Mauricio Sion
Executive Chairman
SGF Global
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View from the Top

Mexico Faces Variety of Human Capital Challenges

Wed, 01/21/2015 - 13:32

Q: Having worked across Latin America, how would you assess Mexico’s main challenges in developing its human resources?

A: One of the biggest issues in this country is nationalism, especially with how virulent the debate has become about opening up the energy sector. Besides the regulatory clarity sought by all companies, Mexico must still deal with the security issue, especially in the north. Colombia partly solved this situation by introducing the Award Tax, where an extra dollar was charged per barrel to pay for the army escorting trucks and protecting oil and gas facilities. Another major issue has to do with the skilled labor force. Although companies are laying people off as a consequence of the low oil prices, the shortage of skilled manpower will still be there. This is because when the oil price was at US$100, people who were supposed to retire did not. Now, many of them will do so, leaving a huge technical skills gap for geology, petroleum engineering, and drilling. The problem is magnified in Mexico due to the fact that many engineers were working for PEMEX, which paid lower salaries than other major oil companies. These will now be lured by IOCs, and the retention of manpower for Mexican companies is going to become much tougher. Finally, the immigration law needs to change to allow skilled personnel to obtain Mexican working visas far quicker.

Q: What is the attractiveness of the Mexican oil and gas market for international skilled professionals?

A: Compared to the Middle East, Africa or Russia, Mexican weather is one of the main advantages, as well as its proximity to the US and the level of westernization. In addition, living in Mexico or other Latin American countries is far cheaper while it is easy to get to Canada or the US, where many professionals come from or have homes. They can save a lot of money here. Next, the cultural proximity is also important. Finally, even though certain oil and gas projects are being delayed or cancelled around the world, Mexico is still forging ahead, even if it is seeing a slight slowdown.

Q: How have conditions for oil and gas workers changed now that most companies in the sector are downsizing?

A: Until now, oil and gas employment used to be a contractor’s game where companies had little choice as to people’s availability. That is now changing and corporations will have the upper hand. There is a far greater pool of talent available so “take it or leave it offers” will now be tabled. However, companies might also be terminating the contracts of people when the market is down and seek to rehire them in a few months once the situation improves. Sometimes, these people will already have been snapped up and companies will turn to outsourcing companies. A big issue is that this industry has not learned from past mistakes and has not fixed a lack of loyalty among its staff. People are not loyal to companies and become mercenaries who seek to work for the highest payers.