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As shale-related projects, and other construction booms, labor shortage remains a challenge



Published: Fri, November 1, 2013 @ 12:00 a.m.

As shale-related projects boom, finding skilled workers is a challenge

By Jamison Cocklin

jcocklin@shalesheet.com

youngstown

An aging workforce and the nation’s strong emphasis on a college degree for high-school graduates have left trade unions in the Mahoning Valley with the challenge of persuading the young to join their ranks to meet growing construction demands.

The squeeze on skilled labor comes at a time when Ohio’s construction industry is surging with projects related to shale-gas development. Pipelines to deliver oil and gas are being laid daily, hotels to house more workers are planned, processing plants need construction, and other major projects yet to be announced are on the horizon.

The problem is not unique — a skilled-labor gap has been projected at job sites and manufacturing facilities nationwide for years.

But while Ohio has hemorrhaged manufacturing jobs since the late 1970s, and jobs in its construction industry declined by nearly 30 percent between 2001 and 2011, moderate growth in the state’s economy — driven in the East by a burgeoning shale-gas industry, a steadily improving economic outlook and a rising housing market — has construction bouncing back.

The turnaround has some of the Valley’s 22 skilled-trade unions — such as plumbers, electricians, heavy-equipment operators and carpenters — facing varying challenges.

With few exceptions, applications for apprenticeship programs are down.

“We’ve come through this before. We’ve spent decades in nepotism — dad wanted to get their kid in the programs,” said Don Crane, president of the Western Reserve Building & Construction Trades Council, which represents 14 crafts and a network of 22 unions throughout the Valley.

“We’ve always sort of been thought of as the gas company — you can’t get in unless you know someone. That’s not the case anymore at all. We’re wide open, but we’re still facing a bit of a hurdle with guidance counselors and the people that have contact with young people,” Crane added.

There’s now a suite of high-profile projects taking place throughout the Valley. Unions are busy providing workers to a $20 million expansion project at ValleyCare Northside Medical Center, a $100 million, seven-story tower at St. Elizabeth Health Center’s Boardman campus and a $375 million cryogenic processing facility for the oil and gas industry in Springfield Township.

Ongoing projects at GM Lordstown, Vallourec Star, hundreds of pipelines in eastern Ohio and new housing construction have kept employment demand steady for a good-paying sector of the economy, union officials say.

There are currently hundreds of pipelines under construction or planned in eastern Ohio, and more will undoubtedly be announced in the coming years as exploration and production companies continue to partner with midstream companies in order to enhance takeaway capacity and further develop the Utica as more than just an emerging play.

The shale industry is credited with the upcoming construction of an $11 million, 85-room Comfort Suites Hotel and banquet center in Liberty. Owners at the Hampton Inn, off Interstate 80 in Austintown, have permits to build a Home2 Suites by Hilton, while ownership at the Holiday Inn Express & Suites there plan to construct a Candlewood Suites.

Both hotels will accommodate oil-and-gas workers with the new extended-stay locations so they can serve more overnight guests at existing hotels.

“We’re still feeling a bit of a pinch when it comes to staffing these oil-and-gas related jobs,” said Rocco DiGennaro, business manager at the Laborers’ International Local 125 in Youngstown. “Right now, we’re finishing up at the processing plant in Springfield, and we anticipate more will come.”

Already, as the Hickory Bend processing facility in Springfield nears completion, Pennant Midstream announced in October that it is clearing land for two others there as it anticipates more demand from Utica and Marcellus operators.

DiGennaro said his laborers, who have been active in constructing many of the region’s pipelines, have been working in the southern part of the state, too, in places such as Columbiana, Guernsey and Harrison counties.

To be sure, local unions are meeting demand without problems. Many have achieved 100 percent employment for their members.

But those opportunities are not always going to Valley workers, Crane said. Demand, especially in the oil-and-gas industry, has left the trade council calling far-off unions in places such as Wheeling, W.Va., Pittsburgh, and other parts of the state to meet its needs in the Valley.

“We’re meeting demand. The problem is when you look ahead,” said Jim Burgham, business manager at the International Brotherhood of Electrical Workers Local 64 in Youngstown. “Applications for the apprenticeship programs have been going down for years, and lately it’s been a noticeable decrease from years past.”

About five years ago, Burgham said, hundreds of apprentice applications rolled into Local 64. This year, the union received about 70 applications, and after basic requirements are met, such as having a high-school diploma, a driver’s license and passing an admittance test, applicants dwindle to about 40.

This year’s class at Local 64 has 12 students enrolled, which will meet workforce demand, but future classes might need to be much larger.

It’s a problem because in 2012, 53 percent of the nation’s skilled-trade workers were 45 years or older, according to Economic Modeling Specialists International, which analyzes data on the labor market for businesses.

Last year in Ohio, 57 percent of the state’s skilled workforce was 45 or older, the 12th-oldest skilled workforce in the country, according to the same data.

At the same time, the Ohio Department of Job and Family Services released a report in July that said core shale-related industry employment, such as pipeline construction and well drilling, was up by 17.7 percent between the fourth quarter of 2011 and the fourth quarter of 2012 — that’s a 17.7 percent increase.

A lack of interest, combined with efforts to drive students toward college instead of trade schools or union programs, and attrition through retirement, means the unions have to do more to increase enrollment, Crane said.

He added that hundreds of positions will need to be filled here in coming years.

“I just think the young people are not being educated or informed about the building trades,” Burgham said. “It’s a good, viable option. That’s great if you want to go to college, but if you don’t, there’s other avenues.”

Butch Taylor, business manager at the Plumber and Pipefitters Local 396, said four years ago the union was struggling with 40 percent employment. That’s changed to 100 percent, and the union has had to increase the size of its apprenticeship classes.

Unlike some other unions, applications are up at Local 396, which received 200 applications this year for its five-year program. Problems there are different.

Of those applicants, only 10 were women and minorities. Increasing diversity is a major goal at the pipefitters union, Taylor said.

What’s more, he added, a serious shortage of qualified welders exists in the Valley. Complex welds on a growing number of heavily regulated pipelines and at processing facilities that will move oil and gas have absorbed what welders were here. Better training and outreach efforts of all kinds have increased at many Valley unions to help fill the potential voids, officials say.

One thing is for sure: The trades pay well, Taylor said.

In Ohio, the median hourly wage for a tradesman is $18.72, according to EMSI. Taylor said it can be much more depending on the craft and skill level.

For core shale-related industries, ODJFS said the average annual wage was $76,643, compared with $44,242 across all other industries.

Taylor said those graduating from area apprenticeship programs will have the earning power of anyone with a bachelor’s degree, which pays nearly double of someone with a high-school diploma, according to data from the U.S. Census Bureau.

“In my opinion, we need to keep reaching out to these kids at an early age, even in junior high,” Taylor said. “This is a strong component of our economy, and it’s a way to make a good living and have high skills.”

A growing supply chain has manufacturers searching for skilled workers to make the parts and equipment that the oil-and-gas industry needs in Ohio and Pennsylvania.

A slew of major manufacturing operations opened in the Mahoning Valley throughout the summer, from Exterran’s facility on Salt Springs Road and Vallourec Star’s new pipe rolling mill, to Industrial Piping Specialists in Girard and the Valerus factory in Youngstown.

“We’re actually seeing a lot of business as an indirect result of the oil-and-gas industry,” said Vic Ing, president of the Alliance Solutions Group of the Mahoning Valley, which provides staffing services across nine industries, including health care, manufacturing and technology. “We’re not working with the companies involved in drilling, but it’s a trickle-down effect. This industry has created a need for pipe, infrastructure and tools. It seems like a good number of the companies I meet, and work with, are seeing a lot of growth from this industry.”

Ing added that it’s not just the major players such as Vallourec or Exterran, but small machine shops and businesses that are picking up indirect work from shale development. In some instances, Ing said, it has been a challenge to find the skilled workers some companies are looking for, but that’s not necessarily a bad problem, he said.

“We opened our office [in Austintown] about a year ago,” Ing said of Alliance, which operates several offices across Northeast Ohio.

“The reason we located here is because a lot of the customers we’d worked with in the past told us about the demand that’s coming here.”


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