Rinaldo Stefan has a tough challenge as he manages construction of Vale SA’sVale SA’s sprawling, $3-billion nickel processor on Placentia Bay: finding enough skilled workers to complete the job on time and on budget.
Mr. Stefan must find 1,500 welders, electricians, plumbers and other workers by next summer, on top of the 2,000 already on the job at the site. But due to a shortage of available skilled tradespeople in Newfoundland and Labrador, Mr. Stefan is now in a mad scramble to fill the positions, placing advertisements across Atlantic Canada to entice qualified workers.
“We are working hard to find the people we’ll need,” said the native of Romania, who has lived around the world working as a construction project manager for Vale, the global mining giant. “For the moment, we are looking in Canada, but the contingency plan will be to go offshore to find people.”
Newfoundland and Labrador is in the midst of an unprecedented energy and resources boom that is straining the province’s ability to keep up. Finding enough workers to complete some $43-billion worth of major projects under way and planned is proving to be a monumental challenge.
Workers are building the frames of nearly a dozen buildings that will house the Vale refinery, which sits on the steep, wooded shores of Long Harbour about 100 kilometres west of St. John’s. After construction winds down in 2013, the Long Harbour plant will produce 50,000 tonnes per year of nickel that Vale mines at Voisey’s Bay in Labrador. But to complete the construction phase, Vale needs to find armies of skilled workers.
Recruiting ‘from away’
Vale is not alone. Employers across the province are having trouble hiring tradespeople for new projects and other positions, even as thousands of people continue to leave home to find employment elsewhere – notably in Alberta’s oil fields – and even as Newfoundland suffers a 13.2-per-cent jobless rate.
As a result, companies are now recruiting potential employees from “away” – as far away as Ireland – for positions that aren’t being filled by local people.
“We’ve got employers at this table regularly saying to us that they’re concerned about the labour pool and they need labour,” Premier Kathy Dunderdale said in an interview at her St. John’s office.
“We know it’s a problem.”
The skills gap is a problem in other parts of Canada. Across the country – from the oil sands of Alberta to diamond mines in the North – resource companies are finding it difficult to attract workers, a shortage that threatens to play havoc with project economics by driving up labour costs and delaying construction schedules.
But deep structural problems in Newfoundland and Labrador’s labour market have led to a serious mismatch between the province’s labour force and the needs of employers.
While the jobless rate remains stubbornly high, many of those listed as officially unemployed are seasonal workers in industries such as fishing and tourism. They often live in rural communities, work for a few months and then survive on unemployment insurance.
At the same time, Newfoundland and Labrador has an aging population, with the highest median age in Canada. Older workers are less willing to move to where jobs are, and less eager to shift gears and train in the skills that employers need.
Younger people have left the province in droves: the population of Newfoundland and Labrador fell by nearly 75,000 people – or 13 per cent – to 506,000 between the early 1980s and 2007. And it tended to be young adults who moved away.
Come home or stay put
One of the biggest challenges is to persuade Newfoundland’s tradespeople who have either left the province or commute to remote workplaces to either come home or stay put. The province estimates that 20,000 Newfoundlanders travel out of province for work – some 90 per cent of them are men, and half go to Alberta.
“You resign yourself to the fact that this is what you have to do, to live on the lifestyle I have. Because I’d never live the lifestyle I have here on minimum wage – or even $25 an hour wouldn’t do it,” said Gerard Kean, who lives in Renews, a small town 100 kilometres south of St. John’s. For years he worked in the oil industry offshore Newfoundland, but now has a more lucrative job working on windmills in the North Sea off Germany.
Fuelled by the mining and offshore oil sectors, Newfoundland and Labrador boasts one of the best growth stories in the country, and a lengthy roster of looming megaprojects. Beyond skilled workers, the province needs engineers, project managers, accountants and other service sector employees that grease the wheels of an expanding economy.
Offshore oil, mining, hydro
With oil prices near $100 (U.S.) a barrel, activity in the offshore is picking up again as companies like Chevron Corp. and Norway’s Statoil ASA pursue new discoveries.
Meanwhile, a consortium led by Exxon Mobil Corp. is preparing to build a production platform for the $8.3-billion Hebron offshore development that will include a massive concrete base to be constructed at Bull Arm on Trinity Bay, and drilling and housing superstructures that will create fabricating work in St. John’s and around the province.
At the same time, the provincially-owned Nalcor Energy Corp. is preparing to break ground on the $6.2-billion Muskrat Falls hydro project on the Lower Churchill River in Labrador, subject to final approval.
The province’s mining sector is also booming, particularly in western Labrador where iron ore companies are building mines to feed China’s seemingly insatiable appetite for steel.
But no one is quite sure where they’ll find the manpower to complete all those capital projects. Hebron and Muskrat Falls together would require some 5,700 workers, the large majority of them skilled trades people.
“It is not inconceivable they could slow things down if the labour market becomes so tight there are not enough people to complete the projects,” said Fred Bergman, senior analyst with the Atlantic Provinces Economic Council. “Where will those people come from to fill these jobs?”
Addressing the skills gap
The provincial government is eager to address the skills gap issue, knowing that a shortage of skilled workers would not only hold back economic growth but would represent a failure to ensure its citizens are benefiting as much as possible from the economic growth.
The government increased by nearly 50 per cent the number of apprenticeship spots at the St. John’s College of the North Atlantic, but the province worries that employers appear reluctant to take on trainees, and would rather import journeyman workers.
“If they see shortages now but they’re not willing to participate and hire apprentices and move them through the system, in years to come they’ll have no supply of labour,” said Advanced Education and Skills Minister Joan Burke.
Employers see a ready work force that flies in and out of the province on a regular base, from home to remote workplaces.
Competing on wages, benefits
But many, including Vale’s Mr. Stefan, say they can’t compete with the wages and benefits that are offered in the Alberta oil sands, where tradesmen regularly earn triple-digit incomes and live in well-appointed camps that offer a wide range of amenities.
John Kearney, chief executive officer of Labrador Iron Mines Holdings Ltd., is planning ahead. The company is developing properties in Labrador and is expanding its construction work force there as production grows from 600,000 tonnes per year to 3 million tonnes.
“One of our main challenges is how to compete with the oil sands in Alberta,” Mr. Kearney said. “Whether they are going to fly in and fly out to northern Labrador, or fly in and fly out to Alberta – it’s only the difference of a couple hours on a plane.”
Labrador Iron Mines hasn’t hit a labour crunch yet, but it still has fairly modest demands. As part of the answer, Mr. Kearney has turned to the local aboriginal communities, which now account for 25 per cent of the work force. But many of those workers have basic skills deficits and need training.
Over the longer term, Mr. Kearney worries about wage inflation undermining project economics as the company tries to lure workers to the remote border area of Labrador and northern Quebec.
Union leader Lana Payne says companies operating in Newfoundland and Labrador are going to have to improve pay scales and quality-of-life issues like scheduling, while devoting more resources to training.
“Is this a skills shortage or is it just a wage shortage? Or that working conditions need to change here in Newfoundland and Labrador?” asked Ms. Payne, president of the Newfoundland and Labrador Federation of Labour.
Will the work last?
She said Newfoundland’s construction workers don’t yet believe there will be a steady stream of work, and are unwilling to make major changes – or give up seniority at current work sites – in order to take short-lived jobs at home.
Her biggest fear is that employers like Vale and Rio Tinto’s Iron Ore of Canada are looking to fast-track foreign people through a temporary worker visa program, which Ottawa has touted as one answer to the skills shortage being experienced across the country.
But employers argue they are sometimes left with little choice but to look abroad for skilled help, and that the province needs to attract immigrants as well as returning Newfoundlanders in order to address its demographic challenges.
Fred Cahill, president of St. John’s-based GJ Cahill Group, a large construction company in Atlantic Canada with operations also in Alberta, said his firm has plenty of work, “but the biggest concern is how you get the work done.”
He said the federal government – which manages the temporary foreign worker program – needs to continue to streamline policy to help alleviate skilled-worker shortages, while the province needs to attract more skilled immigrants.
GJ Cahill was among the companies that participated last month in a provincially-organized immigrant recruiting trip to Ireland, where crippling unemployment has followed the housing boom and bust. In addition to trades people, the province was looking for early-childhood educators, information technology workers and doctors.
Mr. Cahill called it a “prospecting” trip. “There are a lot of skills there out of work that we need,” he said.
Ms. Burke, the skills minister, is sensitive to the foreign-worker issue, having lived in the province as it struggled with chronic unemployment.
“I’m only really comfortable with temporary workers from outside if I’m convinced that the people who live right here in Newfoundland and Labrador have had every opportunity to fill those positions.”
Canada’s booming energy and resource sector is confronting a chronic skills shortage that threatens to become acutely painful as the country’s aging and urban work force is increasingly out of sync with industry’s needs.
Economists say the shortage will get worse with an expected capital-investment boom by resource companies feeding growing demand in Asia, and by the power sector rebuilding an aging electricity infrastructure.
Over the next decade, the Canadian economy is forecast to require 319,000 additional workers to cover retirements and job growth, according to the Construction Council of Canada. But there will only be 163,000 new entrants, given Canada’s current demographics, creating a shortage of 156,000.
The energy industry is particularly hard-pressed, said Eugene Lang, co-founder of Canada 2020, an Ottawa-based think tank. He warned that two major economic forces are on a “collision course” – unprecedented slowing of labour market growth and unparalleled investment in energy projects.
“A comprehensive federal-provincial labour market strategy is needed to ensure energy projects can proceed with minimal labour supply constraints,” Mr. Lang said.