Workforce Woes

Gulf Coast crisis forces cohesive plan to recruit, train

By Angelle Bergeron

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 the work in the Gulf Coast vary wildly, but rather than wringing their hands, industry experts from Texas to Alabama are rolling up their sleeves and coming up with creative solutions.

As the Gulf Coast region forges ahead in recovery, the rest of the country would do well to observe what may be the greatest project management miracle in history - solving the current workforce crisis.

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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.

Along the Gulf Coast, national projections indicate a net shortfall of 250,000 skilled laborers per year for the next 10 years.

"From 2000-2005, we averaged from 90,000 to 110,000 skilled craftworkers in Louisiana," says Eddie Rispone, chairman of the management board for Industrial Specialty Contractors LLC of Baton Rouge. "For 2005-2010, 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. Everything is happening at once."

Prior to the hurricanes, Turner was employing between 9,000 and 11,000 people per year. "Now we have 15,000, and that doesn't include hurricane rebuilds, debris removal etc.," Toups says.

Attracting the workers. 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 Inc. of Columbia, Miss. "It's a supply and demand thing."

As the Gulf Coast area contractors increase wages to attract workers, the outlying areas are forced to up the ante as well. The more skill required and the closer to the hurricane-affected zone, 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 Inc. Although Corpus Christi didn't feel the crunch as bad as other places, MMR was still paying a premium and having a hard time finding people.

"Before the storm, we were paying an A-class journeyman (electrical or instrumentation) $17 an hour," Blalock says. "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.

Robinson says that a survey by his organization of the Louisiana and Texas Gulf Coast found that workforce needs are expected to double in the next two years.

"This is a combination of all types of construction, but favors the heavy, industrial sector," he adds.

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.

Immediately after Katrina, BE&K Inc. of Birmingham, Ala., was flying its top skilled craftspeople across the country to meet the needs of its clients, says Susan Wasley, director of corporate communications.

"It was never worse than right after the hurricane when we felt like everybody rushed to the coast," Wasley says. "We felt the pinch everywhere in the South and Southeast."

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.

Through his company's construction management division, Mike Boudreaux, president and CEO of Gulf Coast Investment Developers Inc. of Biloxi, Miss., says it's 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 GCID numerous 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."

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 Co. of Watsonville, Calif., and Archer Western Contractors, a unit of The Walsh Group, of Chicago began work on the $266.8 million contract to build a new U.S. 90 bridge over the St. Louis Bay in Mississippi, it has been providing 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.

Providing housing also cuts into a contractor's profit margin, which may steer some away from the work on the Gulf Coast.

"We're having trouble attracting the sizeable workforce we need, and that has kept us from bidding on some projects, particularly in Louisiana," says Matthew Walsh Sr., Archer Western president.

Even if companies have the resources to find the people they need, it may be at too high a price to their bottom line.

"This is a serious industrywide problem and it is going to take contractors, owners, educators and government agencies to solve this problem," BE&K's Wasley says. "It is limiting growth - national growth. If you can't build it, you have slowed down the growth of a region or even a nation."

So what's the solution? 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 and promotional aspect of the recruitment effort.

By August, I'm GREAT was launched in Louisiana and Mississippi. The campaign includes radio spots, billboards and signs touting the GREAT campaign and the toll free number to call (888-52-GREAT) to learn more about free training.

"In Louisiana and Mississippi our final trained number was 2,161 people for 2006," says Tim Horst, program manager. There are already plans to expand I'm GREAT into Texas and Alabama by mid-2007 and eventually take the program 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 won't be resolved, says Derrell Cohoon, president of Louisiana Associated General Contractors in Baton Rouge, La.

"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 not a new phenomenon along the Gulf Coast, but it has reached such crisis proportions that it is forcing the industry to take a comprehensive approach that includes image perception, education, recruitment, training and retention, says Industrial Specialty Contractors' Rispone, who also chairs the Louisiana Craft Workforce Development Board.

In November, at the National Construction Users Roundtable conference, Rispone presented the board's comprehensive plan that he hopes will become a template for workforce development nationwide. The board has since presented its recommendations to the Department of Education, Department of Labor and various user groups and is in the process of setting up a meeting with Louisiana Gov. Kathleen Blanco.

"We are going to just keep pushing forward," Rispone says. "This really is a good blueprint for what needs to be done in a coordinated effort for workforce development in any state."