Energy Employers Can't Find Enough Young Job Seekers

Investor's Business Daily

The energy revolution brought on by shale gas is brightening U.S. fortunes as an energy producer, but it has also revealed a shortage of skilled young workers that could last for years.

Shale oil and natural gas extracted by hydraulic fracturing — fracking — has changed the U.S. from being hopelessly dependent on foreign sources to growing its energy independence for decades to come.

Yet significant challenges remain. A study issued in May by the employment agency Manpower found that 58% of energy employers report facing difficulties in finding the right talent, and 74% believe the problem will get worse over the next five years. Jobs in the oil-and-gas sector alone are expected to almost double by 2020.

Jobs in the greatest demand are field workers such as plant operators, linemen and technicians; skilled trades such as iron workers, welders, pipe fitters and electronic machinists; and highly educated professionals such as transmission and distribution design engineers.

An aging workforce, changing skill requirements as a result of rapid advances in technology and educational shortcomings are the three major factors for the shortage, employers say.

The pay is certainly eye catching, especially with so many college students graduating under a mountain of debt and facing a tough job market outside the energy field. Industrial engineers in oil and gas extraction make an average of $130,000 a year.

Shale To Shale SalariesSalaries vary from state to state, with North Dakota averaging $71,000 a year for engineers in the Bakken shale area while the average salary for a Texas engineer is $100,000, according to BLS data from May 2013.

"As global demand for energy increases, particularly in Asia and India, the U.S. and Canada are poised to supply it — if they can find the workforce to support the industry's growth," the Manpower report said. "If they can't, the lost opportunity is high.

The report mirrors a finding last year by the National Research Council that said the U.S. isn't producing enough qualified younger workers to replace baby boomers retiring from the mining and energy sectors.

That study warned educators that traditional four-year degrees weren't adequately aligning with the industry's needs.

The U.S. shale oil and gas industry currently employs 1.7 million people, the Manpower study states. By 2015, that number is expected to rise to 2.5 million, before hitting 3 million jobs by 2020.

The 2007-09 recession delayed retirement for some of these workers due to battered 401(k) investments, but as the economy has slowly healed, they are indeed retiring.

"We have the resources and we have the technology; we just need the people," said Jorge Perez, senior vice president at Manpower, North America.

But It's A Dirty JobOne obstacle is that many young people see the industry as dirty and dangerous, requiring work in undesirably remote locations such as North Dakota or Alberta.

"People don't seem to be entering the field as much as is needed," said Lea-Rachel Kosnik, associate professor of economics at University of Missouri-St. Louis. "People aren't necessarily educated for the right kind of jobs and the right kind of places.

Nevertheless, community colleges are proving to be better training grounds than four-year colleges for this industry, said Ann Randazzo, executive director of the Center for Energy Workforce Development, a non-profit formed in 2006.

CEWD has launched pilot programs to get students and military veterans to start or transition into energy jobs, engaging schools that offer one- or two-year skills-based technician-level training.

For example, Chevron (CVX) has a University Partnership Program that recruits engineers and other workers at more than 90 different schools, including Stanford, UC Davis, Mississippi State and Colorado School of Mines. They've also focused on attracting a more diverse workforce, including women, African-Americans and Latinos.

PNM Resources (PNM), an Albuquerque, N.M.-based holding company, built an apprenticeship program with San Juan College in order to provide a continuing pipeline of employees.

"This is a really technologically advanced industry," said John Felmy, chief economist at the American Petroleum Institute, recounting his pitch to college students. "It pays really well and in 10 years you're going to be running the show.

The economy has made some college students, many of whom are burdened with debt, more receptive to careers in oil and gas as opposed to following their bliss, he added.

Graduating To Work"I think students realize that employment after graduation is a good idea," Felmy said. "I'm hopeful that markets work. As an economist, I don't have any other choice.

The energy industry isn't the only sector facing a need for younger skilled workers. Mining is facing its own difficulties and the aerospace sector is as well. For aerospace, which isn't facing the boom of the oil and gas sectors, education has been key.

"Tie your R&D programs to universities and also tie your manufacturing to universities and that secures that steady pipeline of the best people you can get from these colleges," advised Rick Kennedy, a spokesman for GE Aviation, a unit of General Electric (GE).

It comes down to convincing enough young people that energy is an attractive field — one in which they can make a good wage and help raise a family — and getting the right education first is worth their effort.

"We need to make it sexy," Perez said. "I say that with respect."

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