[Senate Hearing 110-288]
[From the U.S. Government Publishing Office]
S. Hrg. 110-288
DOMESTIC ENERGY INDUSTRY
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
TO
RECEIVE TESTIMONY ON WHETHER DOMESTIC ENERGY INDUSTRY WILL HAVE THE
WORKFORCE--CRAFTS AND PROFESSIONAL
__________
NOVEMBER 6, 2007
Printed for the use of the
Committee on Energy and Natural Resources
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
DANIEL K. AKAKA, Hawaii PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota LARRY E. CRAIG, Idaho
RON WYDEN, Oregon LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota RICHARD BURR, North Carolina
MARY L. LANDRIEU, Louisiana JIM DeMINT, South Carolina
MARIA CANTWELL, Washington BOB CORKER, Tennessee
KEN SALAZAR, Colorado JOHN BARRASSO, Wyoming
ROBERT MENENDEZ, New Jersey JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
JON TESTER, Montana MEL MARTINEZ, Florida
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
Frank Macchiarola, Republican Staff Director
Judith K. Pensabene, Republican Chief Counsel
C O N T E N T S
----------
STATEMENTS
Page
Berrigan, Carol, Nuclear Energy Institute........................ 54
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Bowers, Paul, Southern Company, Atlanta, GA...................... 43
Corker, Hon. Bob, U.S. Senator From Tennessee.................... 4
Cornelius, Andra, Workforce Florida, Inc., Tallahassee, FL....... 16
Derocco, Emily, Assistant Secretary, Department of Labor......... 4
Domenici, Hon. Pete, U.S. Senator From New Mexico................ 2
Hoffman, Patricia, Deputy Director, Department of Energy......... 10
Hunter, Jim, International Brotherhood of Electrical Workers..... 60
Stults, Ray, National Renewable Energy Laboratory, Golden, CO.... 50
Szydlowski, Norm, Colonial Pipeline, Alpharetta, GA.............. 39
APPENDIXES
Appendix I
Responses to additional questions................................ 73
Appendix II
Additional material submitted for the record..................... 93
DOMESTIC ENERGY INDUSTRY
----------
TUESDAY, NOVEMBER 6, 2007
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 9:59 a.m. in room
SD-366, Dirksen Senate Office Building, Hon. Jeff Bingaman,
chairman of the committee, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
MEXICO
The Chairman. OK, let me call the hearing to order. This is
a hearing on the U.S. energy workforce. I'd like to thank all
of the witnesses for coming today, we have two distinguished
panels. Some came from out of town, and I know they have very
busy schedules, so we appreciate them being here.
Let me just mention a couple of statistics. The Energy
Information Administration's annual energy outlook projects
that energy use in the United States is going to increase by 31
percent over the next 25 years. That will result in a very
substantial increase in generating capacity for electricity in
the country. EIA projects an addition of 4,761 miles of new
natural gas pipeline, up by 50 percent from the 2007 projection
that they had earlier come out with.
At any rate, these large increases in the projections by
the Energy Information Administration indicate the Nation will
require a trained workforce on hand to design and build this
future energy generation, whether that's from fossil fuels,
from nuclear power, from renewable sources, and the purpose of
this hearing is to understand what policies we should be
supporting and putting in place to help with the development of
that workforce and avoid a workforce shortage in this critical
period.
So, I very much appreciate folks being here, and let me
defer to Senator Domenici for his comments.
[The prepared statement of Senator Bingaman follows:]
Prepared Statement of Hon. Jeff Bingaman, Chairman, From New Mexico
Let me call today's hearing on the U.S. Energy Workforce to order.
First, I would like thank all the witnesses for coming today, many of
you came from out of town with very busy schedules in order to testify
to the full committee.
Today's hearing addresses whether our existing and future
workforce--both skilled and professional are capable of supplying the
nation's energy needs.
Let me highlight a few statistics on our growing energy need.
The Energy Information Agency's Annual Energy Outlook 2007 projects
that energy use in the U.S. is expected to increase by 31 percent over
the next 25 years.
To help meet this increase in energy use the U.S. generating
capacity is projected to increase by 199 GW of which 258 GW are from
new generating units--or roughly 258 1000 MW plants.
For 2008, the EIA projects an addition of 4761 miles of new natural
gas pipeline, up by 50 percent from the 2007 projection of 3195 miles.
These large increases indicate that the nation will require a
trained workforce on hand to design and build the future energy
generation whether it is from fossil, nuclear or renewable sources.
The Department of Labor estimates that the energy industry employs
well over 1 million people and accounts for 4 percent of the Gross
Domestic Product. However, the average age of energy industry workers
is now over 50 with 500,000 expected to retire over the next 5 to10
years--a turnover rate of 50 percent. The impact of this energy
workforce turnover is projected to be largest in the utilities--which
employ over half of the current energy workforce.
We have assembled before this committee today representatives from
the federal government, state government and industry to help this
committee learn about what the workforce issues are and what we in the
Congress can do to help address what appears to be a looming workforce
shortage.
Again, let me thank everyone for coming today and I look forward to
the testimony.
STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR FROM NEW
MEXICO
Senator Domenici. Thank you, Senator Bingaman, Mr.
Chairman. Actually, this is one of the most important and
exciting meetings that we're going to have regarding America's
ability to solve our energy problems in the future.
It's obvious to me that many of our companies are ready to
make investments to use innovative technology to build new
things. It's obvious that nuclear power is, once again,
exciting. Those who are thinking about using it, obviously,
have to think about borrowing money, for the most part, a lot
of money. They also have to find out whether they can build on
some reasonable schedule.
All of the energy production has to worry about schedules,
because they borrow money based on schedules, they build their
business based on schedules. Frankly, many of them are going to
have a very difficult time finding the employees that they
expect to be available for major kinds of production
facilities, be it a nuclear power plant, or any other kind of,
let's say offshore drilling rigs with everything that goes with
it. It's obvious that they're going to have trouble finding the
equipment, and now we come to what we're talking about, having
difficulty finding the trained people on the highest level,
called engineers, and operational engineers, all the way
through welding, even if these jobs pay well. The question is,
who wants them? Who will take them? Where do we have them?
Certainly, we can start the hearing knowing that we don't have
enough of them on hand. It's not like we can just move them
from one place to another, there just aren't enough
electricians around for three or four nuclear power plants.
You're going to have to find a way, business and America, are
going to find ways to train these electricians, these welders,
these engineers, and that's what the hearing is about, how are
we going to do it?
I, myself, am interested in what industry thinks is the
answer to how we're going to do it. I was telling Senator
Bingaman that I've been thinking in my mind, that maybe we need
a national effort with something like we might call a National
Energy Workforce Training Act, and then figure out what the
Federal Government can do to help organize and help see that
the right kind of information gets to our schools, so that
community colleges would start training, maybe even vocational
education programs can be reinstated at seniors in high school,
so they will get, at least, excited about these kinds of
things.
Now, that's not what I had in my opening statement----
[Laughter.]
Senator Domenici. So, Senator Bingaman, if you'll forgive
me, I won't give the opening statement, that will be it, and
I'll ask that it go in the record. I thank you for calling the
hearing, and I join in thanking you all who came, especially
those from far away.
We hope we get enough out of this to justify all you have
done to help us.
Thank you, Mr. Chairman.
[The prepared statement of Senator Domenici follows:]
Prepared Statement of Hon. Pete V. Domenici, U.S. Senator From
New Mexico
Good morning. I thank you all for your attendance and participation
in today's hearing on the current and projected workforce needs of our
nation's energy sector.
Our witnesses today will describe the pressing needs facing the
energy sector in recruiting, training, and retaining skilled workers
for their industries. The energy industry employs well over 1 million
people and accounts for 4 percent of the Gross Domestic Product. Half
of these workers--that's 500 thousand people--are expected to retire
over the next five to ten years creating a turnover rate of 50 percent.
An analysis by Cambridge Energy Research Associates projects big
delays for large oil and gas production projects worldwide owing to the
expanding shortfall of qualified engineers and skilled workers. The
workforce shortfall could be 10 to 15 percent by 2010, according to
their comprehensive analysis of the engineering and project management
staff needed to deliver the over 400 major projects expected to come
on-stream over the next five years. Their analysis confirms that
engineering and project management personnel are already insufficient
to meet upstream project demand.
A recent study by the Global Energy Management Institute at the
University of Houston estimated that the energy sector's talent
shortage cost the industry more than $5 billion in pretax profits in
2006. This estimate includes costs due to higher wages offered when
competing for workers, and lost business opportunities due to a lack of
available workers.
Take, for instance, the current shortage of welders. At Williams, a
unit of Canada's Flint Energy Services Ltd., the Rocky Mountain
region's thin labor pool has hindered efforts to train more welders
through an on-site training and apprenticeship program. Executives say
the company could increase production by 20% to 25% if it had more
welders.
Williams has raised its starting wage for welders by 30% over the
past two years to $16 an hour. This year, it sent recruiters to job
fairs as far away as Saginaw, Michigan to recruit welders from the
declining auto industry.
Moreover, because these worker shortages are international in
scope, we will not be able to simply import skilled workers to address
national shortages. In Canada's Athabasca oil sands region, engineers
and workers are relocating from as far away as Mexico and China to join
the labor pool.
Energy projects in the Arab Gulf region face delays and
cancellations due to a massive shortage of engineers and laborers to
build them. Analysts predict over the next five years, the Arab Gulf
region will need an extra 100,000 engineers and contractors, and
another 600,000 construction workers. To stay competitive as a nation,
we need to continue to create good jobs in America's energy sector--and
to make sure we are doing everything we can to recruit, train, and
retain workers to support our energy industries.
I look forward to learning more about these challenges from our
witnesses. Thank you.
The Chairman. Thank you very much.
Senator Corker, did you have an opening statement?
STATEMENT OF HON. BOB CORKER, U.S. SENATOR FROM TENNESSEE
Senator Corker. I think you all opened very well, and I
look forward to the testimony.
The Chairman. All right. We will start with our witnesses
here, we have two witnesses from the Federal Government, and
another witness on this panel.
Emily DeRocco, who is the Assistant Secretary of the
Department of Labor, thank you for being here. Patricia
Hoffman, Deputy Director in the Department of Energy, thank you
for being here. Andra Cornelius, who is with Workforce Florida,
Inc., in Tallahassee, thank you very much for being here.
Why don't we just go across the--if you could take 5 or 6
minutes and just summarize the main points, we will include
your full statement in the record.
Senator Domenici. Senator Bingaman, might I state for the
record that last, yesterday evening late, the Appropriations
Committee called a conference meeting on the defense part of
the bill, and I'm on that, and I think you would like me to go
to that meeting, as well as I would like to go.
So, I'm going to go there, and try to come back as soon as
I can. Thank you very much.
The Chairman. All right.
OK, Secretary DeRocco, go right ahead.
STATEMENT OF EMILY STOVER DEROCCO, ASSISTANT SECRETARY,
DEPARTMENT OF LABOR
Ms. DeRocco: Thank you, Mr. Chairman, Senators, for
inviting the Department of Labor to testify at this very
important hearing on the workforce challenges confronting the
energy industry, and how we at the Department of Labor are
helping the industry respond to these challenges.
To better understand the workforce issues of the energy
industry, in 2004 and 2005, my agency--the Employment and
Training Administration--conducted 7 forums for executives from
all sectors of the industry--oil and gas, electric and natural
gas utilities, nuclear, and mining. These forums provided us,
and the workforce investment system, with the opportunity to
gain deep understanding of the critical workforce needs of the
industry, and to begin developing model solutions to meet their
challenges.
Our discussions with the industry identified several key
workforce development concerns.
First, a large percentage of current workers in the
industry are nearing retirement. The average age of workers in
the energy industry is now over 50, and the industry estimates
that up to half of its current workforce--more than 500,000
workers--will retire within 5 to 10 years.
As experienced workers retire, they are difficult to
replace, because too few entry-level workers are equipped with
the advanced skills required by today's technologically
sophisticated companies. Creative solutions are necessary to
help experienced workers who will be retiring, transfer their
knowledge and skills to their replacements, and to help new
workers gain necessary skills as quickly as possible.
The situation is compounded by the problem that too few
potential workers are interested in careers in the energy
industry. Stereotyping of energy careers as ``low skilled''
causes qualified workers and youth to be unaware of the many
highly skilled, well-paying career opportunities the industry
has to offer.
An additional set of challenges arises because many
training programs were reduced or eliminated during the
downturn the industry experienced in the late 1980s and early
1990s. Programs have not expanded at the same rate that the
industries need has rebounded.
Also, we know that employers in all sectors need workers
who are more proficient than their predecessors in math,
science, and especially technology skills.
Finally, it was noted at the forum that too few industry-
defined, portable credentials have been developed in the energy
industry. Additionally, some energy occupations lack clearly
recognizable career ladders, necessary for instilling a new
perception that working in the industry is an attractive and
viable long-term career choice.
ETA began addressing these workforce challenges through an
initiative called the High Growth Job Training Initiative.
Launched in 2002, this initiative is the cornerstone of the
Administration's efforts to create a workforce investment
system, through which taxpayers invest over $15 billion a year,
that is demand-driven, and balances the needs of America's
workers with the demands of employers.
Under this initiative, we've awarded 11 grants, totaling
$27 million, to help model how to meet the workforce needs of
the energy industry.
A quick example is our investment with the State of
Alaska's Department of Labor and Workforce Development. In
order to meet the State of Alaska's demand in the energy
sector, the State--in partnership with education and industry--
is directing training resources directly toward energy-related
competencies and occupations, while at the same time
integrating their vocational and technical education program
with energy skills training.
A key component of this initiative is the use of the
apprenticeship model, a training tool that has been proven to
improve job level skills, and workforce readiness across a
number of sectors, including energy.
Our work in the high-growth sector revealed a critical
shortcoming in the workforce development capacity of many
regions. To address this capacity issue, the Administration has
initiated the community college initiative, or Community-Based
Job Training Grants, to address the need for expanded,
affordable, flexible education and training capacity in local
communities across the country. Due to their close connection
to communities, community colleges are well-positioned to
understand the intricacies of the industry's needs, and better
prepare workers for occupations in these localized industries.
Of our current community college initiatives, 13 grants,
totaling $20 million have been awarded, that focus specifically
on the energy sector. Another example in this arena is with
Montana State University at Billings, to develop an industry-
driven model for just-in-time training, programs in the energy
industry, responsive to new technologies being used in mining,
oil and gas, power generation and biofuels. This project will
train over 1,000 individuals for careers in the industry.
Finally, building on the principles of both the High-Growth
and Community College initiatives, we have begun the Workforce
Innovation in Regional Economic Development Initiative, or
WIRED. WIRED seeks to help regional economies transform their
workforce investment, economic development, and education
systems to support overall economic growth by fostering talent
development in high- growth industries. Thirteen of our current
39 WIRED regions are focusing on the energy industry, and their
talent development needs, and this includes, for example, the
Central New Mexico region.
This regional initiative is led by New Mexico's technology
triangle, an industry-driven regional development alliance
affiliated with New Mexico Tech University in cooperation with
a broad array of stakeholders, the alliance is coordinating an
inter- regional effort to stimulate entrepreneurship, develop
the technical workforce needed by the energy industry, and
create a policy environment that supports and rewards
innovation.
A very important element of WIRED has been our partnership
with other Federal agencies, particularly the Department of
Energy. We have engaged, since 2006, with the National Labs,
represented here today by the National Renewable Energy
Laboratory, which has become a full partner with the WIRED
regions which are exploring alternative energy growth and
opportunities to take advantage of the National Lab's
resources, expertise and technical assistance, to increase
industrial competitiveness, stimulate employment opportunities,
and foster public/private collaboration in talent development.
We have many other initiatives I'd like to share with you,
they're in my written testimony. Perhaps the most important of
which are two we conducted with the 16 Southern States, an
energy Skilled Trade Summit, just a few months ago, to deal
with the issue of advancing careers in the construction
industry tied to new construction in the energy industry, and
we have also launched a partnership with the Departments of
Energy and Interior to conduct the study called for in the
Energy Policy Act, on the availability of skilled workers in
the industry. This study will be done by the National Academy
of Sciences.
We understand that energy is a critical driver in America's
economic growth and competitiveness in the 21st Century
economy, and that high wage opportunities with established
career pathways are awaiting American workers in the energy
industry. The Department of Labor is prepared to continue to
support these efforts.
[The prepared statement of Ms. DeRocco follows:]
Statement of Emily Stover Derocco, Assistant Secretary, Labor
Employment and Training Administration, Department of Labor
Mr. Chairman and Members of the Committee, thank you for the
opportunity to provide the Department of Labor's perspective on the
workforce challenges confronting the energy industry. Recognizing the
importance of this sector of our economy to the Nation's overall global
competitiveness, the Department of Labor has been actively helping the
energy industry respond to the workforce challenges it faces.
The U.S. energy industry is undergoing a dramatic transformation as
advanced technologies revolutionize the traditional methods of energy
extraction and refinement. In addition, the renewable and alternative
energy field presents a whole new set of opportunities for the industry
that did not exist a decade ago. We recognize this transformation as
critically important for our economy as a whole, and that a successful
transformation requires a highly-skilled workforce. Therefore, we are
working with the energy industry to understand their business
processes, market dynamics, and skilled workforce needs.
Leaders in the energy industry, along with other high growth
sectors of the economy, express the need for more highly trained and
highly skilled workers in order to grow and be competitive in the years
ahead. Most of the new jobs created today require at least some post-
secondary training, whether it be a vocational degree or certificate,
apprenticeship training, or a four-year degree from a college or
university. However, the skilled workers that companies need are
becoming increasingly difficult to find. This is where the Department
of Labor has an important role to play.
High-wage employment opportunities with established career pathways
are awaiting American workers in the energy industry, but first, some
key workforce challenges must be overcome. Now, and over the next few
years, the public workforce investment system, private industry, the
education system, and the entire energy community must work together to
address the following challenges: the aging of the energy workforce and
the lack of highly-trained workers in the pipeline to replace them;
outdated misconceptions about careers in the energy sector; the lack of
energy training and education programs due to elimination of programs
during the recession of the early 1990s; the demand for workers with
higher levels of science, technology, engineering, and mathematics
skills; and the need for industry-recognized credentials and better
career pathways for workers in the energy industry.
The Role of the Workforce Investment System Currently, the Federal
government invests over ten billion dollars annually in job training
and employment assistance programs. The Employment and Training
Administration (ETA) administers many of these programs, through the
public workforce investment system, with a goal of preparing workers
for jobs of the 21st century. The workforce system is an important
resource that the energy industry can draw upon to secure a skilled
workforce.
ETA has strived to build a ``demand-driven'' workforce system to
provide America's economic engine--businesses--with the highest quality
workers possible, and to link the two together for their mutual
benefit. This relationship allows businesses to be more competitive in
the global economy and workers to live more productive and prosperous
lives. Key to the success of a demand-driven system is the workforce
investment system's ability to respond to the needs of the labor market
by partnering and working collaboratively with businesses, educators
and trainers, and community leaders in a strategic effort to prepare
workers for opportunities in high growth sectors of the economy. In
recent years we have undertaken a series of initiatives to better do
this, starting with the High Growth Job Training Initiative.
the president's high growth job training initiative
ETA began working to address the workforce challenges of the energy
industry through the President's High Growth Job Training Initiative.
Launched in 2002, this initiative is the cornerstone of the
Department's efforts to create a workforce investment system that is
demand-driven and balances the needs of America's workers with the
demands of employers. Under the High Growth Job Training Initiative,
ETA has partnered with 14 high growth industries and economic sectors,
including energy, to evaluate their skill needs and ensure that workers
are being trained with the skills these businesses require.
Through the High Growth Job Training Initiative, ETA has invested
$288,517,000 in 156 partnerships among employers, education programs,
and the workforce investment system. Each project targets the skill and
talent needs of high growth, high demand industries in our nation's
economy and provides the resources necessary to develop the capacity to
train workers in the skills demanded by the 21st century economy. By
training workers with the skills employers want, more workers will
obtain quality jobs that pay higher wages, while enabling employers to
address their skill shortages and better compete in today's changing
economy.
To better understand the workforce issues of the energy industry,
in 2004 and 2005, ETA conducted seven forums for executives from all
segments of the oil and gas industry, electric and natural gas
utilities, nuclear energy, and mining. These forums provided us and the
workforce investment system with the opportunity to gain further
understanding of the critical workforce needs of the industry and
develop workforce solutions.
Our discussions with the energy industry in these forums identified
several key workforce development concerns. First, a large percentage
of current workers in the energy industry are nearing retirement. The
average age of workers in the energy industry is now over 50, and the
industry estimates that up to half its current workforce--more than
500,000 workers--will retire within 5 to 10 years. As experienced
workers retire, they are difficult to replace because too few entry-
level workers are equipped with the advanced skills required by today's
technologically-sophisticated companies. Creative solutions are
necessary to help experienced workers who will be retiring transfer
their knowledge and skills to their replacements and to help new
workers gain necessary skills as quickly as possible.
The situation is compounded by the problem that too few potential
workers are interested in careers in the energy industry. Stereotyping
of energy careers as low-skilled causes qualified workers, especially
youth, to be unaware of the many highly skilled, well-paying career
opportunities the industry has to offer.
An additional set of challenges arises because many training
programs were reduced or eliminated during the downturn the industry
experienced in the late 1980s and early 1990s. Programs have not
expanded at the same rate that the industry's need has rebounded. Also,
we know that employers in all sectors of the industry need workers who
are more proficient than their predecessors in math, science, and
especially, technology skills.
Finally, it was noted at the forums that too few industry-defined,
portable credentials have been developed in the energy industry.
Additionally, some energy occupations lack clearly recognizable career
ladders necessary for instilling a new perception that working in the
industry is an attractive and viable long-term career choice.
Working from this foundation of information about the workforce
challenges faced by the energy industry, investments were made under
the High Growth Job Training Initiative to implement solutions to the
identified challenges. Of 156 current investments under the initiative,
11 grants totaling $27,093,668 have been awarded to help meet the
workforce needs of the energy industry. One example is our investment
with the State of Alaska's Department of Labor and Workforce
Development. In order to meet the growing workforce demand in the
energy sector, the State of Alaska, in partnership with education and
industry partners, is directing training resources towards energy-
related occupations while at the same time integrating vocational and
technical education with skills training. A key component of this grant
is also apprenticeship training--a training tool that has proven to
improve job skill levels and workforce readiness across a number of
industry sectors, including energy. To build upon the current
investments, ETA anticipates announcing a Solicitation for Grant
Applications targeting the energy industry under the High Growth Job
Training Initiative later this year.
community-based job training grants
Our work under the High Growth Job Training Initiative revealed a
critical shortcoming in the workforce development capacity of many
regions: many communities are not positioned to meet the training
demands of our high growth industries because of limited training
capacity and outdated curricula and training delivery systems. To
address this need for expanded affordable, flexible education and
training capacity in local communities across the country, President
Bush established the Community-Based Job Training Grants program. The
initiative provides grants to help community and technical colleges
train workers for jobs in high growth sectors though the use of
community and technical colleges.
Due to their close connection to local labor markets, community
colleges are well positioned to understand the intricacies of local
economies and better prepare workers for occupations in these localized
industries. To date, the Department has provided $250,000,000 to 142
community colleges, One-Stop Career Centers and other entities under
this initiative. A third round of Community-Based Job Training Grants
totaling $125,000,000 is currently under review by the Department and
award announcements are expected soon.
Of the current investments, grants totaling $20,405,604 have been
awarded that focus on the energy sector. One of those investments is a
$1,998,885 grant to Montana State University at Billings to develop an
industry-driven model for just-in-time training programs in the energy
industry, including mining, oil and gas exploration and production,
power generation, biofuels, bioproduct development, renewable resources
and energy-related construction. The grant expects to train over 1,000
individuals for jobs in energy and establish an Energy Workforce
Training Center that will focus on jobs in the energy industry and will
support training programs and degrees that serve the developing
biofuels sector.
workforce innovation in regional economic development
Building on the principles of the High Growth Job Training
Initiative and Community-Based Job Training Grants is the Workforce
Innovation in Regional Economic Development Initiative, or WIRED. The
WIRED Initiative is also answering the call for competitiveness by
fostering innovation through regional workforce and economic
development. Though global competition is often seen as a national
challenge, it is actually at the regional level where solutions must be
developed and the challenges met. It is in regional economies where
companies, workers, researchers, educators, entrepreneurs and
government come together to create a competitive advantage and where
new ideas and new knowledge are transformed into advanced, high-quality
products or services.
WIRED focuses on labor market areas that are comprised of multiple
jurisdictions within a state or across state borders. It seeks to help
regions transform their workforce investment, economic development, and
education systems to support overall regional economic growth by
fostering collaborative partnerships among universities, businesses,
government, workforce and economic development organizations, and other
key regional partners. Many of the regions selected have been affected
by global trade or Base Realignment and Closures (BRAC) activities, are
dependent on a single industry, or are recovering from natural
disasters. Under the WIRED Initiative, ETA has invested $325 million
and is providing expert assistance to 39 regions across the nation to
implement strategies that will create high-skill and high-wage
opportunities for American workers.
To date, 13 of the 39 WIRED Regions are focusing on the energy
industry, including the Central New Mexico region. The regional
initiative is led by New Mexico's Technology Triangle, an industry-
driven non-profit regional development alliance affiliated with New
Mexico Tech University. The alliance supports the growth of
entrepreneurship, talent and innovation in the state's green
manufacturing industries, including renewable energy, green building,
aerospace and aviation, microelectronics, and optics. In cooperation
with a broad array of stakeholders within and beyond the eight-county
region, the alliance seeks to coordinate an inter-regional effort to
stimulate entrepreneurship, advance the development of the technical
workforce, and create a public policy environment that supports and
rewards innovation.
An important element of the WIRED Initiative is the partnerships
that ETA has developed with other Federal agencies. ETA has worked with
10 other Federal agencies, including the Department of Energy (DOE), to
provide funding, technical assistance, and other support to the WIRED
regions. Beginning in 2006, ETA began working with the national
laboratories of DOE, including Oakridge National Laboratory and the
National Renewable Energy Laboratory (NREL) to increase WIRED region
access to Federally-funded technologies at Federal laboratories. Site
visits at both locations led to increased discussion on how DOE and DOL
can work together to share resources, experience, technology,
information and infrastructure in solving our workforce challenges in
the energy industry. Our partnership with NREL is particularly
noteworthy because it is the only national laboratory dedicated to
renewable energy and efficiency research and development. The assets
and resources at NREL were shared with WIRED regions during a two-day
institute, April 18 and 19, 2007, at which WIRED regional leaders were
introduced to methods to increase industrial competitiveness, stimulate
wealth creation and employment opportunities, foster public-private
collaboration in technology development, and increase innovation, all
of which are essential elements in today's ``knowledge economy.''
additional energy initiatives
ETA has also undertaken a number of other initiatives to more fully
understand the workforce development challenges of the energy industry
and to ensure that the industry has highly skilled workers, including
holding an Energy Skilled Trade Summit, utilizing apprenticeship as an
important pipeline of workers into the industry, and launching a study
on the workforce needs of the industry.
Energy Skilled Trade Summit
To address the workforce challenges faced by the Energy Skilled
Trades sector, ETA, in partnership with the energy industry and the
construction firms and labor management organizations that support it,
embarked on another initiative to improve the pipeline of craftsmen and
utility workers, with a focus on the Southeastern United States. To
kick off the initiative, ETA convened an Energy Skilled Trades Summit
in August 2007 in Biloxi, Mississippi, as part of the Southern
Governors' Association meeting, hosted by Governor Haley Barbour.
Additional key sponsors were the Nuclear Energy Institute, Edison
Electric Institute, the American Petroleum Institute, and the Center
for Energy Workforce Development (CEWD). Among the over 300 attendees
were four Governors and 20 CEOs of major energy and construction firms.
Summit participants discussed strategies to align Federal, state, and
local resources to increase the supply of workers for high growth, high
demand careers in the energy and construction industries, and began to
develop state action plans for improving synergy between industry and
the education, workforce, and economic development systems. ETA and
industry leaders have pledged their continued support for this
initiative.
Apprenticeship Programs
ETA administers the National Apprenticeship Act, which establishes
the framework for registered apprenticeship programs. The
apprenticeship model continues to use the time-tested method of
learning on-the-job in combination with related technical and
theoretical instruction in the classroom to train workers in skilled
occupations. Apprenticeship is an industry driven system that develops
employee skills, competencies, and knowledge in order to meet the
workforce development needs of business. Currently, there are over 900
active apprenticeship programs in energy industries, involving 5,900
apprentices in occupations such as power plant mechanic, boilermaker,
line erector, and operating engineer. These numbers will continue to
grow. As the energy industry builds new facilities and adopts new
processes due to technological advances, the apprenticeship system
works closely with program sponsors to adapt apprenticeship programs to
keep pace with these changes.
Study of Energy and Mining Workforce Supply
The Energy Policy Act of 2005 directed DOE to enter into an
agreement with the National Academy of Sciences to conduct a study on
the availability of skilled workers in the energy and mining
industries. Given our interest and expertise in workforce issues, ETA
approached DOE and proposed to administer this study on their behalf.
ETA is prepared to commit $750,000 to the study, and is executing a
Memoranda of Understanding with DOE to carry out this study. The
Department of Interior is also interested in this issue and will
contribute funding to the study. ETA will soon execute a procurement
with the National Academy of Sciences to conduct the study, which we
expect to be completed by next fall. This study will provide
significant information about the availability of workers to meet
energy and mining industry demands. In turn, this will help us learn
about strategies on how to best meet those demands, thus contributing
to securing the Nation's energy future.
conclusion
In conclusion, Mr. Chairman, energy remains a critical driver of
America's economic growth and competitiveness in the global economy of
the 21st century. High-wage employment opportunities with established
career pathways are awaiting American workers in the energy industry.
The programs and initiatives I have described will not only help
address the structural changes the energy industry is facing, but they
will provide a skilled workforce that can take advantage of the
employment opportunities that exist in the industry. At this time I
would be pleased to answer any questions that you or other Committee
Members may have.
The Chairman. Thank you very much.
Ms. Hoffman, go ahead.
STATEMENT OF PATRICIA A. HOFFMAN, DEPUTY DIRECTOR, DEPARTMENT
OF ENERGY
Ms. Hoffman. Mr. Chairman and members of the committee,
thank you for this opportunity to testify on behalf of the
Department of Energy on the nation's domestic energy sector
workforce.
Our nation's technical workforce is the backbone of our
economy. Given looming retirements in the energy workforce,
success in ensuring America's future energy security will
depend on our ability to recruit, educate, and train highly
skilled workers. Energy security is undeniably linked to our
national interests.
In 2006, the Department of Energy released a report to
Congress on workforce trends in the electric utility industry,
pursuant to Section 1101 of the Energy Policy Act. Although the
report did not forecast an immediate threat to the reliability
of the electric system, it raises awareness of the need to plan
for, and proactively address this workforce transition.
One example of a successful public-private partnership in
this area is the Department's designation of Bismarck State
College in North Dakota as the National Power Plant Operations
Technology and Educational Center.
The Administration, through efforts such as the Advanced
Energy Initiative, supports the enhanced use of renewable
electricity generation. It is clear that continued innovation
and a strong workforce is an important part of unlocking and
sustaining our energy future with renewable technologies. DOE
also estimates there may be additional workforce needs in the
building sector, ranging from trade skills to building
professionals. DOE is working with a consortium of universities
to develop multi-level, multidisciplinary building science
curricula, to support the long-range needs of the home building
industry.
The expansion of nuclear power in the United States offers
our nation the opportunity to foster continued economic growth.
DOE's Nuclear Energy Research Initiative, which focuses on
developing nuclear science and technology, recently announced
the selection of 11 U.S. University-led grant recipient teams,
to receive up to $30.7 million for cooperative research
projects.
The Department also supports the White House Initiative on
Historically Black Colleges and Universities (HBCU's) in
developing the energy sector. This is administered within the
U.S. Department of Education. In the last three Fiscal Years,
the Department's National Nuclear Security Administration
(NNSA) has awarded 41 grants to 25 HBCUs, totaling over $47
million. These grants cover research related to NNSA's nuclear
security and non-proliferation mission requirements.
DOE's Office of Economic Impact and Diversity also
facilitates numerous mentor-protege relationships. This past
summer, for example, the Oak Ridge National Laboratory and
Morehouse College signed the first of the such agreements
between an HBCU and a DOE Office of Science Laboratory. This
new joint initiative will assist students in the college's
science programs, as well as promote research collaborations at
both institutions.
To meet future workforce requirements, the Department has
several recommendations for the committee.
First, foster math and science education. The DOE's Office
of Science has been a long-dominant Federal sponsor of basic
research in the physical science. These research programs are
supported by a dedicated effort designed to recruit, train and
retain the next generation of Americans who are interested in
science, technology, engineering and mathematics.
One example of this is DOE's annual ``Day of Science'' at
Oak Ridge National Laboratory in Tennessee, which this year was
attended by more 1,000 students from 125 universities.
Second, support strategic research in engineering.
University curricula should strike an effective balance between
addressing the short-term needs of industry and promoting the
strategic research necessary to maintain America's long-term
competitiveness. Without strong support for strategic research
in engineering and without qualified replacements for retiring
faculty, the strength of our nation's university-based
engineering programs will wane.
To help address this trend, the Department's funding for
the Power Systems Engineering Research Center--a multi-
university, multidisciplinary National Science Foundation-
sponsored center--develops broadly trained power engineers, as
well as future power engineering faculty candidates.
Third, develop cross-cutting understanding. An analysis of
the interdependencies of the workforce across the entire energy
flow is required to ensure the energy reliability will not be
impacted by a national shortage of skilled personnel. The
Department of Energy is partnering with the Department of Labor
(DOL) to arrive at a better understanding of the energy sector
workforce issues. As Assistant Secretary DeRocco mentioned, the
Department of Energy is working with DOL to fulfill the
requirements of Section 385 and 1830 of EPACT. As you know,
these sections require DOE to enter into an arrangement with
the National Academy of Sciences to conduct a study on the
availability of skilled workers in the energy sector.
This concludes my statement, Mr. Chairman, and I look
forward to answering any questions that you and your colleagues
may have.
[The prepared statement of Ms. Hoffman follows:]
Statement of Patricia A. Hoffman, Deputy Director, Department of Energy
Mr. Chairman and Members of the Committee, thank you for this
opportunity to testify on behalf of the Department of Energy (DOE) on
the nation's domestic energy sector workforce.
Our nation's technical workforce is the backbone of our economy.
These individuals have accumulated a wealth of experience and knowledge
that cannot be duplicated overnight. If America is to remain the
world's leader in science and technology and continue to lead the world
in energy innovation, the energy industry needs to invest in a vibrant
workforce.
Given looming retirements in the energy workforce, success in
ensuring America's future energy security will depend on our ability to
recruit, educate, and train highly skilled workers to meet the demands
of our rapidly evolving, technology-driven energy industries. As
traditional sources of energy become more stretched by the growing
demand for energy domestically and globally, our nation's energy sector
will undergo significant changes. Energy security is undeniably linked
to our national interest. The move to diversify our energy supply from
the conventional sources of the past requires equipping our workforce
with the skills, technology, and creativity required to achieve a
sustainable energy future.
electric sector
In 2006, DOE released a report to Congress on ``Workforce Trends in
the Electric Utility Industry,'' pursuant to section 1101 of the Energy
Policy Act of 2005 (EPACT). The report examined workforce trends
associated with the electricity delivery industry, which is the primary
focus of my office, OE. For electric utilities, whose service quality
and reliability depend on maintaining an adequate, knowledgeable
workforce, managing the upcoming retirement transition is a particular
challenge.
Although the report did not forecast an immediate threat to the
reliability of the electric system, it raises awareness of the need to
plan for and proactively address this workforce transition. For the
purposes of this analysis, trends associated with electrical
lineworkers and electric power engineers were considered representative
of the broader electric utility workforce. Electrical lineworkers'
responsibilities include erecting poles and light or heavy-duty
transmission towers and installing or repairing cables or wires used to
carry electricity from the power plant to the customer; they represent
the physical labor required to operate and maintain the electric grid.
Electric power engineers traditionally focus on systems and devices for
the conversion, delivery, and use of electrical energy. These
applications enable technology enhancements that significantly improve
the capability, performance, and reliability of the entire electricity
system.
electric lineworkers
Since 2000, the electric utility industry's employment level for
lineworkers, which experienced declines from the early 1990s into the
early 2000s that coincided with restructuring of the industry, has been
steadily increasing. This hiring trend is driven by utilities'
anticipation of increased demand, and is a response to the long periods
of little or no capital investment. Utilities, concerned at the
prospect of meeting rising demand for electricity using the existing
transmission lines, have embarked upon a hiring program to provide the
employees necessary to maintain, upgrade, and expand the electric
utility system. The August 2003 U.S.-Canada blackout also focused
attention on the fragile state of the grid, which put pressure on
utilities to ensure that they were meeting reliability standards.
Growth in the industry is outpacing the number of available and
qualified personnel. In 2005, there were approximately 31 lineworker-
training programs across the country, with a total of 1,360 active
students in various stages of lineworker training. Should the present
trend continue, the number of pre-apprenticeship lineworker training
institutions across the country could increase to 45 institutions by
the year 2015. Yet, even with the increased interest of students in
entering these training programs, the numbers may still not be enough
to compensate for the expected retirements. Across the organizations
contacted for the section 1101 report, retirement eligibility and the
percentage of the workforce expected to retire within the next five to
ten years varies from about 11 percent to as high as 50 percent. One
utility indicated that the high level of retirements that began a few
years ago is expected to persist for the foreseeable future due to this
demographic profile, which includes a very high percentage of the
lineworker and engineering workforce.
The electric industry is being proactive in addressing the
lineworker shortage by building awareness, encouraging training
initiatives, and increasing interest in the lineworker profession at an
early age. It is important to note, however, that the magnitude of the
impact on individual utilities varies significantly. Even with the
addition of new lineworkers to the labor pool, the loss of historical
knowledge (and perhaps productivity due to the more inexperienced
workforce) might by itself have a detrimental effect on the reliability
and security of the grid.
Adequate training is the key to sustaining a qualified pool of
lineworkers. Preparing a highly skilled electric utility lineworker can
require 10 to 12 years, including classroom instruction and on-the-job
experience. Potential lineworkers pass through various stages of career
development, from ``Introductory Training'' to formal apprenticeship
programs to on-the-job learning. Since the attrition rate is very high
for new lineworkers, these courses help orient trainees to the mindset
needed for lineworker careers before utilities make a large investment
in the employee's career development. In many cases, however, utilities
will bring trainees directly into their apprenticeship programs without
the student having completed an introductory training program.
Strong public-private partnerships are necessary to promote the
energy industry as a viable employment option, to develop strategies
for encouraging retirement-eligible workers to remain employed in the
industry, and to ensure adequate training and education opportunities.
Developing and using technology to increase productivity and fostering
knowledge transfer may also be beneficial.
One example of a successful public-private partnership, although
geared toward operator training and not lineworkers, is the
Department's designation of Bismarck State College in North Dakota as a
National Power Plant Operations Technology and Educational Center.
Bismarck State's programs in power plant, process plant, electric
power, electrical transmission systems, and nuclear power technologies
will educate and train many of our future energy sector workers. It
also uses the latest technologies via the internet and training
simulations to speed up the knowledge transfer process.
electric power and transmission engineers
Jobs for new power engineering graduates began declining in the
1980s when utilities saw a decline in electric consumption, and the job
market remained challenging with deregulation in the 1990s. However, by
2001 and 2002, power engineering graduates were able to find positions
at generation companies, transmission companies, power traders,
independent system operators, independent power producers, consulting
companies, and large processing and manufacturing companies that have
extensive electrical facilities.
As detailed in the section 1101 report, the projected demand for
power engineers will grow to 11,113 by 2014, which represents an 8.1
percent increase. The average annual demand for electrical engineers in
the electric utility industry is 749 per year for the 10 year period
from 2004 to 2014. International competition and the use of engineering
services performed in other countries may limit employment growth
domestically; nevertheless, the projected strong demand for electrical
devices such as giant electric power generators could provide
employment opportunities in the U.S.
Over the past decades, there has been a decline in the United
States in the number of students considering power engineering careers.
In contrast, in many countries outside of the United States, the power
engineering profession enjoys more prestige and thus, experiences
higher enrollment levels. There are indications that the power
engineering education system in the United States is actually
weakening, and the rate of weakening will likely escalate as faculty
retirements occur without replacement. Without strong support for
strategic research and without qualified replacements for retiring
faculty, the strength of the university-based power engineering
education programs will continue to decline. This is in part because
some schools do not rehire power faculty and instead use the faculty
slots to hire individuals with other technical knowledge.
DOE supports Gonzaga University in Spokane, Washington in
developing an online certificate program in transmission and
distribution engineering aimed at practicing utility engineers who seek
to broaden and upgrade their skills. In addition to basic electric
design, construction, operation, and maintenance courses, this program
also plans to offer courses in related disciplines that would examine
the environmental and legal aspects of electric line design, which have
become inherent components of modernizing the grid. The availability of
this course online minimizes the disruption to the engineer's work
schedule and reduces the employer's cost for the training.
renewable energy sector
The Administration, through efforts such as the Advanced Energy
Initiative, supports new, bold steps toward the goal of a reliable,
affordable, and clean energy future for all Americans. In the energy
sector, the enhanced use of renewable electricity generation--from such
sources as solar photovoltaics, high-efficiency wind power, and
biomass--would help reduce emissions of air pollutants and greenhouse
gases. It is clear that continued innovation is an important part of
unlocking our energy future.
The Department has conducted surveys of key market participants to
better understand the time required for training qualified photovoltaic
(PV) installers. These surveys 5 indicate that the time to train a
qualified PV installer ranges from 6 weeks to 3 months if the trainee
already has basic training in a key ``enabling'' trade, for example, as
an electrician or roofer.
DOE also estimates there may be additional workforce needs in the
buildings sector, including trained trades and trades management
(electrical, plumbing, HVAC techs, etc.); mid-level construction
managers and building operators/energy managers; skilled professionals
(lighting designers, building commissioners, energy auditors,
construction specifiers/purchasing agents, etc); and building
professionals (architects, engineers, designers, etc.). DOE is working
with a consortium of universities to develop multilevel, multi-
disciplinary building science curricula to support the long range needs
of the home building industry. The Department is also working with
professional organizations like AIA, ASHRAE, IESNA, and IALD to promote
the integration of efficiency technologies and practices into their
professions as well as to draw upon their knowledge as we implement our
programs.
nuclear sector
The expansion of nuclear power in the United States offers our
nation the opportunity to foster continued economic growth, to raise
living standards, and to be responsible stewards of the environment by
reducing greenhouse gas emissions. DOE's Nuclear Energy Research
Initiative, which focuses on developing nuclear science and technology,
recently announced the selection of 11 U.S. university-led grant
recipient teams to receive up to $30.7 million for cooperative research
projects.
white house initiative on historically black colleges and universities
The Department also supports the White House Initiative on
Historically Black Colleges and Universities (HBCUs) in developing the
energy sector, which is administered through the office of the
Secretary within the U.S. Department of Education. In the last three
fiscal years, the Department's National Nuclear Security Administration
(NNSA) has awarded 41 grants to 25 HBCUs totaling over $47 million. The
grants cover research related to the NNSA's nuclear security and
nonproliferation mission requirements, curriculum development in
science and technology programs, and infrastructure improvements.
DOE's Office of Economic Impact and Diversity also facilitates
numerous mentor-protege relationships. This past summer, for example,
the Oak Ridge National Laboratory and Morehouse College signed the
first such agreement between an HBCU and a DOE Office of Science
laboratory. The new joint initiative will assist students in the
college's science programs and promote research collaboration at both
institutions. Many students from Historically Black Colleges and
Universities have participated in the Department's internship programs.
Interns from summer 2007 in our offices in Washington, DC and
Germantown, Maryland, worked on projects in nuclear energy, computer
technology, radioactive waste, energy efficiency, scientific research,
and environmental management. An additional 40 students were assigned
to DOE's national laboratories and field facilities. Finally, the Dr.
Samuel P. Massie Chairs of Excellence Program, funded by DOE, is named
after an African-American chemist of national reputation who was a
leader in championing the cause of minority education in the United
States. The program now comprises nine HBCUs that graduate more than 30
percent of the minority engineers in the United States.
meeting workforce demands
The following are ways in which the federal government can address
future energy workforce demands in the United States:
Foster Math and Science Education
DOE's Office of Science has long been the dominant federal sponsor
of basic research in the physical sciences, including physics,
chemistry, and related fields. The Office of Science also supports
computer sciences, mathematics, environmental sciences, materials
research, nanotechnology, and engineering. These research programs are
supported by a dedicated effort designed to recruit, train, and retain
the next generation of Americans who are interested in science,
technology, engineering and mathematics (STEM) careers. The Office of
Science, through its Office of Workforce Development for Teachers and
Scientists, currently supports more than 600 undergraduate internship
experiences at DOE laboratories and 200 K-12 educators who work with
master educators and mentor scientists to hone their classroom skills.
The Office of Science, through its research grants, also supports the
training of thousands of graduate students and post-doctoral
researchers, and has several dedicated graduate fellowship programs in
the physical, computer, and life sciences. The Office of Science is in
the process of working with DOE offices--including OE--that could
benefit from focused placements of internships and fellowships in
dedicated research assignments of importance to the U.S. electric
utility industry.
In addition, the Office of Science promotes science literacy and
interest in the STEM careers through the National Science Bowl, which
annually attracts 20,000 middle school and high school students to
competitions at 100 regional events located throughout the U.S., and
other efforts. One example is DOE's annual ``Day of Science'' at the
Oak Ridge National Laboratory in Tennessee, which this year was
attended by more than 1,000 students from 125 universities, including
many Historically Black Colleges and Universities. Students from across
the country participate in scientific presentations, innovative
technology demonstrations, and one-on-one interactions with laboratory
researchers. Faculty from universities also participate in this annual
event and attend workshops designed to help them understand how to
compete for DOE research grants and participate in DOE's research
enterprise.
Support Strategic Research in Engineering
As noted earlier, university-based research and education is an
engine for innovation, exploration, and ingenuity. Curricula need to
strike an effective balance between addressing the short-term needs of
industry and promoting the strategic research necessary to maintain
America's long-term competitiveness. Without strong support for
strategic research in engineering and without qualified replacements
for retiring faculty, the strength of our Nation's university-based
engineering programs will wane, and along with them, the foundation for
innovation in the energy sector to meet our future challenges. We need
to ensure adequate funding for academic programs in energy-related
disciplines to attract the most talented students to these programs.
For instance, the Department's funding of the Power Systems
Engineering Research Center (PSERC), a multi-university,
multidisciplinary National Science Foundation-sponsored center,
develops broadly trained power engineers as well as future power
engineering faculty candidates.
Promote Interest in Energy-Related Careers
There are significant opportunities for creativity and innovation
in the energy sector to meet the challenges of the 21st century. It is
important to highlight that supporting energy infrastructure is a
national strategic priority. Federal agencies could work with the
private sector to communicate what the energy industry is about, to
emphasize the high-tech nature of future challenges, to identify the
direction the industry is moving, and to build awareness for the
careers of tomorrow.
Capture Existing Workforce Knowledge
Even as we grow our workforce, the loss of historical knowledge as
the so-called baby boomer generation retires, could be detrimental to
productivity. For instance, a shortfall in experienced lineworkers
would create longer restoration times after a disruption. Training,
workforce retention, and phased retirements could help mitigate any
consequences.
Develop Cross-cutting Understanding
An analysis of the interdependencies of the workforce across the
entire energy flow--from coal miners and well riggers to electrical
lineworkers and engineers--is required to ensure energy reliability
will not be impacted by a national shortage of skilled personnel.
The Department of Energy is partnering with the Department of Labor
(DOL) to arrive at a better understanding of energy sector workforce
issues. As Assistant Secretary DeRocco mentioned, the Department of
Energy is working with DOL to fulfill the requirements of Sections 385
and 1830 of EPACT. As you know, those sections required DOE to enter
into an arrangement with the National Academy of Sciences to conduct a
study on the availability of skilled workers in the energy sector.
Assistant Secretary DeRocco's testimony further describes this effort,
and DOE is looking forward to working with DOL and the National
Academies.
Think Globally
In the past, declines in the domestic science and engineering labor
force could be compensated for by attracting the best and brightest
scientists and engineers from around the world. However, with new
cutting-edge research infrastructure being built overseas, and with
strong employment prospects in several developing regions, there is
perhaps less of an incentive for students to remain in the United
States upon graduation. Statutory caps on high-skilled temporary work
visas and employment-based immigration limit the number of students and
professionals that are able to either enter or remain in the United
States.
Conclusion
In order to maintain our economic preeminence in an increasingly
competitive world, U.S. industry must invest in its human capital to
ensure the next generation of skilled personnel, scientists, and
engineers capable of maintaining American leadership in critical
science and technology areas as we work to meet the energy and economic
challenges of the 21st century.
This concludes my statement, Mr. Chairman. I look forward to
answering any questions you and your colleagues may have.
The Chairman. Thank you very much.
Ms. Cornelius, go right ahead.
STATEMENT OF ANDRA CORNELIUS, VICE PRESIDENT, WORKFORCE
FLORIDA, INC., TALLAHASSEE, FL
Ms. Cornelius. Chairman Bingaman, Senator Corker, other
members of the committee, my name is Andra Cornelius, I am Vice
President of Business Outreach for Workforce Florida. Thank you
for the opportunity to provide testimony on behalf of Workforce
Florida, the State's workforce investment board.
We have worked very hard in Florida over the last 18 months
to better understand the energy industry's workforce needs in
our State. We have identified it as a critical sector, because
of the role this industry plays in keeping our economy strong,
and in the event of storm activity, helping us to regain
normalcy.
This industry, like others in our State, is facing
workforce shortages. Since 2002, Florida has had one of the
lowest unemployment rates, and strongest job growth rates among
the Nation's largest States. Florida is forecast to be the
third-largest State in the country in 2011, just behind
California and Texas. We gain about eight to nine hundred new
residents daily.
While every industry is collectively concerned about where
to find skilled talent, with this much growth, our energy
industry will need to develop new power sources. Additional
workers will be needed to generate, transmit and distribute
power. Our Governor has also set very bold guidelines to ensure
our State stays as green as possible, so we're looking ahead to
alternative sources of power generation, as well.
One of the steps we took toward developing solutions was to
form the Florida Energy Workforce Consortium, comprised of all
of our major energy partners, workforce representatives,
educators and associations to identify workforce issues
impacting the energy industry, including the large number of
expected retirements. We also needed to better understand the
existing training option in our State, and the output from our
schools--the pipeline, if you will--and how companies are
transferring knowledge from their existing workers to the new
ones.
We also needed to identify what the specific occupations of
critical concern were, and last, to begin developing solutions
to meet the workforce needs now and in the future.
What are the lessons from Florida, thus far? First, build
effective partnerships--engage industry, labor, education
partners, and the workforce system to collectively craft
solutions for all. Second, build a talent pipeline. Many
companies are finding it difficult to recruit younger job
candidates with the skills needed for success. We will need to
replicate feeder programs, like the Gulf Power Academy in
Pensacola, which uses company instructors and equipment, and
conveys company values to young people while still in high
school. This is very critical in Florida, where 6 out of 10
ninth-graders drop out, or do not go onto college.
The energy industry provides excellent jobs with great
earning opportunities that can change young peoples' lives, and
these jobs are never off-shored.
Our Consortium works closely with the National Center for
Energy Workforce Development. This Center has a ``Get Into
Energy'' website, among other tools, to foster career
awareness.
Finally, in addition to partnerships and deploying pipeline
development strategies, we are implementing policies that will
allow us to meet new challenges related to increasing energy
demand, both traditional and alternative.
Florida's experience leads us to believe that any national
solutions for addressing this industry's workforce challenges
should take into account three things.
First, make the energy industry workforce development
effort, and economic development priority. Reliable power is
the backbone for any growing economy.
Second, focus on talent pipeline development and career
awareness, support programs like the Gulf Power Model that
emphasize skills with documentable results.
Third, align investments for solutions through partnerships
to reduce redundancy and leverage funding.
Chairman Bingaman, this concludes my remarks, I want to
thank you again for this opportunity to testify before this
committee.
[The prepared statement of Ms. Cornelius follows:]
Prepared Statement of Andra Cornelius, Vice President, Workforce
Florida, Inc., Tallahassee, FL
introduction
Chairman Bingaman, Ranking Member Domenici, and other distinguished
members of the Committee: My name is Andra Cornelius, CEcD, and I am
Vice President of Business Outreach for Workforce Florida, Inc. I am
honored to have this opportunity to appear before you today on behalf
of Workforce Florida, the state's workforce investment board. As such
Workforce Florida is charged with fulfilling responsibilities outlined
in the federal Workforce Investment Act. Working with the Florida
Agency for Workforce Innovation and 24 regional workforce boards
throughout the state, Workforce Florida's mission is to develop our
state's business climate through strategies that help Floridians enter,
remain and advance in the workforce, becoming more highly skilled and
successful, benefiting our enterprises and the entire state. Our
success at strengthening Florida's economy also boosts our national
economic outlook.
florida workforce system background
We are very proud of the accomplishments of Florida's public
workforce system, which has been recognized as a national model for its
innovative solutions to meeting workforce needs. The system was
restructured in 2000 to create Workforce Florida, which is a nonprofit,
public-private partnership. What makes our system unique is that a
majority of Workforce Florida's Board of Directors represents Florida
businesses and this workforce investment board is empowered to set
policy by directing the appropriated resources. This ensures Florida's
workforce system remains demand-driven and flexible to meet needs in an
ever-changing economy. The Florida Agency for Workforce Innovation is
our state-level partner and it is charged with administrative oversight
of the regional workforce boards, governing compliance and providing
technical assistance. At the local level, where most of the service
delivery occurs, the also business-led regional workforce boards direct
programs and resources for businesses and job seekers that are tailored
to meet each community's unique needs.
In my testimony today, I seek to address the intent of this hearing
by providing a state workforce investment board's perspective on
whether our Nation's energy industry will have the available workforce,
both craft and professional, to meet growing needs and whether gaps
exist that Congress should act to address. In doing so, I would like to
speak to what Florida's workforce system has done over the past 18
months to better understand the energy industry's workforce needs in
our state, our accomplishments to date, and the challenges and
opportunities we believe are ahead in implementing lasting workforce
solutions for this vital sector. Finally, I would like to offer a few
suggestions for this committee to consider as you continue to develop
strategies in this critical area. Simply stated, I would like to share
with you the three P's we have learned are essential in order to meet
existing and future workforce challenges facing Florida's--and our
Nation's--energy sector. They are: partnership, pipeline and, your
influential role, policy.
creating new partnerships
Developing lasting workforce solutions requires partnerships among
industry, education, economic development and workforce. Across the
Nation, our workforce systems are challenged to provide services within
the reality of a global economy. Prosperity in the New Economy requires
a highly skilled and productive workforce. Improving the skills of our
Nation's workers to meet technological advances and support economic
expansion has been identified as one of the most pressing needs facing
our communities today. That need holds true too for the energy
industry. Florida's energy industry is made up of a diverse mix of
electric companies: investor-owned utilities, municipals and rural
cooperatives. These companies employ about 26,350 people statewide,
often in well-paying jobs that exceed the state and national annual
average wages, but I'll discuss this more a bit later. Our state is
fortunate that our economic outlook has remained strong with low
unemployment and, though slowing, continued job growth. With a labor
force of more than 9.2 million, Florida's 4 percent unemployment rate
in September 2007 was below the national rate of 4.7 percent. Our
state's unemployment rate has been below the national average since
mid-2002 and based on nationwide data the September rate was the lowest
of the 10 most populous states. Simultaneously, Florida ranked third in
job growth among the most populous states, behind Texas and California,
with an employment growth rate of 1.3 percent in September,
representing 105,700 new jobs over the same period a year ago. The
statewide job growth rate was slightly higher than the national job
growth rate of 1.2 percent for September. Still, as our Governor
Charlie Crist has proclaimed: We in Florida are not just focused on
creating jobs, but good jobs that lead to a better quality of life for
Floridians and keep our economy strong.
Our state workforce investment board has chosen to direct Florida's
mostly federal funding for workforce development to programs and
services that lead to high-skill, high-wage employment and advancement
opportunities in high-value industries. These are targeted industries
that drive our regional and state economies, thus aligning with our
state's economic development plan. It's only recently that the energy
industry has become one of those workforce development targets,
contributing to Workforce Florida's leadership role last year in the
formation of the Florida Energy Workforce Consortium (FEWC), which is
one of the key collaborative efforts I wish to discuss today. I must
say too that in creating this consortium we had some extraordinary
motivation.
understanding energy workforce needs
You likely remember the four uninvited visitors to our state in
2004: Hurricanes Charley, Frances, Ivan and Jeanne. Hurricane Dennis
followed them in 2005. In the wake of the destruction of each of those
storms, our utilities were essential in the rapid recovery of our
businesses and citizenry. Line technicians were literally our heroes.
They restored our power enabling us to get our businesses and our lives
back in order. Prior to these storms, the energy industry was never one
of Florida's economic development targets--in other words, it was not
an industry we actively recruited, expanded or retained. However, after
the series of storms, we realized just how vital this industry is to
our state's economic stability. We knew we needed to begin our outreach
by hearing from our industry partners, so we asked colleagues at Gulf
Power Company and Progress Energy to help us get started and to ensure
we had all of the major players at the table.
Formed in April 2006, the consortium seeks to identify and develop
solutions to meet the needs of the utility industry in Florida. The
consortium is comprised of representatives from energy companies and
associations, the workforce system, secondary and post-secondary
educational institutions, labor organizations, and the national Center
for Energy Workforce Development (CEWD). I'll discuss more about the
national center's role and support later too. Interestingly, all of
Florida's investor-owned utilities are at the table and have been from
the beginning. This is noteworthy because these companies traditionally
are seen as strong competitors who keep collaboration at a minimum, but
their mutual need for skilled talent brought them to the table and is
driving their participation in the consortium, which now has more than
50 members. The consortium's primary goals are to:
Identify workforce issues impacting the energy industry in
Florida, including the large number of expected retirements
with few prepared workers to replace them.
Better understand existing training options as well as to
identify opportunities to transfer knowledge from the existing
workforce to entry-level workers.
Bolster labor market projections about future energy
workforce needs--by occupation--with real-time utility company
validation and to prioritize those occupations by critical
need.
Develop a three-pronged approach to energy industry talent
development. First by growing our own skilled workforce
deliberately focusing on youth and career awareness of
occupations in the industry. Second by attracting suitable
workers from previously untapped or under-tapped labor pools.
Finally by re-training workers from other industries who can
transition into in-demand energy sector occupations.
As the consortium got to work, energy companies brought to our
attention that it's not just more line technicians who are needed to
help keep the power flowing to businesses, residences, schools,
hospitals, and elsewhere, but also power plant technicians, maintenance
staff at plants, plant construction crews, and many others. Perhaps one
of our industry partners best summed up the driving force that has led
to this unprecedented effort in Florida to seek solutions to energy
sector workforce needs when he said, ``We can continue to compete for a
talent puddle or work to create a talent pool.''
Before we could begin to identify ways to create this pool, we
needed to better understand the current and future energy and workforce
demands. Growth, of course, is at the top of this list. By 2011,
Florida is on target to become the third most populous state behind
California and Texas. By 2020, our state's population is expected to
top 23.5 million Floridians. We are by no means alone. Our Nation's
population is projected to increase to more than 419 million by 2050,
according to the U.S. Census Bureau. Today and closer to home, the
Southern states account for 38 percent of the U.S. population--with
growth in the region outpacing national growth. Almost everyone uses
power or needs it, so demand will continue to soar as will the need for
additional infrastructure to generate, transmit and distribute power.
According to the Florida Public Service Commission, more than 73
percent of energy in our state is generated from fossil fuels and
nearly 12 percent comes from nuclear energy. Renewables account for 2
to 3 percent, but under the policies being developed and implemented
under the leadership of Governor Crist, who is also a member of the
Workforce Florida Board of Directors, we expect this percentage to
increase. Meanwhile to meet projected power demand, energy companies
have indicated to the Florida Public Service Commission their interest
in bringing online up to 18 new fossil fuel units by 2015 as well as
two new nuclear units beginning in 2016.
Additional major issues affecting the industry's workforce in
Florida, and other states, include the aging power delivery networks
that will have to be replaced; the restructuring of companies due to
deregulation in the 1990s that led many utilities to cost pressures and
cost reductions, especially associated with hiring, training and
retaining skilled craft workers; new technology; and the anticipated
wave of retirements as more than half of the industry's workers
nationwide, such as line technicians and power plant operators, are
scheduled to retire in the next five to 10 years. These challenges
along with the limited current pipeline for entry-level workers have
led to a perfect storm. Unless we undertake long-term solutions to
expand the energy sector workforce, we'll face exceptional challenges
to keep our lights on.
A national Black & Veatch Electric Utility Industry Survey released
about a year ago found that replacing the aging workforce was the No. 1
issue of concern cited by municipal power companies and the No. 3 issue
identified by investor-owned companies. Other issues at the top of the
list were infrastructure and reliability. The North American Electric
Reliability Corporation (NERC) in its 2007 Survey of Reliability Issues
found that ``the aging workforce and lack of skilled workers'' is
ranked first among all business issues, with the highest likelihood and
highest impact on reliability. In a Florida survey, 75 percent of the
state's electric companies cited the accelerated pace of retirements as
a chief concern. Failing to maintain the skills of today's workforce by
replacing retiring workers with competent substitutes, by training and
re-training workers to keep pace with technological changes, and by
capturing and transferring knowledge more effectively could affect the
quality of service to consumers in Florida--and across the Nation--and
impact the sustainability of economic development going forward. A 2006
U.S. Department of Energy study also found that ``the loss of
institutional knowledge is a critical concern, especially for a
profession heavily dependent on mentoring and on-the-job training.''
Several of Florida's investor-owned utilities have formal knowledge-
transfer initiatives in place for this very reason. One Florida company
has surveyed its employees asking them to characterize their knowledge.
Full certainty means they know how to do their job and why they do it.
Partial certainty means they know how, but not why and conditional
certainty indicates they don't know how or why, but are willing to try.
On average, only half of the utility's operations and maintenance
employees report ``full certainty'' of the required skill sets for
their position. How problematic would it be to continue production with
skilled talent exiting their workforce with only half reporting they
have full knowledge of the required skill sets?
high-demand job opportunities
With an understanding of how such critical issues affect the
workforce in power operations and energy delivery now and in the
future, the consortium turned to identifying the jobs in which skilled
employees are most needed by our utilities, which not surprisingly
mirror critical occupations of other utilities in the Southeast. What
are they? In energy delivery, they are line technicians and substation
technicians. In power operations, they are electricians, instruments
and controls technicians, welders and power plant operators. This list
of in-demand occupations also is nearly identical to a nationwide list
compiled by the Center for Energy Workforce Development. The center
also is beginning to focus more attention on the national need for
engineers to support this sector. In fact, a 2007 Center for Energy
Workforce Development survey found that among participating companies
about 46 percent of employees in engineering jobs could retire
beginning in 2012. I mentioned the center earlier and its support of
our efforts in Florida. Ann Randazzo, the center's director, has been
an active participant in our meetings. The national center is a
nonprofit consortium of electric, natural gas and nuclear utilities and
their associations. It was formed about the same time as our Florida
Energy Workforce Consortium and the center's research and advocacy on
behalf of the workforce needs of this sector have been invaluable to
us.
I can't underscore enough how critical the partnership among
industry, education, economic development and workforce is in creating
and sustaining a pipeline for skilled energy workers. The Florida
success story would be incomplete without examining the actions taken
by the industry to not just await a government solution, but to create
programs and partnerships to begin to address their own needs. Florida
energy companies such as Gulf Power, Florida Power & Light, Progress
Energy, Ocala Electric Utility and Sumter Electric Cooperative (SECO)
have initiated partnerships and created pipeline programs with
secondary and post-secondary schools.
A challenge for the industry in recruiting students to participate
in programs such as these is raising awareness about rewarding career
opportunities in the energy sector. To recruit the desired workforce,
companies will have to change their public image from one which is
static to one which is more dynamic, offering challenging careers in an
exciting industry. Creating awareness of jobs is essential and we can't
rely on high school guidance counselors to do it for us. If we are to
build a pipeline of skilled talent, we need to convince young workers
that the industry is a desirable one to work for. They must understand
the industry produces a commodity that is essential to society and to
our quality of living. They also must be taught that those who work in
the industry are environmentally responsible and that the jobs are
stimulating and pay well. The Center for Energy Workforce Development
has developed a website, GetIntoEnergy.com, which acquaints young
people with jobs in the industry. The website provides career
assessment, determining what job suits you; it also offers a career
quiz, salary comparisons, and allows you to view videos of the actual
work and people doing it. It outlines the skills required for key
occupations as well as education requirements and where you can go to
get that education. One of the early projects of the Florida Energy
Workforce Consortium was to identify all school-based energy training
options in our state and to make that information available on this
site. Industry job listings for Florida and other partner states also
are posted on the site.
focusing on secondary education pipeline programs
When we do engage young people who are interested in energy careers
the connection is a powerful one. In North Florida, Gulf Power began
its first academy in Pensacola at West Florida High School of Advanced
Technology in the summer of 2001. It did so to develop a feeder pool
for critical jobs such as entry-level power generation and power
delivery positions as well as degreed positions such as engineers. The
popular program now has expanded to two other high schools, Laurel Hill
School in Laurel Hill and Locklin Tech in Milton. Gulf Power employees
hold formal interviews for those students seeking entry into the
academies. The curriculum is focused on industrial electricity and the
electrical utility industry. Instructors use the National Center for
Construction Education and Research (NCCER) electrical curriculum. In
the Gulf Power program, every 11th grader is paired with a Gulf Power
mentor who is in a career of interest to the student. Seniors who meet
school criteria are placed in the Advanced Career Experience (ACE)
program where they report to Gulf Power on alternating days during
school hours for completion of their curriculum requirements and work
opportunities. Graduates of this high school program earn 15 hours of
college credit and a nationally recognized NCCER industry credential.
Many of the graduates are now employed by Gulf Power. Also critical to
the success of any program is public accountability and the outcomes.
Gulf Power uses the Edison Electric Institute pre-employment tests as a
condition of hiring. In the most recent graduating class from the power
academy program, the exam passage rate was 100 percent, compared to an
average passage rate of 40 percent for general test-takers. The West
Florida High School program has produced 62 graduates. Of those, 20
have been hired by the company into entry-level positions, 10 went to
work for other utilities or related companies, 26 enrolled in college,
two went into the military and four are in the Gulf Power pre-
employment process.
For a more personal peek at the effectiveness of the Gulf Power
Academy program at providing opportunities for a brighter future for
students as well as utility companies, consider the experience of Ron,
though I've changed his name to shield his privacy. Ron was initially
disqualified from participating in the ACE program during his senior
year because of excessive tardiness to school. Program leaders later
learned his tardiness was attributable to an unstable home life. Ron
had a turbulent relationship with his parents and feared for his
personal safety because his father struggled with alcoholism. Ron had
often been late to school because he was homeless for a period
alternately living in his truck, spending the night with friends or
sleeping in parks. Despite this hardship, he continued to come to
school and after opening up about his difficulties, Ron appealed his
ineligibility to participate in the ACE program. Following his appeal,
Ron was accepted into the ACE program and successfully passed Gulf
Power's preemployment tests earning praise from the utility company's
employees for his eagerness to learn, respectfulness and engaging
personality. When Ron graduated from high school he was offered a job
as an apprentice line technician and he began working for Gulf Power
shortly after turning 18. Just over a year after completing the Gulf
Power Academy and graduating from West Florida High School, Ron closed
on a three-bedroom, two-bath home and is well on his way in his career
at Gulf Power. From homeless to homeowner, Ron through his experience
exemplifies how relevant training and support from professionals in an
industry with great earning opportunities can change your life.
In Miami Dade, Florida Power & Light has joined with Miami-Dade
County Public Schools to create a two-year, dual-enrollment high school
apprentice program to train future line specialists. The first class of
nine graduates completed the program earlier this year. In Central
Florida, Progress Energy and other utilities are working with CLM
Workforce Connection, the local workforce investment board in this
region, as well as the school districts in Citrus, Marion and Levy
counties, in a recently opened power industry academy modeled after the
Gulf Power program in North Florida. Workforce Florida awarded two
grants totaling about $157,400 to support launching the new program
that will train high school students and provide a pathway for careers
as utility electricians, electrical engineers and electrical
contractors. The Central Florida academy is taking aim at preparing
students for jobs in anticipated, new power-producing plants in the
region. Eighty students have signed up for the program, which also is
modeled after Florida's CHOICE career academies. Part of what makes all
of these programs such tremendous successes is that they emphasize
industry certifications. Participants graduate not only with high
school diplomas, but also with industry-awarded credentials and often
college credits, at no additional charge to students or their parents.
These certifications demonstrate the students are work-ready and
prepared to step into good paying jobs or to continue their education
in a postsecondary setting.
In fact, these career academies--and others like them in our state
that prepare students for careers in industries such as aviation,
manufacturing, information technology, construction and health
sciences--use rigorous and relevant industry-endorsed curriculum. They
also represent a major transformation in career and technical education
in Florida in part thanks to a new state law, the Career and
Professional Education Act, which will lead to similar high school
academies in every Florida school district to train students for
careers in energy and other sectors that help drive regional economies.
In our state, the work to create the CHOICE model of career and
technical education and the new law that codifies this blueprint was
led by state Senator Don Gaetz, a businessman and former superintendent
of the Okaloosa County School District. Florida's workforce system was
at the table from the beginning helping to shape the CHOICE programs
led by Mary Lou Reed, executive director of the Workforce Development
Board of Okaloosa and Walton Counties. Workforce Florida has awarded
more than $5.1 million in grants statewide since 2005 for initiatives
to replicate and support CHOICE-model career academies. Why is this
important? Again, each CHOICE program is created through partnership
with education, workforce, economic development and industry and
provides excellent choices for future career paths whether it's a head
start on college with credits already in hand or skills that allow
students to enter the workforce qualified for higher wage jobs. Such
preparation is critical in Florida where six out of 10 ninth graders
either drop out of high school or don't go on to college even if they
finish high school. The energy sector, as we know, is among the
industries that have an abundance of well-paying job and career
advancement opportunities that do not require college degrees. In
Florida last year, the average annual wage for electrical power line
installers and repairers was $52,956; for power plant workers, $59,217;
and for first-line supervisors of mechanics, installers and repairers,
$64,480. The state annual average wage for all industries was about
$38,500. The national annual average wage for all industries was
$42,535.
expanding the `pool' through post-secondary initiatives
Beyond our efforts in growing talent at the secondary level,
Florida energy companies also are taking action to forge stronger
partnerships with post-secondary institutions to train and re-train
energy workers. For example, Florida Power & Light, our state's largest
utility company serving 4.4 million customer accounts, has strong
partnerships with Miami Dade College and Indian River Community College
for post-secondary training programs, particularly for nuclear
technicians. Among Florida's newest workforce initiatives are Employ
Florida Banner Centers. These centers, mostly based at Florida
community colleges, are charged with developing new, cutting-edge
training with industry input that is portable and can be delivered
throughout the state by other community colleges, universities,
vocational technical centers, private training providers and others.
These centers also provide training to entry-level and advanced workers
and serve as a clearinghouse for companies and job seekers in their
targeted industry. Workforce Florida has awarded $8.8 million in grants
to support this e3 (employment, education and economic
development) initiative. Two of the 12 new Banner Centers are
designated in energy and alternative energy, based in part on the
workforce needs identified by the Florida Energy Workforce Consortium.
The Employ Florida Banner Center for Energy got under way this past
spring at Lake-Sumter Community College. It builds on the college's
existing six-week pre-apprentice boot camp program that orients those
interested in becoming line technicians with the demanding work. It
also provides skills upgrade training for incumbent workers. In fact,
before the consortium got under way (and later the new Banner Center
for Energy), many of our utilities were recruiting line technicians
from North Dakota, South Georgia, and Puerto Rico, while unaware of the
home-state resource available right there at Lake-Sumter Community
College. The lead instructor for Lake-Sumter's program is Bill Tyler--a
42-year veteran of the line-worker trade. Under the Banner Center for
Energy initiative, Lake-Sumter Community College also has partnered
with Indian River Community College to increase training opportunities
and develop new curricula for power plant workers, expanding the work
of Indian River's existing Power Plant Technology Institute. The Banner
Center for Energy's advisory council is made up of key organizations
and companies represented in the Florida Energy Workforce Consortium
including the Florida Electric Cooperative Association, Florida
Municipal Electric Association, Florida Power & Light, Gulf Power,
Progress Energy, Jacksonville Electric Authority, Orlando Utilities
Commission, Lakeland Electric, SECO and TECO Energy. In its first four
months of offering training, the Banner Center trained 118 incumbent
and entry-level workers in line specialist skills, directly helping at
least 16 of the 18 or so people who were being introduced to the
profession find employment in the industry.
In Florida, we're also beginning to examine more closely the need
to fill critical professional positions such as in engineering that
require post-secondary degrees. We have learned through the consortium
that demand for engineers varies among utility companies. We also know
that with the number of new plants on the drawing board the need for
professional staff will grow. One area that we have identified through
the consortium that needs attention is strengthening articulation
agreements between our secondary career academies and post-secondary
institutions (both community colleges and universities). Workforce
Florida also has worked with the Florida Energy Commission on its
recommendations to the Florida Legislature on strategies to secure the
state's energy future. Not surprising, one of the commission's
recommendations is that Florida establish an Electric Power Institute
within the state university system to concentrate on both undergraduate
and graduate training in fuels, power technology and management. The
workforce system has traditionally focused on short-term training, but
it's critical that we fortify the link with our higher education
partners to ensure the highly skilled engineers and other professionals
required by the industry are produced in Florida and, more importantly,
stay in Florida. Our higher education partners also play a critical
role in the mounting focus on research and development as our state's
energy policies increasingly expand beyond today's power production
technologies.
The new Banner Center for Alternative Energy based at the
University of Central Florida and the Florida Solar Energy Center, for
example, will help ensure our state has a workforce that is equipped to
seize upon opportunities created through renewable energy sources. This
mission is consistent with the greener direction our state is headed
led by Governor Crist, who during his first year in office has set
Florida on a bold path to diversify our energy resources and reduce
greenhouse gas emissions.
linking energy companies with qualified candidates
Another way in which our workforce system helps to expand the
talent pool for this sector is by bridging the divide between employers
and qualified job candidates. Key to our comprehensive strategies for
meeting the energy sector's demand for skilled talent is linking
Florida companies with job seekers both through the job-matching
services offered through Florida's nearly 100 one-stop centers and
through our powerful online tool the Employ Florida Marketplace on the
Web at EmployFlorida.com. The Marketplace website receives 3.85 million
hits and has about 48,800 unique visitors daily. On it you will find
registered 2.9 million job seekers and 159,000 employers seeking to
connect with one another. On any given day, the site has about 285,000
job listings, including those from Florida utilities, posted on it.
There are also 406,000 resumes currently available there.
We also have professional workforce experts in our one-stop
centers, who are dedicated to helping sometimes untapped or under-
tapped groups such as veterans. In fact, veterans represent a strong
talent pool for the energy sector. We are all familiar with the many
benefits of hiring veterans such as their leadership skills, ability to
perform under pressure and penchant for working as a team. They also
receive some of the best training while in the military and, if they
weren't when they joined, they are tech savvy when they leave. To
illustrate just how important the workforce system's role is in
bringing companies and job candidates together allow me to briefly
share the story of Gabriel Johnson.
Mr. Johnson was a nuclear-power-trained Machinist Mate Chief Petty
Officer (E-7) who, as a single parent, decided to get out of the Navy
to raise his two young children. He registered at the Fort Pierce One
Stop Career Center for assistance with finding a job and had expressed
an interest in working for Florida Power & Light at its nuclear energy
plant in South Florida on Hutchinson Island. He applied online through
Florida Power & Light's Web site as well as expressed interest in
nuclear plant jobs in other states. He was mulling an offer in Nebraska
when Larry Sowers, the regional veterans' program coordinator in the
Fort Pierce one stop, reached out to a Florida Power & Light human
resources manager, who had previously indicated her company's keen
interest in recruiting veterans for employment openings. That
intervention led to a job interview for Mr. Johnson, who was offered a
maintenance supervisor position with a $75,000 annual salary. This
experience also demonstrates our system's commitment through our
workforce partners, such as the Fort Pierce One Stop Career Center
under the Workforce Development Board of the Treasure Coast, to
retaining our best talent in Florida to meet the employment needs of
our key industries.
what's ahead: building a national policy blueprint
From creating new partnerships such as the Florida Energy Workforce
Consortium to developing pipeline programs like the career academies
and Banner Centers to leading through policy-setting as Workforce
Florida has done in recognizing the energy sector as vital to our
economic future and investing resources accordingly, we've indeed made
significant progress in our state toward ensuring we have the reliable
power resources needed to sustain our quality of life as well as our
economic prosperity. Yet, we also recognize that more work remains
ahead. Where do we go from here? How do we build lasting solutions for
what will be long-term challenges in meeting the demanding workforce
needs for the energy sector? How do we move this workforce from a
puddle to a pool? We'll continue to build on the strategies that I
outlined today and seek new ones through our collaborative efforts. The
momentum of our early success at building new bridges through our
Florida Energy Workforce Consortium has led us to plans for our first
statewide summit on the energy workforce in February 2008. We'll use
this opportunity to assess our progress, set short-term and long-term
goals and initiate plans to get us there. Additionally, we plan to
invite some new partners to join our efforts by expanding membership in
the consortium to include contractors, their associations, and labor
organizations that provide contract labor that is essential to efforts
at maintaining and increasing our energy infrastructure through both
construction and operations. In Florida's experience are lessons and
strategies that can be replicated to address the national scale of
workforce challenges presented by our country's increasing energy
demand--both traditional and alternative. That experience leads us to
believe that any national solutions to ensuring we have a reliable
workforce to provide reliable power resources should take into account
the following three things:
1) Make the energy industry workforce development effort an
economic development priority. This is paramount because
reliable power is essential to both our quality of life and
business operations and it is the backbone for any growing
economy.
2) Focus on talent pipeline development and raising awareness
about career opportunities in the energy sector. A key point
worth remembering is that many of the in-demand jobs for this
sector such as line workers, power plant mechanics and
electricians are positions that are never, ever off-shored.
Programs aimed at producing more entry-level talent should
emphasize skills attainment with documentable results. That is,
industry-recognized certifications awarded as a result of
training as productive outcomes.
3) Align investments in solutions through partnerships to
reduce redundancy. Ensure that government, industry and labor
are all involved in developing this critical workforce. To
accomplish this, encourage collaboration among companies,
educational institutions, agencies, and nonprofit
organizations, which are empowered to craft solutions with the
urgency to drive results. Also maximize limited public funding
with leveraged private sector dollars.
Finally, in doing these three things, remember the three P's that
are essential to effecting lasting solutions: partnership, pipeline and
policy.
I would like to thank Ann Randazzo, Mary Lou Reed, Jennifer Grove,
of Gulf Power, and Adriane Glenn Grant, of Workforce Florida, for their
assistance in preparing these remarks.
Chairman Bingaman, this concludes my testimony on behalf of
Workforce Florida. I want to thank you, this entire Senate Committee on
Energy and Natural Resources and your outstanding staff again for our
state's participation in this hearing on this critical issue. I welcome
any questions that you may have.
The Chairman. Thank you very much, let me ask a couple of
questions and then defer to my colleagues here.
You know, one thing that occurs to me in hearing the
witnesses so far is that we have efforts going on at the
Federal level to assist with this type of training, or training
of people for this group of industries, out of several
departments--Department of Labor, Department of Energy,
Department of Education, maybe others, that I can't think of
right now. To what extent is that coordinated? To what extent,
in making a decision as to what you will support, in the
Department of Labor, to what extent do you, are you aware, and
do you take into account what is being done by other
departments?
Secretary DeRocco, why don't you answer that?
Ms. DeRocco. Certainly, Mr. Chairman. I will tell you that
coordination among Federal agencies engaged in education and
job training in any sector, but particularly in energy, in the
past has not been well-coordinated, we have known little of
what each other has focused on. Our WIRED initiative has
offered us the opportunity to build a partnership among 12
Federal agencies, engaged in supporting the development of
talent in sectors of the economy that are creating jobs and
assuring economic prosperity.
In that engagement, we have found that there is a
duplication of effort, and it is critically important for us to
institutionalize some ways in which the investments across the
Department of Labor, the Department of Education, in the case
of energy, the Department of Energy, the National Science
Foundation, interestingly, the Department of Defense--all of us
are engaged in some level of investment, and encouragement of
stem education, workforce development and technology skills
development across multiple sectors in our economy.
The Chairman. So, do I take it from your answer that there
is a group now that actually tries to do this coordinating, or
is that just something that's planned, or what?
Ms. DeRocco. No, there currently is a group of 12 Federal
agencies engaged through this specific initiative, the WIRED
initiative, that is working in 39 regional economies across the
country. But, from an institutional basis, there is no current
institutionalized engagement across the agencies for, for
example, the energy sector, when it's not specific to a
regional economy. We need to do that.
There is an example underway in the aerospace industry
which, by law, Congress called for an interagency taskforce on
the future of the aerospace workforce, which has engaged
agencies that are developing the talent to support the
aerospace industry in a very formal way. Now, in the energy
arena, we are partnering in an informal way.
The Chairman. Ms. Hoffman, did you have a comment on any of
that?
Ms. Hoffman. Mr. Chairman, I would agree that we need to
have better coordination among the Federal agencies.
Within the Department of Energy, our activities focus on
research and university-level educational programs to continue
to sustain long-term funding for faculty development, as well
as student development. We do have efforts with DHS and DoD
that are definitely an opportunity for dual-use technologies.
We have interagency agreements with the National Science
Foundation to conduct workshops, and in fact there is a
workshop on November 28 and 29 to look at workforce issues.
There is also a potential to work with USDA through the Rural
Electric Service.
So, I do believe that there is an opportunity that we could
do better coordination.
The Chairman. Ms. Cornelius, let me ask you, I know we've
talked a lot about how you need to stay in close touch with
industries to identify the needs and all----
Ms. Cornelius. Yes.
The Chairman [continuing]. How does what you're doing there
in Florida relate to union apprenticeship programs?
Ms. Cornelius. IBEW sits on the Consortia, J.B. Clark,
State-level IBEW representative is a very important part of our
Consortia.
Again, sir, we need to have everyone at the table, whether
it be through traditional apprenticeship models, or through
new, creative, innovative training models--we need to do all of
it because of the need, the need is so great in our State.
We had a study done by our Florida legislature back in June
2002 that took a hard look at our State apprenticeship models,
and regrettably, we found that there was much more that needed
to be done to align the critical occupations in our State,
particularly in construction, with our traditional
apprenticeship models.
We're intending, at our very next Consortium meeting to
have an overview, again, of the apprenticeship models to find
out where we can develop better linkages, and in addition to
what my colleagues here have said, we must--we need to align
resources, we need to build upon traditional training sources,
and look to new ones as well, to meet the need.
The Chairman. All right, Senator Corker, go right ahead.
Senator Corker. Mr. Chairman, I just, I do want to
reiterate the point you made about coordination. I think that
we have a tendency in government, everybody gets excited about
a particular issue, every department has to do it, every
Senator has to be involved on the committees that they're on,
and I hope that we can work together to really focus these
efforts.
What is happening at the college level right now? I
remember, a long time ago, that much of what students focused
on was sort of what was the cool thing to do at the time, is
there much focus on the university level right now on causing
people to have the background, if you will, moving into
industry that is focused on energy?
Ms. DeRocco. I would be glad to comment on that, Senator.
We certainly have found, particularly the State
universities and land grant colleges, becoming much more deeply
engaged, returning to their mission, so to speak, of economic
development within their regional economies, and thus becoming
much more engaged with us at the Department of Labor in
assuring a connection to the employers within those regional
economies, the growth sectors of the economy, an understanding
of where jobs are being created, and tailoring curriculum, more
specifically, to meet the requirements of the job market, post-
graduation.
I know through our partnerships with the Department of
Energy and the National Science Foundation, we are also
engaged, certainly, in the energy sector in assuring the
highest level graduate degreed engineers, scientists,
mathematicians that are needed to guide that first part of the
innovation life cycle in energy, are seeking an engagement by
the industry to both define their jobs, their career
opportunities, and to make better connections with the
industry.
Senator Corker. Yes, ma'am?
Ms. Hoffman. Senator, I just would like to provide a couple
of comments. First, I think we need to continue to stimulate
the high school level so they engage into education in the
engineering field. We need to get our high school students into
science and mathematics and get their abilities in science and
mathematics to the level that's required for engineering
colleges and universities.
Second, I do believe that there is still a momentum to the
popular-type college programs. One thing that we should do is
to start promoting engineering and emphasizing the high-tech
nature of the industry, whether it's the electrical industry
with smart grids, or whether it's the oil and gas industry with
wired oil fields, and build momentum in gaining some students
back in those fields.
Senator Corker. Which areas of the energy sector do you
think we have the most critical shortages right now, that are
going to affect us in the most immediate future?
Ms. Cornelius. I'd be happy to respond to that, Senator
Corker.
Senator Corker. OK.
Ms. Cornelius. Line technicians is an area that we've been
very, very concerned about in Florida, with an estimated half
of the line technician workforce to be retiring in a 5-year
period.
We're also very concerned about power operators,
electricians, welders that will be needed to maintain our power
sources today, but then looking ahead to new sources of power
generation.
But, if I were to identify the top three, clearly line
technicians, welder, plumber/pipe fitters, and power plant
operators.
Ms. DeRocco. I would like to add to that, if I may,
according to the outreach we've made to all sectors of the
energy industry now, it appears we also need a significant
focus on the future of our nuclear industry, the industry is
projecting that they're going to need 21,000 new workers to
build new plants, and new plant capacity--this goes to the
skilled crafts and trades that this Nation is seriously facing
a shortage of--5,000 new workers to operate the potential
nuclear energy plants currently in the application process, and
25,000 workers to replace retiring skilled workers today.
So, in addition to the utility occupations that my
colleague has emphasized, we are focused very much on the
nuclear sector.
Alternative energy--a growing opportunity in so many
regional economies across our country is now defining new
competencies and skills that their workforce is going to need,
so that's an opportunity for workers, and also an opportunity
for our economy to grow.
Senator Corker. I think the answer to the next question is
self-evident, but climate change legislation would affect the
industry, how? From a standpoint of any comments about the
meeting needs in the future if climate change legislation were
to come to fruition?
Ms. DeRocco. I'm not sure we've done a national assessment,
I would defer to my colleague from the Department of Energy,
but it is clearly the emphasis on climate change issue I think
that is spurring a lot of interest in the alternative, or green
energy sources, and the opportunities for biofuels development,
and alternative energy plants and operations growing all across
the country--ranging from wind to solar to other green energy
alternatives as well.
A whole new set of competencies and skills, a whole new
need for curriculum and education and training opportunities
for America's workers.
Ms. Hoffman. I would agree with Assistant Secretary
DeRocco, that with the growth in alternative energy there are
solar, wind, and the technology opportunities there for that
sector.
I would also comment that, in engaging the university and
power plant operators, we need to get folks up to speed on the
new technologies that are coming out with respect to climate
change--carbon sequestration and advanced nuclear
technologies--so that we can actually educate the workforce to
be on top of where we're heading in the future with our
technology advancements.
Senator Corker. Thank you, Mr. Chairman.
If I could have one point of----
The Chairman. Sure.
Senator Corker. What does a line technician make in
Florida, just so you can advertise on C-Span?
Ms. Cornelius. Fifty-three thousand dollars a year. The
average wage in Florida is about $35,800. With overtime--which
is not unusual with line technicians, they can make up toward
six-figure salaries.
The Chairman. Senator Corker, that's what you make, a six-
figure salary.
[Laughter.]
The Chairman. That's what I make.
Senator Wyden.
Senator Wyden. Thank you, Mr. Chairman, I thank all of our
panelists.
My own sense is that the green energy field is going to be
a huge magnet for economic development and for good- paying
jobs for our country's future. My sense is that we're really
lagging behind in terms of getting good numbers about what's
going on in this area.
I've appreciated Chairman Bingaman's leadership in this
area, and I know he's already tasked the Department of Energy
to give us a sense of their assessment of the workforce needs,
particularly in solar and biofuels and wind.
What can you tell us today, in terms of the workforce needs
in these very promising green energy fields?
Let's make that for Ms. Hoffman to start with.
Ms. Hoffman. We don't have any statistics at the moment on
the workforce needs, but we have expanded EPACT Sections 385
and 1830 to include the workforce requirements for renewable
technologies as part of the potential future agreements with
the Department of Labor. We know that there is growth in the
industry, and that there is a huge potential for alternative
energy and jobs across the United States in this area.
Senator Wyden. When do you think you could give us a report
on your assessment of the workforce needs in this area--and
look, I'm not trying to give you a hard time on this--I think
this is an area we feeling strongly about. My sense has been
that because this is new, the government--and not as a result
of blaming, you know, always flounders a little bit in terms of
trying to figure out how to get all of the information. Can
you, for purposes of this morning, give us a timeline on when
you could get us a assessment of the workforce needs, at least
in those three key areas--biofuels, solar and wind?
Ms. Hoffman.
Ms. Hoffman. Can I defer to----
Senator Wyden. I'm sorry, for our two witnesses from the
Government, Ms. Hoffman, Ms. DeRocco.
Ms. DeRocco. As you can tell, Senator, we're partnering on
the National Academy of Sciences study that is called for in
the Energy Policy Act and with the expansion to alternative
energy, we really have just begun the study work. We certainly
will look at accelerating the work on the alternative energy
field to see when we can get data to you from that study.
Also, we have gained some experience with industry itself,
having projections, and we'd be more than glad to very quickly
reach out to provide the industry projections.
I would also, just want to add that the National Renewable
Energy Lab in Golden, Colorado has been an exceptional partner
with nine of the WIRED regions that are focusing on alternative
energy, to both determine the talent development requirements,
the new competency and skill requirements, and to be of
assistance in ensuring those employment centers around the
country are beginning the skills development programs that will
be necessary to support the growth of the industry.
From those three sources, we will try to get you some
preliminary information as quickly as possible, and we will
focus on this National Academy of Sciences study which, I
believe, is a year-long effort, so----
Senator Wyden. So you could have this to us in 6 months?
Ms. DeRocco. We'll try to get you some preliminary
information within 6 months, National Academy of Sciences study
will look to its conclusion within the year.
Senator Wyden. Because I'm looking at the statute in terms
of the National Academy and it talks about energy and mineral
security requirements--all of which I strongly support, and I
want to be clear on that. I just don't want renewables and
green energy to get the short end of the stick, and I very much
appreciate Chairman Bingaman's leadership on this, because I
think both the Chairman and I think that there are a great many
economic opportunities in this area, it's going to be an
economic magnet for investors, and we're just going to need the
government to be more proactive as it relates to the assessment
of workforce needs in this area. I would like the recorder to
note that there have been a lot of nods--affirmative nods--from
our Government witnesses on this, and we appreciate that.
Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Senator Craig.
Senator Craig. Thank you, Mr. Chairman, for focusing on
energy workforce.
Let me put it in a slightly different context--the Senator
from Oregon talked about green and clean technologies, I am of
the belief that all new technologies are clean or green, or we
won't be building them. That's not only part of the climate
change debate, it's about what we are now. EPACT says it,
others say it--so in the context of all of this, a stainless
steel welder on a nuclear reactor facility is going to be
making twice as much money as the average wage of the State of
Idaho.
How do we take these traditional skills, Madame Secretary,
and do what Senator Corker so appropriately says, how do we
make them cool today? Because all skills related to energy
today are clean, and green, and that's where our country wants
to go.
Now, that construction worker that erects a standard, put a
wind turbine on, is making very good money with potential
benefits. While that might be viewed as a sweat of the brow
kind of labor force, compared to somebody sitting at a computer
keyboard--that's green technology. That's cool. How do we make
it cool? How do we communicate the new need in a way that
catches the imagination of a necessary workforce?
Sputnik did it for us, NDEA--I grew up in that period of
time, 1958 forward. Then we went--National Academy of Science
rising above a gathering storm, produced legislation here, and
I stuck a little nuclear education and training into that.
But, America gets captured by a feeling, and a mood, and a
desire, and what becomes cool in someone's youth oftentimes
drives them into a future employment or job training or
education, how do we make it cool?
Ms. DeRocco. Absolutely, well, we have a very strong
industry education, government partnership looking at exactly
that issue, Senator, you're absolutely right.
I would make several points that we know now, and we are
really advancing our opportunities to make these jobs cool, and
to provide career information.
The first point is, we have developed, the Department of
Labor, in conjunction with the Department of Education, a Web
site called ``Career Voyages,'' which is for young people,
teachers and their parents to take them on a road trip to the
careers of the future, and to present young people very diverse
video, online information about the careers in energy and the
opportunities to make good salaries and to be cool in their
work life and at the workplace.
We also published In-Demand magazine that illustrates the
careers and put it in a million high schools around the
country.
We have to do much more than this, though. As my colleague
from Florida indicated, our statistics show that 30 percent of
our young people that are in 9th grade today will not graduate
from high school 4 years from now. In large measure, we believe
we haven't made education relevant to their work opportunities,
their career opportunities, which tells me age 14 or 9th grade
is too late to begin talking to these young people about the
exciting career pathways that they could explore if they
maintain and gain their academic foundation and then go on to
post-secondary education in multiple forms.
Our current Workforce Investment Act precludes our working
with young people that are younger than 14. I think for career
awareness purposes, and for exciting the young people, we
probably have to look at that age.
Finally, I would say this education, industry and
government partnership now gets it, that we have to meet these
young people where they are. They're on the web, and they're on
iPods, and they're on YouTube, and Facebook, and we need to
find ways to communicate with them in their medium, and we're
working very hard on creative solutions that industry will be
driving to meet them there, and to encourage them to explore
careers in the energy field.
Senator Craig. You mentioned in response, I think, to a
question to Senator Bingaman that our land grant universities
are kind of getting back to the idea of economic development. I
know we've gone through this great period of university
education as one of socialization and experience--maybe we
can't get back to our roots. But, the only way land grant
universities, oftentimes, are driven is by money. The private
sector, in need of a workforce, is likely to invest at a
university level if that university can see the green. In this
case, we're not talking environment, we're talking bucks.
Those kind of partnerships need to re-establish themselves.
If you go back and look at the old background of land grant
universities, they were all about economic development.
Ms. DeRocco. Right.
Senator Craig. Out there on the frontier, if you will, of
economic growth. How do we recreate--or is there an opportunity
for us to assist in creating greater advantages for private
sector investment in our colleges and universities that move in
that path?
Ms. DeRocco. Again, Senator, I keep referring to the WIRED
initiative, because it has been such a phenomenal learning
experience for all of us, including the universities that they
can play such a strong catalytic role in bringing together all
of the strategic partners that are necessary to advance job
creation and economic prosperity within a regional economy, and
they serve so many roles, including being the site of lifelong
learning for new skills and competencies, as well as the
universities as researchers that begin the innovation
lifecycle.
So, they are creating the new products and product
features, and they are training our workforce throughout their
careers for individuals who are going to have multiple jobs and
multiple opportunities in their lifetime.
I'm not naive, either, in knowing that we invest $15
billion a year--as I cited earlier--through this Public
Workforce Investment System, which has rather traditionally
looked to low-wage, low-skill occupations and the churn in the
economy, and today recognizes that 90 percent of the fastest-
growing jobs require some post-secondary education, so the
investment from the Federal Government and from States and
local governments in our post-secondary education system--be it
community colleges or 4-year colleges and universities--is
going to increase. Therefore, they are most interested in
becoming partners with government at all levels, with industry
that is driving job creation and serving a leadership role
within their regional economies. I think our day has come for
engaging our university system as the regional economic
catalyst.
Senator Craig. Good, thank you.
The Chairman. Senator Murkowski.
Senator Murkowski. Thanks, Mr. Chairman, and thank you to
the panelists here this morning, I appreciate your comments.
To my distinguished colleagues, we're going to have to get
with it. ``Cool'' is not the appropriate lingo when you're
talking to teenagers----
[Laughter.]
Senator Murkowski.``Cool'' has now been replaced with
``sick.''
[Laughter.]
Senator Murkowski. So----
Senator Craig. The mother of teenagers.
Senator Murkowski. [continuing]. I've got a 14 and a 16-
year old, and every time they say something is ``sick'' I look
at them, oddly, and they say, ``Well, that's your version of
`cool'.''
So, I don't know that we necessarily want to include that
in our legislation or in the pamphlets that we've had----
[Laughter.]
Senator Murkowski [continuing]. Out for publication.
But, it is important to be meeting the young people where
they are and I appreciate what you said, Madame Secretary,
about going to their venues. Whether it's YouTube or wherever
it is.
We've been relatively successful in the State of Alaska in
some programs to try to get kids more interested in the trades.
We've realized that you don't start in high school. That fifth
grade is about right. By first and second grades, kids are
deselecting their careers. Once they've deselected, they're not
going back to that as an area of interest. So, we need to get
them very, very early on.
I think we missed an opportunity here yesterday, we had
about 5,000 young people here on Capitol Hill, their purpose
was to lobby us on climate change issues. But when you talk
about bright young minds that are passionate about the future
of their country, and how we're going to make a difference, I
told the 25 of them or so that were in my office, we need to be
able to advance these technologies. There are huge
opportunities for us out there, but you all are the ones that
are going to make that happen. We need to tap into that source
there.
I want to ask you, Ms. DeRocco, from the Department of
Labor's perspective, they've been helpful to us in the State of
Alaska with some training grant money--we've received energy
employee training money back in 2004, this was to help us
prepare for our gasline, which we recognize--great opportunity
for us, but it causes us a fair amount of angst, in terms of
where are we going to get the workers that we will need for
this very, very massive project?
We have been working to build the energy workers for this
project, but what we're finding is that, we'll train them, and
they get kind of sucked into that energy infrastructure
pipeline that is already needed. So, the gasline is still years
down the road, we're trying to keep up with the need on the
ground right now, and we're seeing a graying of our oil slope
workers--about the same rate that you're experiencing here in
the lower 48, but--what do we have available to us, in terms of
training dollars across the country that is really going to
make a difference? Do we have enough? Is it sufficient?
Ms. DeRocco. Senator, yes, the needs in Alaska are huge,
and we understand that. In addition to the project that you
mentioned, which was a high-growth project for $7 million, we
just this year provided $7.5 million specific, to creating the
pipeline of workers for the pipeline. Putting the programs in
place through your technical and vocational education programs
and new apprenticeship programs. We've been working very
closely with Commissioner Bishop in Alaska to make sure that we
are supporting the efforts of the State, to use their Workforce
Investment Act dollars which come as an annual appropriation,
and to use them effectively as an investment for both your
short- and long-term needs to build this energy pipeline. I
mean that in both senses--the pipeline of workers, as well as
the new pipeline that we're all working toward.
Are there enough dollars? I think first and foremost, we
have been focusing on reforming this workforce investment
system and the current investment of $15 billion a year, to
ensure that the investment is demand-driven, that we are, in
fact, using it to educate and train workers for the jobs that
are being created today, and those that are going to be created
in the years ahead. To become demand-driven and understand that
it may take longer, and higher levels of education and training
to ensure that our workers are equipped for the marketplace
next year, and 5 years from now.
Once we get that--the use of those dollars that are
currently invested and appropriated--right, I think we'll have
a much better feel for whether additional resources are or are
not needed. You've heard us say--and I know it's been
frustrating to some Senators that--of, just the part of the
Workforce Investment dollars that go through my Agency, which
is about $9 billion out of that $15 billion a year, States and
local workforce investment areas are carrying in over $1
billion each year, unspent.
That tells us there is still capacity to use the current
appropriated dollars better, more effectively and more targeted
to these sectors where jobs are being created, and new
competencies and skills are needed by the workers. We need to
get that right first. We need to assure we have reformed and
well-invested those dollars, before we assess the need for
more.
Then the second point is--it is staggering, the amount of
resources across our Federal agencies that are devoted to
educating and training workers. We need to align and leverage
those resources, and without any institutional framework for
doing that, just the force of an initiative like WIRED, and the
personalities that are currently working together, it is really
hard work. Because every agency is kind of siloed and working
in its own venue, and even the sharing of information is
extraordinarily hard. But, we're getting better at it, and I
think anything that Congress can do to help us in aligning and
leveraging the resources currently devoted, we'll be doing a
better job for Alaska and for the Nation in ensuring an
educated and prepared workforce.
Senator Murkowski. I appreciate that, thank you.
The Chairman. Thank you very much.
There are two Senators who haven't had a chance to ask
questions of this first panel, and I'd just remind everyone
that we have a second panel of five witnesses, still waiting to
testify.
Let me call on you, Senator Sessions, and then Senator
Salazar.
Senator Sessions. Thank you, Mr. Chairman, I appreciate
this discussion. It goes beyond energy, to me. When I travel to
Alabama and talk to businesspeople, they continue to be
concerned about the number of qualified applicants.
I will say to my business friends, however, that in many
areas, the wages haven't gone up a lot, which makes me wonder
how seriously driven they are.
But, I do think it is a national problem, so I would just
say, Mr. Chairman, I'll wait till the next panel, but would
note two problems that we should be able to address.
One is the question of young people finishing high school.
Some have called it delayed adolescence. But they seem somewhat
reluctant to move into a job that might be their permanent job
the rest of their life, it's a commitment like marriage or
something, they're just not willing to make, they don't want to
make. They drift around with much lower-paying jobs, with less
benefits, than they might otherwise take advantage of at some
of these fabulous energy companies who pay well, who have good
benefits and insurance.
So, I guess, are you concerned--any of you would want to
comment on this question of this gap of lost productivity that
occurs when perfectly capable young people are not taking
advantage of, perhaps, the best job opportunities that there
exist, and can we help them take advantage of that?
Ms. Cornelius. I'd like to respond to your question,
Senator.
In Florida, we've passed aggressive legislation to
modernize and make more market-relevant our career and
technical education programs.
But, to your point--our statistics in Florida with our
young people dropping out of school or not going on to college,
6 of 10--it's criminal, that kind of statistic. These are not
children that can not learn, rather, they've become
disappointed with the traditional learning environment. What
we've found through our modernized career and technical
academies, like those we have in construction and in
electricity, that they find some relevancy to the training that
they're receiving--they're able to develop a mentoring
relationship with a energy industry employee. They can see the
future ahead of them and they understand why they are learning
the way that they are.
So, I think if there was anything that I would respond to
your question with, it's the whole market relevancy, and the
better understanding of what they're learning, and the
application to the real world.
Senator Sessions. Wonderful answer. Now, I know you're
doing that in Florida, it sounds good. Let me ask you,
honestly, I assume you're one of the leaders of the Nation in
that, but with regard to the total number of kids graduated
from high school in Florida, you're not yet at--reaching all of
those, are you?
Ms. Cornelius. No, sir, we are not.
Senator Sessions. That's certainly not----
Ms. Cornelius. We're just at the beginning.
Senator Sessions. So, I think we're behind on that.
Other question I would ask is about this aging workforce. I
notice that Southern company representatives said that 45
percent of the half million utility worker employees throughout
the Nation are over 48. So, to me, what do you do at 60 or 65--
is there a way to encourage those older workers to stay and
work longerand maybe taking less stress and less hours, more
free time--are we doing enough to make work appealing for older
workers to keep at it?
Ms. Cornelius. Senator Sessions, if I may, again, respond
to your question.
Through the Florida Energy Workforce Consortia, which is
comprised of all of our major energy partners throughout the
State, we in effect, learn from one another--their knowledge
transferring skills that they employ in their own company to
retain those skilled workers. The ways that they're utilizing
those skilled workers to keep them, either one, in the labor
force, or to use them in other capacities. Perhaps teaching the
new entrants into the workforce. It's a situation that we must
look at.
So, we're learning from one another, our power companies,
learning what best in class for this knowledge transfer model,
and applying it where we can.
Ms. DeRocco. Senator, if I may add to that, just very
quickly, we are about to present to the Senate, an interagency
task force report on the aging of the American workforce called
for by the Senate Select Committee on the Aging, where we are
proposing many recommendations for continuing to engage, or
reengage our older, mature workers in a variety of
opportunities still in our workplace, and to bring down
barriers that currently exist to their continued engagement, be
it in employment, or as educators in these areas where we
significantly need their assistance to ensure a strong, viable
workforce. So, we'll look forward to sharing that report to
you, as well.
Senator Sessions. Thank you.
The Chairman. Thank you very much.
Senator Salazar.
Senator Salazar. Thank you very much, Chairman Bingaman.
I'll just make a quick comment, I know we have another panel
waiting on the wings.
But, I would say first, that through your leadership and
the work on this committee, the work on the Finance Committee,
the work on the Agriculture Committee and the Farm Bill that's
on the floor today, we really are opening up this whole new
opportunity for clean energy economy for the 21 Century.
I think all of us who work on these issues are cognizant of
the fact that we have technological barriers that we have to
overcome, we have economic barriers that we have to overcome,
but also, with that, we need to make sure that we are training
the right kind of people to be able to take on the jobs for
what is, I think, a huge imperative, as well as an opportunity
for America.
The National Renewable Energy Lab who, which is stationed
in Colorado, and we will be hearing in the next panel from Dr.
Ray Stults in a 2006 study NREL provided, made a finding that
one of the barriers that we are looking at in terms of moving
forward with this clean energy economy, is the whole issue of
the absence of trained workers to deal with the new
opportunities that are coming on down the line. So, I just want
to say to you, Mr. Chairman, thank you for putting the
spotlight on this issue, and I look forward to working with you
on this, and so many other matters.
Thank you.
The Chairman. Thank you very much.
Senator Menendez.
Senator Menendez. Thank you, Mr. Chairman, I have a couple
of questions that I'd like to ask.
Secretary DeRocco, as you know, renewable energy demand and
production has been exploding in recent years. For instance,
some have projected 50 percent annual growth in the solar
industry--something my home State of New Jersey is very
interested in--for many years to come.
Of course, creating those new green jobs is great for our
economy, and for our environment, but I wonder what the
Department of Labor has done to ensure that these new green job
seekers actually get reached out in underemployed communities?
For example, does the Administration support Senator
Sanders' and Clinton's Energy Efficiency and Renewable Energy
Workforce Development amendment to the Energy bill that would
provide $100 million to develop a green job training program?
Or, do you have some of your own initiatives in that regard?
Ms. DeRocco. Let me start, Senator, thank you for asking
these important questions. No. 1, in New Jersey, I hope you are
aware that we have three WIRED regions, New Jersey is a huge
contributor to our learning through the WIRED initiative, one
of which is very much focused on green energy, and among their
strategies is to assure that untapped labor pools is a focus
for the education and job training that will provide new
employment opportunities and long-term careers for many that
have been previously been marginalized in the workforce.
So, we are in your home State, looking very definitively at
the opportunities for untapped labor pools. I would say--again,
nationally, this is our time as a Nation to assure that
targeted populations that previously have been marginalized.
The demographics of today's workforce presents huge new
opportunities for us to reach out to everyone and find a good
job with good pay, and security and opportunity for economic
prosperity for them and their families.
So, while we talk about the challenges of the demographics
of our workforce, this is our opportunity to really engage
those who have formerly been marginalized. I think in the
alternative, or green energy area, this is going to be an
exploding area.
The one issue--we did have several issues with the Green
Jobs proposal. It is--it appears to us to be another siloed job
training program. I've spoken often this morning about this
public workforce investment system, where we are now managing
17 different siloed programs which, by the time the resources
and the eligibility requirements and all of the rules and
regulations of 17 different programs get down to the States,
and then to local workforce investment areas, it's very
difficult for them to actually engage in----
Senator Menendez. But, if it's not siloed for--to take your
argument--then ultimately, how do we ensure that we drive in
what seems to be the potential for an ever-growing part of the
labor force, to reach out to it?
Ms. DeRocco. It doesn't mean that it couldn't be focused
specifically on an industry sector or a growth part of our
economy, but I don't believe in that particular provision now,
there is any reference at all to this broad- based public
workforce investment system, and assuring alignment and
leveraging with the resources, the service delivery system, and
the opportunities for workers to access those opportunities
through their community-based one-stop career centers, and to
assure the resources for education and training are among those
that can be accessed in that particular----
Senator Menendez. Let me, in line with that, let me ask Ms.
Hoffman, or you for that matter, you both might be willing to
respond--but part of the purpose of this hearing is to raise
awareness, helping to fill jobs that will ensure that we all
have heat and electricity in the years ahead, but the current
workforce didn't age overnight. It is the product of a whole
host of things, one is aging, of course, but the other one is
layoffs. It wasn't too long ago we had layoffs, consolidation,
deregulation, and result in negative perceptions as to whether
this is a field I want to get into.
The question now becomes, how do we learn from those
experiences as we talk about now moving to a growth level--how
do we learn from those experiences, and what steps do we have
to take to avoid this cycle in the future? So that we don't
enter into the same cycle again? I'd invite anyone who wants to
make an answer to that.
Ms. DeRocco. I think, perhaps, we both do.
One of those things we've learned, we've gotten a lot more
sophisticated about understanding that across, for example,
sectors within the energy industry, there are certain
competencies and skills that are cross-cutting. In other words,
these workers are no longer on a career ladder in a single
sector within the energy industry, they have a career lattice--
an opportunity as business cycles change, as certain sectors
within the industry grow, or others might decline, that their
competencies and skills are transferable, to jobs across the
industry.
One of those things this shortage of skilled workers has
really done for all of us, is engage all of the sectors--oil
and gas, nuclear, power generation, alternative energy
together, in looking at how do we define the competencies and
skills that are needed for our workers, how do we assure that
those workers have portable skills, so that they have career
opportunities within the energy industry broadly, not just in a
narrow sector where they might experience a business cycle
downturn, for example.
Ms. Hoffman. I would agree with Assistant Secretary
DeRocco, that we must have some cross-cutting capabilities
across the whole energy sector, to bring diversity to our new
workforce. We also have to have flexibility within the
workforce to be able to move them around in areas where we have
the greatest need.
The other thing that we need to provide is certainty in the
industry and certainty that the energy sector is an important
part of our economy for the investment that is required.
Senator Menendez. Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Let me thank this panel for your excellent testimony, and
why don't we move right to the second panel here?
The Chairman. OK, let me introduce people as you're taking
your seat, your seats. We have five panelists on this panel.
Norm Szydlowski is with Colonial Pipeline in Alpharetta,
Georgia. Ray Stults is with the National Renewable Energy
Laboratory. I know Senator Salazar wanted to make an
introduction of Ray Stults, and why don't you go ahead right
now with that.
Senator Salazar. Thank you, Mr. Chairman.
I have the special pleasure today to introduce my friend
Dr. Ray Stults, who is the Associate Laboratory Director of
the--for Energy Science at the National Renewable Energy
Laboratory in Golden, Colorado. He is the program manager for
research at NREL, sponsored by DOE's Office of Science, and is
leading NREL's expansion of basic research programs. These
programs are the roots that underpin NREL's applied research in
solar, biomass, wind, buildings, and transportation. Ray has
long been a servant at NREL, with a distinguished career in
leadership in our National Laboratories and he brings a wealth
of experience, bridging government and industry in NREL.
I want to say this very quickly, just about NREL and some
of the efforts we have underway in Colorado. It is our hope
that, along with the rest of the Nation, that we see a
burgeoning of renewable energy and new technologies to deal
with the energy issues that we face in our Nation.
We have to face those issues because of the inescapable
forces of national security, environmental security, and
economic opportunity that we face.
NREL has been at the lead with the University of Colorado,
Colorado School of Mines, and the University of Colorado, in
developing a co-laboratory, which we actually discussed at some
point here on our Energy Committee, where that co-laboratory is
in the process of working with the private sector community to
deploy the research and technologies being developed at NREL
out into the private sector. It's something that we are very
proud of. I know that the workforce issues are very much a part
of those concerns.
So, Dr. Stults, thank you for visiting us in Washington
today. We're proud of NREL and I know that my colleagues here
on this committee are very proud of the work you do.
Dr. Stults. Thank you.
The Chairman. Let me also say that we taught Ray everything
he knows about energy in New Mexico when he was at Los Alamos
National Lab. But we're very glad to see him here representing
NREL, too.
Jim Hunter is with the International Brotherhood of
Electrical Workers here, and we appreciate you being here. Paul
Bowers, Southern Company from Atlanta, Georgia. Thank you very
much for being here. Carol Berrigan is here representing the
Nuclear Energy Institute.
Why don't we just go across from left to right on the panel
here, and if each of you will take 5 minutes to summarize the
main points of your testimony. We'll include your full
testimony in the record.
Mr. Szydlowski, go right ahead.
STATEMENT OF NORM SZYDLOWSKI, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, COLONIAL PIPELINE COMPANY, ALPHARETTA, GA
Mr. Szydlowski. Thank you, Senator. I appreciate the
opportunity to address the committee today.
I think what we're talking about is a convergence of
workforce demographics and energy infrastructure keeping up
with the GDP growth that you mentioned earlier on in your
opening comments, Senator. Probably the solution lies somewhere
in this idea of cooperative, coordinated cooperation.
At Colonial Pipeline, that's the company that I'm from,
we've seen that a lot of good comes when the Government and
energy industry works together to ensure that the
infrastructure is in place, it's strong, it's responsive to the
needs of the Americans. Nowhere was this more evident than the
aftermath of hurricanes Katrina and Rita.
I don't think, for the cooperation between government and
energy industry, that the suffering, I suspect, would have been
far worse and the recovery would not have begun within 48 hours
after those terrible storms had come ashore if that cooperation
was not in place.
There's a number of members on this committee, including
you, Senator Bingaman, that took a special interest, along with
State officials, in seeing that the energy industry had what it
needed to serve the public. That's essentially what we're
talking about, I think, today. Does the energy industry have
the right workers to make sure that Americans will have the
energy they need today, tomorrow, and in the future?
First, let me give you a quick description of our company.
Colonial Pipeline carries about 20 percent of all the liquid
petroleum products that moves on U.S. pipelines. In many
markets we supply the vast majority of fuels that the
communities rely on. Our headquarters in is suburban Atlanta.
There we have a control center that operates this pipeline 24
hours a day, 7 days a week.
We're a company based on some pretty fundamental values.
First of this is safety of the operations, so that we protect
the workers, the citizens whose communities we operate in, the
environment that we all share. Another fundamental value we
share is reliability. Our customers and the public they serve
depend on Colonial Pipeline, the Nation's most efficient,
safest method of delivering fuels, and Colonial strives to be
the best in our industry.
Industry-wide, the petroleum sector estimates, not unlike
the figures we've heard so far from Secretary DeRocco, that 27
percent of the workforce is within 5 years of retirement. That
figure is, certainly the same for us in our company, and the
problem is a little worse for us, in the people that actually
do the operating of the pipeline, where near one in five of the
employees are eligible to retire in 2 years.
Labor statistics put the average U.S. worker at 39 years.
We heard some earlier commentary about a much larger age in the
electrical business. For Colonial Pipeline, our company-wide
average is just short of 44 years. About half of our workers
are over the age of 40.
We currently have a project that we're developing that
would add a third pipeline for our company. Trying to keep up
with demand--this would be another pipeline in a corridor that
exists between Baton Rouge, Louisiana and Atlanta--the project
still faces some regulatory and engineering hurdles, but it
would add about 33 million gallons of fuel delivery capacity a
day. Also, if you look at the U.S. refining capacity, there's
about a million barrels of new capacity scheduled to be
available by 2012.
When we initially proposed the project a few years ago, we
thought it was going to cost a billion dollars. Today, we think
by the time it gets together, it will probably be $2 billion,
given cost increases, which include commodities and as well as
labor.
Colonial today, with industry and government partners also
has been researching some transportation of ethanol and
biofuels in the pipeline. While the initial results are very
encouraging, we still have a lot of work to do, some questions
to answer. Hopefully we'll be in a position to make some test
shipments of those biofuels in 2008.
It's unlikely that these efforts will add a lot to our
workforce demands in the long-term, as we view this biofuels
effort, but there may be some system modifications that, again,
could put some pressure on the construction expertise.
I'd like to suggest some actions that you might consider,
one of which I think, encouraging policies that match the
technical school with the skill-trade training, with workforce
needs, working on the stigma of vocational technical careers,
in the sense of professional careers. I think this would have
the most immediate impact on workforce needs.
It's an area where companies like ours would be willing to
participate, either in design of curriculums or providing some
other support. Also, there's some IRS relief, I think, that
would be a big help to us. This has to do with phased
retirement initiatives that would allow companies to make some
in-service distribution of retirement benefits.
This challenge of workers that are older, between, say, the
ages of 62 and 55, is one--is a group where we need the
experience for training, we need the manpower to do what we
need to do in these areas, and it's becoming very, very
difficult under the current situation to hold on to those
workers and keep them in place.
We can't ask them to jeopardize their pension benefits or
the non-qualified status of our pension plan when we ask them
to help us out and stay on longer and do training and
participate in the company's activity.
So again, thank you for the opportunity to testify.
Colonial Pipeline welcomes your continued interest and support.
It's been invaluable to our company, in particular to--and make
a contribution to the industry and the Nation. Speaking for the
630 employees in Colonial and for the pipeline industry as a
whole, we're ready to help in any way we can to help develop
some solutions for the workforce shortage facing the Nation's
energy suppliers.
[The prepared statement of Mr. Szydlowski follows:]
Prepared Statement of Norm Szydlowski, President and Chief Executive
Officer, Colonial Pipeline Company, Alpharetta, GA
I appreciate the opportunity to address the Committee today. I want
to commend you for focusing attention on whether the domestic energy
industry has the necessary workforce and skill sets to ensure our
Nation has the vital energy we need.
Too often the U.S. energy industry is portrayed as uninterested in
the future, as passive and as part of the problem, not the solution.
The truth is our industry exists to serve the American people by
providing an essential commodity. I was fortunate enough to represent
our country as an advisor to the Iraqi Oil Ministry, so I have seen
firsthand what happens when a Nation's energy industry is unable to
meet the people's needs. First at Chevron and now as CEO of Colonial
Pipeline, I also have seen the good that comes when a government and
the energy industry work together to ensure infrastructure is in place,
is strong and is responsive to the needs of Americans.
Nowhere was this more evident than in the aftermath of Hurricanes
Katrina and Rita. If not for the cooperation between the government and
the energy industry, the suffering would have been far worse and
recovery would not have begun within 48 hours of those terrible storms
coming ashore. Three members of this committee--Senators Bingaman,
Domenici and Akaka--were among the U.S. and state officials who took a
personal stake in seeing that the U.S. energy industry had what it
needed to serve the American public. That is essentially what we are
talking about today: does the energy industry have the right workers to
ensure Americans will have the energy they need today, tomorrow and
into the future.
My remarks will share Colonial Pipeline's experience. As the
largest pipeline of its kind, I believe it provides examples that
represent the entire pipeline segment of the U.S. energy industry. I
believe my remarks also represent experiences of the broader energy
sector, including nuclear, refining, natural gas and electric
utilities. I will conclude with my thoughts on what leadership this
Committee can provide on this issue.
First, let me give you a quick description of Colonial Pipeline.
Created in 1962, Colonial today consists of 5,519 miles of underground
pipeline connecting refineries primarily in the Gulf Coast with markets
across the Southern and Eastern United States. We begin in Houston and
end at the New York harbor. The main lines are 40-and 36-inches in
diameter, with one primarily devoted to gasoline and the other carrying
distillate products such as jet fuel, diesel fuel, home heating oil and
fuels for the U.S. military.
We connect directly to major airports along our system. Visually,
Colonial looks like a long expanse of right-of-way with 15 tank farms
along the way. These tank farms store more than 1.2 billion gallons of
fuel and help provide communities with a 4-5 day supply before they
need to be replenished.
Overall, Colonial carries 20 percent of all liquid petroleum
products that move on U.S. pipelines. In many markets we supply the
vast majority of fuel those communities rely on. In others, such as the
Northeast, we face competition from overseas shipments of fuel. There
our gasoline shipments are less significant than our distillate
shipments (home heating oil, jet fuel, etc.) Our headquarters is in
suburban Atlanta from where our Control Center operates the pipeline 24
hours a day, seven days a week. We are a company based on some
fundamental values. The first of these is the safety of our operations
so that we protect our workers, the citizens in whose communities we
operate, and the environment we share. Another fundamental value we
share is reliability. Our customers--and the public they serve--depend
on Colonial. Pipelines are the Nation's most efficient and safest
method of delivering fuel, and Colonial strives to be the best in our
industry.
When construction began in 1962, it was a different world. There
wasn't the global economy we have today. The pipeline was mostly in
rural areas. Growth and development have brought us much closer to
cities and towns. Suburbs now overlap our right-of-way. There have been
corresponding changes to the workforce as the Nation has grown. The
information highway has shown many young men and women in search of
career opportunities a more glamorous world 2 than pipelines and
refineries. Fewer are following their parents' line of work, instead
pursuing their own career paths and direction.
Across our industry, consolidation has caused a sharp decline in
employment since the early 1980s. Over half a million petroleum jobs
were lost between 1982 and 2000. These layoffs gave an entire
generation the impression that our industry was an unreliable employer.
While Colonial's employment remained relatively stable during these
years, we have had to deal with the same shrinking pool of candidates
applying for careers within the overall industry. We are competing hard
for candidates who may have fewer skills than candidates 10 years ago.
To address the situation, we have increased our compensation
packages in an effort to attract entry-level workers. Colonial offers
candidates with no more than a high school degree a starting salary of
approximately $42,000 with the ability to progress their career to
$70,000 a year. That is only an average. Those who follow this path
can--and do--become Lead Operators earning $84,000 per year. Again,
these are base salaries. On top of the base are shift differentials and
overtime pay. To attract entry-level workers and to retain our current
workforce we have included a full benefits package and annual bonuses.
In critical labor markets such as Houston and the Northeast, we also
pay geographic differentials. I stress that these opportunities are for
non-skilled positions. The competition for engineers and more highly
skilled positions is even more intense and the pay packages accordingly
climb dramatically.
This challenge of recruiting new workers is not unique to our
industry. But what makes it more serious for Colonial is the rate at
which our current workforce is departing. Part of this is due to
realities of the workplace. Fewer workers are spending their entire
career at one company. The consequent trend is for an employee to spend
2-3 years mastering their skills and then to re-enter the job market in
search of opportunities beyond their current employer.
But an even larger contributor is the graying of our workforce.
Industry-wide, the petroleum sector estimates 27 percent of its
workforce is within five years of retirement. That figure is the same
for Colonial's workforce. The problem is worse among the people who
operate the pipeline, where nearly one in five employees is eligible to
retire within two years. Of the four most critical positions, 35
percent of our Senior Operators/Lead Operators and 29 percent of our
Inspectors are within two years of retiring. Among Controllers (who
control and monitor pipeline operations) and Technicians (who maintain
pumps, valves and other pipeline equipment), each group has 15 percent
of their complement within two years of retiring.)
The U.S. Bureau of Labor Statistics puts the average age of the
U.S. worker at 39 years. Colonial's company-wide average age is just
short of 44 years. As the chart* below shows, more than half of our
workers are over the age of 40.
---------------------------------------------------------------------------
* All charts and graphs have been retained in committee files.
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Unfortunately, these workforce issues are striking just as the
business demands on and opportunities for pipelines are accelerating.
This is especially true for Colonial Pipeline. As you are aware,
expansions are under way for several refineries in the Gulf Coast
region we serve. As a large-volume pipeline capable or transporting
this product to the major population centers of the South and Eastern
seaboard, Colonial is in a great position to help with the industry's
growth and with increasing the supply of available fuels.
We are currently developing a project that would add a third
pipeline of 36 inches in diameter along our existing pipeline corridor
between Baton Rouge and Atlanta. This project, which still faces
several regulatory and engineering hurdles as well as the final
approval of our owners, could add 800,000 barrels of additional
capacity every day. That equates to an additional 33 million gallons of
fuel every day. (By comparison, announced refinery expansions will
produce an additional 1 million barrels per day of product by 2012.)
When we initially proposed the project, we estimated the cost would
be $1 billion for 465 miles of new pipeline. However, we now estimate
the project will top $2 billion. Part of that may be our conservative
estimates in the beginning, and part of it is the rising price of
steel. But a significant part of the higher estimate is due to the
competition for qualified workers to build our project. The very
expansions within the refining sector of our industry are soaking up
the available skilled labor pool we are seeking for our own project.
Although construction on our proposed project would not begin before
2011, our forecast is that the labor market will be as tight if not
tighter by that time.
While this expansion will likely have minimal impact on our long
term needs for operations manpower, it will require approximately 2,000
construction jobs during the building period.
Colonial has also been researching the transportation of ethanol
and other bio-fuels on our pipeline. As you may or may not be aware, we
are working with others to determine whether ethanol can be transported
in a steel pipeline without inducing stress-cracking. While initial
results are encouraging and there is much work to be done and questions
to be answered, we hope to make test shipments in 2008. It's unlikely
that the these efforts will add significantly to our workforce demands
long term, but the system modifications to handle these fuels may
require could add yet another need for scarce design and construction
expertise.
We hope projects like our expansion and our research into carrying
fuels that will boost America's energy security are steps toward making
our pipeline industry more attractive to young workers looking for a
company to start and/or develop their career.
The work of this Committee has the potential to have far more
substantial benefits for the workforce needs we face. Speaking for
Colonial, here are some steps I think would benefit the industry as a
whole and therefore the Nation's consumers:
--Encourage policies that improve technical school and skilled
trade training. This would have the most immediate impact
on our workforce needs, and this is an area where companies
like Colonial would be willing to participate either in the
design of curriculums or by providing other support, such
as grants targeting the development of skills and trades
needed in our industry.
--Provide IRS relief on phased retirement initiatives that will
allow companies to make in-service distribution of
retirement benefits. We need to tap into the knowledge and
experience of those employees who retired solely to have
access their lump-sum benefits. We need their help
preparing the new workers, and we can't ask them to
jeopardize their pension benefits--nor the tax-qualified
status of our pension plan--when they answer our call.
--As Congress works on solutions to the Immigration question,
please keep in mind that foreign workers represent a
potential pool of skilled workers that would address our
workforce shortages and provide stable, well-paying jobs
that would not only benefit the individual but the
community as well.
Thank you for the opportunity to testify before the Committee.
Colonial Pipeline welcomes your continued interest and support. It has
been invaluable to our company in particular and a contribution to the
industry and the Nation. Speaking for the 630 employees of Colonial
Pipeline, and for the pipeline industry as a whole, we stand ready to
help in any way we can as you develop solutions to the workforce
shortage facing the Nation's energy suppliers.
The Chairman. Thank you very much.
Mr. Bowers.
STATEMENT OF W. PAUL BOWERS, PRESIDENT, SOUTHERN COMPANY
GENERATION, ATLANTA, GA
Mr. Bowers. Thank you, Mr. Chairman, and distinguished
members of the committee. I am honored to appear before you
today, and offer the perspective from the energy industry on
its workforce needs and concerns.
As we look forward over the next 5 to 10 years, we are
confronted with a significant and increasing shortfall of
skilled craft workers, upon whom we depend on for operation,
maintenance, and development of our energy infrastructure. How
this shortfall is addressed will directly impact the ability of
the industry to satisfy the growing energy needs of our Nation,
while ensuring a thriving secured domestic economy.
To put matters in context, please let me offer you a few
statistical frameworks. The National Electric and Gas Utility
Sector employs approximately 550,000 individuals. More than
half of these individuals work in specific areas, such as
generation, transmission, and distribution, which require
skilled craft personnel in such roles as technicians,
mechanics, power plant operators, and line workers.
In the Southeast, the supply of skilled of craft industrial
labor, in recent years, was measured at approximately 120,000
individuals. That number fell short of the demand by
approximately 20,000 individuals. By 2011 the deficit is
expected to more than double, as demand for labor increases to
more than 170,000 persons.
In short, the supply of skilled craft labor lags well
behind demand. One key reason for this problem is our aging
workforce, which has been mentioned here already. Within 5
years, the utility industry could see losses of between 40 and
50 percent of its generation, transmission, and distribution
employees. Currently, more than 45 percent of the half million
utility employees are at the age of 48. More than 25 percent
are over the age of 53, while only 13 percent are below the age
of 33.
At Southern Company, our numbers are no different.
Approximately 8,000 retirements are expected in the next 10
years, or 31 percent of our company's entire workforce could
retire. The drop in available skill-craft workers is also
attributable to a shift in cultural norms associated with such
careers. As compared to when you and I were in high school,
educators, counselors, and parents today have deemphasized or
eliminated altogether the avenue of vocational or technical
programs. Participation in industry related vocational and
technical courses has decreased by 35 percent over the past
decade.
The consequence of such deficit and skill-craft worker
shortage can not be understated. The North American Electric
Reliability Council found in its 2007 survey of reliability
issues, that the utility user, owners, and operators ranked
aging workforce and the lack of skilled workers as the foremost
cause of reliability risk.
Demand for energy continues to increase. To satisfy this
demand, a national investment of approximately $900 billion is
expected in energy infrastructure projects over the next 15
years, with $400 billion of that committed to the Southeast.
Current forecast assumes approximately 26 new nuclear plants,
77 new generation stations, all could be constructed in the
Southeast, along with 3,500 miles of transmission.
Southern Company has taken a number of steps to address
these issues as best it can. In 2001, which has already been
mentioned, our subsidiary, Gulf Power, opened a academy in
Pensacola, Florida, designed to foster and a feeder pool for
important positions such as entry-level power generation, power
delivery jobs. Southern Company, through Alabama Power and
Georgia Power, provides a number of education leadership forums
for students and educators and has partnered with technical
schools to develop heightened standards of education in an
effort to increase the passage rate of individuals taking
industry pre-employment tests. These efforts can only take
Southern Company and the industry so far, and will inevitably
fall short.
An effort to assist the committee in development of such
plans, Southern Company offers some suggestions and ideas for
consideration and discussion.
One, an increased awareness is needed of the critical
workforce issues we face. In an effort to support continued
economic development across the Nation, our educators and the
students in their care must become better aware of the existing
and future skill-craft labor careers and opportunities. Current
academic mandates do not award credit to students who
participate in career technical educational programs. Their
credit systems must be modified, so that credit toward
graduation is awarded as part of participation in technical
curriculum.
The national curricula and related standards for middle and
high schools are needed to complement and improve the
perception and selection of careers in energy and construction
industries by qualified students. A perfect example is the
model in Florida with the Career and Professional Education
Act.
Finally, let me summarize and say thank you for allowing me
to appear before you. Southern Company and its employees
greatly appreciate your commitment to this issue. On their
behalf, I hope you will carefully consider the points I've
raised in my written testimony and hopefully I'm available for
you to answer the questions you might have.
Thank you.
[The prepared statement of Mr. Bowers follows:]
Prepared Statement of W. Paul Bowers, President, Southern Company
Generation, Atlanta, GA
Thank you, Mr. Chairman, Ranking Member Domenici and other
distinguished members of the committee. My name is Paul Bowers, and I
am president of Southern Company Generation, a business unit of
Southern Company, the largest electric utility in the United States.
Headquartered in Atlanta, Southern Company owns and operates more than
42,000 megawatts of generation capacity and more than 27,000 miles of
electric transmission lines. To operate, maintain and manage this vast
electric energy infrastructure and to reliably supply electricity to
our customers, Southern Company employs more than 26,000 women and men
across four states.
I am honored to have this opportunity to appear before you today on
behalf of Southern Company and offer the perspective of the electric
utility industry on the workforce requirements of our Nation's domestic
energy industry. These needs are an integral part of any discussion
regarding the electric utility industry in the United States--both
present and future--and it is my hope through this testimony to address
the intent of this hearing by outlining several fundamental workforce
issues that our industry faces as it continues to grow into this new
century. First, I will describe the current state of the energy
workforce and the demands facing the industry. Then I will discuss the
future growth requirements expected in the region as well as short-term
actions that have been taken to alleviate problems associated with
current and anticipated industry workforce needs in the face of growing
demand. Finally, I will offer suggestions for this committee to
consider as it addresses these critical issues and recommends policy
actions that will ensure the United States has a secure and abundant
supply of energy.
i. the state of the domestic energy industry workforce
Recent data collected by the United States Census Bureau indicates
that the national electric and natural gas utility sectors employ
approximately 555,000 individuals. Half a million people, dedicated to
keeping the lights of our country on, its homes warm, and its economy
thriving. More than a quarter of this group, or approximately 120,000
workers, serve the Generation (including nuclear) function of the
sectors--namely producing the energy our Nation needs. Another 260,000
people serve the Transmission and Distribution functions, and see that
the generated energy safely and reliably reaches the people and
businesses that require it. Both functions require a host of skilled
craft personnel, who fulfill the critically important roles of
technicians, power plant operators, lineworkers, and pipefitters/
pipelayers.
The energy demand served by the infrastructure to which these
individuals tend has increased by an average of 2 percent annually over
the last five years. In the Southeast, that demand growth has averaged
3 percent over the same period. In any event, according to the Energy
Information Administration, the demand for energy in the United States
is expected to increase 31 percent between 2005 and 2030. As this
committee has recognized, such growth in demand necessarily requires a
workforce to satisfy it. As this committee also appears to have
recognized that, a shortage exists in the number of workers available
to meet this demand.
Internal Southern Company research indicates that the available
supply of skilled craft industrial labor in the Southeast for 2006 was
approximately 120,000 individuals.* \1\ This figure comprises such
service categories as operation and maintenance, environmental, and
industrial, and includes both union and non-union workers trained as
pipefitters/combo welders, boilermakers/tube welders, electricians,
millwrights and iron workers.\2\ The 120,000 person number fell short
of the demand in the Southeast for skilled craft labor in 2007 by
approximately 20,000 workers. Moreover, that deficit is expected to
more than double through 2011, as demand for skilled craft laborers in
the Southeast grows to more than 170,000 persons.
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* All exhibits referred to in Mr. Bowers's testimony have been
retained in committee files.
\1\ See Exhibit 1, Southeast Industrial Craft Labor Demand Chart,
Southern Company Generation.
\2\ See Exhibit 2, Southeast workforce White Paper.
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This demand growth reflects not only the expanding energy needs of
the Southeast (along with the rest of the Nation), but calls attention
to an equally significant workforce issue the electricity industry must
face: an aging workforce. According to a recent Center for Energy and
Workforce Development (CEWD) survey, the electric and natural gas
industries could lose between 40 to 50 percent of their Generation, and
Transmission and Distribution employees within the next five years.\3\
In fact, more than 45 percent of the half million utility employees
serving our country's energy needs are above the age of 48. More than
25 percent are over the age of 53. Only 13 percent of employees are
below the age of 33. According to a fall 2006 Washington Post report,
more than half of the entire electric utility workforce will be
eligible for retirement within 10 years. Not surprisingly, an
accounting for this demographic distribution of personnel results in
projected losses in some skilled craft positions well in excess of 50
percent.
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\3\ See Exhibit 3, Gaps in the Energy Workforce Pipeline: A 2007
Workforce Survey Report from the Center for Energy and Workforce
Development, Executive Summary and Summary of Findings.
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For example, more than 52 percent of Generation technicians may be
eligible to retire by 2012. When that number is considered with the
normal 8.4 percent attrition rate, the potential need for replacement
Generation technicians exceeds 60 percent. Lineworkers likewise present
a similarly significant workforce issue. In 2005, the Department of
Energy concluded that the electric utility industry could suffer a
shortage of 12,000 lineworkers by 2015 (assuming a modest 1.5 percent
growth rate), or nearly 20 percent of the current workforce. For some
organizations, lineworker retirements could approach 50 percent of
total personnel. Vacancies of upwards to 50 percent (and beyond) also
are anticipated for power plant operators and engineering jobs
generally as retirement eligibility grows over the next five years.
The numbers at Southern Company vary little from national figures.
Our 26,000 employees include 6,300 persons serving the Generation
function, 2,500 serving the Transmission function, while the remaining
17,200 serve roles in Distribution, Customer Service and Support
functions. Approximately 15 percent of Southern Company's employees are
below the age of 33; however, more than 45 percent are above the age of
48. Over the next 10 years, Southern Company projects approximately
8,000 retirements, or 31 percent of its workforce, with approximately
one quarter of those being skilled craft personnel such as plant
operators and lineworkers. Retirement eligibility, however, will grow
to 64 percent of the workforce, with approximately 46 percent of the
Southern Company Generation workforce between age 58 and 61.
Compounding these problems is a marked lacked of proficiency of
personnel entering the workplace. Over the past two years, more than
2,000 potential employees could not pass entrance tests required for
employment with Southern Company Generation. Although Southern Company
has seen a slight increase in qualifying applicants between 2006 and
2007, only 37 percent of applicants qualified for employment in Alabama
in 2007 (up from 30 percent in 2006), while 41 percent of applicants
qualified for employment in Georgia in 2007 (up from 39 percent in
2006). A number of sources can be blamed for the shrinking skilled
craft labor pool. Most notable is a shift in cultural norms associated
with skilled craft labor careers.
Presently, parents, school counselors and students' peers emphasize
the importance of completing secondary education with the goal of
gaining acceptance to and attending a four-year college. To this end,
some state government policies (whether organic or interpreting federal
policy) have led to the elimination of many high school vocational and
technical programs that previously served as introductory training for
future skilled craft laborers. Over the past decade, the number of
students in high school who are taking trade or industry-related
vocational and technical courses has declined by 35 percent. Moreover,
many would-be candidates hold misperceptions about such positions. Once
considered excellent career options, the high-paying skilled craft work
is now seen as second class. Individuals also associate such work as
seasonal and without adequate benefits, neither of which may be (and
often is not) true.
ii. future growth affecting the workface and short-term actions taken
The consequences of a skilled craft worker shortage cannot be
understated. The North American Electric Reliability Corporation (NERC)
found in its 2007 Survey of Reliability Issues that utility users,
owners and operators ranked ``aging workforce and lack of skilled
workers'' as the foremost cause of reliability risk. Moreover, a
deficit of 50,000 skilled craft workers by 2011 cannot adequately
sustain the industry growth that the Nation expects in order to satisfy
the corresponding increase in demand. The growing number of industry
retirements that will invariably overlap with the increase for labor
will only exacerbate the problems created by such a shortfall.
Specifically, Cambridge Energy Research Associates (CERA) expects
supply levels in the Southeast to fall over the next five years to
levels that will require investment in new capacity.\4\ According to
CERA estimates, the energy industry nationally will invest
approximately $900 billion in infrastructure projects over the next 15
years, with the South's share of such investment expected to exceed
$400 billion. The Nuclear Energy Institute estimates that the Southeast
could host 26 new nuclear plants for which license applications are
being developed. Moreover, NERC estimates the construction of 77 new
generating stations in the Southeastern Electric Reliability Council
(SERC) region through 2013, along with 3,500 miles of transmission
lines as part of 183 different projects. Through 2025, Southern Company
will require 17,000 MWs of new capacity to satisfy demand within its
four-state control area, an amount that is more than 40 percent of our
current capacity. In addition, Southern Company will be installing
environmental controls over the next three years, for which we expect
to expend $4.6 billion and require 8.5 million skilled craft labor
hours, as well as other projects that we expect to consume more than 2
million skilled craft labor hours.
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\4\ See Exhibit 2, Southeast workforce White Paper.
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Southern Company is not atypical in this regard. Across the
Southeast, 55 new scrubbers to reduce sulfur dioxide emissions are
planned over the next several years that will, in total, require an
estimated 35,000 workers. The skilled craft labor required to serve
these needs does not, however, exist for the utility industry alone. By
way of example, Southern Company understands the new ThyssenKrupp steel
plant in Mobile, Alabama will need skilled craft workers to satisfy
approximately half of its 2,700 total workface, while the new Kia
automobile plant in western Georgia will require a substantially
similar amount of craft labor as part of its approximately 2,800
workers. Additionally, reconstruction along the Mississippi and
Louisiana Gulf Coast in the wake of Hurricane Katrina still consumes
the time and availability of thousands of skilled craftspeople.
It should thus come as no surprise that the spiking demand and
plummeting supply make for an impressive increase in wage expectations
for the skilled craft laborers. While perhaps obvious, it bears
remembering that the work performed by these skilled craftspeople
cannot be outsourced. Rather, it must be performed on site.
Accordingly, in the coming years, union wages are expected to increase
4 to 6 percent annually. Additional compensation, such as subsistence
(per diems, stipends) and other incentives, may become required to
attract union labor to specific projects. Non-union compensation is not
expected to be any different, as wages and benefits packages for open
shop employees currently coincide with that received by union workers.
Although the skilled craft workers certainly benefit from higher wages,
the increased costs ultimately result in higher electricity rates for
customers.
Furthermore, the reduction in qualified skilled craft personnel
increases the potential for quality and safety issues, and a
corresponding lack of productivity. For example, one of Southern
Company's Alabama plants has approximately 1,400 skilled craft
employees on site. Over the past year, the turnover rate at the plant
has increased to 28 percent. Additionally, the plant has seen an
increase in the failure rate of certain quality control metrics. Such
failures cause delays in repairs and ongoing maintenance, which
necessarily impact productivity and result in an increase in plant
costs. In this time, Southern Company also has witnessed an increase in
the percentage of skilled craft workers who are either less familiar,
or unfamiliar, with working on industrial sites. Here too, quality and
safety concerns are implicated.
Southern Company is taking steps to address the issues that it has
recognized. In 2001, Gulf Power (one of the Southern Company operating
companies) began its first academy at West Florida High School of
Advanced Technology in Pensacola, Florida. Through this academy, Gulf
Power was able to develop a feeder pool for important positions such as
entry-level power generation and power delivery, as well as degreed
positions such as engineers. Each incoming junior is paired with a Gulf
Power mentor who holds a career of interest to the student. Incoming
seniors who meet certain criteria are placed in a program where they
report to Gulf Power during certain school hours for completion of
their curriculum and work obligations. Since its introduction, the
program has expanded to two other Florida high schools, and has
produced 62 graduates, 30 of whom have been hired by Gulf Power or
other utility or related companies (with another 26 enrolled in
college).
Southern Company also provides a Summer Energy Career and
Leadership Academy for incoming freshmen in Burke County, Georgia;
facilitates a Summer Educators Forum at its nuclear plants Vogtle and
Hatch for area high school and technical school educators; provides a
leadership conference for junior students in the Mobile County, Alabama
School District to raise awareness of careers in the energy industry;
and partnered with technical schools in Georgia to develop a Technical
Certificate of Credit, the goal of which is to increase the passage
rate of individuals taking the Edison Electric Institute pre-employment
test (and thereby increase our qualified pool of candidates). Southern
Company also is partnering with Georgia technical schools to develop an
electrical lineworker program from which our Georgia Power operating
company can hire new personnel. An additional, but by no means final,
effort undertaken by Southern Company involves collaboration with
technical schools to develop a power-plant operator course that
introduces students to the responsibilities of a plant mechanic at our
Southern Nuclear facilities.
Southern Company also has taken operational steps to address
workforce shortage. One short-term method we have adopted in an effort
to manage the labor demand issues is scheduling. For example, when
possible, Southern Company plans its plant outages to coincide with
environmental-controls construction projects in an effort to optimize
the skilled craft labor on our plant sites. In other situations,
Southern Company has changed the timing of its installation of
environmental controls. In this way, we avoid having too many skilled
craft workers at a particular location at any one time (which often
creates high turnover, as well as quality and safety issues).
Through partnerships with other industries, workforce investment
boards, and state governments across our service territory, as well as
active membership in community, state and national organizations,
Southern Company also is endeavoring to increase the supply of skilled
craft professionals. For instance, in 2004, Southern Company began
evaluating the workforce needs in our region through the CEWD. A
partnership among utilities and industry associations such as the
Edison Electric Institute, the American Gas Association, the Nuclear
Energy Institute and the National Rural Electric Cooperative
Association, as well as contractors and unions, CEWD seeks to expedite
the creation of educational programs, improve the skill levels of
graduates, improve their awareness of opportunities in the utility
industry, and increase the number of diverse qualified applicants who
want to work for utilities.
iii. suggestions for the committee in development of policy action
Despite these and other efforts by Southern Company and others in
industry, there remains much to be done to address the critical
shortfall of skilled craft workers the domestic energy industry faces
in the coming years. Resolving this challenge will not be accomplished
without attention and support from Congress and distinguished leaders
such as yourself. In an effort to assist the committee in this regard,
Southern Company offers the following suggestions.
Increased awareness is needed on issues related to skilled
craft labor and workforce initiatives in order to support
economic development. As I have discussed, the domestic energy
industry is approaching a significant demographic cliff in its
skilled craft workforce. Addressing the problem posed by this
reduction in available labor should be a priority for Congress,
as the growth of the Nation's electric infrastructure
generally, and Southern Company's region of the country
specifically, depends upon the development of a workable
solution to this problem. By increasing awareness of these
issues, the confidence of all business sectors in the South
will improve, as will the quality of life of those working in
it, and dependent upon it.
National curricula and related standards for middle and high
schools are needed that raise awareness of careers in the
energy and construction industries and enhance the ability of
qualified students to enter skilled craft positions immediately
from high school. A possible model would be Florida's Career
and Professional Education Act. Developed through a partnership
with the state workforce and led by Andra Cornelius, vice
president for business relations at Workforce Florida, the act
requires all school districts to have at least one career
academy that prepares students for high-wage, high-skill jobs
within the local economy. The act also requires industry
certification to receive enhanced full-time equivalent
weighted-funding, and it requires the rigor of articulated
coursework with post-secondary institutions. In this way, a
functioning pipeline of skilled workers can be established that
industry can rely upon to serve its growing workforce needs.
Flexible teacher-qualification standards are needed that
would permit domestic energy industry personnel to teach in the
public education system. Additionally, career and technical
education courses should be developed so that they meet
specific quality standards--such as completion rates and
industry and instructor certifications--in order to receive
enhanced funding.
Industry-certification programs are needed in secondary and
post-secondary schools. Current academic mandates do not award
credit to students who participate in career technical
education programs, nor do they provide the time necessary for
students to participate realistically in such programs. The
credit systems must be modified so that technical credit is
awarded as part of a curriculum, thus allowing students who
participate in such classes to accrue sufficient credits toward
graduation. Technical education programs help students become
immediately employable with high starting salaries that often
exceed state averages. Such programs also instill technical
skills in such students, and the certification would be
portable and nationally recognized. Industry certification
should be a component of all career technical education
programs of study.
Lastly, school systems need counseling programs to encourage
students and their parents to consider these career academy
programs. The image of the domestic energy industry as a career
should be one of excitement and opportunity, and not anything
negative or second class. To facilitate this change in
perception, school systems must educate students and their
parents about the potential inherent in the energy industry,
and how they can pursue a career in which they could earn a
good wage.
In summary, Chairman Bingaman, Ranking Member Domenici and other
distinguished committee members, your support and action is needed.
Southern Company and its employees greatly appreciate your commitment
to this issue. On their behalf, I hope that you will carefully consider
the matters I have raised and the requests that I have outlined.\5\ In
the meantime, thank you again for the opportunity to speak with you
today, and I welcome any questions that you may have.
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\5\ A copy of my biography is attached for your convenience at
Exhibit 4.
The Chairman. Thank you very much.
Dr. Ray Stults, please go right ahead.
STATEMENT OF RAY STULTS, ASSOCIATE DIRECTOR, ENERGY SCIENCES,
NATIONAL RENEWABLE ENERGY LABORATORY, GOLDEN, CO
Mr. Stults. Thank you, Senator Bingaman. It's a pleasure to
be here to provide some information regarding the development
of renewable energies as we meet the current projected energy
demands of the U.S. and the world with tremendous growth, as
projected, and particularly as we start to relate to
considering the energy security and the climate change issues
that we believe that renewable energy will play a strong role
in the future.
Ideas of the investment that's going to be required have
been provided by such agencies as Inter-Governmental Panel on
Climate Change, which has estimated a $30 billion--$30 trillion
investment between now and 2030, of which over $5 trillion of
that will be in the U.S. in energy infrastructure. So, the
projections of growth are certainly there, and we're already
seeing growth in the renewable energy.
For example, wind power in the last 5 years has enjoyed an
annual growth rate of 22 percent, 27 percent last year, and
we're seeing a tremendous growth this year. Although, what's
really interesting, is on this growth and investment of over $4
billion in the wind industry, is that if we look at the Energy
Information Agency's projections, that by 2030, the
contribution from renewable energies is almost stagnant. Today
it's about 6 percent and they're projecting only a 7 percent
growth. Now, we're seeing growth in selective sectors of this
because the overall energy portfolio--overall energy demand is
growing, but yet the amount of energy renewables is not
projected to grow.
However, I think that's going to change and it's going to
change by one, the awareness of the need for green energy and
renewable energies. It's always going to change by initiatives,
such as the American Competitiveness Act, the Advanced Energy
Initiative, and so forth. That's a major part of what's
currently going on at our laboratory right now.
As you know, we're a National Laboratory and the primary
focus of what we work on is developing new energy technology
options for the future. So on wind, solar, biomass, geothermal,
we're heavily involved in developing, you know, new energy
options for the future. Only recently have we started to
address the workforce issues, as we develop these new
technologies and we start to build plants.
So, what I would like to do now is to talk a little bit
about one example, and that's the example in the biofuels area
where there's been tremendous amount of interest in the last
several years. Energy renewable--Office of Energy Efficiency
and Renewable Energy is investing in pilot-scale facilities.
The Office of Science has invested in advanced bioenergy
centers in the United States. We've recently done an analysis--
and this is a preliminary analysis of what it would take to
replace 20 percent of our transportation fuels by ethanol by
2017--so we've done an analysis of this, and basically what it
talks about, is how do we produce 20 billion gallons of
cellulosic ethanol, put it into the marketplace, and then have
the mechanisms to use that energy.
Let me just give you a few numbers. Now, these numbers are
not in my written testimony, I actually received these last
night when I arrived in Washington, DC and there's some
information. But I thought I should try to share these. If
we're going to produce 20 billion gallons of ethanol by 2017,
we're going to require developing on the order 400 new
refineries. The stainless steel requirements will equal 8
percent of the annual U.S. production of stainless steel to
build those refineries. In some years, the peak will be more
like 30 percent of the development. We will need 600,000 tons
per year of concrete to build those plants. Once they're
operational, the demands on water is significant, 80 billion
gallons of water per year to do the processing, OK?
Construction labor--this is averaged out over that 10-year
growth period, will be 10,000 personal labor-years per year.
Then once the plants are operating, we'll need 12,000 person-
years of labor each year to operate the plants. So, I think
those numbers are quite staggering and sort of goes along with
everything we've been hearing this morning about the demand on
trained skilled workforce.
In addition, we're going to need dispensing units in the
form of new gasoline pumps to dispense this. So this analysis,
in order to use this, says that by 2015, we need to have E-10
available nationally, and we need to have E-85 pumps available
in many regions of the country. That's on the order of 30,000
stations, investing somewhere between $300 and $600 million
just to put in the pumps to provide this. Flex-fuel vehicles
will need to be available. It's projected that by 2017, we'll
need to have nearly 93 million flex-fuel vehicle on the road in
order to take advantage of this.
So, I think the numbers are staggering and it sort of
accents the problem, and certainly contributes to the demand
for skilled workforce to build the plants, to operate the
plants, and so forth.
The last thing I would like to comment on is something that
we're seeing at our laboratory, and that is the projected
shortage of scientists and engineers in this field. We're
already seeing a workforce demand. We need additional
scientists and engineers in our National Bioenergy Center, for
example. We have numerous positions we're working to fill. It's
going a lot slower than we would like. So, there is a work
labor issue in the science and engineering.
So, I think these are all issues that we need to address in
the future and this is, by a lot of the comments today, I'm
summarizing this, so, anyway, I applaud the committee. I think
this is the first of several hearings, meetings, workshops
that's going to be necessary as we start to address these
issues, and I certainly look forward to answering any
questions.
Thank you.
[The prepared statement of Mr. Stults follows:]
Prepared Statement of Ray Stults, Associate Director, Energy Sciences,
National Renewable Energy Laboratory, Golden, CO
Mr. Chairman, thank you for this opportunity to discuss workforce
issues related to our Nation's growing energy needs. I am Ray Stults,
Associate Laboratory Director for Energy Sciences at the National
Renewable Energy Laboratory (NREL) in Golden, Colo. NREL is the U.S.
Department of Energy's primary National Laboratory for research and
development of renewable energy and energy efficiency technologies.
The challenges we face today in the energy sector are unprecedented
in our Nation's history. While we clearly must produce tremendous
amounts of new energy to serve our citizens and keep our economy
growing, we at the same must strive to reduce our dependence on
imported oil and take new measures to protect our environment.
As we look to the future, the demand for new energy technologies,
and especially clean energy technologies, is expected to grow
exponentially. A study conducted this year by the Intergovernmental
Panel on Climate Change estimated that from 2007 until 2030, the global
need for new energy infrastructure will total some $20 trillion
dollars. New energy infrastructure needs in the U.S. were projected to
be $5 trillion.
renewable energy--a look to the future
The Nation is increasingly looking for solutions from renewable
energy technologies, and wind, biomass and solar energy industries are
growing at rapid rates. Although the renewable energy sector is a long
way from realizing its ultimate potential, these varied industries
already are having significant impact. Wind power, for instance, over
the past five years has enjoyed an annual growth rate of 22 percent. In
2006, U.S. wind power generating capacity rose by some 27 percent. The
wind power industry this year anticipates U.S. investment of $4
billion, with 2,454 megawatts of new generating capacity installed.
Wind power will be the second largest source of new generation in the
Nation--second only to natural gas--for the second year in a row.
While it is difficult to predict long-term growth of any particular
technology in the marketplace, several studies are providing insight
into the future. Perhaps the most inclusive review of workforce demands
from renewable energy development was conducted in 2004 by the Energy
and Resources Group of the Goldman School of Public Policy, University
of California, Berkeley. Incorporating the work of some 13 existing
studies, that examination found that even least-case scenarios of
renewable energy development will create a major new employment sector
in the future.
The University of California study analyzed the employment needs of
renewable energy industries if they were to achieve a 20 percent market
penetration by 2020--a goal of various policy initiatives at the state
level. With biomass contributing 85 percent, wind 14 percent and solar
1 percent of total renewable energy production, the study indicated
that 52,530 jobs would be created in construction and manufacturing,
and 188,317 jobs created for facility operations and maintenance.
The study also found job creation to be generally greater for
renewable energy expansion, as compared to fossil fuels development,
per unit of energy delivered. (A study by NREL's Energy Analysis Office
likewise found economic benefits from encouraging renewable energy
development. In a comparison of renewable energy development verses
fossil energy development, it was found that for every equivalent of
one megawatt produced, fossil energy development generates 25.4 job
years per additional megawatt capacity; renewable energy 41.7 job
years.)
Another valuable assessment of renewable energy growth is DOE's 20
Percent Wind Scenario, which looks at wind power's potential to meet 20
percent of the Nation's electricity needs. The 20 Percent Wind Scenario
found direct employment would be created for nearly 150,000 people, in
manufacturing, construction and operation of wind power systems--jobs
that largely would extend over a period of 20 years or more. (The total
U.S. electric power sector currently employs about 395,000 people.) The
indirect and induced economic activity that would result from that
level of investment in wind power would create an additional 300,000
jobs. The overall economic activity that would be created from wind
development, if it were to reach 20 percent of total generation, was
estimated to approach, and could potentially exceed, $1 trillion.
In addition to the workforce needs of manufacturing and operations,
the equally crucial need for new related infrastructure must also be
considered. No definitive research has been completed in this area.
However, a look into one aspect of biofuels development begins to
reveal the complexities and workforce demands ahead. The Department of
Energy's ``20 in 10'' goal of displacing 20 percent of the Nation's
gasoline use by 2017 would require that 30 billion gallons of E85 be
sold annually. That would require an estimated 28,500 service stations
to be equipped to dispense ethanol. The cost of labor for installing
new tanks averages $20,894 per station; the labor cost for retrofitting
existing tanks averages $7,771. Overall estimates of labor costs
associated with providing enough ethanol pumps at the Nation's gas
stations range from $220 million to $600 million, according to NREL's
Center for Transportation Technologies and Systems.
skilled labor requirements
As the renewable energy sector grows to meet more of the Nation's
energy requirements, there will be new demands for skilled labor. While
few detailed studies exist of future skilled labor requirements,
several assessments have been initiated. One demonstrated area of
concern is the gap between existing workforce skill sets and those
needed for emerging energy industries. The wind power industry, for
example, will require substantial growth of both skilled labor and
technical labor, and create new demands for engineering and scientific
professionals.
Research by the Renewable Energy Policy Project (REPP) analyzed the
likely distribution of benefits throughout the U.S. manufacturing
sector that will result from wind power development. Because
manufacturing of wind turbine components is a labor-intensive process,
some significant manufacturing has gone to foreign facilities. At the
same time, U.S. firms are attempting to increase productivity at
domestic production facilities--to outweigh the advantageous labor
costs of foreign competitors. One wind blade manufacturer with
significant international manufacturing experience estimates that the
labor hours per blade would need to be reduced by a third for a U.S.
factory to remain competitive. To ensure that manufacturing jobs remain
in this country, development of advanced manufacturing technologies is
essential.
To address the projected shortage of skilled workers for the
biomass fuels industry, a number of educational programs have been
initiated at the state and local level. For example, Indian Hills
Community College constructed the Iowa Bioprocess Training Center in
2002, and began offering a two-year bioprocess technician program,
working with two local ethanol producers. Another school, Minnesota
West Community and Technical College, worked with local ethanol
producers and the Minnesota Coalition for Ethanol to create a two-year
Renewable Energy Technology program. A third of program's initial
students moved on to a related four-year program, two-thirds were
immediately hired in the ethanol industry.
On the national level, DOE has created a program to improve and
expand solar installer training and certification in cooperation with
the North American Board of Certified Energy Practitioners (NABCEP).
Similarly, NREL is working through the U.S. Department of Labor's
Workforce Innovation in Regional Economic Development, or WIRED
Initiative, to ensure that skills of the emerging renewable energy
industries will be addressed. The WIRED Initiative supports innovative
approaches to education and workforce development that serve the needs
of employee and employers alike.
We recommend a detailed analysis be conducted of skilled labor
requirements for the renewable energy industry, now and into the
future. A comprehensive, multi-industry assessment of the need for new
craft and skilled workers is essential to inform national policy in
this critical area.
engineers and scientists for the future
The steady decline of engineering program enrollment comprises a
major concern for therenewable energy industry. A report published by
the National Science and Technology Counsel in 2000 found that the
percentage of 22-year-olds earning degrees in science and engineering
will continue to fall over the next four decades. Currently, U.S.
graduate power engineering programs produce about 500 engineers per
year. During the 1980s, this number approached 2,000 annually.
This issue poses risks to U.S. competitiveness. The number of wind
engineering programs at European schools is significantly greater than
that offered in the U.S. Although our Nation has historically been a
world leader in providing broad access to higher education, and in
attracting foreign students, other countries are closing the gap, by
providing comparable educational access to their own population and
attracting large numbers of foreign students.
The nascent biofuels industry in the U.S. already is encountering a
shortage of qualified engineers and scientists with the appropriate
education and training to make the contributions that are needed in the
field. A looming shortfall of potential biofuels researchers in the
undergraduate system today will only be compounded as industry ramps up
its hiring demands in the future. At our own National Laboratory, we
have experienced a severe shortage of qualified candidates for
technical and scientific positions within the National Bioenergy
Center, and competition for qualified candidates is only expected to
intensify in the years to come. Just as Petroleum Engineering served
this Nation for decades as an important discipline, so too must a new
``Biofuels Science and Engineering'' discipline become an attractive
and fulfilling educational and career path for our emerging workforce.
NREL is currently working with the research and consulting firm
Independent Project Analysis, Inc. (IPA), to help DOE better understand
the challenges associated with commercialization of new biofuels
technologies. IPA focuses on the quantitative analysis of capital
projects worldwide, including energy projects, and conducts extensive
research on the factors that influence project success. Through this
work, we are finding that shortages of technically qualified workers
are currently having significant impacts on the costs and schedules of
capital projects, such as power plants, chemical plants and refinery
upgrades. In one striking example, data suggests the cost of
engineering labor on the U.S. Gulf Coast more than doubled between
January 2004 and June 2007, due to a shortage of qualified design
engineers. Such labor issues are likely to be compounded as the
biofuels industry expands.
We recommend a detailed national study be initiated to identify
potential shortages of crucial engineering and scientific
professionals. Study results would provide policy makers with the
information they will need to ensure an adequate workforce is available
to meet the Nation's future energy needs.
The Chairman. Thank you very much.
Ms. Berrigan, go right ahead, please.
STATEMENT OF CAROL L. BERRIGAN, Director, Industry
Infrastructure, NUCLEAR ENERGY INSTITUTE
Ms. Berrigan. Chairman Bingaman, Ranking Member Domenici,
and members of the committee, I am Carol Berrigan, Director of
Industry Infrastructure at the Nuclear Energy Institute. I
appreciate this opportunity to express the nuclear industry's
views on the availability of the workforce necessary to meet
our Nation's growing energy needs.
Let me begin by thanking members of this committee for
their long-standing vision and leadership, which has shaped our
national energy policy, most recently embodied in EPACT 2005.
We commend the enactment of the America Competes Act, which
establishes a solid policy framework for addressing the
challenges in stem workforce, and we look forward to this Act's
implementation.
In addition, this committee has long supported nuclear
engineering education in university programs and we encourage
you to continue to reinforce the importance of these programs
with the Department of Energy.
The 104 reactors operating in the United States today are
among our Nations safest and most secure industrial facilities.
In addition, they are the Nation's lowest cost producer of
base-load electricity. Nuclear power produces one-fifth of
America's electricity and U.S. utilities are preparing to build
advanced design nuclear power plants to meet our Nation's
growing energy needs.
According to EIA estimates, U.S. electricity demand is
expected to grow by at least 40 percent by 2030. Meeting new
demands for electricity will require energy providers to make
major investments in new power plants, as well as transmission
and distribution systems. Nuclear energy holds great potential
for meeting our Nation's climate- related goals. Today, nuclear
energy represents over 70 percent of the Nation's emission-free
generation.
Given concerns about climate change and the need for
affordable and reliable base-load electricity production,
policymakers and energy industry leaders are evaluating an
expanded role for nuclear energy. Both NRG and TVA have taken
concrete steps toward this expanding role, with the submission
of combined operating license applications for new nuclear
reactors to be built in Texas and Alabama. There are currently
15 other companies or consortia who have announce plans to
submit COLOs for up to 27 additional nuclear power plants
across the country.
Since the interest of this committee is in the availability
of workforce necessary to meet our Nation's growing energy
needs, please note that while the nuclear industry faces
several challenges in meeting its nuclear workforce demands,
along with these challenges come significant opportunities for
American workers.
Each nuclear unit in operation today, directly employs 400
to 700 people. In addition to direct employment, the nuclear
industry relies on numerous vendors and specialty contractors
for additional expertise. For maintenance and outages, nuclear
power plants also require a skilled labor to complement onboard
utility staff, in some cases as many as 1,000 additional
workers.
NEI's 2007 nuclear workforce survey indicated that 35
percent or 19,600 current nuclear utility employees may be
eligible to retire by 2012. Within the vendor community that
supports the industry, that number is 25 percent.
The resurgence of nuclear energy will also lead to
increasing demand for skilled labor at all levels. NEI
anticipates that each new nuclear unit will require 1,400 to
1,800 workers for construction, with peak employment of up to
2,300 workers.
If the industry were to construct the 31 units that are
currently being discussed, it would require roughly 43,000 to
56,000 workers during construction with peak employment over
71,000. Once built, these plants would require roughly 12,000
to 22,000 permanent workers.
One area that's often overlooked in considering the nuclear
workforce, is the manufacturing jobs that new nuclear
construction would generate. According to a DOE survey in 2004,
deploying 33 to 41 new nuclear units through 2024 could
generate as many as 37,000 to 38,000 nuclear manufacturing
jobs.
Jobs in the industry also have many desirable attributes.
They are well compensated and commonly include family medical
benefits, pensions, and generous incentive compensation plans.
Across the energy sector, there is growing demand for
technical workers. The nuclear industry, like the rest of
American industry, faces increasing competition for engineering
talent, but we do see some good news.
In nuclear engineering programs, we see a fourfold increase
in enrollment at the B.S. level, and a fivefold increase in
enrollment at the graduate level.
Within the skilled crafts, however, there are challenges
remaining. At the same time that demographics-driven attrition
of skilled crafts is rising, numerous reports--as you've heard
in various testimony--indicate a growing demand for skilled
labor. Recruitment into skilled crafts has several challenges,
the first is a lack of awareness and prestige for these
important occupations.
The shift in national attention toward skilled craft
employment, compounded by some State government policies, and
various interpretations of Federal policies has led to the
elimination of many high school career and technical programs,
further reducing the qualified pool of skilled craft
applicants.
The industry also faces hurdles due to our need for high-
quality rigorous technical and personal standards.
I'd like to--in the interest of time--skip down to talk a
little bit about what the industry is doing. The industry is--
--
The Chairman. Why don't you give us a short version of
that, we're over the 5 minutes, go right ahead.
Ms. Berrigan. I certainly will.
The industry has taken aggressive actions in addressing the
future workforce, pursuing initiatives in career awareness,
developing training programs, providing financial support and
scholarships, and developing regional and State-based workforce
initiatives. We also actively work with the Center for
Workforce Development, that you've heard mentioned elsewhere,
and we're an active participant in the Southeast Skilled Trade
Summit.
Mr. Chairman, in conclusion, I encourage you in this
committee to continue your legacy of leadership on this issue,
through greater national attention, and coordinated efforts of
Federal and State government, industry, organized labor, and
the educational community, we can and will build our future
energy workforce.
Thank you.
[The prepared statement of Ms. Berrigan follows:]
Prepared Statement of Carol L. Berrigan, Director, Industry
Infrastructure, Nuclear Energy Institute
Chairman Bingaman, Ranking Member Domenici and members of the
Committee, I am Carol Berrigan, Director of Industry Infrastructure at
the Nuclear Energy Institute. I appreciate this opportunity to express
the nuclear industry's views on the availability of the workforce
necessary to meet our Nation's growing energy needs.
Let me begin by thanking the Members of this Committee for their
long-standing vision and leadership which has shaped our national
energy policy most recently embodied in the Energy Policy Act of 2005.
Key provisions in this legislation have accelerated the nuclear
renaissance, including Title XVII loan guarantees, the production tax
credit and regulatory risk insurance.
We commend the enactment of the America Competes Act, which
establishes a solid policy framework for addressing the challenges in
the science, technology, engineering and math (STEM) workforce and we
look forward to this Act's implementation. In addition, this Committee
has long supported nuclear engineering education and university
programs, and we encourage you to continue to reinforce the importance
of these programs with the Department of Energy.
The 104 reactors operating in the United States today are among our
Nation's safest and most secure industrial facilities. In addition,
they are the Nation's lowest cost producer of base-load electricity,
averaging just 1.72 cents per kilowatt-hour. Those 104 nuclear power
plants produce one-fifth of America's electricity, and U.S. utilities
are preparing to build advanced-design nuclear power plants to meet our
Nation's growing electricity demand.
According to EIA estimates, U.S. electricity demand is expected to
grow by at least 40 percent by 2030. Meeting new demands for
electricity will require energy providers to make major investments in
new power plants, as well as in the transmission and distribution
systems used to deliver electricity where it is needed. Cambridge
Energy Research Associates estimates that, nationwide, the electric
power industry will invest approximately $750 billion in infrastructure
projects through 2020, with $250 to $300 billion in expenditure for new
generation.
Nuclear energy holds great potential for meeting our Nation's
future climate related goals. Today, nuclear energy represents over 70
percent of the Nation's emission-free generation portfolio, avoiding
3.12 million short tons of Sulfur Dioxide, .99 million short tons of
Nitrogen Oxide and 681 million metric tons of Carbon Dioxide compared
to the fossil fuels that would have been burned in the absence of
nuclear energy.
Climate change is increasingly important as federal, state and
local policymakers consider energy supply and greenhouse gas
mitigation. Given those concerns and the need for affordable and
reliable base-load electricity production, policymakers and energy
industry leaders are evaluating an expanded role for nuclear power.
Both NRG and the Tennessee Valley Authority have announced that
they have taken concrete steps toward this expanding role with the
submission of Combined Operating License Applications for new nuclear
reactors to be built in Texas and Alabama. There are currently 15 other
companies or consortia who have announced plans to submit Combined
Operating License Applications for up to 27 additional new nuclear
power plants across the country.
Since the interest of this Committee is the availability of the
workforce necessary to meet our Nation's growing energy needs, I will
begin by describing the size of the workforce needed to support the
current nuclear industry and new nuclear construction. While the
nuclear industry faces several challenges in meeting its future
workforce demands, along with these challenges are significant
opportunities for American workers.
Current Nuclear Power Plants:--Each nuclear unit in operation today
directly employs 400 to 700 people.\1\ In addition to direct
employment, the nuclear industry relies on numerous vendors and
specialty contractors for additional expertise and services. For
maintenance and outages, nuclear plants also require skilled labor to
compliment onboard utility staff, in some cases as many as 1,000
additional workers over a 4 to 8 week period, depending on the scope of
the outage work. Based on an extrapolation of data supplied from the
Associated Maintenance Contractors, over 30 million man-hours are
worked by supplemental craft labor each year at the Nation's 104
nuclear reactors.
---------------------------------------------------------------------------
\1\ For some single unit sites, the number of workers may exceed
1000. In addition to direct employment, each plant creates economic
activity that generates roughly an equivalent number of additional jobs
within the local community and produces approximately $430 million
annually in expenditures for goods, services and labor, and through
subsequent spending because of the presence of the plant and its
employees. The average nuclear plants also contributes more than $20
million annually to state and local tax revenue, benefiting schools,
roads and other state and local infrastructure and provides annual
federal tax payments of $75 million.
---------------------------------------------------------------------------
NEI's 2007 nuclear workforce survey indicated that 35 percent or
19,600 current nuclear utility employees will be eligible to retire
within five years (2007 to 2012). In addition, the industry continues
to experience non-retirement attrition, which over the same five-year
period may require replacement of an additional 11 percent of the
nuclear utility workforce or 6,300 workers. Within the vendor
community, the NEI survey indicated that roughly 25 percent of the
workforce would be eligible for retirement by 2012.
New Nuclear Power Plants:--The resurgence of nuclear energy will
lead to increasing demand for skilled labor at all levels. Depending on
the build technique selected, NEI anticipates that each new unit will
require between 1,400 and 1,800 workers for construction with peak
employment of up to 2,300 workers. Some estimates with a shortened
timeline and little use of modularized construction techniques have
peak construction estimates at 4,000 workers per project. These jobs
include skilled crafts such as welders, pipefitters, masons,
carpenters, millwrights, sheet metal workers, electricians,
ironworkers, heavy equipment operators, and insulators, as well as
engineers, project managers, and construction supervisors.
If the industry were to construct the 31 units that are currently
being discussed for COL applications, this would require 43,400 to
55,800 workers during construction with peak employment of up to
71,300. Once built, these 31 plants would require 12,400 to 21,700
permanent fulltime workers to operate the plants and additional
supplemental labor for maintenance and outages.
Manufacturing:--One of the areas that is often overlooked in
considering the workforce impact of new nuclear construction are the
manufacturing jobs associated with the nuclear industry. These jobs
include the manufacture of components including pumps, valves, piping,
tubing, insulation, reactor pressure vessels, pressurizes, heat
exchangers, and moisture separators to name a few, and commodities like
cement, structural steel, steel reinforcing bar, stainless steel, cable
tray and cabling. According to a 2004 report from Idaho National Lab
and Bechtel Power Corporation, if the industry were to deploy 33 to 41
new Generation III units through 2024, this could create 37,000 to
38,000 nuclear manufacturing jobs in the U.S.
About the Jobs:--Jobs in the nuclear industry have many desirable
attributes; they are well compensated and commonly include family
medical benefits, pensions and generous incentive compensation plans.
Today, the median salary for an electrical technician at a nuclear
power plant is $67,517, for a mechanical technician, it is $66,581 and
for a reactor operator, it is $77,782. A senior reactor operator's
median income is $85,426. Jobs in the nuclear industry are safe with
fewer reported accidents than numerous other industries, including
banking and other white-collar occupations.
Challenges and opportunities:--Across the energy sector, there is a
growing demand for skilled technical workers.\2\ Many of the challenges
facing the development the future STEM workforce are identified in the
National Science Foundation's ``Gathering Storm'' report. The nuclear
industry, like the rest of American industry, faces increasing
competition for engineering talent, while the supply of this talent
remains static.
---------------------------------------------------------------------------
\2\ Skilled technical workers include both degreed and non-degreed
personnel.
---------------------------------------------------------------------------
Despite the challenges noted in the NSF report, there is good news.
We are seeing the resurgence of interest in nuclear careers at the
college and graduate engineering level, most notably evidenced by the
rapidly increasing enrollments in nuclear engineering programs.
According to a recent study by the U.S. Department of Energy,
enrollments in undergraduate nuclear engineering programs have grown
from just 470 in the 1998 to 1999 academic year to 1,933 in the 2006 to
2007 academic year. Graduate enrollments have also climbed from 220 in
the 1998 to 1999 academic year to 1,153 in the 2006 to 2007 academic
year. The Bureau of Labor Statistics Occupational Outlook Handbook
indicates median earnings for nuclear engineers are amongst the highest
for all engineering disciplines at $84,880 per year.
Within the skilled crafts,\3\ challenges remain. Demand for skilled
craft labor centers on three activities: construction, operation and
maintenance. These activities are common to all energy infrastructure
types, including fossil power, transmission, distribution, pipelines,
petrochemical refining and nuclear power. Skilled craft labor,
particularly for construction and plant outage maintenance (or
turnarounds), is able to work on all types of energy infrastructure.
---------------------------------------------------------------------------
\3\ Examples of skilled craft labor include Boilermakers,
Carpenters, Chemistry Technicians, Electrical Maintenance Technicians,
Electricians, Heavy Equipment Operators, Instrumentation and Control
Technicians, Insulators, Ironworkers, Lineworkers, Masons, Mechanical
Maintenance Technicians, Millwrights, Non-Destructive Examination
Technicians, Pipefitters, Power Plant Operators, Process Technicians,
Quality Assurance Technicians, Quality Control Technicians, Radiation
Protection Technicians, Sheet Metal Workers and Welders.
---------------------------------------------------------------------------
According to NEI's 2007 nuclear workforce survey, up to 39 percent
of nuclear utility maintenance workers, 34 percent of radiation
protection workers and 27 percent of operations staff may reach
retirement eligibility within five years.
Non-utility skilled craft labor will likely be impacted by
demographics-driven attrition as well. A report from the Construction
Labor Research Council estimates that up to 185,000 new construction
craft workers will be required nationally to replace the 95,000
retiring workers and deliver the necessary 1 percent to 2 percent
workforce growth between 2005 and 2015.\4\
---------------------------------------------------------------------------
\4\ ``Craft Labor Supply Outlook 2005-2015,'' Construction Labor
Research Council, 2005.
---------------------------------------------------------------------------
At the same time that demographics-driven attrition of non-utility
skilled crafts is rising, numerous reports indicate a growing demand
for skilled craft labor on a regional or national basis. Figure 1
illustrates anticipated demand for various types of industrial
construction and maintenance workers in the Southeast. Although project
demand after 2011 is difficult to forecast, many strong indications
point to growing demand. When adding the expected rate of worker
attrition to the estimates, the supply-demand imbalance is even more
pronounced.
The nuclear industry draws its supplemental skilled craft labor and
will draw its construction labor for new nuclear plants from the same
labor pool that supports the rest of the energy sector. The
demographics-driven attrition and growing demand that affects the
skilled craft labor pool will have an impact on the nuclear industry.
Recruitment:--Recruitment into skilled crafts has several
challenges. The first is a lack of awareness and prestige for these
important occupations. A shift in cultural norms associated with
skilled labor careers has contributed to the shrinking craft labor
pool. Parents, guidance counselors and society in general push high
school students to complete their secondary education with the
intention of then attending a four-year college program. High-paying
skilled labor jobs, once considered excellent career options, are now
perceived as second class.\5\ This shift in focus, compounded by some
state government policies and varying interpretations of federal
policy, has led to the elimination of many high school career and
technical programs. That, in turn, further reduces the number of
qualified applicants for skilled craft positions.
---------------------------------------------------------------------------
\5\ ``Where Have all the Welders Gone,'' Wall Street Journal
Online, Aug. 15, 2006.
---------------------------------------------------------------------------
The nuclear industry faces additional hurdles. Specifically, there
are few workforce training programs focused on the skills needed for
successful employment in the nuclear energy industry due to the
industry's rigorous technical and personnel standards.\6\
---------------------------------------------------------------------------
\6\ The nuclear industry is required to meet rigorous training and
qualification standards for personnel. These standards are set by the
Nuclear Regulatory Commission and the National Academy of Nuclear
Training. In addition, some personnel must meet qualification
requirements established by international standards organizations such
as ASME and ANSI.
---------------------------------------------------------------------------
As the entire energy industry works to replace its aging workforce
and plans for new facilities and infrastructure, the overall decline in
high quality career and technical education and a general perception
that skilled crafts represent less valuable career choices have
combined to restrict the pool of applicants for skilled crafts jobs.
Individuals often incorrectly perceive skilled labor jobs in the
energy sector to require little or no post-secondary training. In fact,
these jobs require certifications, offer high pay with benefits and
provide opportunities to earn college credits. In an era of rapidly
escalating college costs, the advantages of energy sector skilled craft
jobs are poorly communicated to potential entrants, particularly as
high school students are directed almost exclusively toward four-year
degree programs. Improving awareness of skilled craft jobs in the
energy sector and changing this misperception will undoubtedly lead to
more students electing to enter skilled craft careers and enjoying
long-term, high-wage employment.
Industry Response:--The commercial nuclear industry is taking
aggressive action to develop its future workforce. The industry has
been pursuing a variety of initiatives to increase career awareness
through direct outreach efforts with professional societies, in high
schools, and through the internet and other media. The industry has
developed training programs and partnerships through high schools,
union apprenticeship programs, skills centers, community colleges and
universities. The nuclear industry also provides financial support and
scholarships to students and is actively developing and engaging
regional and state-based workforce development partnerships.
In March 2006, the Center for Energy Workforce Development (CEWD)
was established. It is a partnership between the Nuclear Energy
Institute, the Edison Electric Institute, the American Gas Association
and the National Rural Electric Cooperative Association. CEWD is a non-
profit organization that teams with secondary and post-secondary
educational institutions, organized labor and the workforce system to
create effective solutions to address the need for a qualified, diverse
workforce. CEWD programs include: career awareness, identification and
replication of model programs and processes, and support for regional
and state workforce development partnerships. CEWD also endeavors to
identify and address gaps in national workforce data and promotes
policies that support energy workforce development.
In August 2007, the Nuclear Energy Institute, the Edison Electric
Institute and the American Petroleum Institute co-sponsored the
Southeast Energy Skilled Trades Summit in Biloxi, MS. This Summit,
hosted by the U.S. Department of Labor and the State of Mississippi,
brought together nearly 300 key stakeholders from industry, organized
labor, government, and the educational community to raise awareness
about opportunities in the energy skilled crafts and develop concrete
solutions to the energy skilled craft workforce challenges in the
region. This Summit was the first step in an ongoing process that has
lead to the establishment or enhancement of numerous state-based
consortia that are working to implement innovative workforce
development solutions locally. The industry, in partnership with the
Department of Labor, is also investigating replication of this summit
in other regions of the country.
Recommendations:--Taken together, these programs represent an
enormous investment of time and money in the future workforce of the
industry, but more is needed to develop the technical and skilled
crafts workforce that our Nation will need to deploy additional
generating capacity, including nuclear. Specifically, we must:
raise awareness of the impending skilled craft labor
shortage and its impact on the energy sector
elevate the image, status and prestige of skilled craft
careers in the energy sector
attract, recruit and train workers, particularly from
untapped and under-represented labor pools
align investments and workforce development initiatives to
ensure collaboration and coordination of government, industry
and labor efforts in the develop the energy skilled trades
workforce
build partnerships between industry, government, organized
labor and the education community that promote talent and
economic development
implement performance-based education and training programs
for skilled craft workers through vocational and technical
education programs in secondary and post-secondary educational
environments (including high schools, pre-apprentice,
apprentiship, and community college programs).
Some have argued that wages for skilled crafts have had a negative
effect on attracting new workers into the industry. The Nuclear Energy
Institute and the American nuclear industry have a long, mutually
beneficial relationship with our workers and with the unions associated
with the nuclear industry sector. Our members believe that prevailing
wages have a stabilizing effect in the nuclear construction industry by
promoting good labor relations, encouraging workforce training and
supporting skilled worker retention. On behalf of our members, the
Nuclear Energy Institute supports prevailing wages for this skilled
workforce and agrees with the inclusion of the prevailing wage
provision for new nuclear projects covered by Title XVII loan
guarantees.
Mr. Chairman, in conclusion, I encourage you and this Committee to
continue your legacy of leadership on workforce and competitiveness
issues. Through greater national attention and the coordinated efforts
of federal and state government, industry, organized labor and the
educational community, we can and will build our future energy
workforce. Successfully addressing this challenge will enhance our
national competitiveness and train tens of thousands of workers for the
kinds of high-skill, high-wage jobs that built this Nation.
The Chairman. Thank you very much.
Mr. Hunter, you're the clean-up hitter here, so go right
ahead.
PREPARED STATEMENT OF JAMES L. HUNTER, DIRECTOR, INTERNATIONAL
BROTHERHOOD OF ELECTRICAL WORKERS
Mr. Hunter. All right. Thank you very much.
Good morning, Mr. Chairman and members of the committee. My
name is James Hunter, I'm the Director of the International
Brotherhood of Electrical Workers utility department. I've been
asked by our President, Ed Hill, to speak today on behalf of
the IBEW, and I want to thank you for holding this hearing,
it's very, very important.
The IBEW represents 720,000, more than 220,000 of them in
the utility industry. The IBEW provides a view of the utilities
from inside, that we think is unique.
We see the workforce shortages from a very different
perspective. The 1990s move toward deregulation caused the
utilities to slow down hiring, offer early retirements to
reduce staff, and a radical curtailment in new infrastructure.
The IBEW believes we are facing a critical manpower
shortage in the utility industry today, and it is getting worse
day by day.
Our information shows that average age of a lineman in the
industry is over 51 years old. A line worker must be highly
skilled and trained to perform their physically and mentally
challenging job. It's a job that requires extensive safety
training and on-the-job training.
It takes over 10 years of experience to become a lead
lineman. A study from Carnegie Mellon which charts up there,
shows employment levels in the industry peaked about 1990 at
550,000. It's declined steadily to today's numbers of about
400,000.
The interesting point here is that the total generation
increased during that same time by about 30 percent, while
employment levels dropped by 23.7. On face value, it would
sound like we're doing more with less. But, the truth is, the
companies have achieved these levels by working enormous
amounts of overtime, and reducing maintenance and construction.
The next generation of utility workers must be hired and
trained today.
The situation is also dire in the generation sector. We've
heard NEI has done a couple of studies showing that over 35
percent of the plant workers will be eligible to retire within
5 years.
The IBEW knows it takes 4 to 5 years to train just to the
journeyman level. Proof again that we need to hire today, to
replace the workers that are leaving in 5 years.
NEI's data also shows that 76 percent of all of the craft
workers in the nuclear plants are over 43 years old.
Jeff Sterba, the Chairman and President and CEO of
Albuquerque-based PNM Resources, recently spoke to a group of
IBEW leaders and said that his company faces the grim reality
that within 5 years, 50 percent of his workforce will be
eligible to retire. He said, though, that that really doesn't
both him. What bothered him was that within 10 years, 85
percent of his workforce will be eligible for retirement.
You can see from the other chart, our industry is
different. We have a huge bubble of retirees coming up. The
IBEW has been working with employers to attract people into the
industry, and train then. We've started some regional training
centers, a concept, it looks to partner with the utilities to
help train the new generation of workers.
We see community colleges and resources as a good resource
but not training centers in the practical sense. Many of our
job require hands-on training that can not be taught in the
classroom. IBEW President Hill has said many times that kids
need to be taught how to work.
We understand that being taught by experienced craftsman is
by far the best way to convey skills. The utilities must start
to do some workforce assessments, and implement plans to hire
and retain the future workers in our industry. The IBEW is
working with the Center for Workforce Development, CWD, which
is a partnership of all facets of the utility industry. CWD has
just released a comprehensive study of the energy workforce,
that I think is very revealing.
The IBEW is also at the forefront of anticipating staffing
needs on construction projects. The key to working with
employers long before projects start. We need to have a--we
have a program that forecasts construction projects over the
next few years, to determine how many construction workers will
be needed, in any given area of the country. We then work with
employers to ensure that we have enough trained and qualified
workers available.
The committee has also questioned the use of foreign
workers. The IBEW believes that the worker shortage we're
seeing in the United States is an issue that can be addressed
by retraining, and including unemployed workers displaced by
outsourcing, and shipping jobs overseas. Therefore, training
workers domestically now to meet the coming demand, is where
the industry and Congress should e focusing.
If America is serious about reducing carbon emissions, we
will need to build thousands of wind turbines and solar rays,
along with new nuclear plants. A transition to carbon-free
generation will require different skill sets and training.
While the IBEW is working with companies such as Sharp and
others, to develop training classes, we know that the need for
new skills are enormous.
Funding assistance is needed to implement and operate the
necessary training programs, and it's important for Congress to
work closely with labor and industry to attract, train and
retain the workers in the energy industry.
Thank you very much.
[The prepared statement of Mr. Hunter follows:]
Prepared Statement of James L. Hunter, Director, International
Brotherhood of Electrical Workers
critical energy workforce shortage
Good morning Mr. Chairman and Members of the Committee: My name is
James Hunter and I am the Director of the International Brotherhood of
Electrical Workers (IBEW) Utility Department. I have been asked by our
President, Ed Hill to speak to you today on behalf of the IBEW. Thank
you for inviting us to comment this morning.
Of the 95 percent of investor-owned electric utilities that employ
union members, the IBEW represents 98 percent of those workers. We also
represent the largest number of unionized employees working for
municipal and rural cooperative employers; the IBEW also represents
workers at federal electricity facilities, such as the Tennessee Valley
Authority (TVA) and Bonneville Power Administration (BPA). Of the
720,000 members of the IBEW, more than 220,000 of them are utility
workers, who are covered by some 1,400 collective bargaining agreements
in the United States and Canada.
situation
The IBEW provides a view of the utilities from the inside that we
feel is unique. We see the workforce shortages from a very different
perspective the demand for trained skilled workers is rapidly expanding
in the utility sector. The 1990s move toward deregulation caused the
utilities to slow down hiring, offer early retirements to reduce staff,
and a radical curtailment in new infrastructure. The IBEW believes we
are facing a critical manpower shortage in the utility industry today,
and that it is getting worse day by day. Our information shows that the
average age of a lineman in the industry is over 51 years old. A Line
worker must be highly skilled and trained to perform their physically
and mentally challenging job. It is a job that requires extensive
safety and on the job training. It takes over 10 years of experience to
become a lead lineman. A study from Carnegie Mellon in 2005 showed that
employment levels in the industry peaked in 1990 at about 550,000
employees, and has declined steadily to today's numbers of about
400,000. The interesting point here is that total generation increased
30 percent while at the same time employment levels dropped by 23.7
percent. On face value it sounds like we are doing more with less. But,
the truth is the companies have achieved these levels by working
enormous amounts of overtime and reducing maintenance and construction.
The next generation of utility workers must be hired and trained soon.
Workers will be needed to replace those who will be leaving the
workforce and to bolster the additional numbers needed to repair,
maintain, and build the new energy infrastructure needed for our
future.
The situation is also dire in the generation sector. The Nuclear
Energy Institute (NEI) completed a study showing over 35 percent of
their plant workers will be eligible to retire within five years. The
IBEW knows that it takes four to five years to train to the journeyman
level in most utility jobs. Proof again that we need to hire today to
replace the workers leaving in five years. NEI's data shows that 76
percent of craft workers are 43 years old or older.
Jeff E. Sterba, chairman, president and CEO of Albuquerque-based
PNM Resources recently spoke to a group of IBEW leaders and said that
his company faces the grim reality that within five years 50 percent of
his workforce would be eligible to retire, and that 85 percent will be
eligible within 10 years.
suggested solutions
The IBEW has been at the forefront of the employment issue for
years. We are working with employers to attract people into our
industry, and to train them. We have started a regional training center
concept that looks to partner with the utilities to train a new
generation of workers. We see community colleges and universities as a
good resource, but not training centers in the practical sense. Many of
our jobs require hands on training that cannot be taught in the
classroom. IBEW President Hill has said many times that kids need to be
taught how to work. We understand that being taught by experienced
craftsmen is by far the best way to convey skills.
The utilities must start to do workforce assessments and implement
plans to hire and retain the future workers in our industry. The IBEW
is working with the Center for Workforce Development (CEWD). CEWD is a
partnership between all facets of the utility industry; electric, gas,
investor owned, co-ops, public power and labor. CEWD has just released
a comprehensive study of the energy workforce that you can obtain from
their web site www.cewd.org We believe that working together with our
employers and the federal government we can be successful.
The IBEW is also at the forefront of anticipating staffing needs on
construction projects. The key is working with employers long before
the projects start. We have a new program that forecasts construction
projects over the next few years to determine how many construction
workers will be needed in any given area of the country. We then work
with employers to assure we have enough trained and qualified workers
available.
The committee has questioned the use of foreign workers. The IBEW
believes that the worker shortage we are seeing in the United States is
an issue that can be addressed by retraining and including unemployed
or underemployed workers displaced by outsourcing and shipping jobs
overseas. Therefore, training workers domestically, now, to meet the
coming demand is where the industry and Congress should be focusing.
The IBEW is diligently and actively recruiting new workers with job
fairs, DVDs, websites like ElectrifyingCareers.com, and even the
sponsorship of a race car in its attempt to get a few moments in front
of America's youth. Recruitment sites like ElectrifyingCareers.com give
broad descriptions of dozens of positions available within the industry
and provide easy steps to get more information. The site even tailors
its information to the specific needs of students, parents, counselors,
and people interested in making a mid-life career change to the skilled
trades. Additionally, a website founded and supported by the Building
and Construction Trades Department of the AFL-CIO called
HelmetsToHardhats.com is specifically designed to recruit people
leaving the military, a group that is known for their responsible work
ethic and a ``team'' mentality that leads to success in the
construction industry. These online outreach programs are often the
first step toward attracting employees to the electrical industry,
because they provide information necessary to make smart decisions
about their future.
If America is serious about reducing carbon emissions we will need
to build thousands of wind turbines, and solar arrays along with new
nuclear plants. A transition to carbon-free generation will require
different skill sets and training. While the IBEW is working with
companies such as Sharp and others to develop training classes, we know
that the need for new skills will be enormous. Funding assistance is
needed to implement and operate the necessary training programs. It is
important for Congress to work closely with labor and industry to
attract, train, and retain workers in the energy industry.
The Chairman. Thank you very much for your testimony.
Let me ask a question of Mr. Szydlowski, first. You have a
suggestion here in your testimony that we provide IRS relief on
phased retirement initiatives. You say we need the help of
these older workers in preparing the new workers--we can't ask
them, the older workers, to jeopardize their pension benefits,
nor their tax-qualified status or pension plan.
Could you be a little more specific about what you're
recommending we do? Do you have people who are approaching
retirement age, and who want to start drawing retirement while
they're still on the company payroll, is that the idea?
Mr. Szydlowski. Yes, Senator, it's an opportunity to--I
think you may have mentioned this earlier in some of your
comments for older workers to not work full-time, but at the
same time, have some access to their retirement benefits.
Today there's a change with the Pension Protection Act,
which comes into force on January 1, 2008, and I think the
final regulations, I think will be out this week, but I
understand that the retirement age is set at 62. If the
retirement age, for example, was set at 55, that would allow an
opportunity for workers in that range--55 to 62--to work at
some amount of time in these roles where they may not want to
work full-time, but at the same time, they could help an
organization like ours--Colonial Pipeline--do training, keep up
with ongoing work, but not risk their pension, lump sum.
To try and explain that just a bit more, the challenge and
a lot of anxiety in companies like ours where 55 is a special
age, because people are allowed to retire, there's concern
about the value of their lump sum benefit. The new Pension
Protection Act changes the discount rate--changed it from
Treasury's to investment rate bonds. That will be an overall,
somewhat a reduction, it looks, in terms of what the lump sum
will be worth, and there's anxiety.
There's anxiety that I'm not quite sure what my benefit
will be in the future, so it's an incentive to me to retire
now, take my benefit, and most of these people, Senator, go
back to work. They can't come back to work, in our case, for
Colonial, they may go work for a competitor, they may go work
for a contractor. They're still eager to contribute, they're
not ready to retire. But there's an odd--I would call it a
disincentive in our retirement system today, which is
encouraging them to leave early.
The Chairman. Thank you for explaining that, and I'll try
to look into that and understand it better. If you have
anything written up on that issue, I'd be anxious to get it.
Mr. Szydlowski. Yes, I do, I'd be glad to send it.
The Chairman. OK, thank you very much.
Senator Domenici.
Senator Domenici. I just wanted to follow-up, because you
said a couple of things that I was surprised at. To whom does
the 55 year retirement apply? All of the workers in the company
you're talking about?
Mr. Szydlowski. In our company, Senator Domenici. We have--
as many companies in our industry have--55 has been set as the
eligibility date for a person to retire, the soonest date that
they can draw on their retirement benefits. So, it's our--that
55 is our date. It's frequently used, at least in our industry.
Senator Domenici. Now, what industry is yours, which part
of it?
Mr. Szydlowski. This would be petroleum and oil and gas.
Senator Domenici. Don't you think that is kind of early?
[Laughter.]
Senator Domenici. Considering the problems we're having? I
mean, it seems to me we ought to be thinking about some way to
let them work longer, and not jeopardize their pension, is that
what you're talking about?
Mr. Szydlowski. Absolutely, I couldn't agree more. I think
that's the purpose for bringing this subject up. Because, these
are folks that are at a time when I think they're very, very
productive, we see them as a wonderful asset and resource, and
we don't want them to leave. We'd rather have them--their
highest and best use is to stay with the company they're with.
Senator Domenici. Senator Bingaman's on the committee that
looks at that, so I assume he will look at that, you raise a
very good issue.
Could I ask you, Mr. Hunter, I'm very concerned about,
well, I'm old enough to have lived through Lyndon Johnson's
programs--what did he call his ideas? The Great Society? One of
the efforts was to establish training centers all over the
country, because it was thought that the schools, the regular
schools, weren't properly training people for jobs--you go
through high school, you weren't trained for a job, you go
through community college, you weren't--and then we went
overboard, we had three or four different agencies setting up
job training centers. So, when I was mayor of Albuquerque,
there were at least four that were funded and were out there
trying to train people, and they didn't know what the hell they
were training them for.
So, one time they reported in, they were training women to
be hairdressers? I said, ``That's fine, how many are you
training?'' I know the little town they were training them for
couldn't use more than 6, 7. They said, ``We've got at least 50
that we're training for Espanola,'' and I said, ``You expect
them to work for hire? Fifty of these hairdressers?'' They
said, ``We don't know, but the ladies like it.''
Do you envision or see something that we ought to be doing,
by way of the Federal Government getting involved in the
establishment of training centers, or paying for half of the
cost or in some way being involved. I've been dreaming about
this, and I'm befuddled but yet as to what the Federal role
might be. Know the labor unions are involved, and should be
involved, because most workers at a nuclear power plant are
unionized, and we ought to see what the union has to do about
training them.
Are you the lead union, in terms of training in these
fields? Or would we need to get more information as to what
programs you all have, and the unions have?
Mr. Hunter. Traditionally the IBEW, we're obviously, by far
the largest in the electrical sector, and we have always
trained electricians, we've had our own apprenticeship programs
and trained internally.
We've never really been involved in the utility side,
because utilities always hired the employees and they trained
them themselves.
Senator Domenici. I see.
Mr. Hunter. Now, we're starting to see more and more of a
trend to try to use community colleges, Southern Company, for
instance, because of the grants in the State, are, you know,
kids can come right out of high school, get a grant, go into a
community college, and they've partnered up with the community
college, along with, you know, the IBEW folks that, you know,
we've got poles in the community colleges that the kids can
actually climb, they've got bucket trucks, they can see and
feel what is the job, even at that level.
That type of concept is what we're looking at to be able to
take, especially a six week class, a boot camp, and get the
kids out, show them what the industry is all about, what the
jobs are about. Because we've got a tremendous drop-out rate.
The kids go into the schools after the first couple days, it's
like, you know, ``No, this isn't what I want to do.'' So, we're
trying to look at how do we orient them to the job, see that
they are interested in the job, get them through drug tests and
entrance-level tests and all of those things with an
experienced person that can actually convey to them, what does,
what's it like working in a nuclear plant?
Senator Domenici. OK.
I don't want to take too much time, but I assume that we
have had testimony on, by previous witnesses looking at the
list, that talk about job training, and how that's done out
there? What did the Secretary of Labor say about the Federal
Government having--did she talk about programs that we already
have for training workers?
The Chairman. Dr.----
Senator Domenici. Secretary----
The Chairman. [continuing]. DeRocco. She spoke about a
variety of programs the Department of Labor has to train people
in skills that are relevant to the energy sector, and I think
the representative from the Department of Energy did, as well.
Mr. Szydlowski. Senator, I might add that they have focused
on the energy sector, and really have that they have focused on
the energy sector and really have directed funds and
assistance, if you will, on heightening the awareness of the
opportunities within the sector, plus creating a dialog within
the Southeast, particularly, with the Southern Governor's
Association, to heighten their interest in funding
opportunities for different programs. So, they've done a good
job of heightening the interest.
Senator Domenici. I've been thinking about whether there
was a role for the United States to establish something like an
Energy Worker Training Act, and then figure out what it would
do to help the States and the junior colleges, community
colleges, and the like, get involved in the kind of training we
need. I still think maybe there is a role, but we have to look
at that and see what we could do. We'll talk to the unions,
obviously.
Let me ask Dr. Stults, you know, I was really caught by
surprise recently when I asked about the wind turbines and wind
energy in the United States. You state about how much it was
growing, but the truth of the matter is, that there's a backup
there in orders where you have to wait a long time to get
turbines, right? Two years, I understand? So, even a simple
thing like buying the parts for a windmill, you have to wait
and most of it comes from other countries, right?
Mr. Stults. Correct.
Senator Domenici. It's imported.
Mr. Stults. Yes.
Senator Domenici. The thing that drives it all, and puts
these companies in business is this tax credit, right? That's
the principal thing that's driving wind energy. I would assume,
therefore, that you would recommend an extension of the credit,
would you not?
Mr. Stults. Certainly. Anything that we can do to stimulate
and for the----
Senator Domenici. Because, it runs out and you probably
need it for more than just 6 or 8 or 10 months, you need it for
a couple of more years, and maybe beyond that, right?
Mr. Stults. We'll need it for extensive time in order to
also establish the manufacturing capability and enhance that,
and so that we have advanced manufacturing capabilities to
overcome the labor cost difference between offshore and in the
United States.
Senator Domenici. Would a company like Southern, Mr.
Bowers, join with a local unit of government that was trying to
train people, and put Southern in it, so that they could train
for what you need?
Mr. Bowers. Yes, sir.
Senator Domenici. Is that kind of thing being done?
Mr. Bowers. Yes, sir, they are. We're joining in the State
of Alabama and Georgia with the local communities and high
schools, creating academies and training initiatives to try to
get people in this sector.
Senator Domenici. Now where does the money come from to do
the training? Is that grants that they get from the Federal
Government, or do you know?
Mr. Bowers. There is grants available for them from the
Federal Government, as well as State funds as well. We fund
some of that activity.
Senator Domenici. You fund some?
Mr. Bowers. Yes, sir.
Senator Domenici. How about you, Ms. Berrigan? You must be
out there checking to see what's available for nuclear and be
very worried that we don't have enough trained people. Is that
a fair statement?
Ms. Berrigan. I think that we're paying attention to what
the numbers look like and tracking the issue closely. We're
also working to share best practices directly with our members,
as well as through the Center for Energy Workforce Development
on effective means to develop the workforce programs that are
necessary to train the workers. So it's definitely an issue
that we're paying very close attention to and we're expending a
lot of resources on.
Senator Domenici. If you're looking out there--this is my
last question, Mr. Chairman--if you're looking at all this,
could you tell us what is the principal way that business is
now training for these skilled jobs. What's taking place out in
the marketplace? Do you all know?
Ms. Berrigan. There are a number of different approaches
that people are taking toward developing a workforce for these
skilled jobs. They include programs like--the program that's
run through the Central Virginia Community College system, that
starts in the high school, continues with the Community College
program. Then it's something that we like to call a two-plus-
two effort, where after they get an associates degree, it's
articulated so they can go on for a bachelors degree and
beyond. That's one model of a regional-based initiative. Others
are focused on more coordination on a--on a wider scale, using
both union apprenticeship, training centers, as well as
community colleges and their local university systems.
Senator Domenici. One last question of anybody that knows
enough about it to tell me. What is the Center for Workforce
Development and who pays for it and what does it do?
Mr. Bowers. The Center for Energy Workforce Development is
a consortium of groups. The EEI, the Edison Electrical
Institute, AGA, the NRAECA, the National Rural Electric
Cooperatives, IBEW, other unions are joint together to heighten
the issue and awareness around workforce shortage and workforce
training. That group was formed approximately 2 years ago and I
was the initial chairman of that group.
Senator Domenici. Great.
Ms. Berrigan. If I can add. That group is--NEI is also a
partner in that group. I serve as the Vice President of the
Center and it's funded by utility contributions as well as
contribution from the participating associations.
Senator Domenici. Does it work?
Ms. Berrigan. Seems to be working pretty well so far.
Senator Domenici. What do you think, Mr. Bowers?
Mr. Bowers. It's created a momentum and awareness within
the industry as a whole. I think it has gained a lot of status
within the sectors to create an opportunity for us to go
forward.
Senator Domenici. So are you telling young people what
you've got? Is that what it is? What kind of jobs they might
expect and----
Mr. Bowers. There are Web sites where it highlights the
opportunities for careers in the energy sector, absolutely.
Ms. Berrigan. There's also a branding campaign that CEWD
has launched just, I guess it was about 2 weeks ago at their
annual summit, to educate young people about career
opportunities in many of the key areas important to the utility
sector.
Senator Domenici. Positively my last question. What's the
pay scale? If you're telling some teenagers or young adults
that they don't have good jobs, and you're saying, ``You ought
to get trained for the utility industry somewhere out there
because they're better jobs.'' What are they? How much does an
ironworker job on a nuclear power plant make if it's unionized
and they're hired to do the principal work on a plant?
Mr. Hunter. I can tell you from the utilities sector, which
I came from PEPCO here in the Washington area. I would say that
our average lineman across the country is making well over
$100,000. Power plant operators--and again, now that's with a
lot, a substantial amount of overtime. So, spending a lot of
hours on the job.
Senator Domenici. Experience.
Mr. Hunter. Yes. But $100,000 plus is very reasonable.
Mr. Bowers. Senator Domenici, the wage rates are, for
electricians, $25 to $30 an hour, pipe fitters are in the $35
to $38 an hour range. You get per diems, that could push that
up to almost $45 to $50.
Senator Domenici. So, that's the kind of information you
can throw out there to people that are looking at it, if you
have a way of getting it to them.
Mr. Bowers. Absolutely.
Senator Domenici. If you're working at a job paying minimum
wage plus $2, think of us. We pay four times as much or
whatever it is. Right?
Mr. Hunter. I think the CEWD Web site, if you get into it,
it's really neat. It sends the kids--and it's, we're in
cooperation with Google, and the kids are, if they're looking
for a job, just playing on the Web site. They'll get into the
Web site. It's takes them in, it asks them a bunch of
questions. Do you enjoy working outdoors, working with your
hands, computers, whatever. Then after that, it will steer them
and start telling then about different jobs in the utility
industry. It will have streaming video where you'll have an
overhead lineman standing there telling what his job is and
that. It does have pays, you know, approximate pay scales and
that. Then it will also, if you want to continue on down the
road, it will actually send you to locations of the country
where you can Google earth and I'm, you know, living in
Atlanta, Georgia. I'm interested in a job here. Here's all the
companies in that area that are hiring, both electric and gas.
Senator Domenici. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Senator Murkowski, you're our final questioner.
Let me just indicate that any Senator who has additional
questions would be asked to submit those by the close of
business tomorrow.
I'm going to have to duck out and make a phone call, so why
don't you conclude the hearing, Senator Murkowski.
Senator Murkowski [presiding]: Thank you, Mr. Chairman.
The Chairman. I thank all witnesses.
Senator Murkowski. My questions will be brief. You have
been very patient with all of us, but your information has been
very helpful. I think as Senator Domenici has pointed out,
there's great stuff out there that just needs to get to the
right place.
Mr. Bowers, you mentioned the term stigma. We've got to
change the attitude. In so many of the trades, the attitude is
``you can do better than me.'' We've got to be working with the
folks that are working at Colonial and Southern Electric and
within IBEW, those folks that have young children or teenagers
or those that are preparing to go into the marketplace. We
don't need them saying ``you can do better than me.''
You know, this has been the American Dream, you want to do
better than your parents. But by saying that, in a way you're
denigrating the fact that you've been a linesman and you had a
good and a honorable respectable profession, and did well by
your family. We need to make sure that in our actions, our
statements, our cartoons, plumbers aren't looked at very
favorably in many of the cartoons. How did that ever come
about? I don't know why. But gosh, what is a plumber making
nowadays?
I digress, but I think this is an issue that we've got to
focus on. In the State of Alaska, our estimates are that about
70 percent of the kids that are graduating from Alaskan high
schools are choosing not to go on to college. Recognizing that
as a reality, are we preparing them to take on the career
opportunities that really are available through the technical
and the skilled occupation. We need to be doing a better job
with them.
I serve on the HELP Committee, as does Senator Bingaman.
This panel would be great to have in front of the Health,
Education, Labor Pensions Committee, as we talk about
reauthorization of No Child Left Behind. A focus from the
Administration on some very core academic areas, so that we can
get you all moving toward college.
That's great, but what happens if you're a kid that isn't
destined for college, for whatever reason? We've got to have
the guys that are keeping the lights on and keeping the
temperatures cool and comfortable so that all these brainiacs
can do what they need to do from the policy perspective.
I'm really singing to the choir here, but I wanted to ask
generally, to any of you who may wish to respond. From an
education policy perspective in this Nation, with our focus
towards standards, are we doing enough to prepare young people
to go into the fields that you need them in? Or when they come
to you, whether it's for training through the IBEW, do you have
to prep them for the training that they will then encounter?
Mr. Hunter, you're nodding.
Mr. Hunter. Absolutely. You know, we have probably about 40
percent of the people, there's a caste test that EEI has as an
entrance level, which is really basic math, basic reading,
fundamental skills. We have over 40 percent of the kids that
take it fail. So that becomes a part of what we have to do
early on, is----
Senator Murkowski. So you do remedial within your training
programs, then?
Mr. Hunter. Yes, we have to, or you can't get them passed
through the caste test.
Senator Murkowski. What about you, Mr. Bowers, in the
academy that you all have put together there through Southern?
Mr. Bowers. That is a vehicle from a voc-tech skills
training platform where most of the schools have really stopped
providing that as a curriculum. Focused on getting the credits
for graduation that leads to higher education, i.e. college. I
think we've got to get back to the basic fundamentals, that
it's OK to have vocational training and you get credit for
graduation and we also supplement, with our workforce, going
into those classrooms and trying to train our young folks about
the opportunities and get them upgraded in their skills.
Because fundamentally, like Mr. Hunter said, they are
failing the simple math and reading and just mechanical
concepts. They don't have a clue about what it takes to be
productive in this United States, especially in the energy
sector.
Senator Murkowski. Yet, if you could get a curriculum that
has some relevance to them, they see where the math skills
could be taking them to a good, high-paying job, whether it's
in the nuclear industry or working pipelines. That gives them
the incentive to not only stay in, but to focus on the academic
curriculum that they need.
I'm a little concerned that with this needs assessment of
the workforce shortage that we're not really projecting out
adequately, because we don't really know what we're going to
anticipate, whether it's in nuclear or wind or solar or
geothermal. That what we are hearing today about the very
dismal forecast is going to play out and be even worse than we
think it might be. Do you think I'm right or am I being
pessimistic this morning?
Mr. Szydlowski. If I might take a try at this, Senator. No,
I think you're quite right, although I have to say this is a
good problem to have. This idea of growth and trying to find
our way to expand and do more and provide more, I think is a
good problem. As opposed to trying to contract and other. But I
think we have a--I think we have a pretty good idea of the
kinds of needs, the kinds of skilled craft, the kinds of
welders and so on, those skill trades that are necessary.
I want to comment on your thought on the stigma. Because I
think there's something that everybody can do and it doesn't
take a Federal program, necessarily, to do it. But if you look
around this room, I would say everybody here is probably guilty
of sort of a stigma of a college-educated person versus someone
that's in a voc-tech. I am. I have a son who's 21-years old.
The last four or 5 years, I'm sure he convinced he's been a lot
wiser than I am.
But Andy was smart about one thing. He got accepted in good
schools, he went, he did it, one semester he did terribly,
didn't like it. Today, he works two jobs. He goes to Cincinnati
State, which is a community college, to be an automotive
mechanic. He's never made less than an A in any of his courses
and I couldn't be more proud of him.
Senator Murkowski. That's great. That's great.
Senator Domenici. He's got a good job.
Senator Murkowski. Yes.
Mr. Szydlowski. He will have a good job.
Senator Murkowski. Yes.
I thank you all. You're right, it could be worse. We could
be faced with a different situation where we didn't have the
great resource that we have with our young people, and just
need to help focus them in the right direction.
Thank you all.
Senator Domenici. One final observation. It's not like all
these things I've seen and heard about lead me to what we ought
to do. I think it's a very complicated subject because I think
it's even a high school issue and it's very hard to get high
schools to conceive of the idea that they ought to go forward
with some vocational education. That's perceived to be
backward, right? That's not forward. But it's forward right now
for 30 or 40 percent of the kids, because if they get this,
they might work in their life. If they don't get it, they might
not, you know. That's 30 or 40 percent.
I was in an elevator in Albuquerque at a big Intel plant.
In walked four people, all dressed in the suit that they wear
to go into the clean room, C-L-E-A-N, clean room. They all
looked about 35, about 34, something like that. I introduced
myself and I turned around and started talking to each one and
they were training to go to work for Intel at, a program that
they each would start at $42,000, $38,000 or $42,000. I said,
``That's interesting''--to this one--``what did you do before
you applied for this job?'' He said, ``I got a Bachelor of Arts
from Michigan.'' ``University of Michigan?'' ``Yes.'' ``Oh.
You're doing this?'' ``Yes, best job I can find and much better
than anything I can find with the degree that I got.'' Everyone
was degreed and none could find a better job than training for
a high-level job with Intel and work in clean rooms and the
like.
You know, very interesting, they aren't mad at anybody, but
someone like me does wonder, are we misleading those people,
especially when the next 10 years we don't have to mislead them
about what they could do because we know. They could get
terrific jobs. You just told us what they get paid. Especially
if they start young and by the time they're 30 they're already
very experienced, that they make very good money if they work
on a nuclear power plant, right?
Mr. Bowers. Absolutely.
Senator Domenici. They're in the union, they get all the
benefits, and they go to the next job. I think we're going to
have to realize that we either talk our kids into it with
programs that are meaningful or we're going to have to find
somebody else to do the jobs. I know we don't want to do that.
I know you don't. But, you know, it might be that that's what
immigration does for this country, if we get that off, you
know, far enough down in the direction of not having anybody
that wants these kind of jobs.
I thank you for yielding.
Senator Murkowski. Thank you.
With that, we're adjourned.
[Whereupon, at 12:10 p.m., the hearing was adjourned.]
APPENDIXES
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Appendix I
Responses to Additional Questions
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Responses of W. Paul Bowers to Questions From Senator Bingaman
Question 1. You note on page 3 of your testimony that the demand
for skilled workers in the Southeast was 120,000--20,000 short for 2007
and that the demand is expected to grow to 170,000 by 2011. How serious
are weather and other disruptive events like Katrina on the
availability of skilled workers and how long does the disruption
typically last?
Answer. Southern Company must continually monitor weather and
weather-related events in order to prepare for and respond to any
disruption caused to the planned operation of the electrical system. Be
it through high temperatures and their impact on load; continuing
drought and its impact on hydroelectric and other generating resources;
or severe storms and tornados and their impact on generation and
transmission facilities, weather impacts can require the redirection of
resources and skilled craft personnel to address and resolve sudden
problems caused by the weather.
Catastrophic events such as Hurricane Katrina only magnify the
disruption caused to the electrical system, and as might be expected,
deplete the available skilled craft workforce required for generation
activities such as maintenance, new generation resource construction or
environmental retrofit construction. Initially, such workers are called
upon for emergency restoration and clean-up efforts. Over time, those
efforts are replaced by the need for the restoration of infrastructure,
as well as the reconstruction of commercial and residential facilities.
Although Southern Company's labor market analyses do not track the
demand for skilled craft labor associated with Katrina recovery and
restoration, Southern Company expects the labor market to experience
increased competition from Katrina-related projects for years to come.
However, it should be emphasized that the shortfalls described in my
testimony are baseline figures (regional generation construction
projects and other major industrial plant activities) that do not
factor in projected workforce commitments that would be required in the
aftermath of another catastrophe like Katrina.
Question 2. You note on page 5 of your testimony that only around
40% of applicants could pass entrance for employment at Southern--are
these for skilled labor positions? Can you please explain what these
tests typically consist of?
Answer. Southern Company utilizes two different employment tests as
part of its consideration of potential new skilled labor hires: the
CAST (Construction and Skilled Trades Selection System) aptitude test
for Transmission and Distribution candidates; and the POSS-C/MASS
(Plant Operator Selection System/Power Plant Maintenance Selection
System) test, which includes an aptitude test as well as a background
and experience questionnaire for Generation candidates. These tests
were developed specifically for the electric utility industry by
investor-owned electrical utilities (including Southern Company) in
conjunction with the Edison Electric Institute, and have been utilized
effectively throughout the industry for the past 20 years.
CAST is a cognitive ability test that measures specific candidate
faculties that are predictive of job performance for Distribution and
Transmission positions in the electric utility industry, including
graphic arithmetic, mathematical usage, mechanical concepts and reading
for comprehension. The CAST test contains a total of 110 questions and
takes approximately 2.5 hours to administer.
POSS-C/MASS is a combined test battery that measures both cognitive
faculties as well as background and experience that are predictive of
job performance for Plant Operations and Maintenance positions in the
electric utility industry, including math usage (short and long),
assembly, mechanical concepts, tables & graphs, reading comprehension,
and background and opinion questionnaire (total of 402 questions). The
POSS-C/MASS test contains a total of 402 questions and takes
approximately 3.5 hours to administer.
Candidates are not expected to complete each question in each test,
and candidates are not penalized for unanswered questions. Each test
component is weighted in such a way as to maximize the prediction of
job performance. The scores on each component are combined to achieve a
raw score. This means that strong performance in one test component can
compensate for weaker performance on another test component. Candidate
scores are compared to the cutoff score established by Southern Company
to determine those who are recommended for further consideration.
It is worth adding that applicants who have completed specialized
training programs, such as the academies in Florida affiliated with
Gulf Power Company, have a significantly higher passage rate of the
entrance tests than applicants without such instruction. In the case of
Southern Company's Gulf Power Academy graduates, passage rates approach
100 percent.
Question 3. On page 6 of your testimony you note that high paying
skilled craft work is seen as undesirable as a profession--what would
recommend to alter that image?
Answer. Altering the image of skilled craft work as undesirable
will require concerted efforts of industry, educators and governmental
leaders toward changing that perception as it exists among those
entering the general workforce. One way to change that perception is to
increase awareness and understanding of what skilled craft work entails
and what levels of compensation are commensurate with the work.
Specifically, and as I noted in my testimony, many individuals do not
recognize the fact that skilled craft work can be high paying, often in
excess of state averages, with competitive benefit packages. A national
advertising campaign may be one way to tackle this issue. Ideas
circulating about the industry for which federal assistance would of
significant value include a ``Get Into Energy'' campaign, as well as an
umbrella campaign titled ``We Build America'' that encompasses a number
of industries into a larger group of potential skilled labor careers.
Another approach is to ensure that such career options are
integrated into the career awareness processes employed at the middle
and secondary school levels and presented as a viable career option to
students. Students often choose a course of study as early as the
eighth grade that can determine whether or not they will have the
academic and technical skills required by our careers. Unless students
and their parents are fully informed about the avenues available within
the energy industry, candidates who might consider learning the
technical skills that would be useful for such a career could be
missed. To accomplish this objective, funding assistance for the
placement of career counselors at middle and secondary schools, as well
as community colleges, would be of great assistance.
Southern Company also has sought to alter the negative opinion of
utility industry careers through its creation of, and involvement in,
technical programs for secondary students. With the support of
educators, the success of efforts can only grow. However, as I
explained in my testimony, many schools have begun to phase out, or
already have phased out, technical programs, in order to comply with
certain federal and state educational standards that do not accommodate
a technical education curriculum. Thus, federal and state policymakers
need to work with educators and with those in industry to develop and
implement workable solutions that allow students to pursue technical
studies and reward those students who do so and excel. The Career and
Professional Education Act in Florida is one such example.
There is also concern that society as a whole has devalued the
importance of a strong work ethic, particularly associated with the
labor requirements expected from skilled craft positions. Changing
perceptions in this respect is a more difficult task, given the
complexity and magnitude of the issue. Nonetheless, Southern Company is
involved in several organizations, such as the Center for Energy
Workforce Development (CEWD) and Construction Users Roundtable (CURT),
which are exploring ideas associated with a national marketing campaign
to promote energy industry careers. As with efforts in the educational
arena like those discussed above and in my testimony, assistance and
support from state and federal policymakers is an important component
to the future success of these and like efforts.
Question 4. There are skilled manufacturing jobs elsewhere in the
United States which are loosing employment, whether it is outsourced or
through declining sales, is it possible to retrain these skilled
workers for the utility industry?
Answer. As a general matter, individuals skilled in certain
manufacturing jobs can be very capable of transitioning into the
skilled craft positions needed to support the utility industry. In the
case of Southern Company, its internal staffing recruiters, service
providers, as well as organized labor supporting its plants make
efforts to reach out to individuals facing layoffs with manufacturing
facilities and alert them to the availability of skilled craft work in
the utility industry. Other industries are doing the same, however, as
evidenced by the relatively low unemployment statistics in the
Southeast. On this point, it is notable that employment statistics for
the month of October showed Alabama with an unemployment rate of 3.1
percent (compared to the national rate of 4.7 percent).
The extent to which these efforts can be expanded or improved in
part depends on the extent to which there are other individuals who
possess skills and experience that are directly transferable or who can
be retrained and the costs associated with such retraining. On that
front, assistance from federal and state authorities would greatly
facilitate the ability of those in industry to commit the time and
resources that would be needed to investigate the potential of
transitioning skilled manufacturing labor to the utility industry, and
then implementing any required retraining programs in order to bolster
the actual skilled craft workforce.
Question 5. On page 12 of your testimony you recommend flexible
teacher training programs where skilled energy crafts can teach in
schools--has anyone discussed this with the Department of Education?
Answer. Although Southern Company is currently working with
individual state education systems to address this issue, Southern
Company itself has not had any such discussions with representatives of
the Department of Education, and is not aware of the extent to which
discussions have been had with the Department by others in industry.
Southern Company welcomes the opportunity to do so, and would
appreciate any direction from this Committee as to whom we should
direct our inquiries.
Responses of W. Paul Bowers to Questions From Senator Domenici
Question 1. In your testimony, you provide an example of how
Southern Company optimizes its skilled labor through scheduling. Are
there other examples of how to optimize available labor?
Answer. In addition to scheduling, Southern Company endeavors to
optimize its skilled craft labor force through the meticulous planning
of maintenance and project development tasks. Southern Company also has
implemented leading industry practices in connection with its
construction and maintenance management processes. Another way Southern
Company has optimized its contracted skilled craft workforce is through
progressive labor agreements for its projects utilizing organized
labor, as well as the maintenance of a balanced labor posture, using
both union and non-union labor, for the plants it constructs, operates
and maintains.
Question 2. Are you aware of any regional disparities in future
energy workforce demand? More specifically, will these issues have a
more profound affect on the Southeast than in other areas of the
Nation?
Answer. As discussed in my testimony, the workforce shortages that
Southern Company foresees are being exacerbated by the confluence of an
aging workforce and increases in energy demand. These factors generally
are common across the Nation. However, energy production from electric,
gas and oil and alternative fuels in the Southeast region is expected
to increase at higher rates than many other areas. In addition, damage
from hurricanes striking the Southeast in 2004 and 2005 is estimated at
over $150 billion. Thus, a regional disparity with respect to
competition for skilled labor likely is being experienced in the
Southeast and is expected to continue for the foreseeable future. With
this increased competition, there also is some expectation that the
demand for skilled labor will impact the availability of such labor in
other areas of the country. For instance, regions of the country that
have relied in the past on skilled workers based in the Southeast to
serve their projects when need arises will encounter a limited pool of
workers who may tend to serve the existing (and increasing) projects at
home, rather than travel in order to obtain work.
______
Responses of Andra Cornelius to Questions From Senator Bingaman
Question 1. Your testimony on page 17 notes the creation of a
``Banner Center'' in renewable energy center at the University of
Central Florida--would you be able to explain this in a little more
detail?
Answer. Employ Florida Banner Centers, an initiative of Workforce
Florida, target industries that are critical to growing Florida's
diverse economy. They serve as clearinghouses for companies needing
training and create relevant and rigorous new curricula for training
entry-level workers as well as those who need to upgrade their skills.
Each Employ Florida Banner Center, most of which are based at Florida
community colleges or universities, has an advisory council made up of
industry leaders along with state and regional education, economic
development and workforce stakeholders. Banner Centers have the design
and aspiration to become go-to centers that serve as statewide
resources for just-in-time workforce training in key sectors. They
offer an innovative and strong foundation for building the pipeline for
better-skilled workers in Florida's high-value industries. The
initiative already is drawing national attention for its innovative
approach to leveraging partnerships to expand training opportunities.
The 10 existing centers and the two new programs that are about to get
under way (one of which is the Banner Center for Alternative Energy)
all engage educational institutions, businesses, and workforce and
economic development partners, among others, to provide a focal point
for industry-specific skills training.
The Banner Center for Alternative Energy was awarded competitively
in September 2007 to the University of Central Florida, Florida Solar
Energy Center, based in part on its mission--to research and develop
renewable energy, energy efficiency and alternative energy technologies
that enhance Florida's and the Nation's economy and environment.
Sunlight is a compelling solution to our need for clean, abundant
sources of energy in the future. Among this center's deliverables in
year one will be to focus on solar thermal (solar water heating) and
photovoltaic device installation and service technician training, in
partnership with other educational institutions statewide. The
technicians will be able to receive industry-recognized certification
from the North American Board of Certified Energy Practitioners. Given
that Florida will soon be the third largest state in the Nation, and
that about 53% of energy consumed in Florida is by its residents, solar
thermal and photovoltaic technologies offer two viable solutions
provided that more technicians are developed through targeted training.
Additionally, to spur solar energy uses, particularly among residents,
the Florida Legislature is becoming more active in the support of solar
related projects. In the 2006 session, the Legislature appropriated
$2.5 million for solar hot water and photovoltaic rebates. The 2007
Legislature continued the rebate program with funding set at $3.5
million. (To find out more about Employ Florida Banner Centers, go to
EmployFlorida.com.)
Question 2. How do you track the success of your program, do you
have established metrics?
Answer. The Florida Energy Workforce Consortium, just 18 months
old, is in process of articulating its benchmarks to track progress on
goals. We will focus on results rather than process in such areas as:
Increasing the number of rigorous new career academies at
the secondary level in construction and/or electrical
technology
Increasing the number of graduates from training programs in
critical occupations
Comparing the graduates scores on pre-employment tests
(e.g., Edison Electric Institute) to those of other applicants
and their retention rates
Increasing the number of industry-recognized certifications
awarded
Employer satisfaction of the graduates from the Employ
Florida Banner Center for Energy
Leveraging and tracking private and public sector funding
from energy companies targeted toward workforce development
Increasing the number of training graduates placed in energy
jobs
Question 3. Do your graduates tend to stay in Florida or do they
migrate to regions where there is greater demand?
Answer. Given the growth rates in Florida, our graduates tend to
stay in our state and very often stay in their region of training. One
of the early precepts of the Florida Energy Workforce Consortium is
that given the steady demand for talent in this industry sector, it
makes good business sense and offers a more lasting solution to grow
your own workers rather than to poach from each other from a limited
pool of workers. The ``growing your own'' workforce strategy often
enables a company to attract people with ties to the area who are
likely interested in maintaining their roots.
Question 4. The unions like IBEW have strong apprenticeship
programs, how does your program work with these union programs--are
they feeders for the skilled workforce such a utility lineman?
Answer. The IBEW is an important member of the Florida Energy
Workforce Consortium due to their historical role in developing talent
for critical occupations like line technicians. We are learning how to
further expand the apprenticeship model in Florida, in partnership with
our energy companies and educational institutions along side other
innovative talent development models. For example, in June 2002, the
Florida Legislature, through its Office of Program Policy Analysis and
Government Accountability, did an analysis of apprenticeship programs
in the state--both union and non-union--and found that the programs
were indeed beneficial, but were limited in meeting state demands. The
Florida Energy Workforce Consortium will be receiving an update from
the Office of Apprenticeship, Florida Department of Education, at its
December 2007 meeting, to learn about improvements in the program since
2002, funding levels and what we can do together to meet the state's
needs. The demand for workers in critical occupations is such that we
will need to do all we can, building on traditional models and
embracing new models, to generate sufficient worker supply.
Responses of Andra Cornelius to Questions From Senator Domenici
Question 1. It seems that workforce issues are best addressed at
the State and local level. What role do you envision for the Federal
government when addressing energy workforce issues beyond federal
funding to state programs?
Answer. Other than federal funding to state workforce training
initiatives for this industry sector, we offer the following
suggestions to increase improved performance and accountability:
1. Encouraging cross-agency workforce solutions (e.g.,
Departments of Labor and Energy) and co-mingling of funding
opportunities.
2. Streamlining requirements that allow and encourage
industry professionals to teach in career and technical
education settings.
3. Allowing the opportunity for academic credits to be given
for career and technical education to enable more students to
have time on their schedules to accommodate this track.
4. Mandating that career and technical education result in
industry-recognized credentials for graduates (similar to the
Florida Career and Professional Education Act) and for
participating educational institutions to receive increased
funding based on Career and Technical Education (CTE) student
hours.
5. Incentivizing performance accountability that focuses on
outcomes rather than process improvements.
6. Aligning and coordinating investments in energy workforce
training and education to reduce duplication and support best
practices
7. Funding and support for utility technology and energy
awareness in K-12 to include coal, nuclear and natural gas
8. Funding and support for energy career awareness in K-12
9. Funding support for pre-apprentice career and technical
education
Question 2. Are you aware of other programs in other states similar
to the Gulf Power Academy?
Answer. I am aware of no other programs in other states similar to
the Gulf Power Academy in structure, nor performance (outcomes).
However, one of the first career academy's in the United States was in
energy so there may be best practices elsewhere from which to learn.
Question 3. Is there any best-practice data available for state
programs such as Workforce Florida, Inc.? If not, would it be useful?
Answer. As the nonprofit, public-private organization charged with
setting policy and overseeing the state's workforce system, Workforce
Florida continues to lead through its commitment to accountability,
responsiveness and innovation. It does so by linking workforce,
economic development and education strategies through business-driven
initiatives and programs to ensure Florida's workforce has the skills
needed to support the state's enterprises and thus the economy.
Workforce Florida also promotes an environment in which Floridians have
the opportunity to upgrade their education and skills to obtain jobs
that lead to greater economic prosperity. This work is supported by key
workforce system partners--the Agency for Workforce Innovation (state
agency responsible for administrative and fiscal affairs), the 24
regional workforce boards (primarily responsible for service delivery)
and the nearly 100 one-stop centers (bricks-and-mortar gateway to
services and resources for most businesses and job seekers).
Here are some of the accomplishments in 2006-07:
More than 766,000 people were served through a one-stop
center, which offers a range of employment and training
services to individuals as well as businesses.
About 75,000 veterans, including 9,300 who had recently left
the military, and 1,500 family members of Florida veterans
received workforce services.
Workforce Florida's popular training grant programs
available to Florida businesses, Quick Response Training (QRT)
and Incumbent Worker Training (IWT), awarded $17.2 million in
grants to train nearly 30,000 workers. Businesses responded
with cash and in-kind matches projected at $263 million in
investments for improving their workers' skills.
Ten new Employ Florida Banner Centers were launched, mostly
at community colleges and universities, to increase the
availability and quality of cutting-edge training for new and
experienced workers in high-skills, high-wage sectors such as
biotechnology, energy, health sciences and aviation and
aerospace that help diversify the state economy--a top economic
development priority in Florida.
At the end of June 2007, Florida's unemployment rate of 3.5
percent was one percentage point lower than the national rate
of 4.5 percent, continuing the below-the-national-average trend
that started in mid-2002. Florida also had recorded 58
consecutive months of job growth, gaining about 113,700 more
jobs than a year ago. Industries gaining the most new jobs were
education and health services, leisure and hospitality and
professional and business services. Job losses were in
construction, manufacturing and information.
Workforce Florida's continued success at responding to the training
and employment needs of businesses and citizens is rooted in its
continuing efforts to foster collaboration not just throughout the
workforce system, but among partners in education, economic
development, industry and elsewhere. The responsiveness and flexibility
of this organization allows us to act and react quickly to workforce
needs, such as those expressed by the energy industry sector.
Question 4. In your testimony, you state that to build our energy
workforce, we ``need to convince young workers that the industry is a
desirable one to work for, [that] they must understand the industry
produces a commodity that is essential to society and to our quality of
living [and that they] must also be taught that those who work in the
industry are environmentally responsible and that the jobs are
stimulating and pay well.'' Are these factors identified because they
are current inhibitors to a stronger energy workforce?
Answer. The image of the energy industry is in need of improvement,
as stated by many company representatives in the Florida Energy
Workforce Consortium. For the first time, the energy industry has had
to promote itself in the job marketplace, due to a number of factors
including tight labor markets, an increasing number of retirees with
fewer workers to take their place, and a diminished focus on career and
technical education. The current image of jobs in the energy industry
is less than desirable--hot, dirty, repetitive and risky. This is
further exacerbated because many teachers and guidance counselors, who
are the existing source of career information, have limited, if any,
knowledge about the energy industry, the kind of jobs within it, the
career paths and earning potential, or how one enters a job and
advances in this sector. Students and guidance counselors are unaware
of the cutting edge technology and safety practices that are utilized
by utility employees to fulfill the critical role they play in
providing energy to their communities. For this reason, building career
awareness of the well-paying jobs in the sector is cited as one of the
top priorities of both the Florida Energy Workforce Consortium and the
Center for Energy Workforce Development. Additionally, the Consortium
and the Center are affirming the importance of career and technical
education in secondary education, particularly those educational
programs that convey industry-recognized credentials to program
graduates.
______
Responses of Emily Stover DeRocco to Questions From Senator Bingaman
Question 1. As you know the U.S. energy industry is large and
diverse. Does the Department of Labor have a good data base on the
extent of the workforce problem facing our Nation from which to develop
training programs at both the skilled labor and professional levels?
Answer. I am pleased to report that the Department's Employment and
Training Administration (ETA) is fully engaged with multiple sectors
within the energy industry in order to ensure that the workforce
investment system has aligned its strategies with the needs of the
industry. Our information on workforce issues facing the energy
industry is not maintained in a single database, but relies on a
variety of sources. One source is a 2007 report that discusses
workforce shortages in three major energy sectors--utilities, mining,
and oil and gas. It is in this industry report where we note that the
average age of workers in the energy industry is now over 50, and that
the industry estimates that up to half of its current workforce--more
than 500,000 workers--will retire within 5 to 10 years. This report
also notes that the utilities sector expects it will need to replace
approximately 25,000 workers by 2015, that the mining sector expects to
replace half of its workforce over the next seven years, and that the
total number of workers in the oil and gas sectors will decline 28
percent by 2012.
ETA considered it a critical step to find mechanisms to better
understand the future direction of the energy industry. To that end, as
part of the President's High Growth Job Training Initiative (HGJTI), we
have done extensive research with industry leaders about the workforce
challenges facing the sectors of the energy industry. In 2004, after
conducting a scan of the energy industry to gain a better understanding
of the opportunities and challenges it faces, ETA met with chief
executive officers (CEOs) from across the energy industry to learn
about the growth potential of their industry and to understand
workforce challenges critical to continued growth. We then conducted a
series of workforce solutions forums with industry human resources
executives and representatives from the education and the public
workforce investment system. These solutions forums were designed to
compile industry-driven strategies that would address the workforce
challenges of the industry. The results of these sessions, along with
the statistics referenced earlier, are summarized in an Industry Report
which is available online at http://www.doleta.gov/BRG/pdf/
Energy%20Report--final.pdf.
As a result of our continued engagement with industry partners, in
August of 2007, ETA convened an Energy Skilled Trades Summit where we
met with leaders from the energy industry, education and the workforce
system and heard first-hand about their workforce challenges. Among the
over 300 attendees were four governors and 20 CEOs of major energy and
construction firms. We hosted this event in partnership with industry
associations, such as the Nuclear Energy Institute, the American
Petroleum Institute, Edison Electric Institute and the Center for
Energy Workforce Development, to call attention to the workforce needs
of the industry in the Southeast States and to help facilitate a
collaborative public-private approach to addressing these needs.
Research conducted by these organizations provided background for
discussion about the industry's critical workforce shortages at the
Summit.
ETA also maintains a database of its own strategic investments in
the energy industry that have been made through the HGJTI, the
Community-Based Job Training Grants (CBJTG) and the Workforce
Innovation in Regional Economic Development (WIRED) Initiative. To
date, ETA has invested over $150 million in 37 projects across these
three major initiatives. The HGJTI and CBJTG have trained over 86,000
participants, many of them in the energy sector.
Finally, we are working closely with the Department of Energy (DOE)
to obtain labor market information on workforce issues facing the
energy industry. ETA, in conjunction with our colleagues at DOE and the
Department of the Interior, are commissioning the National Academy of
Sciences to conduct a study on the availability of skilled workers in
the energy, mining, nuclear, and alternative energy industries. By
bringing together the workforce data collected by ETA and the Bureau of
Labor Statistics, connecting with business leaders in the energy
industry, and working with our federal colleagues at DOE, we are
developing a comprehensive, data-driven, demand-driven picture of the
workforce challenges facing the industry. It is this synergy that
allows us to make informed policy decisions with federal and non-
federal resources when developing training programs at both the skilled
labor and professional levels.
Question 2. How early in their educational career are potential
workers being targeted by the Workforce Investment System? Is it
possible to push this into working with workers when they are even
younger?
Answer. Currently, through both formula and discretionary grant
programs, the workforce investment system engages youth as young as age
14 who face barriers to school completion and employment, to prepare
them for the 21st century workforce. Over the past two years, ETA has
worked steadily on implementing its Shared Youth Vision Initiative
which asks employers to define the skill needs for the emerging youth
workforce and to pair those skill needs with workforce investment
system resources. Multiple education pathways are used to reconnect the
neediest youth with education and career options, especially dropouts.
These pathways are developed by mapping a variety of alternative
learning strategies and environments that provide academic instruction
that is rigorous and challenging, as well as relevant to emerging
occupations and careers through applied learning strategies.
Alternative learning environments such as career academies allow
students to apply their academic course work to the world of work
through internships and business involvement in curriculum design and
instruction, with the goal of increased student achievement,
preparedness for post-secondary education, and a greater ability to
transition into in-demand careers.
Many industries, including energy, have identified significant
challenges related to the capacity of high school graduates to enter
higher education for careers that require strong foundational Science,
Technology, Engineering, and Math (STEM) skills. ETA is currently
working collaboratively with our colleagues at the Department of
Education and the National Academy of Sciences to focus on new
education models at all levels, with a strong emphasis on applied
learning in order to also expose students to careers in industries like
energy. In addition, STEM education is a key focus in ETA's 39 funded
WIRED regions, which are incubating many new models that will be shared
nationwide.
Another area of focus for ETA has been to develop partnerships and
tools that support strong career awareness and guidance. In partnership
with industry and the Department of Education, ETA hosts the Career
Voyages Web site (www.careervoyages.gov). Targeted to young people and
career changers, this Web site highlights career information in a wide
array of high growth, high demand industry sectors, including the
energy sector. The Web site, containing a wealth of user-friendly labor
market and economic development information, is designed to be used by
students, as well as their parents, teachers and guidance counselors.
By having a presence on the Internet, we are hoping to reach a younger
generation of future workers and make them aware early on in their
career decision-making process as to the opportunities that exist in
the energy industry.
As a complement to Career Voyages, ETA has published print copies
of InDemand magazines, which focus on high growth industry careers. ETA
has sent over a million copies of these magazines to high schools
across America. This information can be read or downloaded from the
Career Voyages Web site, and ETA is particularly proud of the magazine
developed for the energy sector, which can be found at http://
www.careervoyages.gov/indemandmagazine-energy.cfm.
In an effort to help parents support their children's education and
career decisions, ETA has also partnered with the National Parent
Teacher Association to provide school personnel, students, and families
with information that will better enable high school aged youth to
utilize available resources to assist with career planning and to help
them make the right academic decisions that will support successful
transitions from school to work. We are currently working on tools for
specific industry sectors, such as energy, as the next step in that
partnership.
Question 3. How is the Department of Labor ensuring that workers
are being prepared for energy related careers that will be permanent
and lasting? Is DOL targeting career training that will translate into
other positions as the energy model expands and adapts to innovation
and new technology?
Answer. All of ETA's efforts are designed to help both students and
adults gain access to postsecondary education and education pathways
that will provide access to careers. During this administration, ETA
has been working to guide the workforce investment system to become
more demand driven, ensuring that individuals served by the system
understand the jobs available within the industry sectors that drive
their economies. ETA has used the HGJTI as a key vehicle to drive this
approach in the energy sector and other high growth industries.
As a result of the HGJTI, today governors and State Workforce
Investment Boards are routinely identifying targeted industry sectors
as part of their strategic plans under WIA, and this leads to training
resources being targeted to help skill individuals for employment in
the energy industry.
As your question implies, in the current economy, there is a need
to ensure that we have a workforce with highly transferable skills. To
support the workforce investment system and its education partners in
understanding how competencies may cut across industry sectors, ETA is
currently working with the Center for Energy Workforce Development
(CEWD) through the HGJTI. CEWD and its partners have created a Web
site, Get Into Energy (http://www.getintoenergy.com), that provides
information on the industry, career opportunities, competency and skill
requirements, and information on where to access training. Through the
site, educators (and parents) have access to lesson plans and tools for
communicating opportunities in the energy industry to students. The key
components of the Get Into Energy site are a career assessment tool, a
competencies and skills tool, a salary comparison tool, a training and
job locator using Google Earth technology, and a utilities lineman
career profile video that serves as a model for videos on additional
occupations.
Question 4. How successful have these programs been--do you have
tracking metrics? Your testimony points to the amount of investment but
what is the success rate of the Workforce Investment System? How
successful has DOL been in meeting the training needs of employers and
employees?
Answer. The performance measures for the workforce investment
system are entered employment, retention, and earnings. These measures
allow ETA to evaluate its progress in meeting the core purposes of our
programs, namely, how many of our program participants got a job, how
many stayed employed, and what were their earnings. To date, the
workforce investment system has demonstrated the ability to be
responsive to the needs of both high growth industries and program
participants. For the WIA Adult program, nearly 80 percent of those who
received training obtained immediate employment and of these
individuals, more than 86 percent maintained their employment. The WIA
Dislocated Worker program also performs at a very high level, with 86
percent of those who received training entered employment and 91
percent retained employment. Both programs have consistently sought to
increase the earnings of their trainees by placing them in high growth,
high wage occupations with career ladders. Overall, we believe these
measures and results accurately describe our effectiveness in focusing
our education and training investments to meet the needs of high growth
industries, such as energy, and to facilitate local, regional, and
state talent development for occupations in demand.
In addition to our WIA investments, ETA has three major job
training programs currently underway--the President's High Growth Job
Training Initiative (HGJTI), the Community-Based Job Training Grants
(CBJTG), and our newest initiative, Workforce Innovation in Regional
Economic Development (WIRED). Each provides training tailored to the
skill and occupational needs of the energy industry in regional
economies. To date, the HGJTI grants have trained 73,430 participants
and the CBJTG have trained 13,466 participants, many of them in the
energy sector. For example, the College of Eastern Utah was awarded a
$2.7 million High Growth grant to consolidate training curricula that
are applicable to multiple sectors of the energy industry and will
ultimately aid employees looking to enhance their skills for promotion
or career changes. This project creates a conduit among local, state
and federal workforce agencies and the energy industry to more
effectively leverage workforce system resources and meet industry
needs. To date, the project has trained 3,600 workers and built the
capacity to train up to 2,100 people annually. Another example is the
$2.4 million High Growth grant to the Wyoming Department of Workforce
Services to establish the Rocky Mountain Oil and Gas Training Program.
This program is designed to provide safety training for heavy equipment
operators, truck drivers, crane operators, and safety coordinators
through a simulated work environment on a 76 acre simulated oil and gas
field. As of Spring 2007, the program had trained and certified 425
workers, with 411 getting jobs.
Further, ETA has focused on creating a demand driven public
workforce investment system that is dedicated to serving the needs of
business. The workforce system understands that serving employers and
workers is critical and many states have highlighted energy, both
traditional and alternative, as a key industry in their WIA plans. This
industry focus is driving the allocation of resources at all levels of
the workforce system to the benefit of employers, workers, and the
Nation's economic competitiveness.
Responses of Emily Stover DeRocco to Questions From Senator Domenici
Question 5. You note in your testimony that employers of all
sectors of industry will need workers who are more proficient in math,
science and technology. Senator Bingaman and I worked very hard on the
America COMPETES Act, which was enacted earlier this year. This new law
will go a long way to strengthening the brainpower of our young people
who will be the next generation of scientists and engineers. How can we
build on the provisions of the America COMPETES Act to make sure it is
serving the needs of the energy sector?
Answer. As mentioned in my testimony, one of the workforce
challenges in the energy industry is the misconception that energy jobs
are low-skilled, require little education or training, and provide
inadequate compensation. From alternative energy and nuclear energy to
utilities and natural resource refinement, the U.S. will need workers
at all levels in the energy industry in the foreseeable future. From
the skilled trades (such as welders, electricians, and pipe fitters)
who will build and maintain our Nation's power plants, to the
scientists, engineers, and operators who will run them, the energy
sector needs a talented, well-educated, well-trained workforce.
The America COMPETES Act will help erase the traditional stigma
against energy careers by promoting education in Science, Technology,
Engineering and Mathematics (STEM) and raising awareness about career
options where we need it most--in our schools. We need to be reaching
our Nation's young people long before they transition out of high
school.
Further, by promoting STEM awareness and mentorship in STEM careers
to elementary and middle school students the America COMPETES Act helps
to alleviate the stereotype about energy careers. Grades one through
eight are critical in a child's life when career choices and
perceptions of the workplace are beginning to be formed. Once
interested in STEM, students can begin to explore career options,
including those in the energy industry. Summer internship programs for
middle school and secondary school students in STEM, the establishment
of statewide specialty schools that provide comprehensive STEM
education, and the creation of regional Centers of Excellence in STEM
in secondary schools will each provide opportunities to promote careers
in the energy industry. Future generations of young Americans will
associate the energy industry with lucrative, fulfilling careers as
scientists, engineers, mechanics, as well as the skilled trades, and
provide the power we need to not only keep the lights on, but to keep
our competitive edge in the global economy.
While ETA is working to support activities to inform students about
career pathways and opportunities specific to STEM careers, we have
more of an impact through the public workforce investment system on
individuals who are typically disconnected from the traditional
education system. The workforce system assists workers who may not be
equipped with STEMS skills, but who can utilize the resources of the
system to gain these skills. By providing meaningful career guidance
and access to training resources, such as apprenticeships and technical
education, the workforce system plays an important role in
transitioning workers into high-skill and high-wage job opportunities
in the energy industry and others reliant on STEM skills.
In addition to reaching out to our Nation's youth and adult
workers, we must improve America's competitiveness in the areas of
technological innovation and STEM by leveraging and aligning Federal
funds in education, research and development, facility construction,
and public-private partnerships. Any additional Federal investment in
these areas will contribute to a collaborative effort that must bring
together many resources--government, private industry, and education,
financial and human capital, and brick-and-mortar assets such as
laboratories.
This type of integrated approach to solving our Nation's workforce
challenges is what the Department has been undertaking since 2006
through our WIRED initiative. As mentioned in my testimony, 13 of the
39 WIRED regions are focusing on workforce challenges in the energy
industry. Within these 13 regions, the breadth of activities spans the
energy industry spectrum, from biofuels research in the Arkansas Delta,
STEM education and skill development in Colorado and Michigan,
alternative energy in Indiana, to renewable energy in Minnesota and New
Mexico. The Department's WIRED investments complement the mission and
objectives of the America COMPETES Act, while at the same time
addressing the workforce needs within the energy industry.
Question 6. I was interested to learn that the Department of Labor
has 13 regional initiatives focused on the energy industry, including
one in Central New Mexico. I was also interested that other regional
partnerships are working with Oak Ridge National Lab in Tennessee, and
with the National Renewable Energy Laboratory in Colorado. Do Sandia
and Los Alamos participate in the regional partnership efforts in New
Mexico? If not, do you see a way that the New Mexico labs could add
value to the regional effort?
Answer. I am pleased to report that both Sandia National
Laboratories and Los Alamos National Laboratory are full partners in
our WIRED investment. Both facilities have committed to making their
resources available to support technology maturation projects being
developed onsite. Additionally, Sandia National Laboratories will be
making internships available for students in support of its ongoing
programs and as part of the National Institute for Nano-Engineering,
which is a new educational outreach program being established at Sandia
Labs. More information on this investment is available in my written
testimony.
Question 7. You note in your written testimony that few portable
credentials have been developed in the energy industry. (A) Is there a
role for the Department of Labor in helping industry develop
standardized credentials for its workforce?
Answer. Yes, there is a role for the Department of Labor in helping
the energy industry develop standardized credentials for its workforce.
The development of credentials is usually a multi-phase process: 1)
assemble an industry agreed-upon body of knowledge, competency model,
and/or skill standards; 2) develop a curriculum to teach the required
competencies (knowledge, skills, and abilities); 3) develop an
assessment of the competencies; and 4) establish an industry-recognized
certification based upon successful completion of the assessment and
other requirements.
Developing and administering actual assessments and certifications
require specific subject matter expertise and intensive industry
involvement. Within our resources, and given the wide scope of
different industries that we work with, ETA has made the strategic
decision to focus on the development of industry competency models and
related curriculum as the foundational pieces in assisting industry in
developing credentials.
The President's High Growth Job Training Initiative identified
industry 14 sectors, one of which is energy. These sectors are
projected to add substantial numbers of new jobs to the economy, affect
the growth of other industries, or are existing or emerging industry
sectors being transformed by technology and innovation requiring new
skills sets for workers. Through the initiative, ETA has worked with
business leaders to create comprehensive and readily accessible
documentation of the skills and competencies required in a variety of
high growth, high demand industries.
These industry competency model frameworks assist businesses,
educators, and workforce professionals in developing education and
training programs that effectively address core competencies, such as
having basic familiarity with computer applications and selecting the
right tools to solve problems. The goal is to advance understanding of
the skill sets and competencies that are essential to educate and train
a globally competitive workforce.
In partnership with the Center for Energy Workforce Development and
representatives of member companies of the Edison Electric Institute,
work is underway to develop an energy competency model. ETA has also
funded projects to develop curriculum in the energy sector through the
HGJTI and the CBJTG. These initial steps by ETA, the development of an
energy competency model and an energy curriculum, are leading to
standardized, portable credentials across the energy industry.
Question 7B. Should the Departments of Labor and Energy work in
partnership to address this issue?
Answer. ETA is committed to working in close partnership with the
DOE to develop standardized credentials in the energy industry.
Although DOE's involvement is key to addressing this issue, they are
not and should not be our sole partner in this effort. A critical step
in the credentialing process is the collaboration and engagement of
energy stakeholders all levels, public and private, Federal, state, and
local, to collect an industry agreed-upon body of knowledge that leads
to the discussion of cross-cutting skill standards. An example of this
partnership is that ETA and DOE, along with the Southern Governors
Association, were able to jointly participate in an Energy Skilled
Trades Summit in August where we were able to articulate our vision for
how Federal agencies and the energy industry would work collaboratively
to build a skilled energy workforce, with a particular focus on skilled
trades.
Perhaps most importantly, ETA and DOE have worked closely through
our WIRED regions to align and leverage Federal resources to support
regional economic development which is central to workforce
development. Focusing our efforts on regional economies, our effort is
to create portable, transferable credentials across the energy industry
and across the country. WIRED allows our Nation's workforce to be both
flexible and adaptive to change by creating ``career lattices.'' A
veteran electrical lineman in Dallas who wants to update his skills
should be allowed to take his knowledge and experience to be trained to
lay fiber optic cable in Fort Worth. The following is a full list of
partnership opportunities currently in progress under the WIRED
Initiative:
Thirteen WIRED regions attended an Alternative Energy
Institute at the National Renewable Energy Laboratory (NREL).
ETA has been working with the Technology Transfer Office at
NREL to continue to provide WIRED regions with information on
NREL's biomass research program and technology transfer and
commercialization programs and to discuss mutually beneficial
follow up activities.
In addition to NREL, ETA is partnering with other DOE
National Laboratories across the country to increase WIRED
region access to Federally-funded technologies at federal
laboratories (e.g., automation, prototyping, materials science,
information technologies, energy and environmental
innovations). The partnership will lead toward the
establishment of portable, standardized industry credentials
and increase the regions' industrial competitiveness. This will
stimulate wealth creation and employment opportunities as well
as foster public-private collaboration in technology
development, innovation and commercialization.
ETA has negotiated a partnership opportunity with the DOE's
Office of Science to give preferential placement for WIRED
regions in its Summer Training for Science and Math Teachers.
Currently, it offers a three consecutive summers of training
and mentoring experience for cohorts of teachers at its federal
labs across the country.
he North Central Indiana WIRED region has developed an
energy efficiency certification with the input of our Federal
partners: U.S. Department of Commerce's National Institute of
Standards and Technology, the Manufacturing Extension
Partnership program and the DOE-supported Industrial Assessment
Center at Purdue University.
ETA will continue this exciting work into 2008 to actively seek out
opportunities for collaboration in our WIRED regions and in all areas
where the potential for cross-fertilization exists. In addition, ETA
will continue to work with our energy stakeholders to address the
establishment of portable, standardized credentials and all workforce
challenges currently being faced by the energy industry.
______
Responses of James L. Hunter to Questions From Senator Bingaman
Question 1a. Your testimony on page 1 indicates that the average
age of a line man is 51 years old and they are working enormous amounts
of overtime. What is the average amount of overtime they work in a
year?
Answer. We have many utilities that are averaging 800 hours a year
in overtime. That means some people are working over 1200 hours.
Question 1b. Do you think the quality of service provided by some
utilities is affecting by the line man shortage, age and large amounts
of overtime--if so how?
Answer. The quality of service has been impacted by the reductions
in the workforce. We have 40% less workers than in 1990 and the system
has increased in size by 30% during that period. When major storms hit
the utilities do not have enough trained workers to assist the out of
state help that is sent in by reciprocity agreements. One scenario that
congress should remember is the major storm in 2003 that hit the DC
area. Customers were out of service for over 8 days, inside the DC
beltway. Customer hookup times and service complaints have steadily
increased over the last few years across the U.S.
Question 2. Do you believe workers in skilled manufacturing jobs
that are in danger of being outsourced or whose plants are being closed
due to competition are good candidates for training in the utility
industry? If so, how can IBEW, the Congress and the executive branch
work to tap into this resource?
Answer. The IBEW believes that the manufacturing sector is an
excellent source for potential candidates for the utility industry. The
IBEW and Congress should work together to attract and pay for
retraining initiatives in the utility industry. The IBEW is starting a
major training initiative in the utility sector and would welcome
Congressional involvement. The IBEW is also working with the Center for
Workforce Development (CEWD) to attract people to our industry.
Question 3. Has the IBEW began an assessment of the skilled
workforce needed for the increasing demand for solar and wind
generation or is it mainly viewed through the connection to the grid?
Answer. The IBEW has not done an assessment of the employment needs
of the wind and solar industries. The uncertainty of the tax credits
and placement issues have made long term planning difficult.
______
Responses of Ray Stults to Questions From Senator Bingaman
Question 1. In your testimony you note the increased demand that
will be placed on the workforce for the production of biofuels, for
companies such as Colonial--how far out will this impact their pipeline
projections? Will new pipelines have to be built to accommodate
biofuels or is it possible to use existing pipelines?
Answer. In some regions, and among some job categories, we are
hearing that employers already are finding it difficult to hire
employees with the skills and experience they need. Colonial, of
course, would be in the best position to address the specific impacts
on their projects.
The issue of using existing pipelines is sparking keen interest
among biofuels companies. While some opportunities may exist to shift
existing pipelines to ethanol, there are concerns that differences in
the chemical properties of existing fuels, and ethanol, will largely
preclude a wholesale redeployment of existing pipeline infrastructure
to serve the expanding ethanol production industry, and in most cases
it is anticipated that entirely new pipeline systems will be required.
Question 2. You mention that your own laboratory has difficulties
obtaining trained professional personnel in biofuels--your facility is
one that is primarily R&D, do you think industry will have similar
problems in chemical engineers as it scales up to large scale
production?
Answer. It is our understanding that industry already is
encountering such issues. The shortage of qualified professionals
threatens to force delays and drive up costs of important biofuel
projects.
Question 3. In your testimony you mention that the U.S. would have
to lower the labor hours per blade of a wind turbines by 1/3 to remain
competitive with foreign manufacturers--what specific manufacturing
technologies do foreign firms have an edge over the U.S. in? Does that
mean that most wind turbines are manufactured overseas?
Answer. Because turbine blade manufacture is highly labor
intensive, some firms have gone offshore in search of lower labor costs
for blade manufacturing facilities; turbine manufacturers import blades
for the US market from Brazil, Mexico, and various EU countries.
Eliminating shipping import costs provides some advantage for domestic
production. However, in order to fully compete on a cost-competitive
basis, U.S. firms may have to develop more advanced technologies and
systems for U.S. production as well.
As turbines and blades grow larger (2.5MW+), there may be increased
efforts to develop advanced manufacturing technologies, fabrication and
assembly techniques that are co-located at or near wind farm
development sites. This could potentially reduce transportation costs
and improve the economies of future wind turbine blade construction.
Responses of Ray Stults to Questions From Senator Domenici
Question 1. You recommend several studies assessing our energy
workforce as an initial policy directive. Do you have recommendations
for Federal policy beyond such studies?
Answer. The studies we recommend would provide valuable insights
into the future demand for those job specialties that will be needed to
support the expanding renewable energy industries. Once those findings
are in, we hope to be in a better position to assess the overall
picture, and identify potential gaps between the existing workforce and
the skills required by industry. Armed with that information, we may be
able to prescribe additional initiatives that would be beneficial.
Question 2. Would you say current assessments on our future demand
for an energy industry workforce properly account for the projected
growth of the renewable energy industry?
Answer. Much depends on the policies enacted to support renewable
energy technologies, as well as external forces such as the price of
oil. This is why research needs to continually track evolving market
trends and government initiatives. As the Nation's energy outlook comes
into clearer focus, new policies should be informed by the most current
and comprehensive investigation available.
______
Responses of Patricia A. Hoffman to Questions From Senator Bingaman
Question 1. Does the Department know whether the shortage of
transmission linemen has affected the ability to bring a grid up after
hurricanes or power outages?
Answer. During an extreme event such as Katrina, linemen came from
across the country to aid in restoration. The physical state of the
area (e.g. flooding) in addition to the travel time did delay
restoration efforts. However, it is difficult to accurately evaluate
the impact of workforce on grid restoration time. No two events are
identical and the response to specific events (such as Katrina versus
Rita) is affected by many factors, such as the availability of poles
and transformers or the extent of storm damage. While the electric
industry in general maintains a high level of reliability of the
electric system, the Department recognizes that one factor that could
delay restoration efforts in response to multiple catastrophic events
is the availability of skilled linemen.
Question 2. Your August 2006 report on the electric utility
industry, which mandated by section 1101 of the 2005 Energy Policy Act
states in the executive summary that even with the expanded training
programs ``analysis indicates a significant forecasted shortage in the
availability of qualified candidates by as many as 10,000 line workers,
or 20% of the current workforce''. What impacts does the Department
project of this impact if it is realized?
Answer. If the electric utility industry does experience a shortage
of qualified line workers, the most obvious impact will be one of
supply and demand--as the supply of workers goes down, wages will go
up. There may be a growing divergence in quality and quantity of
lineworkers between utilities and regions. Utilities that can afford to
hire the top talent will likely do so, while other utilities may pursue
other options such as outsourcing. However, this could result in longer
restoration times since lineworkers may not be in close proximity to an
event.
Question 3. Section 1101 further instructs the Department to report
to Congress as soon ``as practicable after the Secretary identifies or
predicts a significant shortage of skilled personal in 1 or more energy
technology industries''. Has the Department identified any other
significant shortages besides lineman?
Answer. The report prepared by the Office of Electricity Delivery
and Energy Reliability focused on the workforce in the utility segment.
The Department of Energy is preparing to enter into an agreement by the
end of November with the Department of Labor to engage the National
Academies to perform more extensive analysis in other energy technology
sectors.
Question 4. Section 1830 of the 2005 Energy Policy Act asks for the
Department to enter into an arrangement with the National Academies to
study the short-term and long-term availability of skilled workers to
meet energy and minerals needs of the U.S. Where is the Department in
meeting section 1830?
Answer. The Department of Energy is working closely with the
Department of Labor to fulfill the requirements of EPACT section 1830
through a memorandum of understanding we expect to finalize by the end
of November. Thereafter, the Department of Labor plans to enter into an
arrangement on behalf of the Department of Energy with the National
Academy of Sciences (NAS) to conduct the study required by EPACT. We
understand that the NAS believes the study will take approximately 18
months to complete.
______
Responses of Carol L. Berrigan to Questions From Senator Bingaman
Question 1. The NEI has stated at a February 2007 American Nuclear
Society meeting that ``the average age of employees in the industry is
48 years--one of the oldest of any major industries in the country.
Retirement attrition will create the need to essentially re-staff the
existing fleet over the next 10 years. We need to get the younger
generation into the industry''--and this does not include the expected
new plant builds from the 15-30 combined operating licenses to be
submitted to the NRC. Have you seen any shift in your employment
surveys to indicate a re-staffing is occurring?
Answer. NEI conducted staffing surveys in 2003, 2005 and 2007. The
data referenced during the February 2007 CONTE meeting was drawn from
NEI's 2005 staffing survey. The most recent survey (for which results
were not available at the time of the CONTE conference) indicated
increased hiring activity across the industry, most notably in the
engineering, operations and vendor segments. The 2007 survey indicates
that young engineers (18-27 years of age) made up 7.5 percent of the
utility engineering workforce compared to only 5 percent in 2003 and
5.6 percent in 2005. Young operations personnel (18-27 years of age)
made up 5.2 percent of the utility operations workforce in 2007
compared to only 3.7 percent in 2003 and 3.9 percent in 2005 and within
the vendor workforce, young professionals make up 7.9 percent of the
workforce compared to 5 percent in 2005.
The increase in younger workers entering the nuclear industry can
also be seen in the growing membership of North American Young
Generation in Nuclear (NA-YGN), an organization of young professionals
(35 and under) who work in nuclear related fields. At the NA-YGN/
American Nuclear Society Young Professional Congress held in November,
the NA-YGN announced that their membership has grown to roughly 3,100
members. This is an increase from approximately 500 in 2003.
Question 2. Your testimony, on page two of your testimony, you note
that new builds will require 1,400 to 1,800 workers for construction
with a peak of 2,300 and with a outbound of 31 combined operating
licenses this is about 43 to 56,000 skilled workers. Do you know where
the greatest need in the type of skilled craft the industry will need
and will it compete with other utilities?
New nuclear construction will require numerous skill types
including: welders, pipefitters, masons, carpenters, millwrights, sheet
metal workers, electricians, ironworkers, heavy equipment operators,
and insulators, as well as engineers, project managers, construction
supervisors and other specialized workers. Many of the skills needed in
the nuclear industry will be similar to those used in other energy
construction and labor availability will be affected by other competing
work within local and regional labor markets.
Based on the companies and consortia that have announced plans to
submit combined operating license applications, we expect much of the
new nuclear construction will be centered in the Southeastern U.S.
(Maryland through Texas) with some additional nuclear construction in
other regions. A recent survey by the Southeast Manpower Tripartite
Alliance indicated that in the Southeast, the high demand crafts will
be pipefitters (includes welders) and electricians and that high growth
crafts will include boilermakers (includes welders).
In addition, we have identified growing needs in the following
areas: construction management, engineering project management, non-
destructive examination, instrumentation and control, quality
assurance/control and construction supervision.
Question 3. Nuclear quality control or NQA-1 as the NRC refers is
just as much about trained personnel such as welders as components.
Does the industry have adequate training programs in place to certify
some of the crafts to build new plants to NRC workforce standards?
Answer. As the nuclear industry prepares for new construction, it
is actively engaged in developing training and certification programs
to support future needs. It is important to note that workers who are
trained in industrial skilled crafts support many industries. It is
somewhat impractical to establish project based training programs since
many of the skills needed require an extended period of training or
apprenticeship to become proficient and will work for numerous
employers in several industry sectors. Overall, the industry is
increasing engagement in regional or state training initiatives which
include broader energy/ industrial sector involvement.
In order to adequately answer this question, it is necessary to
separate training from qualification. The industry is required to meet
applicable NRC qualification standards. In the case of welders, the
applicable qualification standard relies on the demonstration of
knowledge and skills through a certification process and exam. I
believe the industry will have ample capacity to certify the needed
workers for new construction in compliance with NRC requirements.
Question 4. There has always been a strong link between trained
personnel in the nuclear navy and civilian reactor fleet, how has the
draw down in size of the nuclear submarine fleet affects if any the
staffing of the civilian fleet?
Answer. During the draw down of the nuclear submarine fleet, the
nuclear industry was able to recruit significant numbers of workers
with prior nuclear navy experience for employment in the civilian
nuclear sector. While the industry is still able to recruit some
personnel with prior nuclear navy experience, the industry is relying
more and more on development of local talent pools through community
college, apprenticeship and skills center training programs. In
addition, the industry is also recruiting mid-career personnel from
other industries. The industry also continues to participate in and
support programs that assist returning military personnel transition
into the civilian workforce such as the Helmets to Hardhats and the
Hire a Hero programs.
Responses of Carol L. Berrigan to Questions From Senator Domenici
Question 5. We have heard a lot today about the overall scale of
the looming workforce shortage facing the energy industry. Could you
give us some specific recommendations for actions the federal
government could take that would be most effective in addressing these
problems?
Answer. In my testimony, I outlined six areas where action is
needed. I believe the federal government can take effective action in
many of these areas.
Raising awareness--This committee has continued to demonstrate
strong leadership on energy workforce issues and holding this hearing
on November 6th continued this legacy. During the hearing, Senator
Murkowski suggested conducting a similar hearing for the HELP committee
to better educate her peers on that committee about these issues.
Holding such a hearing would continue to raise awareness of this
important issue. In addition, I would encourage members of the
committee to seek other venues through which awareness of this issue
and the opportunities afforded to workers in the energy sector can be
raised among decision makers at the federal state and local level and
with the public.
Aligning investments, elevating image, training workers, building
partnerships--Since much of the funding used to invest in workforce
development comes from the Federal government, a coordinated Federal
approach that includes the Departments of Labor, Energy, Education and
Interior in close consultation with the energy industry and organized
labor is warranted. This approach should include measures to increase
career awareness at the secondary education level, support pre-
apprenticeship career technical education for all energy related
skilled crafts, support community college and skill center training for
specialized technicians, and provide regional grants for integrated
workforce development programs.
In addition, the Federal government should consider employer tax
credits for apprentice utilization, incumbent worker training and
displaced worker training for employment in the energy sector.
Question 6. Assistant Secretary DeRocco pointed out that some
segments of the energy industry lack ``portable certification''
credentials for their workers. Is this an industry issue? Is there a
role for the Nuclear Regulatory Commission for helping to develop
certification programs, beyond what is currently being done?
Answer. The portable certification issue raised by Assistant
Secretary DeRocco, is generally not an issue for the nuclear industry.
Many workers in the nuclear industry require qualification with
specific industry-wide or consensus standards such as those promulgated
by ASME, ANSI, ASNT or the National Academy of Nuclear Training.
Others, such as reactor operators, are required to be licensed by the
NRC on the specific reactor design that they will operate.
I do not believe that that there is a role for Nuclear Regulatory
Commission in this area as their purview is nuclear licensees and the
issue the Assistant Secretary described is multi-sector. Any additional
certifications the NRC develops may further complicate portability of
certification since it would be nuclear specific and the energy skilled
trades workforce is transient between nuclear and non-nuclear energy
infrastructure.
Question 7. In your testimony, you highlight the relationship
between the manufacturing workforce and energy industries. Would you
recommend addressing manufacturing workforce issues, such as
outsourcing, simultaneously or separately from energy workforce issues?
Answer. I would recommend addressing manufacturing workforce issues
in conjunction with energy workforce issues only in cases where there
is significant overlap in the labor pool and specific challenges. For
example, I would not attempt to address outsourcing issues for
manufacturing simultaneously with energy workforce issues. Utility jobs
are largely unaffected by overseas outsourcing. However, it may be
effective to address ASME qualified welder issues for both
manufacturing and the energy workforce since the skill sets will be
similar.
Question 8. Your testimony highlighted an increase in nuclear
engineering enrollment between 1998 and 2006. Can you identify factors
leading to this increase?
Answer. The increase in enrollment in nuclear engineering can be
attributed to numerous factors. They include: the President's Committee
of Science and Technology Advisor's (PCAST) 1997 report advocating the
continuation of DOE's historical support for maintaining the discipline
and stewardship of university infrastructure, Congressional support in
legislation for increased federal investment in nuclear engineering
education through the DOE University Reactor Infrastructure and
Education Assistance Program during the late 1990's through 2006;
increased media coverage and resultant public awareness about the
nuclear renaissance; expanded career awareness outreach conducted by
industry, professional societies and government; enhanced recruiting
and hiring within the industry, government and national laboratories,
and improved recruitment of students into nuclear engineering programs
by universities.
Question 9. In your testimony, you state that the ``nuclear
industry faces additional hurdles. Specifically, there are few
workforce training programs focused on the skills needed for successful
employment in the nuclear energy industry.'' How would you address this
issue at the federal level? At the state level? At the local level?
Answer. At the Federal level, I would:
1. Direct the Department of Labor, in cooperation with the
Departments of Energy and Education, the National Science
Foundation and the Nuclear Regulatory Commission, and in
consultation with the nuclear industry and organized labor, to
create an integrated, national nuclear workforce development
program. Key elements of this program would include: expanding
nuclear technology and nuclear career awareness at the primary
and secondary education levels; developing community college
and skill center training programs for nuclear technicians
(e.g. radiation protection technicians) based on industry
standards; supporting development of construction management
personnel for nuclear construction projects; and providing
regional grants for integrated nuclear workforce development
programs.
2. Appropriate sufficient funds to the Department of Energy
for the execution of their stewardship responsibility for
Nuclear Engineering and Health Physics Education, to support
the necessary infrastructure for the continued safe operation
and needed upgrades of existing training and test reactors and
to develop new or expand the capabilities of existing training
and test reactors as needed.
3. Provide tax incentives to support apprentice utilization,
incumbent worker training and displaced worker training for
employment in nuclear industries.
At the State level, I would:
1. Include the energy sector (specifically nuclear) in state
workforce development and economic development plans,
2. Integrate nuclear-related jobs into the career cluster
framework used in each state,
3. Provide academic credit for career and technical education
in nuclear-related fields at the secondary level and
articulation of this academic credit at the post secondary
education institutions,
4. Provide funding for the maintenance of nuclear workforce
development programs at community colleges, skill centers and
other educational institutions,
5. Develop more flexible teacher certification rules that
would facilitate nuclear professionals entering the classroom.
At the Local level, I would work on better educating local schools
science teachers, guidance councilors, and workforce development
professionals about the career opportunities available in the nuclear
industry and work to provide education opportunities for individuals
who wished to enter these lucrative careers.
______
Responses of Norm Szydlowski to Questions From Senator Bingaman
Question 1. On page 5 of your testimony, you estimate that the cost
of building a new pipeline along your existing pipeline between Baton
Rouge and Atlanta has risen from $1 to 2 billion, how much of that
increase is due to material and that due to a shortage of labor?
Answer. From the time we first estimated the cost of this project--
about three years ago--to our current projection with completion in
2012, labor cost and materials cost have doubled.
Question 2. You note that you have the same retirement statistics
as the rest of the petroleum sectors--27 percent eligible for
retirement in five year except it is two years for Colonial. Does
Colonial anticipate a large wave of retirements or do you believe your
workforce will continue to work past retirement?
Answer. Taken in its entirety, the 650-person workforce of Colonial
fits the same eligible-to-retire profile as the rest of the petroleum
industry. That is, 27 percent of our overall workforce will be eligible
to retire within five years. Note that this snapshot of Colonial's
workforce includes administrative, accounting, IT and all other
workers--as well as those who are actively engaged in operating the
pipeline. In our testimony, we attempted to describe a more focused
picture of the challenge we face with employees responsible for
operating the pipeline. (This includes a wide variety of engineers,
controllers, schedulers and others in addition to those who physically
operate the line for Colonial.) Our personnel records show that 35
percent of our Operations workforce will be eligible for retirement
within two years. While that number is slightly higher than the all-
inclusive employee number, it is the potential of losing these trained
and experienced workers within two years that has focused all of us at
Colonial (and especially our Human Resources Department) on finding
ways to retain talented workers and recruit talented new employees.
Question 3. You mention that foreign workers represent a sizeable
pool of talent; do you know what countries Colonial typically hires
from and what occupations?
Answer. Colonial views those foreign workers who are legally
permitted to work in the United States as one of several solutions to
the rising labor challenge faced by the petroleum industry. Within our
company, we have two employees--both engineers--who are not U.S.
citizens. One is a system integrity engineer from Canada, and the other
is a Venezuelan responsible for Colonial's electrical systems analysis,
design, construction and maintenance. We do not keep records that
distinguish nationalized citizenship for employees. However, a review
of our employee roles suggests that there are approximately a dozen
employees, primarily of eastern Asian heritage, who are U.S. citizens
and work in the Engineering, IT and Operations fields. While greater
access to a larger skilled workforce may contribute to Colonial's
employment pool, the greater impact will be within the construction
trades we contract with to build new lines and to help Colonial with
repairs and other short-term projects.
Question 4. You mention in your recommendations the ability to have
the IRS provide relief on phased retirement so that retirement age
employees can still contribute to the workforce--can you please explain
this in more detail?
Answer. This challenge is shared by other companies in our
industry, but my examples will draw from Colonial's experience and from
the policies in effect at our company. Colonial offers a very
competitive benefits package in order to attract the talent we need.
That package includes a pension plan that offers a lump-sum payout as
soon as the early retirement age of 55 for qualified workers. Our
experience has been that employees take advantage of this opportunity
upon reaching the average age of 57, at which point their employment
must be terminated. Many are interested in continuing to work, but IRS
rules against ``sham retirements'' prevent them from continuing at
Colonial after receiving their lump-sum pension payout. Most who are
interested in continuing to work will go to other companies. A smaller
number leave for a six-month waiting period before returning to
Colonial either as a contractor or as a part-time worker.
We hoped that the Pension Protection Act's phased-retirement
initiatives would let companies make in-service distribution of
retirement benefits. This would give persons who retired early to
secure their lump-sum benefit a means of accessing their lump-sum
benefit and remain with Colonial. However, the IRS rules do not allow
this for employees under the age of 62. The IRS does allow companies to
lower the full retirement age to 62 or below 62 if that is an industry
standard. However, this option is prohibitively expensive because the
retirement would be at full rates and not reduced for the early
departure. Indeed, we expect this approach would give an even greater
incentive to retire for -eligible, 55-year-old employees.
A solution we offer for consideration is to lower the in-service
distribution age for retirement plans from 62 to -55 -, and to retain
the current plan's early retirement reduction factors. This would give
Colonial, and companies like us, a legally permissible means of
allowing employees their lump-sum pension benefit without reducing the
full retirement standard of age 65. Companies could retain experienced
workers and employees could secure their lump-sum benefit without
having to terminate their employment. Effective Jan. 1, 2008, lump-sum
calculations will be based on a New Mortality Table (which reflects
that people are living longer) and New Interest Rates (based on
corporate bond yields). The expected impact is that lump-sum benefits
for persons retiring at age 55 will decline 1.4 percent in 2008 and by
13 percent by 2013. This information will give eligible employees more
reason to retire now.
Responses of Norm Szydlowski to Questions From Senator Domenici
Question 5. In your testimony, you point to ``more glamorous''
career opportunities and a perceived unreliability of the energy
workforce as inhibitors to recruiting new workers. How would you
address these perceptions? What role, if any, do you see for the
Federal government in addressing these inhibitions?
The perception of our company and our industry as worth the
consideration of people searching for a career is primarily our
responsibility. The American Petroleum Institute currently is
conducting a significant education campaign to explain the industry's
role and its work as a critical part of America's energy solution. All
of us as individuals can recognize the value and honor of craftspeople
and appreciate vocational/technical education. The message we often
send our children, that the only successful career is the one that
includes a four-year university degree and work in an office
environment, must change. The Federal government can play a helpful
role by coordinating state and regional workforce development efforts
and facilitating their broader application.
Question 6. You recommend IRS tax relief as a possible solution to
retain retirement-eligible employees. Do you regard this tactic as a
short-term or long-term solution?
Answer. It would be an important part of the solution. Other
actions are also necessary, such as better transfer of knowledge from
the more-experienced employees to the newer ones. Increased recruiting
from technical schools and four-year colleges is needed. But at a time
of growing demand for knowledgeable workers, and a time when workers
are willing and more able than ever to continue working, we should not
increase the incentive to retire early through tax policy. The
challenge of meeting the energy needs of a growing economy is a good
problem to have. We will need the help, knowledge and innovation of our
experienced workers along with that of our newer workers to solve it.
In addressing this IRS-pension question from both Sens. Bingaman
and Domenici, we have tried to be direct and concise in our reply. The
following summary was provided by Colonial's Vice President of Human
Resources, Wayne St. Claire, in case greater detail is helpful. Of
course, we are ready to help further as you consider how to ensure the
energy industry is adequately staffed and position to continue meeting
our Nation's energy needs.
attachment
Retention Issues--Phased Retirement/In-Service Distributions
Our employees retire (on average) upon reaching the age of 57 take
advantage of our retirement plan's generous lump-sum pension benefit.
They reason that they are better off if they retire, take their lump
sum, and work elsewhere in a comparable job. They conclude that because
the Pension Protection Act is decreasing lump sums and because it
appears that interest rates are rising which also decreases lump sums,
they had better retire now and get their lump sum before it goes down.
As a result, we are losing our most experienced staff. In the next five
years, we can lose 25% of our workforce due to retirement alone.
In many cases, these retiring employees would like to continue
working. They just want to secure their lump-sum benefit at an
opportune time. The IRS rules do not allow them to retire to receive
their lump sum and then be reemployed by us full-time. So, they retire
and then go to other companies or contract back to our company, but
this usually as part-time work under very strict and specific rules and
guidelines.
Our pension plan does not allow the participants to draw their
pensions or receive their benefits without terminating employment. We
hoped that Pension Protection Act phased retirement initiatives would
permit companies to make in-service distributions of retirement
benefits. This would permit persons who retired early just so they
could receive their lump sum an alternate way to access their lump sum
and stay with our company. The Pension Protection Act does this, but
only for employees at least age 62. Consequently, these provisions are
not very useful because they do not allow in-service distributions
below age 62 where the majority of our retirements occur.
There is a second way participants can access their pension and
then continue to work with our company. New IRS regulations make it
clear that plans can permit distributions after persons attain their
normal retirement age. These new regulations also state that plans can
lower their normal retirement age to 62 without any question or lower
it to be below age 62 if a lower age is customary in the industry.
While this would be a useful way of letting employees receive their
lump sum while continuing to work, it is expensive because benefits are
not reduced for early commencement at normal retirement age. Lowering
the normal retirement age to say age 55-57 would be very costly. So,
this approach is not useful.
There is a principle that the retirement trust is a tax-favored
vehicle and should have restrictions as to participants' ability to
access the funds. So, under IRS rules participants need to separate
from service to have access to their funds. In our case, employees are
quite willing to separate from service to have access to the funds;
they simply retire early to get the funds and go to work elsewhere. If
an employer would let employees retire and then come back immediately
to their old jobs, the IRS would view this as a ``sham retirement''
designed to skirt their rules. This is why companies that comply with
the IRS rules place restrictions on reemployment. Since there is no
clear guidance on what employers must do to avoid being accused of
bypassing the rules, 5 the employers impose restrictions on rehire that
generally involve a waiting period, reemployment only as a part time-
time employee, or a change in job duties. Faced with the prospect of
working only part time or in a different job many retiring employees
just go to work elsewhere, usually for our competitors.
Our company has a comprehensive review process for hiring leased/
contract employees that include restrictions along the line of the
restrictions described above. Our company understands the importance of
classifying employees correctly since employees have many more rights
than do leased/contract employees. Our company also requires legal
review before rehiring former employees.
The improvement Norm Szydlowski raised was to have the IRS lower
the in-service distribution age for retirement plans from 62 to say 55
or 56 while retaining the plan's current early retirement reduction
factors and normal retirement age. Companies like ours need a legally
permissible means of allowing employees receive their lump sum
distributions without having to lower the normal retirement age which
would greatly subsidize the entire participant population. This would
give companies the ability to retain employees with years of valuable
work experience yet continue contributing to our company instead of our
competitors. That way, employees get access to their pension benefits
and have the option of continuing their career with their current
employer. In the foreseeable future, companies like ours who offer
valuable benefits to our employees could lose valued employees in a
period of time when we need most of these employees to continue meeting
the needs of our customers, the national security and economy of this
country, and have the ability to reasonably transfer knowledge from our
existing workforce (before they retire) to our new employees.
Effect of PPA on Lump Sums
Effective January 1, 2008, The Pension Protection Act modified the
minimum lump sum requirements by specifying that lump sum calculations
be based on:
A New Mortality Table--The table not only reflects that
people are now living longer, but also project future
improvements in mortality.
New Interest Rates--New interest rates based on corporate
bond yields replace the 30-year Treasury Bonds rates that are
currently used. There are three interest rates--one rate for
the benefits expected to be paid in the first five years, a
second rate for the benefits to be paid in the next 15 years
after that, and a third interest rate for benefits expected to
be paid more than 20 years in the future.
The expected impact is that lump sums of persons retiring at age 55
will decline 1.4% in 2008 and by 13% in five years when the new lump
sum basis is fully phased in.
Survey Information
Here are some third-party surveys and statistics you may find
helpful:
The Society of Actuaries' Phased Retirement and Planning for
the Unexpected, 2005 Risk and Process of Retirement Survey
found that only 38% of pre-retirees actually stopped working
all at once.
A 2005 AARP survey found that 40% of 50+ retirees would be
interested in participating in a phased retirement program
(i.e., reduced work schedule).
A January 2006 AARP Public Policy Institute paper reviewed
study results by researchers at the University of
Massachusetts-Boston and Cornell University which found that
phased retirement was more prevalent among better educated,
white-collar, or highly skilled workers. It also found that it
is more prevalent at the younger end of the of the older worker
age span, reflecting a transition to full retirement. Persons
who work for the same employer as a phased retiree are more
likely to have more positive views of work than those who come
from other employers. Many phased retirees would work even when
they do not need the income--i.e., money is not the only
motivator for work.
In addition, AARP reported in a research report in March of
2005 that the number of workers age 55 and older is expected to
increase 49% while the number of workers under age 55 is
expected to grow by only 5%. AARP noted that employers who do
not attract and retain older workers might have difficulty
finding qualified workers.
Caring About Retiring Employees
Retaining our experienced workforce is not our only objective. We
find that our retiring employees think in terms of today's dollars.
They do not understand how general inflation, rising health care costs,
and extended lifetimes will require greater retirement amounts than
ever. If we can keep them in our workforce longer, either as full-time
or part-time employees, we can continue educating them and help them
accumulate the additional funds they will need to cover rising future
costs. We want them to make the right financial decisions based on
solid knowledge.
Appendix II
Additional Material Submitted for the Record
----------
Statement of Will Green, President, American Association of
Petroleum Geologists
To the Chair and Members of the Committee: I would like to thank
the Chairman and this Committee for holding a hearing on the workforce
challenges facing the domestic energy sector. It is a challenge. As
President of the American Association of Petroleum Geologists (AAPG) I
want to assure you that we are taking active steps to address it. But
U.S. national and economic security also demands federal action to
ensure the availability of a future petroleum industry workforce.
AAPG, an international geoscience organization, is the world's
largest professional geological society representing over 30,000
members. The purpose of AAPG is to advance the science of geology,
foster scientific research, promote technology and advance the well-
being of its members. With members in 116 countries, more than two-
thirds of whom work and reside in the United States, AAPG serves as a
voice for the shared interests of petroleum geologists and
geophysicists in our profession worldwide. Included among its members
are numerous CEOs, managers, directors, independent/consulting
geoscientists, federal and State regulators, educators, researchers and
students.
AAPG strives to increase public awareness of the crucial role that
geosciences, and particularly petroleum geology play in energy security
and our society. As the National Petroleum Council (NPC) notes in its
2007 study, Hard Truths: Facing the Hard Truths about Energy, oil and
gas demand will not abate anytime soon. Aggregating data from multiple
oil and gas demand predictions, they report:
Global oil demand in 2030 will be 103 to 138 million barrels
per day, up from 76 million in 2000;
Global natural gas demand in 2030 will be 152 to 225
trillion cubic feet per year (TCF), up from 94 TCF in 2000;
U.S. oil demand in 2030 will be 22 to 30 million barrels per
day, up from 19 million in 2000; and
U.S. natural gas demand in 2030 will be 25 to 30 TCF, up
from 21 TCF.
Where is the workforce that will ensure there is adequate supply to
meet this demand in 2030? According to U.S. Department of Labor
estimates, over one-half of the U.S. technical workforce will retire in
the next fifteen years. The NPC 2007 study concurs, stating that
``Nearly half of the personnel in the U.S. energy industries will be
eligible for retirement within the next ten years, and fewer people
have entered the workforce over the past generation.'' The demographics
of AAPG's 30,000 members demonstrate the challenge: The median age of
our members in 1991 was 41, in 2001 it was 48, and in 2006 it was 53.
And it isn't just industry that is facing the challenge. AAPG's
membership includes many faculty members whose hair color is as gray as
that of their industry colleagues, and there are fewer faculty prepared
to teach the next generation of geoscientists and engineers. According
to the American Geological Institute, the number of geosciences
bachelor degrees has decreased from 7,180 in 1982 to 2,436 in 2005, a
66% decline. The number of geosciences master degrees decreased from
2,047 in 1987 to 1,074 in 2005, a 48% decline. And the number of
geosciences doctoral degrees reached a peak of 1,058 in 1989 decreasing
to 457 in 2005, a 57% decline.
The good news in these bleak statistics is that we have seen an
uptick in petroleum geosciences and engineering enrollments in the past
year. This suggests that students have become aware of the career
prospects in the petroleum industry, and are interested in pursuing
related geosciences and engineering studies. We're getting the
students' attention. The question is whether we, as a Nation, can
provide the opportunities and infrastructure needed to turn this uptick
into a sustained reversal.
The federal government needs to play an active role in reversing
the current petroleum workforce trends. Programs that encourage science
and math education in elementary and secondary schools provide a solid
foundation for students entering university. At the university level
much of the federal support for science comes in the form of
competitive research funding. This funding provides direct benefit to
society by enhancing our understanding of the natural world and
developing new technologies. The second, no less direct, benefit is
that these funds provide research support for faculty, graduate
research opportunities, and the means to develop and maintain
laboratories and instruments to conduct this research.
The elimination of the Department of Energy's oil and gas research
program has significantly impaired the Nation's ability to train a
future petroleum workforce. These funds had historically provided this
support to geoscience and petroleum engineering programs at U.S.
universities. The funds are now gone, weakening the departments at the
same time as we're asking them to attract and train talent for the next
generation.
The America COMPETES Act of 2007 is a very good start. But it does
not go far enough to ensure that we can successfully reverse current
workforce trends.
AAPG recognizes that the solution to the Nation's petroleum
workforce challenge requires both government and private involvement.
To that end, I would like to share with you what AAPG is doing to
promote interest in geosciences, and particularly petroleum geology,
and its positive impact on the United States.
Through our local affiliated societies we strongly encourage
elementary and secondary school students to take classes in science and
math. In October 2007 many of our societies participated in the Earth
Science Week program of the American Geological Institute. The West
Texas Geological Society, my local society, sent volunteers into 50
local schools to talk to fourth to sixth grade students about the
geosciences. In addition, AAPG's regional sections train middle school
teachers in geology, with applications to petroleum geology, through
our ``Rocks in your Head'' seminar.
The AAPG Foundation's Grants-in-Aid program supports graduate
students in earth sciences whose research has application to the search
for and development of petroleum and energy mineral resources and to
related environmental geology issues. These awards are competitive, and
in 2006 AAPG celebrated the 50th anniversary of this program.
We also support the Visiting Geoscientists Program where
professional geoscientists visit campuses, give lectures or seminars,
and meet with students. These one-on-one interactions give students an
opportunity to discuss career options and learn from someone who is
professionally active in the field.
AAPG encourages the development of student chapters at schools
around the world. There are currently 160 student chapters worldwide,
80 in the United States and 80 internationally. We regularly conduct
student expos for students to meet with the oil industry to receive
career information. And just this year AAPG launched a contest for the
student chapters that provides a real-world experience of working as a
team to predict the petroleum exploration potential of a particular
geologic basin. The contest was well received, and we're expanding it
this year.
In addition to our educational activities in schools, colleges, and
universities, AAPG has a long history of providing its members with
continuing education programs. These programs range from day-long
workshops to week-long short courses and field trips.
We have recently moved to significantly increase this activity
through the Petroleum Technology Transfer Council (PTTC). The program
was developed by oil and gas producers with the support of the
Department of Energy and designed to provide continuing education
workshops and technology transfer to oil and gas producers on
engineering, geology, geophysics, and oil and gas operations and
technologies. PTTC links universities, State geological surveys and
bureaus, local oil and gas producers and others involved in the
industry. On September 27, 2007 the PTTC board approved a proposal by
AAPG to assume leadership of PTTC. We will continue to work closely
with the organizations that have been involved in the past, including
the Department of Energy, and are inviting other associations to join
us.
Our current workforce challenge did not emerge overnight, and
neither will the solution. But it is essential to find a solution if
the United States is to develop its oil and gas resources in a
beneficial and environmentally responsible way. Mr. Chairman, I want to
thank you for holding this hearing and encourage you to hold additional
hearings to further highlight the national workforce challenge we face
in the petroleum and other industries. The federal government must play
an active role to solve the problem. But by working cooperatively, I
believe we can. AAPG stands ready to assist.
Thank you for the opportunity to submit this testimony to the
Committee.
______
Statement of Daniel H. Lopez, President, New Mexico Institute of Mining
and Technology, Socorro, NM
Thank you for your leadership and commitment to the workforce
crisis in the United States and for the November 5, 2007 hearing before
the Senate Energy and Natural Resources Committee. As you know, this is
an issue of great importance to New Mexico Tech, the citizens of New
Mexico and the American people.
This hearing and others that follow will serve to help identify
where members can effectively focus attention and resources to insure
the needs of the American people are met. Mr. Chairman, I urge you to
have additional hearings on this important issue. Today's discussion
only addresses part of the problem. The Committee must fully explore
the educational crises in the Nation's geologic, petroleum and mining
sector. This is made even more important because this Nation will need
more skilled geologists as we explore ways to capture & store carbon
dioxide in deep rock formations, as recently announced by the U.S. EPA.
We truly have an education & workforce crisis in this country that
if left unchecked will harm our national security, ability to compete
with the rest of the world and our fundamental way of life. The United
States is the world's largest user of mineral commodities. Minerals and
petroleum power our cars, computers and homes, accounting for nearly
$500 billion of the U.S. economy. The continued development of our
Nation's resources is a critical factor in maintaining our quality of
life and ensuring that our Nation has the basic fuels and materials to
keep our economy strong.
Workforce availability has become a significant problem for the
domestic petroleum and mining industries. Numerous reports have
repeatedly warned that not enough students are graduating from these
programs schools to replace the large number of active engineers and
geologists who will be eligible to retire in the next 10 years. The
number of college students pursuing petroleum and mining degrees
dropped 80 percent over the last two decades and the Nation is now down
to 17 petroleum schools (from 34 in 1983) and 12 mining schools (from
25 in 1983).
An example of the extent to which the age profile of mining
professionals is advancing can be gained by examining the ranks of the
geoscientists (geologists, geophysicists, metallurgists, and mining
engineers) employed by the United States government. Around 2500 of
these professionals are employed by the various federal agencies, with
around 60% in the Department of the Interior. Just slightly under half
(49.4%) of these individuals are currently over the age of 50, and a
quarter of the (25.5%) over 55. The demographics for the subset holding
positions as mining engineers--a more direct indicator of the situation
facing the U.S. mining industry--are identical.
At the same time, government funding for university research in
mineral resources disciplines has been eliminated or greatly reduced. A
large percentage of the faculty in mineral resources programs are
retiring and there are few PhDs in the pipeline to replace them.
Further compounding the problem, according to the U.S. Bureau of
Labor Statistics, almost half of the working engineers and geologists
in the petroleum and mining industries are over 50. The potential for
significant workforce losses to retirement in the next 10 years is huge
while the number of replacements is much too low to sustain the
industry. Among the mining schools, the situation is nearing a critical
point as 25 percent of the Nation's mining engineering 70 faculty
members expect to retire in the next 5 years; fully 50 percent expect
to retire in the next 10 years.
Skilled trades people are in short supply across the industry.
Industries looking for qualified applicants to fill these jobs are
often forced to turn to foreign schools to fill their vacancies.
Without an adequate workforce, the basic building blocks of the
economy--energy and minerals cannot be domestically produced.
We recently wrote to urge your support for the Energy and Mineral
Schools Reinvestment Act (EMSRA). EMSRA sets out the policies for
maintaining a healthy domestic energy and mineral workforce at the
professional, technical, and blue collar levels. It establishes policy
to fund research to support the educational institutions that produce
the workforce. It establishes policy for sustainable energy and mineral
development by the application of science and engineering. It sets the
goal of sustaining and protecting America's competitive edge in the
21st century economy through research.
In sum, EMSRA will begin to restore the petroleum and mining
engineering and technological world leadership of the United States
which has been maintained for more than two centuries. It means New
Mexico Tech and similar institutions or programs, from West Virginia to
Arizona, Pennsylvania to South Dakota, and others can build capacity in
petroleum and mining teaching and research that would attract the best
and brightest faculty and students for the coming energy resource
global competition.
We strongly urge you to sponsor EMSRA and to do everything in your
power to have Congress enact this legislation during the current 110th
congressional session. This legislation can have a regenerative impact
on the Nation's mining and petroleum engineering schools and encourage
the growth of the energy and minerals workforce to meet the Nation's
needs.
The consequences for failing to address this educational crisis are
real, and include: higher commodity prices, overall loss of industry,
loss of technology, and educational infrastructure. In short, you lose
the ability to educate the people necessary to produce the energy for
this country over the long term.
Thank you for your support and leadership on this important issue
to the state of New Mexico and the Nation.
______
Consumer Energy Alliance,
Houston, TX, November 13, 2007.
Hon. Jeff Bingaman,
United States Senate, Washington, DC.
Hon. Pete Domenici,
United States Senate, Washington, DC.
Dear Chairman Bingaman and Senator Domenici: Consumer Energy
Alliance applauds the Committee on Energy and Natural Resources for
recognizing the importance of a strong domestic energy workforce. While
we appreciate the efforts of the committee and chairman to address this
important issue, we also encourage you to expand your focus to include
education programs for petroleum, mining and geological engineers, as
these programs are the foundation for a healthy energy workforce and
economy.
The strength and success of our Nation depends on a highly-skilled,
competitive workforce equipped with education and training. In the past
few decades, workforce availability has become a significant problem
due to the lack of petroleum, mining and geological programs in the
U.S. The number of students graduating with petroleum and mining
degrees dropped more than 80 percent over the last two decades, and the
Nation is now down to 17 petroleum schools (from 34 in 1983) and 12
mining schools (from 25 in 1983). Studies show that there are simply
not enough petroleum and mining graduate students to replace the active
engineers and geologists who plan to retire in the next ten years,
creating a 38 percent shortage of qualified U.S. engineers and
geologists by 2009. A severe lack of qualified professionals threatens
our ability to compete in today's rapidly changing global economy.
What was once an issue of concern has now become a national crisis.
In order to raise awareness on the gravity of this situation,
Consumer Energy Alliance is working with members of our Board and
interested stakeholders to bring the petroleum, mining and geology
industries together with academia to organize and mobilize a broad
coalition in support of engineering education. We recognize the
importance of academic institutions in creating a highly-skilled
workforce and in generating the research base necessary for the
competitiveness of tomorrow's industry. We are also aware that failure
to support these programs will ultimately increase our Nation's
dependence on foreign sources of intellectual capital, threatening
domestic economic and energy security.
If we fail to generate the necessary support for our Nation's
education infrastructure, current workforce trends in these vital areas
will only worsen. We have already seen severe declines in the number of
training programs around the country, and now our schools are nearing a
critical point as 25 percent of the Nation's 70 mining engineering
faculty members expect to retire in the next 5 years and 50 percent
expect to retire in the next 10 years. The aging of faculty and a
decline in graduates could result in a serious shortage of teaching and
research staff, as well as talented workforce. point as 25 percent of
the Nation's 70 mining engineering faculty members expect to retire in
the next 5 years and 50 percent expect to retire in the next 10 years.
The aging of faculty and a decline in graduates could result in a
serious shortage of teaching and research staff, as well as talented
workforce.
A lack of qualified engineering professionals hinders our ability
to develop new energy resources and technologies, and with the demand
for crude oil on the rise, it is vital that we act now to improve the
workforce crisis. In a 2007 report, the National Petroleum Council
found that oil and gas demand will significantly increase in the next
30 years. For example:
Global oil demand in 2030 will be 103 to 138 million barrels
per day, up from 76 million in 2000;
Global natural gas demand in 2030 will be 152 to 225
trillion cubic feet per year (TCF), up from 94 TCF in 2000;
U.S. oil demand in 2030 will be 22 to 30 million barrels per
day, up from 19 million in 2000; and
U.S. natural gas demand in 2030 will be 25 to 30 TCF, up
from 21 TCF.
Without an adequate workforce to access and develop energy
resources, we could face serious shortages in energy supply that
jeopardize our economic security. Consumers are already feeling the
impact of high energy prices, as business energy costs increased 51
percent from 2000 to 2005, and companies such as American Airlines are
paying billions of dollars more for fuel each year. With the price of
gasoline increasing 105 percent since 2001, the price oil approaching
$100 a barrel, and global energy demand on the rise, it is more
important now than ever to support the institutions and professionals
that work to improve domestic energy security.
Consumer Energy Alliance is extremely concerned about the future of
our Nation's petroleum, mining and geological programs, as well as our
economy. We encourage you to boost support for the academic
institutions that provide education and training for these
professionals so that we may replenish our dwindling energy workforce
and strengthen national security. A healthy education system is vital
to the production of a well-qualified workforce able to meet the needs
of the industry and compete with the ever-changing global economy.
Once again we thank you for your efforts in addressing our Nation's
energy workforce issue, but we hope you will hold additional hearings
to consider petroleum, mining and geological education. These
professionals play a critical role in energy and economic security,
making it vital that interested stakeholders and the federal government
work together to increase support for the academic institutions that
sustain and protect America's competitive edge in the 21st century.
Sincerely,
David Holt,
Executive Director.
______
Independent Petroleum Association of America,
Washington, DC, November 20, 2007.
Hon. Jeff Bingaman,
Chairman, Committee on Energy and Natural Resources, U.S. Senate,
Washington, DC.
Hon. Pete V. Domenici,
Ranking Member, Committee on Energy and Natural Resources, U.S. Senate,
Washington, DC.
Dear Chairman Bingaman and Senator Domenici: On behalf of the
Independent Petroleum Association of America (IPAA), representing over
5,000 independent producers of American oil and natural gas, I would
like to thank you and the committee for shedding light on the mounting
workforce challenges the domestic energy sector continues to face.
Meeting America's growing demand for oil and natural gas will require a
skilled, educated workforce. IPAA and its members, who drill 90 percent
of all American wells and produce 68% of domestic oil and 82% of
domestic natural gas, would like to work with you and your staffs in
your attempt to address this important, but challenging issue.
The problems associated with meeting the workforce needs of the
energy sector, and in particular the oil and gas extraction industries'
needs are not new. The American petroleum industry reduced its
workforce fully 60% between 1986 and 2000, with a record 38,000 job
lost in 1999 alone, due in large part to the volatility of the market.
Of the remaining oil and natural gas industry workforce, half are now
between the ages of 50 and 60, while only 15 percent are in their early
20's to mid-30's. The average age in the industry is 48, with some
major and super major companies reporting an average age in the mid-
'50's. According to one of the larger independent producers quoted in
the Interstate Oil and Gas Compact Commission's (IOGCC) report,
``Petroleum Professionals--Blue Ribbon Task force: A Follow-up Report''
(Jan. 2007), ``One third of our (the industry's) geotechnical staff is
eligible to retire in the next five years.'' According to an American
Petroleum Institute's (API) 2005 report on workforce issues, since the
peak employment of more than 860,000 jobs in the petroleum industry in
1982, more than 500,000 jobs were lost by 2000. The report goes on to
say that ``this sharp drop was accomplished by sustained layoffs, which
gave the industry a reputation of an unreliable employer and sharply
curbed entry into the industry by nearly a full generation.''
After peaking at 11,000 in 1982, petroleum engineering enrollments
in the U.S. fell to a low of 1,300 in 1997--a year before the most
recent downturn. Although there has been a slight up tick in the number
of enrollments within the last 2 years, in 2005 for example, enrollment
in petroleum engineering in U.S. universities stood at approximately
1,500, still down 85% from the 1982 peak. In 2004, only 303 students
graduated with bachelor's degrees in petroleum engineering in the U.S.,
according to a study by Texas Tech petroleum engineering department
head Lloyd Heinze. From 1982 to 2005, the number of baccalaureate
programs producing petroleum engineers declined from 34 to 16, while a
very similar scenario occurred in the geosciences programs. The number
of undergraduate geologists in U.S. universities plunged to 3,381 in
2003 from 7,524 in 1984, reflecting a drop ite 300 Washington, D.C. of
55%. For example, in 1982, approximately 4,000 advanced degrees (PhD
and masters) were awarded in the geosciences, with about 50% winding up
employed by the petroleum industry. These days that number is about 500
annually, with perhaps 100 of them entering the petroleum industry.
Considering that the National Petroleum Council (NPC) notes in its 2007
study, ``Hard Truths: Facing the Hard Truths About Energy'', that the
rise in demand for supply of oil and natural gas will continue, with
U.S. oil demand in 2030 expected to be 22 to 30 million barrels per
day, up from 19 million in 2000, and U.S. natural gas demand expected
to be 25 to 30 trillion cubic feet per year (TCF) up from 21 TCF in
2000, educating and sustaining an adequate and skilled workforce in
order to meet these needs should be viewed as an issue of paramount
importance.
IPAA views education as the key to developing and sustaining a
skilled workforce. In its workforce mission statement, IPAA states the
need to both educate and encourage target audiences as to the
prospective career opportunities associated with the oil and natural
gas industry. In fact, IPAA's board of directors, at its recent annual
meeting in San Antonio, Texas, moved forward with the consolidation of
its separate Workforce and Education Committees, demonstrating the
inextricable linkage between the two areas. IPAA also views as vital
the development of initiatives that encourage both professional and
vocational education to expand the industry workforce, necessarily
covering both ends of the spectrum.
IPAA is working in secondary schools and universities to reveal the
employment opportunities in the oil and natural gas industry.
The IPAA Educational Foundation, founded more than a decade ago,
has provided funding to dozens of nationwide programs that help educate
consumers, lawmakers and students about the industry. Detailed in this
brochure are the successful undertakings that IPAA has been able to
work on thanks to the contributions of its member companies, volunteers
and staff.
In 2006, IPAA launched its Education Center in Houston. The
Education Center is dedicated to coordinating initiatives in public
education and workforce expansion. IPAA education initiatives operated
by the Education Center, include:
Academies for Petroleum Exploration & Production Technology.--IPAA
is pleased to announce that the Advanced Placement Math and Science
Program at Milby Science Institute was chosen as the first IPAA
sponsored academy in the country--with more to come in California,
Colorado and Texas. IPAA has coordinated the curriculum development as
well as programs that encourage the collaboration between academia and
industry, student field trips, industry speakers, internships/mentoring
plus various other educational initiatives. IPAA has also spearheaded
the drive to bring laptop computers, reservoir software, as well as
technical equipment to this unique advanced academic learning
environment.
Science and Engineering Fair of Houston (SEFH).--IPAA is a co-
sponsor of the 48th Science and Engineering Fair of Houston. The fair
includes entries from over a hundred schools and more than 28,000
projects entered in the preliminary school/district fair competitions.
The NEED Project.--IPAA serves on the board of the National Energy
Education Development Project, a 501(c)(3) nonprofit education
association dedicated to promoting a realistic understanding of the
scientific, economic, and environmental impacts of energy so that
students and teachers can make educated decisions. To ensure that
teachers and students are working with accurate information, NEED
materials are updated on a regular basis, using the latest data from
the U.S. Energy Information Administration, as well as from a wide
range of energy industry partners. NEED works with educators and
students to improve existing materials and develop new ones to meet
national and state curriculum requirements. NEED provided curriculum,
hands-on kits and training to over 52,000 classrooms in 45 states.
The Taft Oil-Technology Academy.--IPAA is working with the Taft
Oil-Technology Academy in California provides 10th through 12th grade
curriculum in industry-related courses of study (college prep
curriculum), while enabling and encouraging them to earn paid
internships at leading oil and technology companies, obtain employment
after graduation, and pursue higher education.
World Affairs Council of Houston/Global Energy Initiative.--As one
of the largest funding sources for the Council, IPAA has helped
introduce energy policy issues to students. Last year over 330 Texas
Teachers benefited from the Council's energy programs impacting 43,000
students statewide.
Over the next year, we hope to build on IPAA's educational
initiatives throughout the country. Again, we thank the Committee for
turning its attention to this important issue, an issue that is
inextricably linked to meeting the oil and natural gas supply needs of
this Nation. The Committee has made a good first step towards
addressing this issue in the form of its November 6 hearing; however,
since the witness list did not include any witnesses from the oil and
gas extraction community, we would urge you to consider scheduling a
second hearing, in order to allow you to hear from the entire energy
sector. In the interim, we look to working with you and your staffs as
you attempt to take on this difficult, but important issue.
Sincerely,
Barry M. Russell,
President and CEO.
______
Statement of Mary Poulton, Department Head and Professor, Mining &
Geological Engineering, University of Arizona, Tucson, AZ
Mr. Chairman, thank you for your leadership and commitment to
workforce issues in energy and natural resources. I urge the committee
to conduct additional hearings on the workforce education crisis in
this country to more fully develop the extent of the problem we face in
educating mining and petroleum engineers and resource geologists and
developing near-term solutions. Time is of the essence in solving these
problems, and I look forward to working with the committee on a hearing
to explore these important issues in the coming days.
I am Dr. Mary M. Poulton, Professor and Head of the Department of
Mining and Geological Engineering at the University of Arizona. On July
8, 2004 I testified in front of the House Subcommittee on Energy and
Mineral Resources regarding the impending ``demographic earthquake'' in
the energy and minerals sectors. I will summarize some of my testimony
here and provide updated information.
from july 2004 testimony
We are faced with a situation where the engineering workforce
in the minerals and petroleum sectors are aging and we are
losing our capability to educate the next generation of
engineers because of the frail state of mining engineering and
petroleum engineering departments at US universities. I believe
for mining engineering we are in a crisis and a crisis is an
opportunity.
The mining business is ``graying,'' with the great majority
of current workers approaching retirement in the coming 10-15
years, and few younger workers entering the business. Nowhere
is this fact more evident than in the professional ranks
underpinning the industry. SME statistics are instructional.
The portion of members over 50 years old will soon exceed 60%,
with the number of new professional level entrants almost
insignificant--less than 4% of the 2003 membership is younger
than 30.
An example of the extent to which the age profile of mining
professionals is advancing can be gained by examining the ranks
of the geoscientists (geologists, geophysicists, metallurgists,
and mining engineers) employed by the U.S. government. Around
2500 of these professionals are employed by the various federal
agencies, with around 60% in the Department of the Interior.
Just slightly under half (49.4%) of these individuals are
currently over the age of 50, and a quarter of the (25.5%) over
55. The demographics for the subset holding positions as mining
engineers--a more direct indicator of the situation facing the
U.S. mining industry--are identical.
The convergence of these two trends--the approaching
retirement of the experienced mining cohort and lack of young
people entering the industry--has a major negative implication
for Arizona's First University--Since 1885 mining companies.
The opportunities to transfer experience from the older to the
younger generation has been seriously impaired.
We are losing our technical mineral resource workforce,
especially our academic mining engineering workforce, in this
country and we do not have a global surplus on which to draw.
Once you lose your capability to educate a technical workforce
you do not easily regain it. We are on the verge of losing that
capability in the US and I thank this Subcommittee for their
interest and advocacy.
The University of California Berkeley, University of
Illinois, Ohio State, University of Minnesota, University of
Alabama, University of Idaho, Columbia University, University
of Pittsburgh, Texas A&M, University of Washington, University
of Wisconsin--Madison and Platteville, University of Wyoming
have all closed their mining engineering programs since 1985,
most on this list have closed since I made the decision to
enter academia in 1987.
James Wicklund also testified at the July 8, 2004 hearing, focusing
on issues in the energy sector and the economic implications of our
declining workforce. Mr. Wicklund, in answer to questions from
Chairwomen Cubin, testified that when we lose the technical workforce
capacity in the energy sector (and the same is true of the minerals
sector) in this country we lose leadership in the industry. When we
lose leadership we lose the ability to affect purchases from suppliers
in this country. When we lose suppliers we lose high paying jobs, and
the tax base they support. The repercussions are felt beyond just the
lack of the technical professionals and the multiplier for the economic
impact is large.
current situation
Undergraduate enrollments at most mining engineering programs have
responded to market forces and have risen to 906 enrolled in 2006. In
2006, 128 BSc mining engineers graduated in the US, up from a low of 86
in prior years. Yet, the shortfall for mining engineers in the US to
replace retirees is projected to be 300% and when production increases
are factored in (including the oil sands industry in Canada which hires
US graduates) we may be short by 600%. The workforce shortage is not
just restricted to university degrees but is also felt in the skilled
trades such as diesel mechanics, electricians, pipe fitters, etc. The
shortage has already manifested itself as major delays and cost
overruns on new mining projects. The next manifestation is being felt
in safety.
Our capacity to increase enrollments in our university programs is
limited. Faculty sizes for mining programs in the US are typically 5-10
full time professors supplemented by part time adjunct faculty. Faculty
sizes in Canada, Australia, and South Africa tend to be larger than US
mining faculties. Faculty sizes in the US tend to be small because
federal research opportunities to support faculty and their graduate
students are nearly nonexistent after the closure of the US Bureau of
Mines. Other countries have supported technological advances to a much
greater degree, to the point where US R&D dollars are being spent in
Australia instead of the US because the Australian government will
leverage those dollars and the US government will not.
The age profile of mining engineering faculty is another limiting
factor in expanding capacity. Professor M. K. McCarter from the
University of Utah has published an analysis of the current and future
professorate in mining engineering in the September 2007 issue of
Mining Engineering (p. 28). The number of mining engineering faculty in
the US peaked at nearly 120 in 1984 and today there are a total of 86
budgeted lines for mining engineering faculty at all US universities
with mining engineering departments. The average age of the faculty is
52. We expect nearly 30 retirements out of the 86 faculty lines in the
next 5 years. Of the 27 of PhD candidates expected to graduate in 2007
only 4 are expected to even consider the option of a university
position. Further exacerbating the problem, the specializations of
current Ph.D. candidates is mismatched with the anticipated
specializations to replace retiring faculty. For example, there is a
pressing need for mine design specialists and there are almost no PhD
candidates in this area.
The recent National Research Council publication on ``Minerals,
Critical Minerals, and the U.S. Economy'' outlines how essential
minerals are to vital sectors of our economy from defense to
telecommunications and computers to automotive. Everything we use on a
daily basis starts with a mined commodity. We have enjoyed an economy
of abundance for more than 50 years and take for granted that we will
always be in first position anywhere in the world to take resources
from others that we are not willing to produce ourselves. This is no
longer the case. Not only do we increasingly lack the political and
economic clout to develop resources in other countries but we are
quickly losing the technical capability as well. Do we want an economy
of scarcity to be our legacy?
From my perspective, the way forward is obvious.
1. We must have a rational mineral policy and legal framework
that ensures we can provide basic materials for our economy.
Rational mining law reform can accomplish this.
2. We must have a research base that tackles the grand
challenges in mineral resource development that will allow
environmental protection, growth, and resource development to
co-exist. The Energy and Mineral Schools Reinvestment Act can
accomplish this.
3. We must communicate to our university presidents that the
remaining mining engineering departments in the US must be a
priority for support so we do not lose more capacity. Letters
or meetings with the 13 university presidents with mining
programs can accomplish this.
Mr. Chairman, you are in a position to make a major contribution to
the country that will last for generations by taking action on these
issues.