South Texas Project Units 3 and 4 to Drive Soaring Demand for Skilled Craft Labor in Greater Houston Area, a "Navigating the Currents of Change" Webcast on Industrialinfo.com

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Demand for skilled craft man-hours in the Greater Houston market is expected to double by 2013, which means that large capital projects like the South Texas Project units 3 and 4 will require a large percentage of out-of-market labor for their projects, Lamar Blanton, manager of Industrial Info's skilled craft labor group, said in an exclusive "Navigating the Currents" interview. He estimates that between 25% and 45% of the 6,000 skilled craft laborers who will be needed to work on the South Texas Nuclear Project (STP) units 3 and 4 will have to come from outside the Greater Houston labor market.

Located in Bay City, Texas, the construction of STP units 3 and 4 represents a 2,700-megawatt (MW) expansion of the existing South Texas Nuclear Project. The expansion is scheduled to kick off in 2012, assuming all regulatory approvals are received and the expansion receives billions of dollars of federal construction loan guarantees. The expansion project is owned by NRG Energy Incorporated (NYSE:NRG) (Princeton, New Jersey), Toshiba Corporation (TYO:6502) (Tokyo, Japan), and Tokyo Electric Power Company Incorporated (TEPCO) (TYO:9501) (Tokyo). The facility will use two 1,350-MW advanced boiling water reactors supplied by Toshiba.

Toshiba is the engineering, procurement, and construction (EPC) firm for STP units 3 and 4. Subcontractors include Fluor Corporation (NYSE:FLR) (Irving, Texas), Sargent & Lundy LLC (Chicago, Illinois), Bechtel Group Incorporated (San Francisco, California), and Westinghouse (Monroeville, Pennsylvania). For more on the STP units 3 and 4 project, see February 24, 2010, article - Nuclear Developer Seeks New Partners for South Texas Project as Split with CPS Energy Nears Finalization.

"STP units 3 and 4 is a huge and very complex project, which is great news for skilled craft labor," Blanton said. During the five-year construction period, an estimated 6,000 skilled craft laborers will be needed at various stages of the project. Demand will be strong for a variety of skilled crafts, including boilermakers, pipe fitters, millwrights, iron workers and electricians, he said. Boilermakers and pipe fitters would be the skilled crafts most in demand in the early stages of the project, he added.

"If STP units 3 and 4 were the only construction project that was scheduled to be active near Bay City in 2012, then the local market would have enough skilled craft labor to get that job done," Blanton said. "But there are other construction projects--windfarms and other forms of power generation, for example--that are also expected to draw on the local supply of skilled craft labor. There is not enough skilled craft labor in the immediate area to fulfill the expected need, so some will have to be brought in from outside markets. And we think 2012 will be a booming year for construction across the country." The U.S. economy is expected to experience robust growth in 2012, Blanton said, which in turn will drive a sharp increase in demand for skilled craft labor across the U.S.

According to Industrial info's Manpower Analyzer, capital construction projects in the Greater Houston area will result in a doubling in demand for most skilled craft labor between 2010 and 2013. The Manpower Analyzer's estimates for overall demand growth for specific skilled trades tied to capital construction projects in the Greater Houston area follow:

• Pipe fitters: 7.2 million man-hours in 2013, up from 3.6 million man-hours in 2010
• Electricians: 5.2 million man-hours in 2013, up from 2.6 million man-hours in 2010
• Millwrights: 1.1 million man-hours in 2013, up from 574,000 man-hours in 2010
• Iron Workers: 418,000 man-hours in 2013, up from 207,000 man-hours in 2010
• Boilermakers: 375,000 man-hours in 2013, up from 178,000 man-hours in 2010

STP units 3 and 4 and the other industrial projects that are scheduled to kick off in the next few years means that at least 25%--and as much as 45%--of the skilled craft labor will have to come from outside the Greater Houston area, Blanton said.

Local imbalances between the demand for and the supply of skilled craft labor can present "overwhelming challenges" to project managers and cost estimators for large capital projects, Blanton said. "What we've seen in the past is that engineering companies and contractors have struggled with estimating the amount of manpower they're going to need for a project, because they don't know what's going on around them. They need a mechanism to better understand the local projects that will compete for man-hours with their project. The size and scope of the South Texas Project units 3 and 4 make the Manpower Analyzer an indispensable risk-management tool for anyone trying to estimate or manage an industrial construction project."

Industrial Info's Manpower Analyzer can help project managers and cost estimators better understand the aggregate demand for a variety of skilled craft labor, broken out by project and local geography. "This tool will help people make more informed decisions relating to the supply of skilled labor," Blanton said. Requests for additional information about the Manpower Analyzer can be sent to Lamar Blanton at 713-980-3470, or emailed to the IIR skilled craft labor group at manpower@industrialinfo.com.

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