Canadian pipeliners enjoyed boom times in 2008 and are facing a once-in-a-generation opportunity to build essential pipeline infrastructure; however, there are factors that could affect the outcome, said Edward (Ted) Shipka, outgoing president of the Pipe Line Contractors Association of Canada (PLCAC).
“After an exceptionally strong year of activity in Canadian pipeline construction, the PLCAC and its members are undoubtedly in a good position to weather any near-term challenges posed by the prevailing economy,” said Shipka. “The mainline segment in 2008 recorded activity levels second only to the record level registered in 1999. The volume of work in the distribution segment is the highest ever recorded in Canada.”
Presently, 10 collective agreements administered by the PLCAC cover the type of work preformed by members of the association in Canada. Of those, four relate to construction of mainline transmission systems, four apply to distribution systems, one is used for pipeline investigation and assessment work, and one covers field overhaul of equipment.
“There is some concern,” Shipka continued, “of the effect on our industry on the potential impact of a protracted period of economic uncertainty in light of the world-wide recession, tight credit conditions, reduced oil and gas demand and deterioration in commodity prices, which could pose a real threat to the volume and timing of future pipeline projects. At present, there is no clear indication that the economic downturn is close to being finished, but there is optimism that these conditions may very well abate within the next year resulting in the owners and pipeline operators continuing to pursue a very aggressive program of pipeline construction.”
Shipka is well versed with the concerns and needs of the Canadian pipeliners and with those of the association’s primary roles. This is Shipka’s second term as PLCAC president. He first served as president in 2001-02. He joined the PLCAC Labor Committee in 1975 and subsequently was appointed to serve as a director (1994-present); as chairman of the Safety Committee (1995-present); and as a member of the Canadian Pipeline Advisory Council (1998-2002; 2005-09).
Early in his career, Shipka summers on various pipeline construction projects throughout Western Canada and Ontario while attending the University of Alberta. After graduating in 1972 with a bachelor of commerce degree, as well as an MBA, Shipka joined Pe Ben Oilfield Services Ltd. Over the years, he held several operational, managerial and executive positions before becoming president and CEO of the company. Subsequent to the sale of Pe Ben in 2006, Shipka co-founded and is president of Triple Random Inc., a multi-faceted transportation company that specializes in pipe and pipeline material hauling, stringing and stockpiling; pipeline equipment moving; oilfield services; and heavy industrial transportation services for the construction and mining industries. The company is headquartered in Edmonton, Alberta.
Upon assuming his role as PLCAC president, Shipka and the association focused their efforts on these key areas:
- Successfully concluded the negotiation of several project-specific labor agreements with the four trade and craft unions, which enhanced the competitive position of PLCAC members bidding on these projects;
- Renegotiated the Pipeline Maintenance and Service Agreement for Canada, which expired Dec. 31, 2008;
- The Safety Committee completed the development and presentation in both eastern and western Canada of a second generation, pipeline-specific, Professional Leadership Development Program for pipeline supervisors;
- Advanced long-range planning strategy in terms of succession with the recruitment of a new assistant executive director, Neil Lane; and added two new members to the board of directors; and
- The Investigation and Assessment Agreement expires on April 30, 2009 and negotiations for renewal are underway.
Looking ahead, Shipka believes that the association and its members face three primary issues — renewal of the mainline pipeline and distribution agreements, the availability of skilled labor and the economy.
“The mainline pipeline and distribution agreements for Canada with the four trade and craft unions will expire on April 30, 2010,” explained Shipka. “Renegotiation of these agreements will begin in the next several months. Over the past several years, competition between the unionized and non-unionized sectors in the Canadian pipeline industry has intensified and a significant difference between the two groups exists in terms of the overall cost for labor because of the present labor union agreements. If PLCAC members are to remain a viable force in the Canadian pipeline market in the future, we must reach a settlement with the unions that will allow us to more effectively compete and assist in driving the necessary economies and increased efficiencies of operation necessary to secure the work.”
Shipka said that the availability of skilled labor to meet these construction demands continues to be at the forefront of the challenges facing PLCAC members.
“Over the past several years, the volume of overall construction activity in Canada has been exceptionally high, especially in Alberta, where a multitude of projects relating to the upstream oil and gas industry, including the mining, extraction and processing of tar-sands (heavy oil) has been concurrently underway,” he said. “This high volume of overall activity had the effect of severely depleting the available pool of skilled labor at a time when the Canadian pipeline industry desperately needed more workers. While our industry has successfully worked around this problem with the cooperation of the unions, there is concern that when economic conditions inevitably correct themselves and pipeline owners and operators decide to “ramp-up” the level of new pipeline construction to meet consumer demand, we will again be scrambling to find and recruit more workers. This concern is intensified by the fact that an aging workforce confronts us and many of those experienced and skilled pipeliners who have historically been the backbone of our labor force will shortly be exiting the workforce.
“At present, the outlook for 2009 for the pipeline industry in Canada remains positive, although an element of uncertainty certainly exists in terms of the prevailing economic circumstances,” Shipka added. “On the mainline side there are several projects in the midst of construction such as the Enbridge Alberta Clipper and the TransCanada PipeLines North Central Corridor Looping program; and on the distribution side, our members remain busy on several fronts.
“The outlook for 2010 and beyond is harder to predict due to the prevailing economic circumstances and concerns as to how long it will take the economy to rebound. There are projects on the drawing board which the owners and operators have indicated they are committed to, but it is a matter of timing and the level of sustained consumer demand that will determine just how busy it will be.”
According to Shipka, major projects currently proposed for future construction include the Enbridge Fort Hills Project, the KXL Keystone Expansion and the Enbridge Gateway Project.
Shipka noted other areas of concern for PLCAC members, but was quick to point out that these are similar to the challenges faced by almost everyone in the construction industry, be it pipeline, or otherwise. They include:
- Concerns over an aging workforce — the need and means of attracting and retaining younger workers who can be trained to replace experienced workers who will be exiting the work force over the next several years;
- The impact of globalization on competition for contracts;
- The environmental movement and its effect on industry policies, practices and procedures;
- Increased regulatory legislation and oversight, contributing to an increase in the “red tape” associated with working in the construction industry and;
- Improve safety in the workplace to ensure the protection of all stakeholders.
In reflecting on his term as PLCAC president, Shipka said: “It has been a very satisfying year working with the board of directors and the staff to collectively address the many issues that our industry faces and to carry out the PLCAC’s mandate from the membership.”
Shipka represented the PLCAC at the annual conventions of the International Pipeline & Offshore Contractors Association, Distribution Contractors Association and the U.S. Pipe Line Contractors Association.
“The opportunity to represent the PLCAC was exceptionally rewarding,” commented Shipka, “not just from the perspective of being able to travel to exotic locations, but to gain further insight into the challenges facing our sister associations and the various ways that they are addressing those challenges to advance the mutual interests of our industry.
“The PLCAC is a fantastic organization to belong to,” he continued. “Beyond being able to access the broad range of industry-specific services, assistance and training opportunities, membership brings with it a special sense of camaraderie, which I personally have not found in many other associations. I have also found that membership in the PLCAC provides an extraordinary networking opportunity in terms of not only meeting and interacting with the key players engaged in the industry, but the chance to discuss areas of common business interest and mutual challenges our companies face as industry participants. Membership also provides the possible means of enhancing the interests of not only our own individual organizations, but the industry as well.
“I am really looking forward to the upcoming PLCAC Annual Convention in Victoria, British Columbia from April 26-30. Victoria is a gorgeous city in the spring and I know that the PLCAC staff and the Convention Committee have put a lot of hard work and effort into ensuring this will again be a world-class event. With the industry coming off a banner year, we expect a wonderful turnout!”
For More Information:
Pipe Line Contractors Association of Canada
55th Annual Convention
Victoria, British Columbia
Fairmont Empress Hotel
April 26 – 30
PLCAC: (905) 847-9383, www.pipeline.ca