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US contractors urged to boost training despite oil slump
Engineering, procurement and construction (EPC) companies on the Gulf Coast should focus on training skilled craft workers as a long-term strategy even as low oil prices are putting pressure on company balance sheets and project deliveries in the short term, said Jim Hanna, vice president, Construction/Fabrication HR, Craft Services and Industrial Relations at Fluor.
Speaking at a Petrochemical Update webinar on February 9 together with workforce experts from Olin, Associated Builders & Contractors (ABC) and the Greater Houston Partnership, Hanna said the US energy construction industry should learn from past mistakes and prevent its best workers from leaving the sector.
"The only way to work through this in the long term is to invest in training,“ Hanna said. "It has to be sustainable and it has to be a long-term commitment. This is not the time to pull back because the oil prices are down or you can’t afford it.”
The sharp drop in oil prices has cooled off oil and gas expenditures in exploration and production, prompting some EPC companies to restructure and shed jobs for upstream projects.
Yet according to Hanna, falling oil prices have not softened the demand for qualified craft, and the US Southeast, Mid-Atlantic and Gulf Coast will continue to be short on skilled trades.
Across the broader energy sector, the expected drop in capital spending in oil & gas exploration & production in 2016 will be largely offset by positive growth in refining, petrochemical, LNG and natural gas transmission projects, which will support demand for pipefitters, welders and other skilled crafts.
According to ABC Greater Houston President Russell Hamley, while commercial construction on the US Gulf Coast will slow down in 2016-2017, employment in the industrial construction sector is going to be “red hot,” and competition among contractors for skilled crafts will be “fierce.”
On February 9, CB&I said during an investor day in New York that it will increasingly eye petrochemical, refining and liquefied natural gas projects In Texas and Louisiana while riding out the oil bust.
Fluor, one of the leading E&C suppliers to the oil and gas and related industries, is currently working on three big ethylene projects for the Dow Chemical Company, Chevron Phillips Chemical and Sasol.
The company also recently landed contracts for more downstream projects, including a front-end engineering and design (FEED) and cost estimate contract for PTT Global Chemical’s proposed petrochemical complex in Ohio, as well as FEED work for LyondellBasell’s proposed propylene oxide and tertiary butyl alcohol plant in Texas.
Training for the long term
The US construction sector will see a precipitous decline in skilled, experienced workers as more baby boomers reach retirement age over the next 10 years, making training imperative.
Besides increasing productivity and safety in the field, training is also key to retaining high-demand workers, according to Hanna.
About 86% of Fluor’s current workforce has been with the company for less than five years. The company employs more than 12,000 crafts – up from 3,500 three years ago – and is quickly approaching 20,000 in the coming year, Hanna said.
“The key to the success and the sustainability of training the workforce is first and foremost having job opportunities that people can go to after they are trained,” he said.
Offering high safety standards, competitive wages, good work experience, job mobility, and opportunities for promotion and training have also helped Olin keep more workers, according to Bruce Raiff, learning & performances leader at Olin.
“It’s going to take the collective effort of the contractors with the industry, with the owners, with the community colleges, with the associations to realize that [training] is a long-term commitment and investment,” Hanna said.
In 2013, Fluor launched its Craft Education Initiative to invest resources in targeted colleges, schools and programs throughout the United States to get more students to pursue and complete high-value construction industry certifications. The company is partnering with Brazosport College and Lee College in Texas, among others.
In addition to collaborations with colleges and contractor associations, Fluor offers free training programs for entry-level craft, welder upgrade training, craft certification and supervisory training.
Trainees receive industry-recognized entry-level credentials in the National Center for Construction Education and Research (NCCER) Core Curriculum in either electrical, instrumentation, millwright or pipefitting.
In 2015, Fluor offered more than 90,000 hours of craft training on its projects led by master trainers and members of Fluor’s field supervision staff, Hanna said.
Fluor also offers 14-16-week, four-day-a-week welder training programs in Houston for experienced welders who want to hone their skills or advance to the next level.
Welders would train from Monday through Thursday, and get paid to work on outages and other projects on weekends. Hanna said there are currently more than 500 people waiting to begin Fluor’s training program.
In December, Fluor also opened a regional craft training center in La Porte, Texas, for both entry-level and welder upgrade training. The center has about 65 students and four NCCER-accredited instructors.
Meanwhile, ABC is also looking to expand its training capabilities. "We see that as a long-term solution to the skilled worker problem that the industry has," Hamley said.
In the last 18 months, ABC has been offering semester-based NCCER-certified training for new hires at community colleges and plans to expand some of the training programs to incumbent workers. It also seeks to expand the training to more locations and offer more flexible training options such as smaller, customizable training packages, Hamley said.