Legislature(1995 - 1996)
04/02/1996 01:35 PM Senate L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
JOINT SENATE AND HOUSE LABOR AND COMMERCE COMMITTEE
April 2, 1996
1:35 P.M.
SENATE MEMBERS PRESENT
Senator Tim Kelly, Chairman
Senator John Torgerson, Vice Chairman
Senator Mike Miller
Senator Jim Duncan
Senator Judy Salo
SENATE MEMBERS ABSENT
All members present
HOUSE MEMBERS PRESENT
Representative Pete Kott, Chairman
Representative Jerry Sanders
Representative Gene Kubina
HOUSE MEMBERS ABSENT
Representative Norman Rokeberg
Representative Brian Porter
Representative Beverly Masek
Representative Kim Elton
COMMITTEE CALENDAR
Local hire
WITNESS REGISTER
Ken Thompson
ARCO Alaska
P.O. Box 100260
Anchorage, AK
Bill Cheek, Vice President
Alaska Petroleum Contractors
Ray Jakubczak
British Petroleum
P.O. Box 770056
Eagle River, AK 99577
Ken Langel
HC Price Co.
ACTION NARRATIVE
TAPE 96-24, SIDE A
Number 001
CHAIRMAN KELLY called the Joint Senate and House Labor and Commerce
Committee meeting to order at 1:35 p.m. and said they had invited
some members of the oil and gas industry to attend today to discuss
local hire and outsourcing with the committee.
KEN THOMPSON, ARCO Alaska, said they had a booklet prepared through
an overall joint effort of ARCO, BP, and about 20 contractors who
work on the North Slope. The oil industry in Alaska has long held
a preference hire for Alaskans. As industry numbers from the
Department of Labor show that they are outperforming many other
natural resource industries in regard to percentages of their own
people who live in Alaska. However, they do realize there is room
for improvement and over the last several months, at the request of
Governor Knowles, various legislators, and Commissioner Cashen of
the Department of Labor, they have tried to look at ways of
improving Alaskan hire in their industry.
MR. THOMPSON noted that 21,000 nonresident individuals work in the
food processing industry here, 15,000 in the service sector, 10,000
in hotels, restaurants, and retail, 5,000 in the transportation
industry, 5,000 in construction. In State and local government
there is currently 3,800 nonresidents being employed. In oil and
gas there's 3,100 nonresidents employed.
He and John Morgan, President of BP, got together about 20
contractors and looked at a number of issues like what were the
success stories in their industry, what were some of the hurdles
they face for Alaska hire, what are some of the problems that have
occurred for Alaska hire, and then they shared some ideas for
improvement.
MR. THOMPSON said they are willing to have their improvements
measured. They considered union hire, nonunion hire, native hire,
and regional hire.
Number 90
He said all the contractors voluntarily agreed to a common
commitment to, as an industry, maintain leadership and improve
Alaska employment while maintaining competitive costs.
Number 130
BILL CHEEK, Vice President, Alaska Petroleum Contractors, said they
separated this issue into three main areas of improvement -
training and development of recruitment and hiring, retention, and
the measurement of those two. They made recommendations for the
producers, the contractors, and one for the State.
Under training and development their goal was to insure an
adequately trained and available Alaskan work force. They could do
this by working with producers to forecast jobs one to three years
ahead of time to determine what kind of skill levels will be needed
for the industry. They would determine what kinds of skills are
developed throughout the State that represent the unemployment
numbers they see every day. Then they could develop a training
curriculum that would insure Alaskans would be used in the future
for the forecasted jobs.
MR. CHEEK said they would look to the State to help them identify
existing education programs and monies that are currently being
spent on those training programs.
Under recruitment, hiring, and retention their goal is to retain a
safe, competitive, and long term work force; to actively recruit
and hire Alaska residents, and encourage non-Alaskan hires to
become Alaska residents. This boils down to a few points. They
have to get better at Alaska wide recruitment throughout the State
and in the rural communities.
They have to be able to post jobs that are available and insure
that each one of their companies' policies doesn't conflict with
Alaska hire. These policies include rotation schedules and
compensation packages.
They are looking for the State, especially for the contractors, to
improve infrastructures to support such things as instate
fabrication, the road systems, the dock facilities for large module
load outs, etc.
Number 180
MR. THOMPSON commented that they recommend that companies who pay
Alaska cost of living whether or not the person lived in the State
or not would have to stop. Cost of living would be appropriate
only for Alaska residents.
Certain companies pay transportation back and forth for certain
people to live outside of Alaska, he said. There are some
inconsistencies and both producers and contractors have agreed to
relook at all of their policies in regard to that and to develop
real incentive for workers to live in Alaska.
SENATOR KELLY asked how they got their people up to the North
Slope. MR. THOMPSON replied that they fly shared service planes
with ARCO normally from Anchorage. They did have two stop overs
per week in Fairbanks which isn't enough flights for Fairbanks
residents and so on April 1 they added two more stops in Fairbanks.
He said on the average 73 percent of their workers in the oil and
gas industry reside in Alaska and are transported from Anchorage
and Fairbanks, not from out of state.
Number 210
RAY JAKUBCZAK, BP, said they think the measurement of the
performance is very important. Their specific commitment as an
industry is to track performance and to report so they know what
they are doing is having an effect and to see improvement in safety
and environmental performance.
This recommendation recognizes that each companies' situation is
different and each companies' current performance on local hire is
different. On a company by company and project by project basis
they are committed to establish local hire goals and report on
them, he said.
MR. JAKUBCZAK said they would work specifically with the Department
of Labor to develop an improved methodology for measuring
everything. There is a two year lag in the nonresident data they
now compile. They want accuracy, consistency, and timeliness.
SENATOR KELLY asked how they define an expatriate employee.
MR.JAKUBCZAK replied that would be a foreign national that's
working in the United States.
Number 258
KEN LANGEL, HC Price Co., said each company is committed to
reviewing their individual policies and procedures to see what
affect they may have on Alaska hire and see what can be done.
Training was a big issue that came up in the recommendations. A
training subgroup was created to work within the industry in
conjunction with the appropriate State agencies to see what was
available in the State and to insure it was effective.
Another subgroup was created to deal with the Department of Labor
issues already mentioned.
In summary, Mr. Langel said, the group wholeheartedly endorsed the
Alaska employment agenda. There is a basic underlying requirement
for the industry to be competitive in a world market. A
competitive industry returns benefits to the State through an even
greater potential for job opportunities for Alaskans. To
accomplish this they need a better understanding of the potential
costs and tradeoffs associated with their Alaskan hire stance and
the increasing need to compete, not just on a regional basis, but
with the lower 48 on a global basis.
Number 300
DWIGHT PERKINS, Department of Labor, said he was present to listen.
He said the industry has been talking with his commissioner.
SENATOR SALO said she hoped they were working in her district with
Dennis Stephie of the KPC. MR. LANGEL said they are working with
him and an industry group toured the Kenai Peninsula and they like
what they saw.
MR. JAKUBCZAK said they were surprised and impressed with the hands
on training and with the amount of real industry equipment they saw
in the laboratories. They were particularly impressed with the
instrumentation program and talked to some people about getting
ready for some jobs that might available in a year and a half down
the road. He said this skill is consistently in short supply.
SENATOR SALO remarked that she thought it would be wonderful if the
Northstar modules could be built in Alaska and asked if they would
be built with Alaskan workers. MR. JAKUBCZAK replied that
instrument training program was geared toward that project.
Number 345
REPRESENTATIVE PETE KOTT commented that this is a relatively unique
process with the industry and it is an important one. He mentioned
a story he heard about how the industry brought in 25 welders for
a one day job and thought there were plenty of Alaskan who could
have done that job.
MR. CHEEK replied that he wasn't familiar with that story, but he
couldn't remember when they had a one day job. He said in the last
two years they have had difficulty in the higher skilled trades,
such as electricians and some pipe welders which they have had to
recruit outside. He said they have a rigorous recruiting program
which is monitored by Arctic Slope Regional Corporation and insures
that they give ASRC shareholders a first chance to go to work,
Alaskan natives, and then Alaskans. They have a very vigorous
monitoring program to make sure they are complying with that.
MR. THOMPSON said as a result of some of this work they have looked
at the North Slope, ARCO, for example, in the Kuparek Field, one of
their construction projects is a large pipeline project and
pipeline modification. In that particular project they were able
to use APC and other companies - unions out of Fairbanks, 90
percent plus are Alaskans. Also BP at Milne Point and some other
projects have been able to increase Alaskan hire. However, they
are hearing loud and clear that this isn't enough and they are
going to try to follow through on these specific recommendations
they have outlined.
REPRESENTATIVE JERRY SANDERS applauded their efforts to increase
Alaska hire in the last couple of years and encouraged them to work
with the legislature to let them know how they could help.
Number 406
REPRESENTATIVE GENE KUBINA asked if ARCO was planning to outsource
more. MR. THOMPSON replied that currently they have about 1,550
employees within ARCO and their long range plan calls for that into
the future. They do not plan at the time to have any major
outsourcing of ARCO employees work. Certain segments of their work
evolved in the '90's when Alaskan contractors did certain types of
work for them, like construction and operational. Within those
contractors there were some subcontractors using 80 - 90 percent
Alaska hire and some contractors were using about 50 percent
Alaskan hire. Those contractors have agreed to improve and they
don't have plans to outsource on ARCO work.
Two years ago they had major restructuring within their company and
looked at outsourcing major functions. They got bids from outside
firms for those and it was at a substantially lower cost. They
challenged their own employees to meet or beat those costs and
streamline to improve efficiency. Today they are at that lower
cost.
REPRESENTATIVE KUBINA said it does appear when there are contract
agreements with the union they seem to get a lot more Alaskans and
asked him if he was as restricted as the State government in terms
of giving preference to Alaskans. MR. THOMPSON replied that they
have had in many of their recent contracts Alaska hire preference
clauses. It is controversial, because under federal law people can
travel and can work anywhere in the U.S. and they do have out of
state workers who like to work in Alaska.
This report shows that even though there are Alaskan preference
clauses in certain contracts, industry did not make a commitment to
be measured.
For the most part union hire contractors are a higher percentage
Alaskans. Using the hiring at Kuparek as an example, he said, they
first found that the unions were not cost competitive whatsoever.
He said crafts people out of Fairbanks sat down with their
management personnel and shared numbers and the need to be cost
competitive and they came up with innovations where they got to a
competitive cost and they got the work. At the same time there
were some groups that were not willing and they did not get the
work. So it is important for everyone to be really serious on the
cost competitive issue.
Number 475
SENATOR SALO said she thought it would take about 20 cannery jobs
to equal one good oil industry job. So the figures might look
terrible for the seafood processing industry, the oil industry jobs
are good jobs for Alaskans that pay a living wage.
Number 482
REPRESENTATIVE KUBINA said he looked forward to working with
industry on the gas project coming in the future.
MR. THOMPSON said that for ARCO, North Slope gas is the single
largest potential resource their company has.
SENATOR KELLY thanked everyone for their participation and
adjourned the meeting at 2:15 p.m.
| Document Name | Date/Time | Subjects |
|---|