Labor Shortage In Energy Industry A Bright Spot In Otherwise Troubled Economy

AVEVA recently announced that Houston Community College (HCC) is increasing the number of courses, as well as the number of campuses, that provide training in AVEVA's Plant Design Management System (PDMS). AVEVA's higher education-industry partnership with HCC is part of an ongoing effort to help alleviate the severe labor shortage of engineers and piping designers trained in 3-D design that continues to challenge the energy industry.

Rob Glasier, head of U.S. operations for AVEVA, said "Despite the great demand for qualified 3-D pipe designers and the six-figure salaries they can command, there simply is not enough skilled labor out there, which can delay owners and operators from moving forward with projects. We're working to solve this labor scarcity by increasing PDMS training opportunities – with our customers, through partnerships with industry associations, such as the Society of Piping and Engineering Designers (SPED), and with educational institutions. AVEVA has donated over $2M in software to regional colleges and universities to date, with over $1M in software donated to HCC alone."

AVEVA's PDMS 3-D software solution is widely used throughout the energy sector, particularly now as a backlog of oil industry infrastructure projects are coming to the drawing board.

Some Hard Figures and Facts on the Engineering Shortage:

• Compared to the 1970s, the number of U.S. based colleges and universities offering degrees in petroleum engineering has decreased 50 percent.
• By 2010, a labor shortfall of 10 to 15 percent in engineers is projected globally, according to Cambridge Energy Research Associates (CERA), based on the analysis of 400 projects expected to begin worldwide over the next five years.
• The average age for engineers is now 51. More than 50 percent are expected to retire by 2015 (an attrition rate of roughly six percent a year) (CERA).
• Two-thirds of the membership of the Society of Petroleum Engineers (SPE) is over age 40.
• To help alleviate this severe shortage, the Federal Government and President Bush recently signed (August 14, 2008) H.R. 4137 – Loan Forgiveness for Service in Areas of National Need – that provides up to $10,000 in loan forgiveness to graduating engineers ($2,000 per year for five years).

According to Doug Coberley, president of Professional Consulting Services (PCS) and the lead PDMS instructor for HCC's Continuing Education Program, "Currently, there are not enough skilled structural and piping designers. These are possibly the best paying jobs you can get with just a two-year degree. But the companies also demand a great deal of experience for those top paying positions. When they can't hire experienced personnel, they have to hire and train personnel with less experience. Candidates for these opportunities need to prepare themselves with extensive CAD training, piping or structural design training, an understanding of drafting and design standards, coordinate systems, the ability to read drawings, and a thorough understanding of orthographic and isometric projections. Candidates who have also completed PDMS training should appear that much more appealing to these companies."

Demand for PDMS training at HCC continues to grow. Courses fill up quickly, and the college has recently hired two additional PDMS instructors so that it can offer more classes at more locations. HCC is expanding the evening and weekend program from the Northline Mall, Pinemont, and Codwell Hall Campuses, to now include the Katy Campus, as well as the Town & Country and Alief Campuses in Houston.

One of Coberley's former students, Yousof Allam, is now a paid student intern working for a major engineering firm that serves the oil industry's deepwater market. Allam recently completed a certified Professional Piping Designer (PPD) training program that was offered at HCC through the Society of Piping Engineers & Designers (SPED), a leading organization based in Houston aggressively addressing this labor shortage. According to SPED president, Bill Beazley, "In cooperation with the Texas Workforce Commission and Houston Community College, we offer training in PDMS and piping design. Last year, 14 local companies within the petro-chemical industry sponsored 150 students for training; today that same consortium is planning to sponsor 170 students. This represents a roughly 14 percent increased demand for piping professionals in just one year."

Originally, the threat of jobs being outsourced overseas encouraged most engineering professionals to steer clear of a career in piping and plant design. Now many foreign countries are busy with their own projects, with no engineers and designers to spare. "The result is a labor shortage in the U.S. that will last well into the foreseeable future," said Beazley.

With the average age for engineers now at 51, more than 50 percent are expected to retire by 2015 (CERA). "This aging workforce, coupled with the current pressure on the industry to deliver energy more cleanly, is changing the character of the labor landscape," said Beazley. "All too quickly, the greens must replace the grays."

According to Wayne Pierce, the program manager for Continuing Education IT at HCC, the classes currently underway in PDMS are full, with new classes now being scheduled for spring 2009. "Demand for PDMS in this industry is enormous, especially here in Houston – the epicenter of the domestic oil, energy and gas business. At the moment, there are so many people interested in our spring ‘09 classes that we are already planning the summer '09 schedule." This deep shortage in "the talent pool", according to Pierce, is the result of a number of factors, mainly: the emerging markets abroad, the significant collateral damage caused to rigs and refineries by several hurricanes in the Gulf, and an aging generation of engineers and 3-D piping designers cashing in on early retirement. "Companies are very busy and behind in their projects, which is driving up both job opportunities and salaries," said Pierce.

"PDMS is a well-respected technology, with a good capacity to handle large industrial projects," concurred Beazley. "Demand for highly trained piping designers and engineers, including those trained in PDMS, is seen everywhere. Regional training programs and classes in piping design are full, but students are often hired before completing their degrees. HCC, for example, offers night classes so working students can finish their programs. There is also a strong backlog of awarded or planned design projects, especially in the industrial and petro-chemical sectors, and an abundance of plant construction projects already in the pipeline. For skilled piping professionals, the future looks great."

This bright spot for employment, despite the country's current economic climate, is being evidenced by the recent students like Allam. Based on his experiences, Allam has found that training in PDMS, along with some oil industry experience, will vastly increase job opportunities. Said Allam, "Even a brief conversation in the elevator today again confirmed this fact, as a veteran engineer informed me it was possible to make $150 hour with a background in PDMS." Other senior engineers are also advising him to stick with it, with a real payoff in salary coming in just a couple of years. "These guys often make more than their bosses and managers, due to the demand for piping designers. This is because not many people go into the design-side sector of the industry. A working knowledge in PDMS is considered to be golden by potential employers. The more you know, the more you'll make. I've already had job offers from two other firms in the industry, but have declined," said Allam.

As oil prices drop to more sustainable levels, more projects become feasible. Employment for PDMS trained piping professionals, like Allam, are expected to increase, putting further pressure on salaries. Every owner/operator along the Gulf of Mexico seems to be feeling the labor pinch. Even a leading Houston-based engineering/procurement/construction (EPC) firm such as Mustang Engineering recently reported a backlog of oil and natural gas projects around the world and is actively looking to hire hundreds of engineers and 3-D piping designers. EPC companies are advertising in the paper, on the radio, and at college football games.

Marvin L. Griffin, the program chair for college credit courses in drafting/design engineering technology at HCC, said "Over the past three years, HCC has doubled the number of its piping classes from four to eight to help satisfy growing student interest and the demand from the oil industry for skilled entry level personnel in the latest PDMS technology. All of our current day and evening classes are full, and were filled within the first two weeks. This is because most of the students are hired before or soon after they complete their Certificates or AAS Degrees."

About the Society of Piping Engineers & Designers (SPED)
SPED is a non-profit professional society that promotes the advancement of quality piping design. For more information please visit http://www.spedweb.com.

About Houston Community College (HCC)
HCC is an open-admission, public institution of higher learning whose relevance to Houston and the surrounding areas is reflected in its status as the No. 1 community college in the country for international students. The learning opportunities offered by HCC prepare individuals in our diverse communities with the essential tools for success in an increasingly international and technological society.

About AVEVA Group plc
AVEVA Group plc is one of the world's foremost and fastest-growing lifecycle engineering IT solutions and services providers to the oil and gas, paper and pulp, power, chemical, pharmaceutical and shipbuilding industries. Listed on the London Stock Exchange (LSE:AVV), the Group reported pre-tax profits for the year ended March 2008 of GBP 45 million on revenues of GBP 127.6 million. The Group has grown consistently since 1967 on the strength of pioneering engineering technology that protects the information assets of its customers from the volatile nature of the IT industry. The Group's history of innovation spans five decades and has produced most of today's major engineering IT technologies. Serving over 1700 clients, AVEVA has a dominant position in many market sectors both on and offshore. In May 2004, the Group acquired Tribon Solutions AB, the market-leading shipbuilding solution company and now serves 85% of the world's top 20 shipbuilders.

The Group's clients include leading plant owner operators, shipbuilders and engineering contractors such as Aker Solutions, Alstom, AMEC, Areva NP, Babcock Marine, BASF, BP, Chevron, China National Nuclear Co (CNNC), China Power Engineering Consulting Group Co. (CPECC), CNOOC Offshore Oil Engineering, Daewoo Shipbuilding & Marine Engineering, EDF, ExxonMobil, Foster Wheeler Power Group, Harland & Wolff, Hyundai Heavy Industries, Jacobs, Mitsubishi Heavy Industries, SBM, Shell, Sinopec Engineering, Statoil, TKMS – ThyssenKrupp Marine System, Uhde, VT Shipbuilding, Wood Group (Alliance & Mustang) and Worley Parsons.

SOURCE: AVEVA