Downstream capital spending projected to hit $100 billion over the next three years will create labor shortages, especially in skilled trades, panelists said at a conference Wednesday morning.
The Gulf Coast will see much of that spending — and the tight labor market – as companies build or expand refineries, chemical plants and pipelines, speakers told oil and gas leaders at a forum sponsored by the research firm IHS.
But the labor demand will not approach the heyday of 2007, characterized by relentless recruitment wars between companies and double-digit wage inflation, speakers said. Wage growth for skilled trades probably will be in the 5 percent to 6 percent range through 2016, as continuing economic weakness in other labor sectors mitigates the downstream building frenzy.
The Texas Workforce Commission estimates that there were 267,000 workers in Texas in the oil and gas sector by the end of 2012.
“We do not believe we will be returning to the tight labor market of 2007,” said Laura Hodges, director of IHS, noting that the global labor market is helping to take some pressure off labor demands on the Gulf Coast.
Petrochemicals: Dearth of skilled workers imperils $100 billion in projects
For the international energy workforce, China, Brazil and Australia continue to be the hottest areas of competition. Energy labor growth in other formerly popular areas, including the United Kingdom and India, have begun to cool off. Canada, the United States and Germany are potential areas of growth for energy labor, but it is too early to forecast a trend, Hodges said.
More than two million construction jobs were lost during the recession, but these will return by 2017, Hodges said.
“But we still have a lot of surplus workers out there right now,” Hodges said.
Texas’ unemployment rate is 6.5 percent and Louisiana is just slightly higher, at 7 percent. Both are below the U.S. average of 7.3 percent.
Hodges said cities with high unemployment that could provide a potential supply of energy construction labor include Cleveland, Ohio; Detroit; Flint, Mich.; Las Vegas; and Los Angeles.
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