Saturday, January 05, 2008

Forget Peak Oil: The Problem is Peak Manpower

The most serious shortage facing the developed world is the shortage of skilled and talented workforce participants.
While Zay looks for executives and top-level managers, the entire energy industry – from welders, tank builders, and roughnecks to petroleum engineers, nuclear engineers, and technicians – is strapped for talent. And the problems are likely to get substantially worse before they get better. Nor is the labor shortage limited to the U.S. and the hydrocarbon sector. Rather, it is worldwide, and being felt in industries ranging from coal mining to nuclear power. The reasons for the labor crunch are many: an aging workforce, lagging student interest in engineering, a lack of interest in blue-collar jobs like welding, and perhaps most important, the strong commodity prices that have led to a boom in energy projects of all types.

...The dearth of skilled workers can be seen by looking at the Gulf Coast. “There is a shortage of several thousand skilled laborers for the offshore industry,” says Bill French, a three-decade veteran of the oil industry and an executive search director for the recruiting firm World Wide Worker. French says that the entire coast is feeling the pinch. All of the offshore industries need welders, not just those who cater to the energy sector. “Welders are making twice as much as they were five years ago,” says French. “It’s like a merry go-round, with workers going across the street for 50 more cents [an hour]…everybody needs welders.”

Michael Harter, chairman of the Tulsa Welding School, the nation’s largest, says demand for his students has never been greater. “I have three to ten job opportunities for every student that leaves us,” he said. Demand is so great that Harter has nearly doubled the size of his classes. Five years ago, the school, which begins a new class every three weeks, would have 60 students. Now, those classes may have 100. And Harter doesn’t see demand slowing down any time soon. “There are so many welders who are already between 55 and 65 and who are retiring. They are retiring as fast or faster than new welders are coming into the job pool.”

The situations for blue-collar workers is matched by that for white-collar professionals. For instance, engineers are in short supply in the North Sea, where Robert Rapier works for one of the supermajors. Rapier, who writes the R-Squared Energy Blog and requested anonymity for his company, says the demand for engineers is “insatiable,” and that he has “posted jobs that literally go unfilled. Supply and demand is out of balance, so the supply side – the manpower – can command high premiums. We have started recruiting a lot in Iran and India.”

Skilled manpower shortages are indeed worldwide, from Hong Kong, to India, to Canada, to large sections of the US.

We already have an active bidding war for top talent in the energy sector. This competition for skilled workers will grow more heated, as experienced workers leave the workforce through retirement.

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