Ongoing skilled labor issues pose the greatest risk to the bottom lines of Gulf Coast petrochemical owners, a panel of industry experts at a New Orleans petrochemical conference said.
According to the panel, which included Mike McAtee, senior vice president of engineering and maintenance at BASF, labor shortages, lackluster labor productivity and high labor costs are potential impediments to future investment and profitability among Gulf Coast owners.
In particular, an increase in the number of “traveling” skilled laborers chasing higher wages has led to a decline in productivity.
The panel was featured at the two-day Petrochemical Engineering and Construction Conference taking place at the New Orleans Downtown Marriott at the Convention Center.
“There are different dynamics depending upon the area, but in most cases craftsmen are being driven to a per diem rate and still are not achieving the productivity,” McAtee said. “It’s not helping productivity in the field.”
Dan Spinks, vice president and general manager of Fluor Corp., said he has seen a noticeable decline in productivity in recent years, compounded by rising rates of turnovers and absenteeism.
His engineering-procurement-construction company has turned to moving work off-site to lessen the burden of managing sizeable workforces.
“Productivity is not getting better from what I’ve seen,” Spinks said. “We’ve got some work to do there, in order to improve. That’s why moving some of the work off-site is absolutely critical. If you have a site with 5,000 to 6,000 craftsmen, it really becomes a challenge to manage.”
McAtee pointed to other factors that will impact the profitability of U.S. petrochemical owners in the short term. “The real wild card is Asia, particularly China,” he added. “Over the last six to eight months, even as oil prices have come down substantially, and the economy has pulled up a bit, the Chinese producers are still pushing material into the market at very low prices. That’s going to have a disruptive effect on the overall import/export market.”
—Sam Barnes
