Houston Area Workforce Owners’ Perspective

1. Houston Area WorkforceOwners’ Perspective December 08, 2005

2. Crisis or Bump in the Road? • Not a crisis yet • Significant concern for specific crafts, especially short term labor • A predicted problem for many years, accelerated by recent hurricanes • Underlying cause - an aging workforce & few recruits in pipeline • Construction is not an attractive career choice

3. Experience on Recent Turnaround • Increased wages and retention bonuses • >40% turnover of contract craftsmen • >100% turnover of equipment operators • Difficulty in obtaining qualified welders • Instrument craft skills below expectations • Shortage of equipment inspectors • Shortage of repair shops

4. Impact on Work • Turnover increasing and replacement difficult • Short term work impacted more than long term workforce • Moving labor between maintenance, construction & T/A’s to level needs • Less qualified workers being used • Some foreign labor is being used

5. Incentives and Actions Taken • Wage increases & retention bonuses • Developing strategies for next T/A’s • Multiple smaller contracts • Compensate for lower skills • At this time most planned projects and turnarounds going forward • Lower priority work may be delayed

6. Impact on Contracting • So far, little impact on existing labor contracts • Will review and adjust as situation continues to evolve • Lump sum difficult without labor cost qualifiers • Increasing number of qualified suppliers

7. What Should be Done? • Continue to disseminate information through associations like HBR, ABC and CMEF • Develop incentives to attract young people into craft work as a career choice • Continue to develop effective skills training programs, consider innovative approaches such as “fast track training” • Long term the labor market will self correct