22 March 2013 13:41 [Source: ICB]
North America's petrochemicals industry is in an expansionary mood, but will it find enough of the right people to fulfil its plans, or is the 'brain drain' imminent?
Access to cheap domestic natural gas produced from shale deposits has made investment in new petrochemical projects in North America attractive for the first time in decades. The various projects announced will require highly skilled workers for the initial construction phase as well as the continued maintenance and operation of these facilities.
Finding qualified people to interview may well become the hardest part of recruitment
Copyright: Rex Features
A negative perception of the chemical industry among the public in general, and among newly graduated students in particular, also continues to plague the sector, which will be competing for available talent with many other growing industries.
Petrochemical firms must, therefore, develop and begin implementing creative strategies to address their human resource needs.
"The chemical industry, particularly in the US and Europe, has been facing the prospect of a potential brain drain for several years," notes Duane Dickson, a principal at Deloitte Consulting. "The baby boomers that were hired in the 1970s are all within 510 years of retirement. That means a larger number of experienced people will soon be leaving these companies," Dickson adds.
The loss of company knowledge is a critical issue. "It takes a good 510 years of working to really gain an understanding of the industry," Craig Heiser, managing director of talent and organisation for the energy/chemicals industries with Accenture, observes. "Companies need to look at different opportunities for making creative use of experienced employees."
In the past, companies have often hired-back retired workers as contractors, which ends up costing more. While finding contract resources within the group of already retired resources will still be an important aspect going forward, Dickson believes companies will need to extend the retirement age for those workers that would otherwise be retiring soon, or perhaps retain them on a part-time basis.
"Regardless of the specific strategies, companies definitely need to develop a new model for managing this aspect of the human resource equation," Heiser asserts.
Even with new strategies however, there will still not be enough people to fill the gap of workers needed. As the experienced people retire, others are promoted to take their place, and the layers of employees at the lower level become thinner, according to Andy Talkington, managing director, global chemicals and crop science with executive recruiting firm Korn Ferry International.
Filling these positions is already difficult, without having to meet the needs of new shale gas-driven projects.
First, the increasing emphasis on sustainability has led to the need to save energy and water and minimise resource consumption, which often requires more complex production systems that in turn require a higher level of skill to operate, according to Heiser.
Second is the regulatory environment. "Most US policy has been in the area of safety and the environment, and not on building demand. That puts the country at a disadvantage compared to many emerging regions, where extensive investments are being made in education and economic development," Dickson, also the global chemicals sector leader at Deloitte Touche Tohmatsu, says.
Thirdly, the petrochemical industry will be looking for people in the same pool of talent accessed by the upstream energy sector, downstream fine and specialty chemical industries, and other related and unrelated markets such as biotechnology, healthcare, computers and microelectronics.
IN THE WRONG PLACE
The energy sector, which is developing cheap natural gas feedstock, is already struggling to find skilled workers, from welders to truck-drivers to engineers, particularly in areas that lack existing infrastructure.
Many of the planned new crackers will suffer the same difficulties, because they will be located outside the typical petrochemical production areas - such as in Pennsylvania and North Dakota - where there is no infrastructure or pool of skilled labour.
"The current generation does not seem to be that interested in moving around to new places, and those that are interested have already taken advantage of opportunities to work in other countries in the Middle East and Asia where the petrochemical industry has been expanding and has been a further drain on resources," Dickson says.
He further notes that the shale gas environment is entrepreneurial and thus constantly changing, and the need to be able to respond quickly only intensifies the staffing issues.
Competition for newly graduated engineers and other technically trained people is also fierce. About 20 years ago, according to Phillip R Westmoreland, president of the American Institute of Chemical Engineers (AIChE), 65% of US chemical engineering graduates were entering the fuels and chemicals industry. Ten years later, that number had fallen to 39%.
"Now the demand for chemical engineers is growing as increasing numbers of manufacturing industries become more reliant on the properties of chemicals. They aren't just assembling things any more, but forming and processing new materials," Westmoreland comments.
The result has been a dramatic rise in the number of students graduating with a degree in chemical engineering - up from a low of 4,900 graduates per year in 2008 to 6,500 per year for the last two years, notes AIChE executive director June Wispelwey.
Unfortunately for the petrochemical industry, according to Talkington, these new graduates prefer many of the newer sectors, for example biotechnology and microelectronics.
"Despite the fact that the chemical industry has good, relatively well-paying jobs, its attractiveness compared to other technology-based businesses is currently very low. The industry faces a big challenge in overcoming public perceptions and conveying that chemistry is fundamental to life," Talkington remarks.
Trade groups, individual companies and academic institutions are responding and attempting to tell the story in a more effective manner. The National Academy of Engineers, for example, has launched a "Changing the Conversation" initiative highlighting how engineers are helping to solve major global challenges, according to Wispelwey.
"Many new graduates want to be part of these solutions. Talking to them about how the chemical industry can help address water quality, sustainable energy, waste management, healthcare, and other worldwide issues is much more inviting," she says.
In addition, the initiative also places a great deal of emphasis on describing engineering opportunities and careers in new ways that are more welcoming to women and other groups presently under-represented in the Science, Technology, Engineering and Mathematics (STEM) workforce.
INTERNSHIPS ARE POSITIVE
There are many programmes designed to engage and educate children in grades K-12 and at college level about chemistry and its importance. Heiser also sees the growing number of internship programmes as a positive step forward.
However, he cautions, "companies need to invest in these programmes and be sure to give these high school and college students an amazing and challenging experience so that they are excited about coming back."
Engineers are just one of many types of skilled workers that will be in short supply. Most large companies will be able to fill managerial positions - either by promoting from within, repatriating expats, or poaching from one another - and can hire retired workers as contractors for the build phase. However, they will struggle to find reliable, safe people to operate and maintain the new facilities once they are built, according to Heiser.
Talkington adds that: "It takes a specialised skill-set to run and maintain a chemical plant, including trades people, pipe-fitters, millwrights, [and] technicians, etc, and they all need to be located physically near the plant particularly in places like Pennsylvania and West Virginia. These people will all need to be brought in."
GLOBAL TALENT SEARCH
To find these people, many companies will have to look globally, not only by bringing back expats, but also by using foreign nationals. "In the short term, I expect the chemical industry to join with IT and software industries in pushing for a better visa programme for temporary workers," Talkington says. "The US must participate in the global talent market; if we don't develop the skilled workers we need here, then we will have to import them. How successful the industry will be, though, will depend on the policy-makers."
Petrochemical firms are also finding it necessary to increase the attractiveness of compensation packages in terms of both wages and benefits. "We also hear increasingly that companies looking to hire talented, ambitious people that are eager to be effective and productive, are finding that work-life balance issues are very important. Those firms that are innovative and support employees in this respect will be in an advantageous position," Talkington observes.
Overall, petrochemical companies that are creative about managing all aspects of their human resources effort will have better luck attracting and retaining the skilled workforce they need, in order to take advantage of the opportunities afforded to the industry through the development of shale gas.
They should consider all avenues, Dickson says: retaining skilled workers for longer; focusing on the technical education of young people; increasing the attractiveness of the industry for new graduates; accessing the global talent pool; and offering innovative compensation packages.
"There is no simple solution to the [human] resources issue that the industry faces. However, if companies are going to find ways to manage these issues, they must be planning today in order to be prepared for the time when the situation will be most acute," Heiser concludes.
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