Evan Brewer could soon be the Alberta economy's salvation – and its worst nightmare.
Near the end of the energy boom, the 24-year-old New Brunswicker worked as a journeyman welder in the oil sands, making close to $5,000 in a good week in Fort McMurray.
Then the bottom fell out of the market and he is back in Fredericton, picking up occasional work that pays $800 a week at best, and waiting for the next bonanza.
“The difference is unreal,” says Mr. Brewer, who is taking courses to add pipefitting to his welding credentials. “There was good money in Alberta – and I'd go back.”
He may get his chance.
The energy industry, particularly on the oil side, is rebounding, and there are concerns that, once again, there will be a burst of new projects and a shortage of tradespeople in the West. That could set off a labour bubble similar to the frenzied 2004-08 period, leading to sky-high wage costs and the mass importing of workers from outside Western Canada.
“We are about to start running into, believe it or not, another labour shortage,” says Brian Vaasjo, president of Capital Power Inc., the big electricity generating company that last year was spun out of the City of Edmonton's utilities company.
“It is going to be significant again,” he says, adding that the labour squeeze could happen within a matter of months. “I don't know how to deal with that.”
That scenario would be just fine for Mr. Brewer – another high-paying job in Alberta – but disastrous for many employers, particularly in non-energy sectors, which actually benefited from one aspect of the energy slowdown: the cooling effect on labour markets.
The problem is the market typically overcorrects on both the upside and downside. When the energy market is strong, there is a mad scramble for new projects and skilled labour, with wages heading out of sight. When things cool down, jobs are slashed, and itinerant tradespeople go home to the Maritimes, to Mexico, or to their farms in Alberta and Saskatchewan.
The sense that things have turned around again is partly spurred by once-delayed projects being pulled off the shelf, such as ConocoPhillips and Total's plan to quadruple the capacity of their Surmont oil sands facility south of Fort McMurray. But the most telling signals are in the drilling sector, which suffered a deep plunge in activity over the previous 18 months, but is now showing signs of life.
Drilling firms, many in their peak winter activity period, have been calling back laid-off workers and advertising for employees in traditional labour pools such as Canada's East Coast.
“The hiring activity is at a dull roar right now,” said Wilf Gobert, a former Calgary investment analyst who is a senior fellow in energy studies at the Fraser Institute. “It reflects a need when you start advertising for people,” But he adds the volumes are not huge and they are concentrated in certain skill levels.
Capital Power expects that the bulk of its major capital projects should be well advanced by the time the trades shortage becomes dire, but Mr. Vaasjo has concerns about future maintenance shutdowns, when he must bring in hundreds of people.
In the boom years, Alberta's labour unions and employers agreed the province could import many out-of-province workers. That transfer slowed during the downturn, but the next time around, it could be more difficult to turn on the taps.
For one thing, a number of resource megaprojects are gearing up in Newfoundland and Labrador, which will pull in East Coast labour, creating more competition. Also, there are new energy hot spots in northeastern British Columbia and southern Saskatchewan.
These concerns are played down by Greg Stringham, vice-president of oil sands and markets for the Canadian Association of Petroleum Producers, who points out that, while oil is showing some life, natural gas markets are still relatively depressed.
He said the industry will deal with the Alberta labour problem better this time around by finding supply sources elsewhere. Western oil and gas companies are more prepared to get supply chains of equipment and materials filled by manufacturers in Central and Eastern Canada dealing with excess capacity. “We seem to learn lessons as we go through these cycles of ups and downs, and one of the big lessons is to nurture these relationships,” Mr. Stringham said.
