ECF ’16: Energy contractors need newcomers to ease labor shortage

By Ben DuBose
Digital Editor

GALVESTON, Texas -- Downstream project operators and contractors should focus on the development of more construction careers in order to relieve the ongoing and unprecedented shortage of skilled labor, a prominent industry executive said on Tuesday.

James Slaughter, president of S&B Engineers and Constructors, told delegates at the second annual Energy Construction Forum that pressures are rising throughout the industry. Already, 35% of projects fail and 65% of all mega-projects fail, as defined by a cost or schedule overrun of at least 25%, reduced cost-competitiveness and/or severe operational problems.

Given those pressures in place, developers can ill-afford to sit idly by on issues of workforce development, he said.

"Bottom line, the shortage of skilled craft workers is critical and is at a critical point, and projects should plan for an increased shortage," Slaughter said. "We're going to have increasing pressure on pipe fitting and welding."

Despite paying relatively high wages, the S&B executive says there simply is not an adequate flow of newcomers coming into the industry at this time. Additionally, even when newcomers are found, Slaughter contends that they are not always adequately trained on safety protocols.

"We need to have the machinery in place to train these people on craft skills and safety," Slaughter said.

Slaughter believes an uptick in US Gulf Coast construction fatalities can be attributed to such training difficulties. In 2012, the number of construction fatalities in Texas, Louisiana and Mississippi was 90 before rising to 95 in 2013, 102 in 2014 and a projected 127 in 2015. Those figures are for both commercial and industrial construction, but because commercial projects have been rather flat, Slaughter believes it is "safe to assume" that industrial fatalities are responsible for the increase.

"If we bring in people not properly trained in safety and skills, no doubt human lives are exposed," he said.

To improve the situation, the S&B executive called on industry contractors to make the case to project owners to better support community training programs.

"You need to get training programs included in contracts," Slaughter said. "And train local people, because they can be around after the project is complete for maintenance and other smaller jobs.

"That's really the cause of today's problem, that we haven't had training in contracts, he added.

Slaughter identified former military personnel and women as two demographic groups that could be better targeted with local training programs.

From the owner's perspective, the training should eventually pay for itself through per diem savings, Slaughter said.

Speaking to a room comprised largely of contractors, Slaughter urged those listening to adopt a "Five Ps" approach.

"Perfect planning prevents poor performance," he said, stressing that advanced planning begins with a clear scope and excellent front-end planning, including a well-thought-out construction plan.

As that pertains to the industry's broader issues of workforce development and safety, that means keeping focus on the "crew level", Slaughter said, with personalized worker offering such as craft mentorships, buddy systems, safety training and on-the-job craft skills training.

"Above all, we need to remember to treat people like human beings," Slaughter said. "Give them respect, recognition and keep the project morale positive."

"They say in football that games are won and lost in the trenches, and the same can be said in construction," he added. "Projects are won and lost in the crews."

If that happens, Slaughter believes the economics are in place to turn the shortage around. In the greater Houston area, construction base wages have risen by more than 20% since June 2011 to over $30/hour, while total compensation has surged by 49% in that period to roughly $38/hour.

"Construction pays well," Slaughter said. "It is a matter of educating the public on the positive aspects of the industry, including pay."

The second annual Energy Construction Forum continues through Wednesday at Moody Gardens.

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