Oil & Gas Industry: The Labour Crunch

April 22nd, 2009 by

By Pat Hinds

A recent headline in the Calgary Herald read, “Oilpatch layoffs could trigger labour crunch.” The article talks about the 200 employees that were laid off at Petro-Canada and the impact this might have on the oil and gas labour front in the future. Factoring the aging population into industry projections became an interest of mine when I tried to predict the time frame that all oil and gas employees would carry a smart phone. I based my initial predictions of adoption rates of smartphones on an employees’ last five years of activation data; my projection was 100% smartphones by 2012. I did further research on the 53% of people who did not have a smart phone in the oil and gas sector and it became apparent that the average age of employees without smartphones was 49 years of age. I began to ask myself what impact does this have on my projection; I adjusted my projection of 100% smartphone adoption such that it will either be based on manufacturers stopping to make voice only phones or all employees over the age of 41 retiring.

The labour crunch is going to have a major impact on the oil and gas industry as we are only recently coming out of a period of 2.5% unemployment in the province. The Herald article makes a point that the cyclical nature of the oil & gas industry will scare people from wanting to make a careeer in that area. It is my opinion that the oil industry will loose these people to “greener” industries that will emerage from the masive economic stimulus programs offered by the US and Canadian governments. If we evaluate the statistics from Shell listed below we see that the average age of Shell’s employees is 41; if we use the industry Canada stats of 15% of Canadians in the work force being between the ages of 55-65 this would mean that 30% of the employees at Shell that are older than 41 are getting ready to retire. Over the next 10 years the oil & gas industry is going to face a human resorce problem based on retiring employees and an exodus to new “greener” industries.

Shell Demographic Overview

Industry: Crude Petroleum and Natural Gas Extraction. Stock Symbol: RDS-N. Established: 1911. Parent Company: Royal Dutch Shell (The Hague, Netherlands). Major Canadian Hiring Locations: Calgary AB, Fort Saskatchewan AB, Fort McMurray AB, Sarnia ON, Montreal QC. Full-Time Employees: 5,120. At this location: 2,541. Worldwide: 104,000. Part-Time employees: 105. New jobs created in Canada last year: 185. Voluntary employee turnover last year: 5%. Longest serving employee: 42 years. Workforce engaged on a contract basis: 28%. Number of applications received last year: 107,566. Percentage of employees who are women: 32%. Of managers: 21%. Percentage of employees who are visible minorities: 11%. Of managers: 4%. Average age of all employees: 41.

I am going to focus my next few oil and gas blogs on how companies need to address the potential lose of employees by implementing technology solutions that will capture the intellectual capital of these workers prior to them leaving the industry.

Calgary Herald Article:

Shell Statistics

Oil & gas Employment Numbers

Topics: Sales Consulting