In La Marque, one shop is offering $5,000 signing bonuses and $90,000 annual salaries to skilled machinists. Even at those terms, it’s having to dicker with candidates from as far away as Chicago.
In Texas City, refineries desperate to fill $28-an-hour jobs are snapping up college students before they’ve earned their process operator degrees.
In Hitchcock, a petrochemical engineering and construction management firm is locked in a recruiting war with competitors, some of which are becoming increasingly aggressive in attempts to steal employees.
As oil and gas prices continue to break records, the U.S. energy industry is flush with cash, helping Texas add 245,000 jobs in the past 12 months while job growth nationally was flat.
But what’s eating the industry is a shortage of skilled workers so severe it’s threatening to slow projects and force companies to turn away work.
Industrial-sized Irony
“The irony is the economy is hurting and a lot of these good jobs are going unfilled,” said Jerry Duncan, director of the Center for the Advancement of Process Technology, a consortium of 51 community colleges and industry housed at the College of the Mainland in Texas City.
The shortage includes jobs from rig hand to engineer.
Its origins can be traced to several factors, including massive refinery expansion projects, a graying work force and perceptions about a gritty, boom-and-bust industry that never has been bashful about shedding workers when crude was cheap and times were hard, observers say.
Building Boom
“You’ve got an oil boom going on and, in addition to that, a lot of construction,” Duncan said.
“BP is putting an awful lot of money into the plant; if you go to Beaumont, they’re spending billions on major plant upgrades.
“They’re scarfing up not only new people to run the plant, but people to build — welders, carpenters, insulators, ironworkers — all the trades.”
BP in Texas City and Royal Dutch Shell in Port Arthur are spending billions on turnarounds and expansion projects, thinning the pool of available workers.
Since 2005, when Hurricane Rita shut down the entire refinery and the complex was rocked by deadly explosions, BP has hired thousands of contract workers to get the complex back up to speed.
Valero Energy has refinery expansion projects in Port Arthur and St. Charles, La.
Industry along the Petroleum Coast is facing mass baby boomer retirements in the next five to seven years, when about 50,000 jobs will need filling.
But only about 5,000 students are enrolled in courses teaching how to monitor equipment at refineries and plants. And the jobs have become very technical; the days of doing plant work without formal training are gone.
Dirty Money, Sexy Money
Process operators with associate’s degrees can start out earning about $50,000 a year. Moderate overtime can bump that to $65,000 or $70,000, Duncan said.
But young people with technology skills often are opting for “sexier jobs,” industry observers say.
“You get your hands dirty, and a lot of it’s outdoors in the Texas heat,” said Bill Day, a Valero spokesman.
“It’s not terribly glamorous, but it’s crucially important to the country’s economy.”
The need for refinery workers is so great that companies are snapping up students at College of the Mainland before they complete process technology training.
Ramon Castro, 24, was two classes into the process technology program when he got a call from Valero. Castro’s previous job with a utility company made him an attractive prospect.
“They were looking at my skills with a previous job,” said Castro, who lives in Texas City with his wife and daughters, ages 2 and 5.
“There’s so many people looking for a job; to me it’s a blessing.”
Although it will take longer with a full-time job, Castro said he intends to complete the associate’s degree program.
Thinking Outside The State
Management at A&A Machine & Fabrication in La Marque, which services refinery equipment, is having to get creative to lure skilled machinists, advertising as far away as Detroit and Chicago, said Alan Hutchins, vice president and general manager.
A little more than a week ago, A&A Machine was negotiating with a potential hire in Baton Rouge. The company is offering signing bonuses from $3,000 to $5,000.
It also is offering $1,000 referral bonuses to employees who recommend successful hires.
A journeyman machinist working overtime can make as much as $90,000 a year, Hutchins said.
“We’re just having to think outside the box,” he said. “For many years, we’d just advertise locally.”
A&A Machine, which offers apprentice programs, is attending job fairs in search of candidates.
Brains And Brawn
It shouldn’t be so difficult to get young people interested in well-paying trades, Hutchins said. But through the years, schools have abandoned vocational courses as students veer toward college, leaving a shortage of welders, electricians, plumbers and even auto mechanics, Hutchins said.
In some cases, A&A Machine is competing for skilled labor with the very refineries it supplies.
“It takes an intelligent person,” Hutchins said. “The craft and skill almost become an art over many years.”
A&A Machine, which has clients worldwide, has seen business double in each of the past two years as it meets orders. Last year, it posted more than $20 million in sales.
The company, which has about 100 employees and needs another four or five machinists, has not yet had to turn away orders. But it’s not pursuing new work, either.
“Our sales are growing, but our sales could be even more if we had the people,” Hutchins said.
Empty Desks
Even white-collar positions are difficult to fill, employers say.
“Demand for engineers, designers, drafters is crazy,” said Jason Lawrence, project engineer at Hitchcock-based Chemic Engineers and Constructors Inc., which provides engineering services to the plants and refineries. “The supply of qualified personnel is too low to meet demand.”
Chemical, civil, mechanical and electric engineers all are in short supply, Lawrence said. Entry-level engineers are not as difficult to find as those with experience, he said.
Companies are stealing away good engineers with better benefits, higher salaries or signing bonuses, he said.
The recruiting wars are causing wage escalation in the industry, with salaries in some cases rising by 25 percent.
Chemic Engineers and Constructors, with 60 employees, has to stay competitive, Lawrence said. The company refers to Texas A&M University’s listing of the average annual salary from former students it surveys. According to a fall 2007 survey by the university, 58 students with a bachelor’s degree in mechanical engineering reported an average offer of $64,181. The maximum offer, according to the survey, was $85,000.
“There are some people running around trying to double their salaries,” Lawrence said. The largest demand is in the design area, Lawrence said. Most engineers got out of the petrochemical industry in the late 1990s and 2000, when demand for their services weren’t there.
“It’s a very interesting market,” Lawrence said.
Oil Bubble Not Bursting
Oil prices slid some last week, but rose Friday above $131 a barrel on concerns about production cuts in Nigeria. Some analysts last week were speculating the July 11 high above $147 a barrel may be the last record the market sees — for a while, according to reports. Still, economists and industry observers say oil prices are being driven by global demand, particularly from China and India. Few predict demand to wane significantly.
Castro, who hopes to make a career at Valero, expects demand for oil to continue for the foreseeable future.
