, engineers and lab technicians, among others.

“As we see growth in the industry and maturity of the workforce and more retirements come on, we see more need for these jobs,” he said.

Louisiana, a number of years ago, partnered with the Louisiana Community and Technical College System to develop a two-year degree in Process Technology Certificate that allows graduates to find a job quickly.

“That demand will remain strong. If you are looking for a job in process technology, it is pretty likely you will find jobs in Louisiana,” Johnson said.

The second category is the construction professionals, particularly skilled craft professionals such as welders, electricians, ironworkers and millwright, among others.

“We’ve known there would be a labor shortage, so the stakeholders including representatives from the petrochemical plants, legislators, construction companies, training programs came to the table to discuss how to recruit and train for these jobs,” Johnson said.

“While the entire country will see a shortage of these jobs, we think Louisiana will feel the shortage less. There has been great collaboration among the plant owners, contractors and laborers and government working together to prepare for the 30,000 plus full-time staff we estimate we will need here.”

There is an immediate need for about 30,000 skilled craft workers in the state. The TJC Group estimates additional 30,000 workers will be needed over the next three to five years to replace those who are retiring.

Louisiana was the first state to adopt the Build Your Future (BYF), a National Center for Construction Education and Research (NCCER) initiative that provides a collaborative grassroots approach to construction workforce forecasting and development that includes recruitment, training, placement, retention and image enhancement strategies.

The Louisiana Community and Technical College System is also partnering with the Associated Builders and Contractors (ABC) and organized labor to create a common recruitment and training process.

“Using NCCER curriculum, all courses are similar within the system. When one class is full, they can send their students to another program,” Johnson said.

To adjust to the workforce needs, the K-12 school system has also adjusted its school rating system to promote technical jobs, as well as four-year university courses.

“Over the last 25 years, we have created a culture that says you must graduate high school, go to a four-year university and get a four-year degree kind of job,” Johnson said.

High school principals were previously scored based on how many students were ready for a four-year university and enrolled in college. The new scoring system also factors in students who pursue Associate degrees and technical programs.

The Louisiana Department of Education K-12 system has initiated Louisiana Jump Start, a program for school districts, colleges and businesses to collaborate in providing career courses and workplace experiences to high school students.

“This is a refocus on career and technical courses at high school level to identify high-growth jobs and prepare students for the job while in high school,” Johnson said.

“Students can take technical classes at high school and have dual enrollment in a community college. High school students can graduate job ready from high school, some with an associate degree, or just one semester away from an associate degree.”

NCCER has been supporting the K-12 efforts providing accreditation for high schools and the college programs.

By Heather Doyle