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We were Warned…

Warned about what?  About this…

In a recent Reuters news article “U.S. refiners face severe labor shortage for deferred maintenance” it was stated that US refiners have deferred routine work for the last two years while margins were high.  However, now with an excess of global fuels, the refiners see an opportunity to undertake their maintenance shutdowns.  However, there are multiple billion dollar projects that are competing for the skilled labor workforce.

If the refiners do not start the needed work, the article points out that they run the risk of more unscheduled outages and safety issues.  So with this in mind, US refiners are planning to spend $1.26B on planned maintenance in 2017.  The article points out that refiners are going to have trouble finding skilled workers which is going to “complicate scheduling and even extend outages”.

How bad will this shortage be?  From Brownsville, TX to New Orleans it is estimated the refiners will be short 37,400 craftsmen needed to complete all the planned capital projects in 2017.  The area impacted the most is Lake Charles, LA where there will be a shortage of over 18,000 workers in 2017. In Baytown, TX labor costs are projected to drive up a project’s cost by 10% from previous expectations.   In fact, 74% of Texas contractors are having trouble filling hourly craft positions.  Over 60% of the survey respondents said they had to bump up salaries to attract more skilled craft workers.

How could this happen? When did we first know about it?   Did this problem develop overnight?  No, it did not.  In 2001, Harvard Business Review published an article “Cultivating the Gold Collar Worker”.  In this article, it warned that our educational systems were “unhinged from the needs of the business world”.  The article continued (about the educational system) “it Fails to prepare students in the primary and secondary grades for 21st century work”.

But the educational system is not the only culprit.  The article continued with a second problem – our perception that you are either a blue collar or white collar worker.  It highlighted the fact that companies today are ignoring a new class of knowledge worker – The Gold Collar Worker.  This is a highly skilled employee who combines the mind of a white-collar worker with the hands of a blue-collar employee.

Skilled trade technicians fall into this new class of workers.  If you do not believe this is true, reference the previous quote dealing with how contractors are acquiring these employees – by “bumping up the salaries”.

One additional reference is “The 2010 Meltdown”.  The material in this text continues the theme of skill shortages.  In this text, the author contends that the year 2010 was the tipping point, where the skill trades shortage would become sever due to the lack of new applicants and the departure of many of the older, highly skilled “baby boomers”.  The only thing that stopped this prediction from occurring by 2010 was the recession, which delayed the retirement of many of the skilled “baby boomers”. However, that time has now passed and most of the “baby-boomers” have recovered their finances to the point that they can retire in the very near term.  In fact, a recent Bloomberg article by Luke Kawa, said that the number of Americans 65 and over rose by over 800,000 in Q-4 of 2016.  He made the additional comment “the secular trend of retirements can only be delayed for so long”.

We have known for over 15 years that industry (worldwide) was facing an eventual skilled labor shortage and we did nothing.  The positive part about the labor shortage is we will solve the problem in the next decade or we will see the industrial age (as we know it) end.

Where do we start?  The next blog will present some ideas.

Join my upcoming webinar “The Good,The Bad, The ISO55000” to learn more about the international asset management standard – ISO55000. This presentation will holistically examine issues regarding ISO55000; since they all impact one another.  In addition, it will look into the future and see if these topics will be good, bad, or indifferent to businesses. Click here to reserve your webinar spot on February 28th!

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