Energy Fueling Boiler and Pipe Markets

In what could be good news for some metals producers and scrap processors, a rising tide of alternative energy projects is beginning to fuel strong demand for metal pipes, valves and boilers.

According to a report from Industrial Info Resources (IIR), Sugar Land, Texas, a factor that could hold back that tide is a potential shortfall in skilled labor positions critical for these projects.

In the electric power industry, IIR says it is tracking 688 renewable energy projects in North America scheduled to begin construction in 2010. The projects, which involve a total investment value of $125 billion and combined can produce nearly 60,000 megawatts (MW) of generating capacity, may not all kick off as scheduled, with one reason being a shortage of skilled craft labor.

Anthony Salemme of IIR says its Manpower Market Analyzer is identifying supply/demand imbalances that indicate craft labor shortages and therefore potential wage rate increases.

“Already, local labor imbalances are becoming evident,” says Salemme. In Ohio, he notes, demand for boilermakers’ man-hours is expected to surge by about 40 percent in 2010 compared with 2009. California is expected to need 53 percent more boilermaker man-hours in 2010 as well. “Some of this surge in demand is attributable to construction of concentrated solar power projects, which have extensive piping requirements to carry gases or heated steam to and from the solar arrays,” according to IIR.

The research firm points to the $1.3 billion Lake Elsinore hydropower plant and the Hayward Natural Gas Energy Center in California as two examples, both of which are scheduled to start construction later in 2010.

In Massachusetts, the $400 million Westfield Gas-to-Oil Center and the $150 million Russell Biomass project also are scheduled to kick off in 2010.

“Make no mistake, there will be economic growth in the industrial construction markets in 2010,” adds Salemme. “Cost estimators will need to begin looking harder for skilled craft labor supply in certain areas of the country.”