U.S. economic pain may be Alberta oilpatch gain

CALGARY — The U.S. economy’s pain could be Alberta’s gain — at least when it comes to labour costs in the oilpatch.

CALGARY — The U.S. economy’s pain could be Alberta’s gain — at least when it comes to labour costs in the oilpatch.

With an unemployment rate pushing 10 per cent, the United States has plenty of workers to spare, many of whom have skills coveted in Canada’s energy sector.

“It’s a golden opportunity, I think, for Alberta companies right now,” said Todd Hirsch, an economist with ATB Financial.

The U.S. housing bust took a severe toll on that country’s construction sector, leaving scores of skilled tradespeople out of work. Many of those jobs — welders and electricians, for example — would be a good match for what Alberta’s oilpatch needs, Hirsch said.

And the United States is an “obvious and attractive” place to recruit workers since it has so much in common with Canada, Hirsch added.

“Someone who has a welding ticket from Indonesia — we don’t really sometimes know what that means,” he said.

“The fact that Canada and the United States share a language and have similar cultures — we can be pretty sure that if they’re a ticketed welder from Illinois, that they’re going to be able to come to Alberta and do just fine.”

Labour costs spiralled out of control during the last oilsands boom, with firms scrambling to fill jobs by recruiting across Canada and abroad and enticing workers with rich wages.

Out-of-control costs and the financial crisis forced many oilsands producers to put their plans on ice in late 2008. Most of them have since restarted those large-scale projects, raising the spectre of a return to the same inflationary environment.

Last week, the CEO of Canada’s dominant oilsands player said he was worried about rising labour costs but doesn’t believe it will be as bad this time around.

“One thing that makes this cycle a little bit different as I look forward is, you probably will be able to pick up some labour out of the United States,” Suncor Energy Inc.’s (TSX:SU) Rick George told analysts on a conference call.

“You know the unemployment numbers as good as I do, and the one thing about this is it’s nearby, there’s lots of really good workers, good craftsmen,” he said.

Glen Hodgson, chief economist with the Conference Board of Canada, said the sector is bound to return to the “crazy days” of 2005 to 2007, when skilled labour was in drastically short supply.

“We think full employment is coming back . . . gangbusters by about 2013,” Hodgson told a compensation and human resources conference Tuesday.

Access to the American workforce may help a bit, but immigration from overseas and education are going to play much larger roles in how Alberta fills its labour gaps, he told reporters.

“A lot of Americans, frankly, don’t want to move. They can’t because they can’t sell their house. Their house price is way down. So that has become a real break on the mobility of labour within the U.S. economy,” Hodgson said.

“But at the margin, there may be more access to American talent than there’s ever been, and we could draw upon that to fill some of the holes in our workforce.”

The BP well blowout in April, which set off the worst oil spill in U.S. history, had a damaging effect on employment along the Gulf Coast, where most domestic U.S. oil is produced.

While a six-month moratorium on new drilling has been lifted, it’s unclear what the long-term impact on Gulf drilling may be.

Offshore workers are some of the most experienced and knowledgeable in the industry, since they have to deal with rough conditions and complex equipment, said Cheryl Knight, executive director of the Petroleum Human Resources Council of Canada.

So those skills would likely translate well into Canada’s oilpatch, she said on the sidelines of Tuesday’s conference.

“It’s an easier transition to go from offshore to conventional than it is the other way around,” she said.

However, Knight agrees that the U.S. labour pool will only satisfy a small part of Canada’s future demand and that immigration, temporary foreign worker programs and other measures will play a larger role.

As well, Knight’s group — which is government-funded but works closely with industry — has been drawing talent from sectors outside of the oil and gas industry.

For instance, the council has had success moving workers from British Columbia’s pulp and paper industry into the oilpatch in neighbouring Alberta. Attempts to do the same in Central Canada’s automotive and chemical processing sectors has not been as successful, mostly because of the distance, Knight said.