Employers in the energy sector are facing a crisis not seen in most managers’ careers.
The crisis, brought on by sustained demand for crude oil and natural gas, is a stunning lack of talent, said one local job recruiter.
“Employers are facing the fact that baby boomers over the next five years will be retiring,” said Ron LaManque, TSC Energy Service Group Partner at the Rowland Group, 3851 S. 103rd East Ave.
Most of the difficulties employers are facing in finding qualified talent stems from the low unemployment rate, saidJim Deatherage, owner of the Spherion Tulsa recruiting firm.
“Shortages of people with specific skill sets have been significant in a number of areas.”
The shortage of workers in the oil and gas industry today is due to so few people entering the sector over the past two decades, LaManque said.
Thousands of white- and blue-collar workers were laid off following the 1980s bust in the oil and gas field, followed by industry collapses in the ‘90s and 2000, said Lynn Flinn, CPA, Rowland Technical president and managing director.
“These people were not returning to the field,” she said.
“No one earned geology degrees, or petroleum engineering degrees from my age, 47, on down,” LaManque said. “Those who did are few and far between.”
The energy market is so hot that demand is far outstripping supply.
Fueling this “crisis” are two issues: unemployment rates in Oklahoma and around the country are experiencing 20-year lows, and potential employees are no longer lured to employers simply on the basis of salaries or traditional benefits packages.
Unemployment remains around 4 percent or even lower in the Tulsa market, according to the latest statistics from the state Employment Commission. The national unemployment rate hovers between 4 and 5 percent.
Research from Oklahoma State University economists Mark Snead and Suzette Barta reveals Oklahoma continues to build on three years of a broad-based economic expansion, fueled in part by the revived energy sector. Oklahoma has outperformed the nation in both job creation and income growth from the 2003 to 2006 period.
Growth in wage and salary income has been equally impressive, the economists said.
The 10.2 percent gain for 2006 represents the fastest annual growth in state wage and salary income since the end of the oil boom in 1982.
The rate of growth in the state’s energy sector has moderated from its steep climb during the four-year expansion, said Amarillo, Texas-based economist Karr Ingham.
“But, it does signify continued strength in some important statewide energy exploration and production indicators.” Ingham compiles the state Energy Index for the Oklahoma Independent Producers Association.
What that means for employers is that there are fewer individuals available in the labor market to fill vacant positions, LaManque said.
“There is lack of men and materials.”
Recruitment efforts, which traditionally focus on enticing individuals to accept available jobs, now have to first focus on finding bodies.
“Business is good. It is driving the market and the fundamentals,” LaManque said. “Production is up. Demand is also rising. The end-users (consumers) are using more.”
The demand for engineers, information technology experts, accountants and finance analysts is high in the upstream, midstream and downstream sections of the industry, LaManque said.
Sinclair Refinery, for example, announced plans last month for a major expansion at its Tulsa facility, which would raise production from 75,000 to 115,000 barrels per day.
Sinclair begins construction on the $1 billion refinery expansion next summer. Completion is expected in late 2010.
There are not enough aging baby boomers to fill the void created by the growing numbers of retirees, LaManque said.
“The 25-35 and the 35-45-year-olds have a tremendous opportunity going forward,” he said.
Skill Sets at Home and Abroad
As companies recognize the impending talented labor shortage, they will form training programs to create qualified staff to fill vacant positions.
“The key is having the skill sets,” LaManque said. “Companies look at you from a technical threshold, a cultural threshold and then price. It is three-legged stool. It must have balance.”
A job candidate could have “great” technical qualifications, but if the person does not fit into a team, or if he or she does not fit the culture, “they will not the get the job.”
“Of course, if they are asking for too much money, they won’t get an offer,” LaManque said.
Companies could be forced to look to the international talent pool for workers, LaManque said.
There are obstacles to overcome in bringing those people to the U.S., said Chrisie Bedsworth, CSP, Engineering Services Group Partner at Rowland.
“There are fees, which vary a lot, but generally are around $5,000. Those are all legal costs,” she said. “And, it so time consuming. There is a lot of paperwork to go through.”
Hiring increasingly from overseas is likely the next step, however.
“Someone will figure out the model to make it successful,” he said.
Many skills are transferable, and the smart companies will plan for the future and have a foundation, Flinn said.
“They are going to be conservative with their spending and how they hire. They will make sure they do not overhire,” she said.
“Because good times will vary, you cannot be extravagant. You have to stay conservative.” ?