Houston Area Workforce Owners’ Perspective Welcome attendees to breakfast meeting. Ask attendees to review HBR guidelines for conducting meetings. December 08, 2005

Crisis or Bump in the Road? Not a crisis yet Significant concern for specific crafts, especially short term labor A predicted problem for many years, accelerated by recent hurricanes Underlying cause - an aging workforce & few recruits in pipeline Construction is not an attractive career choice

Experience on Recent Turnaround Increased wages and retention bonuses >40% turnover of contract craftsmen >100% turnover of equipment operators Difficulty in obtaining qualified welders Instrument craft skills below expectations Shortage of equipment inspectors Shortage of repair shops

Impact on Work Turnover increasing and replacement difficult Short term work impacted more than long term workforce Moving labor between maintenance, construction & T/A’s to level needs Less qualified workers being used Some foreign labor is being used

Incentives and Actions Taken Wage increases & retention bonuses Developing strategies for next T/A’s Multiple smaller contracts Compensate for lower skills At this time most planned projects and turnarounds going forward Lower priority work may be delayed

Impact on Contracting So far, little impact on existing labor contracts Will review and adjust as situation continues to evolve Lump sum difficult without labor cost qualifiers Increasing number of qualified suppliers

What Should be Done? Continue to disseminate information through associations like HBR, ABC and CMEF Develop incentives to attract young people into craft work as a career choice Continue to develop effective skills training programs, consider innovative approaches such as “fast track training” Long term the labor market will self correct