Gulf Coast Crisis Forces Cohesive Plan to Recruit, Train
Construction was already experiencing a national workforce crisis when hurricanes Katrina and Rita walloped the Gulf Coast region with a one-two punch in 2005 and left an unprecedented amount of work in their wake.
Estimates for the number of people it will take to actually perform work in the Gulf Coast vary wildly, but rather than wring their hands, industry experts from Texas to Alabama are rolling up their sleeves and crafting creative solutions.
As the Gulf Coast region forges ahead in recovery, the rest of the country would do well to observe what may turn out to be a blueprint for solving a workforce crisis.
Most everyone is familiar with the prehurricane reasons for the labor disaster.
“Boomers are retiring and some states are experiencing a decline in the number of 19-year-olds entering the workforce for the first time,” says Loren Scott, a Baton Rouge economist who prepares an annual state economic outlook. “If you have a reduction on one end because they are aging and no one to pick up the slack on the other end, you will have a shortage problem.”
National projections peg shortfalls of 250,000 workers annually along the Gulf Coast.
“From 2000 to 2005, we averaged from 90,000 to 110,000 skilled craftworkers in Louisiana,” says Eddie Rispone, chairman of the management board for Industrial Specialty Contractors of Baton Rouge. “For 2005 to 2010, we were going to need twice that many to do the work identified before the storms. That was huge. Now we need at least 90,000 more.”
The Gulf Coast Workforce Development Initiative estimates that an additional 45,000 workers will be needed to rebuild the Gulf Coast, but that figure doesn’t include all the oil, petrochemical, and Liquefied Natural Gas construction in the region, says Stephen Toups, vice president of business development for Turner Industries of Baton Rouge.
“In the last five years, deepwater efforts have spent about $20 billion on deep offshore rigs,” Toups says. “In the next five, they are expecting to spend $65 billion. Everyone has more activity.”
Prior to the hurricanes, Turner was employing 9,000 to 11,000 people per year.
“Now we have 15,000, and that doesn’t include hurricane rebuilds, debris removal etc.,” Toups says.
Attracting Workers to a Crisis Zone
Since the 2005 hurricane season, contractors throughout the Gulf Coast have been paying extra wages and incentives to keep the workers they have, attract new ones from other parts of the country, or woo them away from local competitors.
Workers are getting sign-on bonuses, higher hourly rates, per diems, and housing and/or gas stipends for travel.
“We’re doing whatever we can do to get qualified employees,” says Jay Carney, president of T. L. Wallace Construction of Columbia, Miss.
As Gulf Coast area contractors increase wages to attract workers, outlying areas are forced to up the ante as well. The more skill required and the closer to hurricane-affected areas, the higher the price.
“Pay rates are specifically dictated by how close you are to New Orleans,” says Barry Blalock, district manager for the Corpus Christi, Texas, office of MMR Constructors. “Before the storm, we were paying an A-class journeyman [electrical or instrumentation] $17 an hour. After the storm, we were paying $18 an hour, and now we’re paying $19.”
Wages will continue to escalate during the next two years, says Jeffrey Robinson, president of Personnel Administrative Services of Saline, Mich., which tracks nationwide wage and benefit trends and is working on a two-year forecast of workforce needs in the Gulf Coast.
“In some active areas in Louisiana and Texas we have seen wages increase 3 to 4% each quarter over the past 12 months,” Robinson says. Most of this increase is in the heavy, industrial sector, but commercial and institutional will likely catch up in the coming months.
Many construction executives in the Gulf Coast area reported wage rate increases of 7% in 2006 and project increases of 7% or higher in 2007, Robinson says. He interprets that as a sign that wage increases for crafts will follow the same pattern and be even higher in key industrial and petrochemical areas.
The lack of skilled labor is slowing down delivery of some projects as they take a back seat to high-profile contracts with big budgets and early completion incentives. Mike Boudreaux, president and CEO of Gulf Coast Investment Developers of Biloxi, Miss., says operating his company’s construction management division has become a constant struggle.
“When I go out and see 14 roofers when the subcontractor said they would have 25 on the job, that’s when there is a problem,” Boudreaux says. “They scramble to get laborers to get the work done, but sometimes they’re just bodies.”
The problem has caused severe delays.
“Our Oak Shores development [in Biloxi] was supposed to be finished in August,” Boudreaux says. “Now we won’t start closing out units until the first week of February. We’re talking about a six-month delay on that project.”
No matter what contractors are paying for the actual work, they also have to dig deep and foot the cost for housing, too.
“Even if you could get all the people you need to perform the work, where are they going to live?” asks C.J. “Buddy” Edens, president of Mississippi Associated Builders and Contractors.
Since the joint venture of Granite Construction of Watsonville, Calif., and Archer Western Contractors, a unit of the Walsh Group of Chicago, began work on the new $266.8 million U.S. 90 bridge over St. Louis Bay in Mississippi, it has provided camps to house employees.
“We’re paying higher wages and incentives, but they’re probably still not as high as we would be paying in other parts of the country,” says Allen Nelson, GAW project manager.
Looking for Workable Solutions
Congress passed legislation in fall 2005 to fund existing and new workforce development programs, including the Gulf Coast Workforce Development Initiative.
The initiative kicked off its “I’m GREAT” (Gulf Rebuild: Education, Advancement and Training) campaign, with the goal of recruiting and training up to 20,000 new construction craftworkers for the Gulf Coast region by 2009. In July, the Business Roundtable took over the marketing aspect of the recruitment effort. By August, the campaign began in Louisiana and Mississippi with radio spots, billboards, signs, and a toll-free number.
“In Louisiana and Mississippi our final trained number was 2,161 people for 2006,” says Tim Horst, program manager. “Our goal for 2006 was to train 2,500, so we were a little bit short of that.”
But Horst adds that he is encouraged that November’s training data was at the monthly rate required to meet the 2009 goal of 20,000 people. There are plans to expand the program to Texas and Alabama this year and eventually nationwide.
As long as redevelopment continues to be stymied by unresolved insurance issues, lack of housing, and the absence of a comprehensive rebuild plan, the workforce problem will remain, says Derrell Cohoon, president of Louisiana Associated General Contractors in Baton Rouge.
“At this point, I’m betting that number [20,000 trained] isn’t as close to what the actual numbers should be because the rebuild really hasn’t started,” Cohoon adds. “But people won’t take training classes unless there are jobs waiting.”
The worker shortage is forcing the industry to take a broad approach that includes image perception, education, recruitment, training, and retention, says Rispone, who also chairs the Louisiana Craft Workforce Development Board. The board’s own comprehensive plan, which Rispone says can become a template for workforce development nationwide, has been presented to the National Construction Users Roundtable, Department of Education, and Department of Labor.
“This really is a good blueprint for what needs to be done in a coordinated effort for workforce development in any state,” Rispone says.
But Turner Industries’ Toups says he is confident that the crisis will pass, because the industry always adapts.
† “The right people are talking, working on it, and paying more attention to workforce development than in the past,” he says. “We’re educating people, talking about it, working smarter, using technology, and communicating better.”