Skilled Labor Crisis or Opportunity

1. Skilled LaborCrisis or Opportunity Joint Member Subscriber Breakfast September 13. 2007

2. Purpose • Report information learned at • NPRA Conference In Houston on Aug 23 • Southern Governors’ Energy Labor Summit in Biloxi on Aug 27-28 • Summarize the • Future Labor Demands in the Gulf Coast • Challenges Facing Industry • Possible Solutions • Encourage More Industry Involvement

3. Gulf Coast Craft Labor ForecastRevised

4. Gulf Coast Craft Labor Forecasts

5. Golden Triangle Projects

6. Golden Triangle Labor • Unannounced projects - possibly add $5-7 Billion • Commercial / Industrial Workforce • Historically 8,000 –10,000 • Currently 10,500 –13,000 • Two to Five Year Horizon is 25,000 - 30,000 • Future Commercial Ripple Effect 2,000 - 5,000 • Fulltime Positions / Attrition - 1,500 - ??? • Economic Ripple Effect - 7,500 - 10,500 • Residential Construction - ??? -??? • Maritime / Service sector - ??? -??? • Total Needs - 31,500 – 44,500

7. Energy Industry Outlook • Electricity demand increasing 3% per year in South • Most southern states must have new capacity installed and operating by 2011 and beyond • Over $400 Billion in new generation and distribution facilities. NEI estimates; • 31 nuclear power plants, 27 in Southeast, 9 in Texas • 16 new coal fired plants • 26 gas turbine & 35 combined cycle generation stations • 3500 miles of new high v. transmission lines • 50 major retrofit projects – scrubbers, SCR’s, etc.

8. Energy Industry Outlook • API estimates refining capacity will increase over 1 million barrels per day by 2012. • SEMTA estimate 30,000 more craft workers needed in next 4 years. Primary craft needs are PF, Welders, BM, MW & Elect. • 50% of the 400,000 electric utility workers will be eligible for retirement in 5 to 10 years. • CLRC estimates 185,000 new construction workers needed nationally to replace 95,000 retiring and for the increased demand over next ten years.

9. Challenges Facing Our Industry • Unemployment currently at very low levels and the recruiting pipeline is empty • We compete with other industries and areas for qualified recruits. • Energy, health care, rebuilding infrastructure to name three other industries • Construction image is low, particularly in southern states, due to low wages & benefits, working environment, perceived safety problems, cyclical nature of work. • Skilled labor demand will be high for a very long time, perhaps 10 to 20 years

10. Challenges Facing Our Industry • High School drop out rate is over 30% and much higher among minorities • 28% of 9th graders will achieve a 4-year college degree but only 20% of U. S. jobs require this level of education. • 32% of 9th graders go on to enter an associate degree program at a community college but 65% of U.S. jobs require this level of education • Many students leaving high school are not “work ready” and lack desire to do physical and outdoor work.

11. Challenges Facing Our Industry • Federal and State Education requirements have caused High Schools to drop vo-tec programs to make room for other mandatory courses geared to preparing students for college and passing TAKS tests. • Superintendents, principals, guidance counselors, teachers and parents are not aware of careers in industry. • Skilled labor careers are considered “second class” among many school administrators, teachers and parents

12. Possible Solutions - Education Change the Education System in Texas • Top down & bottom up approach involving all Owners and Contractors and their associations and lobbying groups • We need to influence state legislators, local school boards and high schools to establish or reinstate Vo-Tec programs that meet industry’s needs • Make it O.K. and even desirable to be in skilled labor training in High School • Michigan Study – “at risk students are 8 – 10 times less likely to drop out if they enroll in a career & technical program instead of the general program. • Start NCCER training in 10th grade or earlier. Create an alternative track for skill based careers.

13. Possible Solutions - Education • Teacher standards/qualifications must allow non-degreed “subject matter experts” to teach in high schools and community colleges. • We should encourage and provide incentives for retired Craft SME’s to teach in HS & CC. • It’s a waste of time to only talk to students. • We need to make sure District Superintendents and Principals are committed to supporting industry needs. They should in turn communicate to and expect their teachers, counselors and parents to encourage students to consider the skilled labor track. • Talk about industry needs as a National Security issue and tell school administrators that skills training increase TAKS scores and lower drop outs

14. Possible Solutions - Recruitment • High Schools & Community Colleges should be expected to recruit for industry. • Step up industry marketing and recruiting efforts • Target groups should be current high school students, recent graduates, the underemployed, returning military, women and minorities • Bring in marketing specialists to help design programs • Create a team for each target group. • Include young persons in determining best approach to reach them. • New technology might help – “You Tube” and “My Face” – go where the youth gather

15. Possible Solutions - Recruitment • Aggressively recruit returning military • More than 5000 soldiers are discharged each week • TAP or Transition Assistance Program - week of training and job fairs at every military base in the U.S. • AFL-CIO has the “Helmets-to-Hard-Hats”, where is the merit shop program? • Model after the “Driller” recruiting/training program in Casper, Wyoming • Resources - Hireveterans.com and gijobs.net • Former military should be the best recruits for construction – demonstrated good work habits and are willing to travel and work outdoors

16. What Industry Can Do • Owners and Contractors need to fully implement KPA. Make room for new recruits and give them priority if they continue training. • Owners should only use Contractors that are engaged in Workforce Development initiatives such as HCCI. • Require NCCER certifications for journeyman level. • Increase cents per hour to cover marketing and recruiting costs. • Educate State legislators and agencies about industry needs and reduce “red tape” where ever possible.

17. What Industry Can Do • Talk to your school boards and attend PTA meetings and other venues to tell parents and educators about opportunities in industry. • Help high schools with lab equipment/facilities and material needs. • Implement programs to temporarily use non-fluent English workers and expect them to learn English through industry sponsored ESL programs. • Use foreign workers as last resort. • Encourage multi-crafting and provide incentives. • Resist “labor wars” and guaranteed overtime.

18. What Industry Can Do • Partner with other industries (Energy for example), other groups and associations. • Offer a future to new recruits, not just a job. • Improve worker benefits – health care, 401K plans, etc. • Assign a qualified mentor to every new recruit to encourage and track progression through training. • Maintain labor stability as much as possible– level labor demand on every site and across the greater Houston area. • Get more involved at every level