Assessing 2015’s infrastructure workforce needs
Tower tech “shortage of 5,000” is sharply at odds with current industry downturn
December 4, 2014 – Somewhere, at some time, someone said that the wireless infrastructure industry needed at least an additional 5,000 tower technicians to support an ever-looming shortfall of workers. And like lint on a velvet painting of Elvis, it stuck and was continuously buttressed by trade groups and the media who accepted it as gospel because, well, someone said it.
But it was most likely not true.
Almost as if they were in a 5K run to put a long distance from having the 5K worker shortage number attributed to them, carriers, trade organizations and others who have parroted the critical labor shortage during the past 18 months almost consistently informed Wireless Estimator, “That’s the number that’s been generally used.”
Seven key industry executives, who publically used the 5,000 or higher shortage figure, were unable to provide any study or data to address their claim, other than anecdotal conversations they’ve had with others in the industry.
One association spokesperson said that his organization’s belief that there was a severe shortage came from a web site statement that estimated, without any documentation, that there are between 8,000 and 10,000 open positions that need to be filled in the next 18-36 months to keep pace with the industry-wide expansion and upgrade.
Another executive said that he based his comments about the shortage after Warriors 4 Wireless said in November 2013 that it was going to certify and find jobs for 5,000 veterans over three years.
Although it was most likely not their intent, fostering an unsupported belief that there was a severe shortage was beneficial to numerous organizations and higher education institutions seeking federal funding for training.
It also spurred a few companies to commit millions of dollars to staff up with crews and equipment to meet what they termed the explosive growth and manpower needed in the next three years. However, their build it and they’ll have to come model failed and they had to readdress their strategy.
Was AT&T ground zero?
A number of industry insiders believe that the genesis of the shortage number might have come from AT&T, but it wasn’t necessarily reflective of actual industry needs, but what the carrier required to ensure that its build-out time-frame was met for its current 4G upgrade and their envisioned, but failed, cell site of the future.
In 2012/2013, AT&T was assessing the number of additional dedicated crews that it would need to meet its projected build. Their shortage reportedly was approximately 1,000 four-man crews.
The carrier reportedly had at that time a minimum of an additional 1,500 crews that it could muster through existing contractual commitments and its turfing partners.
MasTec Network Solutions, BlueStream Professional Services and other companies ramped up to support that goal, but in May of 2014, AT&T froze a greater amount of its work following its acquisition of DirecTV for $49 billon.
Opportunities are slowing
Work is slowing down for many contractors throughout the nation as AT&T continues to pull back. In mid-November the carrier provided capital expenditure guidance that was 13.5% below consensus expectations.
An AT&T manager informed Wireless Estimator that their 2015 build program was going to be cut back considerably less in absolute dollars for 2015 than the company spent in 2014.
As a result of AT&T’s pullback, some contractors are scrambling to keep crews busy as witnessed by the pricing being bid and the number of companies seeking to provide services for the Rural America and 700 MHZ Project Deployment which is expected to total greater than 3,000 sites, according to a T-Mobile manager familiar with the project’s plans.
According to RBC Capital Markets, next year’s capex forecast for T-Mobile Verizon and Sprint will be basically flat. Analyst Jonathan Atkin said that he anticipated a slowdown of new macro sites from approximately 3,600 in 2014 to 1,500 in 2015.
Whereas wireless capex forecasts used to be steady drivers for future business expectations, project reversals, acquisitions and other unexpected events have left infrastructure providers more cautious about their windows of opportunity.
Insurers see a number of companies leaving the industry
In 2014, versus the past few years, two insurers with an industry presence said that they are seeing a greater number of companies, both small and mid-size, that are exiting the business.
Although the primary reason was because they had financial problems as a result of poor business management and /or cash flow problems, extensive loss runs have caught the attention of their customers who are being more selective in who they will allow to perform their work.
Also, many smaller companies, and those wishing to enter the market, are not being provided with workers’ compensation coverage by the three major underwriters – Zurich, Amerisafe and AIG - and are finding it difficult to obtain all states coverage required by carriers, contractors and tower owners.
Some large companies are also squeezed for cash.
UniTek Global Services had a subdued 10th anniversary this year, and its present last month was a bankruptcy court approval for its restructuring plan.
According to CEO Rocky Romanella, the court's action “ensures that we will be able to maintain regular operations, while meeting our obligations to our suppliers and serving our customers as we work to realign our capital structure as expeditiously as possible."
The full service network design, construction, project management and installation company has over 3,000 employees. It was founded in 2005 and went public in 2010 via a reverse merger with Berliner Communications, Inc.
New lenders have infused $43 million to support the company’s emergence from Chapter 11.
Help wanted ads drop signals a downturn
Wireless Estimator, with the nation’s largest industry job board, has seen a steady growth in advertisements since 2006, but as a result of AT&T’s freeze in May, postings plummeted 36%.
However, although there are still many hundreds of jobs being advertised, employers and staffing companies are seeking additional workers to fill special project needs, especially retrofitting personnel, but not for general 4G deployments.
In addition, numerous advertisements for tower technicians aren’t always indicative of a shortage, but the requirement for contractors to fill an always on spigot of employees who leave or are terminated.
According to the U.S. Bureau of Labor Statistics, the monthly turnover rate in construction through September 2014 averaged 4.5% per month. There are no known statistics for wireless construction.
Wages would have indicated a shortage
According to a CEO of a company employing over 100 elevated workers, if there truly was a shortage of over 5,000 workers, it would have been reflected in wages that would have been considerably higher than they are now.
“Wages are being kept in check simply because of a supply that is currently close to meeting the demand,” he said.
He also noted that it is too difficult to accurately predict employment needs even a year or two out. “These people were forecasting two to three years using the same shortfall numbers. That’s nonsense,” he said.
“I don’t think anyone can with any certainty identify employee needs over a prolonged period. I’ve been in this since 1989 and have seen all of the peaks and valleys, and I’ve seen my employee count rise and fall with every one of them.”
Some say shortage of 5K does exist
Three company owners informed Wireless Estimator that there could very well be a 5,000 worker shortage, but they emphasized that that shortfall pertains to “qualified” workers.
“Every time there is an upturn in the industry we’re forced to hire-on unskilled and oftentimes undesirable workers just to round out a crew,” said a Midwest contractor who has maintained approximately seven crews over the past six years.
“When there’s a slowdown it is actually healthy for the industry. We’re able to get rid of the ‘problem children’ and spend our time training folks who want to enjoy a long-term career with us. I think it benefits everyone.”
Whether or not there is a worker glut or shortage, federally-funded training programs through Aiken Technical College (ATC) and Virginia State University (VSU) will assist in elevating the skills of entry-level employees or possibly providing replacements for marginal workers. ATC is currently providing courses; VSU is in their course development stage.
In addition, the Telecommunications Industry Registered Apprenticeship Program (TIRAP), a joint venture of telecommunications companies and the U.S. Department of Labor (DoL) that develops DoL-credentialed apprenticeship programs, is now available to qualified employers for the training and career development of their employees. The program has been heralded as a major advancement to assist in unifying the training requirements of industry workers.
Caution is new hiring catchword
Whereas a number of companies have put a freeze on hiring, others have let workers go. Following MasTec Network Solutions’ acquisition of WesTower, making it the nation’s largest wireless contractor, a number of workers were terminated, but according to a WesTower project manager, they were primarily workers whose roles were already being handled by MasTec employees.
Although AT&T’s May project freeze seriously cut into MasTec and WesTower’s revenues since their anticipated projects were severely impacted, AT&T’s long-standing relationship with MasTec may see the contractor selected to assist the carrier in building out their recent south of the border purchase since MasTec already has a presence in the Mexican wireless infrastructure.
AT&T last month acquired Mexican wireless provider Iusacell for $2.5 billion. Iusacell's wireless infrastructure is a 3G wireless network based on the global GSM/UMTS technology that AT&T uses in the U.S.
By acquiring Iusacell and bringing it together with AT&T's U.S. network, users will have a more seamless wireless experience no matter which country the caller is in or which country they are calling.
Using MasTec’s current workforce might not be as unified since it is more economical to use Mexican labor where the current minimum wage per day for an electrician is $6.85 U.S.
What’s on the horizon?
When wireless infrastructure builders were impressing Wall Street in the mid-1990s, their common safe haven presented to investors was that they were just providing the wheelbarrows and shovels, and were immune to technological changes.
Today, that tap dance is out of step with how much contractors are aligned with technology, as witnessed by the upsurge in business to roll out 4G; spectrum integrations and other allied advancements.
But great contracting expectations are quickly crushed when budgets take an about-face and other unforeseen events happen such as when LightSquared found that there was no practical way to mitigate potential GPS interference and they scrapped their plans for a 4G-LTE wireless broadband network.
The next highly anticipated build-out tagged at a cost of $7 billion, the First Responder Network Authority (FirstNet), is a minimum of a couple of years away, but it now appears that it is a reality since the FCC’s AWS-3 auction is north of $40 billion and the federal government has the money to fund it.
To provide emergency responders with a nationwide, high-speed, broadband network dedicated to public safety, there will be considerable work for contractors installing new equipment on towers and building additional structures.
The FirstNet’s Radio Access Network (RAN) portion of the network consists of the radio base station infrastructure that connects to user devices. RAN includes cell towers as well as mobile hotspots embedded in vehicles that backhaul to the core network over satellite or other types of wireless infrastructure.
Since most network outages are due to power failures and the loss of data links, the FirstNet sites will need redundant power backup that relies on a variety of sources. Power, backhaul, sites and coverage will be designed with the goal of avoiding single points of failure.