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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--In the 1960s, a folksinger suggested young people coming to San Francisco should wear some flowers in their hair. These days, industrial supply-chain managers and procurement executives with projects in San Francisco might want to bring some boilermakers, millwrights and operators, as there's a shortage of those skilled craft laborers in that area.
The metropolitan San Francisco area has a significant shortage of workers who can operate backhoes, bulldozers, excavators, wheel loaders and other heavy equipment, according to Industrial Info's proprietary Labor Duration Geolocator. That shortfall is expected to continue for several years. Boilermakers also are in short supply, as are millwrights, iron workers and instrumentation and electrical technicians.
This is the second in a series of articles on the demand for and the supply of skilled craft labor in various markets around the U.S. Our first article is this series, Expected Shortfall of Some Skilled Craft Labor Hangs Over Planned Industrial Projects in Los Angeles, ran March 22, 2017. Industrial Info has launched its 2017 North American Labor Survey where contractors and owners can share their views on local market conditions for skilled craft labor. For more on this, see March 21, 2017, article - Industrial Info Launches 2017 North American Construction Skilled Labor Survey.
The Industrial Manufacturing, Pharmaceutical & Biotech, Petroleum Refining and Power industries are likely to be the feeling the impact of an imbalance between supply and demand for some skilled craft labor in and around San Francisco. Those industries plan to start construction on about 142 projects valued at roughly $13 billion in that area between 2017 and 2022, according to Industrial Info's North American Project Platform.
The Industrial Manufacturing Industry plans to begin construction on 33 projects valued at about $8.4 billion over the next six years in and around San Francisco. That industry's biggest projects over that timeframe includes Phase II of the San Jose Bay Area Rapid Transit (BART) Silicon Valley Extension, valued at $4.7 billion, and Phase II of the $1.26 billion Fremont Vehicle Assembly Plant Expansion.
Between 2017 and 2022, the Pharmaceutical & Biotech Industry plans to begin work on 46 projects valued at $2.7 billion in the Greater San Francisco area. These projects include Phase I of the South San Francisco Grassroot Landing at Oyster Point Life Science Campus, valued at about $300 million, and the Santa Clara Science, Technology, Engineering (STEM) Complex Addition, valued at about $275 million. Both projects plan to begin construction next year.
Petroleum Refiners in Greater San Francisco are expected to have a particularly high demand for skilled craft labor in the next few years, as about $1.4 billion of projects are scheduled to begin construction. Skilled craft labor is particularly important for process-related projects, and the expected shortfall of labor likely will be exacerbated with a high volume of project activity.
The Power industry plans to begin work on 15 projects in the metropolitan San Francisco area over the next six years. These projects, valued at about valued at $377 million, include construction of a 30-megawatt (MW) grassroot geothermal power plant at the Geysers, a $150 million project, and the Alameda 49.5-MW Sand Hill Windfarm, a grassroot generation project with total investment value (TIV) of about $95 million.
"All labor is local, and it's clear with the volume of projects that are scheduled to kick off in the next few years in the greater San Francisco area, something must be done to increase the supply of certain skilled crafts," said Tony Salemme, vice president of Industrial Info's Craft Labor Group.
Salemme will be one of the speakers on a complimentary webcast on imbalances between supply and demand for skilled craft labor in various metropolitan areas around the U.S. This complimentary webcast will take place April 12 starting at 9 a.m. CDT (10 a.m. EDT). Register here.
"The California labor market has an additional nuance, notably passage of a law, S.B. 54, in 2013 requiring that 60% of the skilled craft workers on a construction job be journeymen who have graduated from a state or federally approved apprenticeship program," Salemme noted. The law, passed after several high-profile accidents at industrial construction sites, was designed to ensure workers have adequate training before stepping onto a construction site. "The percentage starts at 60% and rises in subsequent years. S.B. 54 likely will increase union membership while also creating new complications for asset owners already facing a shortfall in some skilled craft labor."
A shortfall of skilled labor in one metropolitan area could be partly addressed by journeymen willing to travel from other regions, Salemme noted. The Labor Duration Geolocator shows that areas to the north, east and south of San Francisco have excess supply of some craft labor. But bringing workers in from those out-of-town places likely will involve housing, mileage and per-diems, all of which must be factored into a project's cost.
"There could be spillover effects if one firm or project in the area decided it needs to pay housing, mileage or per-diems to secure the necessary skilled labor for a project," Salemme noted. "Workers tend to migrate to jobs where they get the best wages and benefits. That's why this skilled crafts market is so dynamic a market right now: As projects are announced, or completed, or postponed, that affects the demand for different types of labor, which in turn affects the cost of that labor."
"If you costed your project two years ago," Salemme continued, "I can assure you that the supply and demand fundamentals on which you calculated your labor costs have changed, in some cases significantly. And that could affect the economic viability of your project as well as its date of commercial operation."
He emphasized that the supply and demand for skilled craft labor is dynamic. "Craft labor estimating and costing is not something you can 'set and forget'. Companies and labor organizations need to stay on top of this fast-changing picture."
He recommended companies with industrial projects in and around San Francisco have their supply-chain, cost-estimation, procurement and project-management professionals take a fresh look at the supply of, and demand for, skilled craft labor in that area.
Industrial concerns and labor organizations can obtain dynamically updated multi-year forecasts of supply and demand trends for 14 skilled craft labor categories across North America by subscribing to Industrial Info's Labor Duration Geolocator. Please reach out to Tony Salemme at tsalemme@industrialinfo.com.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
The metropolitan San Francisco area has a significant shortage of workers who can operate backhoes, bulldozers, excavators, wheel loaders and other heavy equipment, according to Industrial Info's proprietary Labor Duration Geolocator. That shortfall is expected to continue for several years. Boilermakers also are in short supply, as are millwrights, iron workers and instrumentation and electrical technicians.
This is the second in a series of articles on the demand for and the supply of skilled craft labor in various markets around the U.S. Our first article is this series, Expected Shortfall of Some Skilled Craft Labor Hangs Over Planned Industrial Projects in Los Angeles, ran March 22, 2017. Industrial Info has launched its 2017 North American Labor Survey where contractors and owners can share their views on local market conditions for skilled craft labor. For more on this, see March 21, 2017, article - Industrial Info Launches 2017 North American Construction Skilled Labor Survey.
The Industrial Manufacturing, Pharmaceutical & Biotech, Petroleum Refining and Power industries are likely to be the feeling the impact of an imbalance between supply and demand for some skilled craft labor in and around San Francisco. Those industries plan to start construction on about 142 projects valued at roughly $13 billion in that area between 2017 and 2022, according to Industrial Info's North American Project Platform.
The Industrial Manufacturing Industry plans to begin construction on 33 projects valued at about $8.4 billion over the next six years in and around San Francisco. That industry's biggest projects over that timeframe includes Phase II of the San Jose Bay Area Rapid Transit (BART) Silicon Valley Extension, valued at $4.7 billion, and Phase II of the $1.26 billion Fremont Vehicle Assembly Plant Expansion.
Between 2017 and 2022, the Pharmaceutical & Biotech Industry plans to begin work on 46 projects valued at $2.7 billion in the Greater San Francisco area. These projects include Phase I of the South San Francisco Grassroot Landing at Oyster Point Life Science Campus, valued at about $300 million, and the Santa Clara Science, Technology, Engineering (STEM) Complex Addition, valued at about $275 million. Both projects plan to begin construction next year.
Petroleum Refiners in Greater San Francisco are expected to have a particularly high demand for skilled craft labor in the next few years, as about $1.4 billion of projects are scheduled to begin construction. Skilled craft labor is particularly important for process-related projects, and the expected shortfall of labor likely will be exacerbated with a high volume of project activity.
The Power industry plans to begin work on 15 projects in the metropolitan San Francisco area over the next six years. These projects, valued at about valued at $377 million, include construction of a 30-megawatt (MW) grassroot geothermal power plant at the Geysers, a $150 million project, and the Alameda 49.5-MW Sand Hill Windfarm, a grassroot generation project with total investment value (TIV) of about $95 million.
"All labor is local, and it's clear with the volume of projects that are scheduled to kick off in the next few years in the greater San Francisco area, something must be done to increase the supply of certain skilled crafts," said Tony Salemme, vice president of Industrial Info's Craft Labor Group.
Salemme will be one of the speakers on a complimentary webcast on imbalances between supply and demand for skilled craft labor in various metropolitan areas around the U.S. This complimentary webcast will take place April 12 starting at 9 a.m. CDT (10 a.m. EDT). Register here.
"The California labor market has an additional nuance, notably passage of a law, S.B. 54, in 2013 requiring that 60% of the skilled craft workers on a construction job be journeymen who have graduated from a state or federally approved apprenticeship program," Salemme noted. The law, passed after several high-profile accidents at industrial construction sites, was designed to ensure workers have adequate training before stepping onto a construction site. "The percentage starts at 60% and rises in subsequent years. S.B. 54 likely will increase union membership while also creating new complications for asset owners already facing a shortfall in some skilled craft labor."
A shortfall of skilled labor in one metropolitan area could be partly addressed by journeymen willing to travel from other regions, Salemme noted. The Labor Duration Geolocator shows that areas to the north, east and south of San Francisco have excess supply of some craft labor. But bringing workers in from those out-of-town places likely will involve housing, mileage and per-diems, all of which must be factored into a project's cost.
"There could be spillover effects if one firm or project in the area decided it needs to pay housing, mileage or per-diems to secure the necessary skilled labor for a project," Salemme noted. "Workers tend to migrate to jobs where they get the best wages and benefits. That's why this skilled crafts market is so dynamic a market right now: As projects are announced, or completed, or postponed, that affects the demand for different types of labor, which in turn affects the cost of that labor."
"If you costed your project two years ago," Salemme continued, "I can assure you that the supply and demand fundamentals on which you calculated your labor costs have changed, in some cases significantly. And that could affect the economic viability of your project as well as its date of commercial operation."
He emphasized that the supply and demand for skilled craft labor is dynamic. "Craft labor estimating and costing is not something you can 'set and forget'. Companies and labor organizations need to stay on top of this fast-changing picture."
He recommended companies with industrial projects in and around San Francisco have their supply-chain, cost-estimation, procurement and project-management professionals take a fresh look at the supply of, and demand for, skilled craft labor in that area.
Industrial concerns and labor organizations can obtain dynamically updated multi-year forecasts of supply and demand trends for 14 skilled craft labor categories across North America by subscribing to Industrial Info's Labor Duration Geolocator. Please reach out to Tony Salemme at tsalemme@industrialinfo.com.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
