Significant workforce-related hurdles remain in place for CPI companies, but signs of progress are emerging
For the past several years, companies in the chemical process industries (CPI) have been grappling with three consequential workforce issues that have also plagued other heavy industrial sectors. These issues are the wave of retirements by experienced workers from the “Baby Boom” generation, recruiting and retaining “Millennial” workers to fill in the ranks and a less-than-stellar perception of the CPI as an attractive place to work. While all three are likely to persist into the future, signals are now emerging that the effort and resources aimed at addressing these issues are starting to have positive effects on the overall employment landscape in the CPI. By emphasizing digital technologies, enhancing partnerships with colleges and universities, and developing new job-related approaches, CPI companies are seeing improved attraction and retention of required workers.
Meanwhile, low unemployment and continued demand are keeping salaries in the CPI high as companies explore new compensation mechanisms [see "Employment opportunities and salaries" below].
Challenges persist, but progress made
Much of the current employment landscape in the CPI remains similar to the situation experienced over the last few years, according to Duane Dickson, vice chairman and chemicals & specialty materials sector leader at Deloitte Consulting LLP (New York; www.deloitte.com). “The demographics situation continues to evolve, but there is still a large distribution of people in the chemical industry that are close to retirement,” he explains. Dickson is a co-author of a 2015 report from Deloitte titled “The Talent Imperative in the Global Chemical Industry.” Deloitte has found that the chemical manufacturing industry has one of the oldest workforces of all industry sectors, with a median age of 45.3, and that 23% of the chemical industry workforce will be eligible to retire within the next 10 years.
As they do so, “knowledge retention is still an issue — the evidence suggesting that those skills and knowledge that are leaving through retirement will be replaced is not strong,” Dickson says. “We’re still at the tip of the iceberg for retirements,” he adds, but there is recognition on the part of that cohort of workers that they need to be diligent about mentoring younger workers.
The high rate of mergers, acquisitions and divestiture activity in the chemical manufacturing industry over the past several years further “accelerates the need for companies to get the right skills and to take advantage of new sources of talent and new methods of training,” says Thomas Morrison, a principal in Deloitte Consulting’s Human Capital Practice.
However, despite the ongoing challenges, Dickson, Morrison and others are optimistic about the industry’s ability to meet them. “Two or three years ago, there hadn’t been much movement on these issues, but 2017 has definitely seen some progress — it’s a hopeful time,” Morrison says. Companies are beginning to figure out how best to put together a useful human resources platform that can successfully navigate the current world and engage the people that are working in it, Morrison says.
Stephanie Rogers-Whaley, a managing director who leads Accenture’s (www.accenture.com) who leads the human resources, talent and learning teams focused on chemicals, natural resources, oil and gas and utilities, agrees that companies have been spending more time and effort on workforce planning and talent acquisition and that these investments are paying off. “Many CPI companies are starting to crack some of the problems in attracting talent to their industries,” she says, especially those workers in the “Millennial” generation. “Companies are absolutely changing their behaviors with regard to attracting workers,” she states.
“There is a lot of activity in this area,” Rogers-Whaley says. “Traditionally, companies have often treated hiring plans as a line item on a page, but companies are now crafting carefully thought-out workforce planning programs with detailed strategies and tactics.”
Strategies for millennials
In many ways, these changes in hiring approaches on the part of CPI companies have been driven by companies’ need to recruit and retain millennial workers.
Accenture’s Rogers-Whaley says “We are starting to see some changes in the talent strategies of companies, who are showing a pronounced desire to freshen up how prospective employees think about their companies and about the jobs and work experience they can offer. To help attract millennials, companies are definitely “reinforcing the digital aspects of the jobs,” she adds, as a way to show themselves as more current, and built for the future — which can help to counter some of the past negative perceptions that have surrounded many types of manufacturing jobs.
And the efforts to shift the perceptions of the industry to attract workers seem to be bearing fruit. “We are also starting to see some excitement on the part of millennial workers for the CPI and other heavy manufacturing industries, in large part because of the awareness that they have a large positive impact on the world’s citizens,” and the integral nature of digital technologies for many jobs, says Rogers-Whaley.
Aside from improvements in attracting talent, there has also been progress in worker retention. “Millennials tend to move around and try different jobs to find what they are looking for — they are not afraid to jump around from job to job, which makes the retention of workers more difficult and more complex,” Rogers-Whaley says.
“Millennials are wired for wanting to feel that their job has immediate impact, and they want to feel that they are progressing quickly,” Rogers-Whaley explains.
At the company level, meeting these expectations can be more challenging than attracting talent in the first place. Among the strategies companies are using is to try to craft job roles and projects that are attractive to millennials. “Of course they have to make sure that roles and projects are aligned with the business plan,” Rogers-Whaley says, but there has been “concerted effort to create jobs that also gel with what workers are passionate about.”
Millennial workers tend to crave engagement, so many companies are implementing rotation programs, where workers move around the plant to get a feel for many sides of the business, Rogers-Whaley explains. For example, there are hybrid positions becoming available that combine engineering and information technology, as well as programs that involve cross-training to offer experience for workers on a variety of projects and functions of the business, including research and development, engineering, sales and marketing and others. The goal is to match a company’s value proposition with the talents and interests of the workers.
“More opportunities for workers give them a wealth of experience that makes them valuable to the company, but also give them a sense of engagement and impact,” Deloitte’s Dickson agrees.
Dickson explains further: “A lot of sophisticated strategies are being tried, all with the aim of changing the shape of what it’s like to be new in a chemical manufacturing company. By exposing newer workers to the right experiences, the companies are able to steer employees toward opportunities that resonate with them and maintain motivation.”
In addition to experiential programs, much attention is also being paid to workplace design and work schedules, Rogers-Whaley says. “There is a lot of movement on workplace design — open concepts are popular, with workers able to sit, stand and interact for brainstorming.” Many companies are looking at healthy worker programs and possibilities for taking courses, she adds, and the ability to access information from mobile phones makes it more feasible to have flexible work schedules.
“These features can sometimes feel minor, but all of this matters,” Rogers-Whaley says. “They help foster a sense of forward movement and engagement, and are part of a multi-layer strategy for worker retention.”
She points out that while the economy is generally good, and many companies are doing well, financial resources are not endless, so companies cannot pursue every “sparkly” project. “Companies have to be thoughtful about how they set these programs up and deploy personnel,” Rogers-Whaley says.
Impact of digital technologies
CPI companies are joining other industries making significant investments in, and significant use of, digital technologies for their operations, including industrial internet of things (IIoT)-enabled digital tools, data analytics capabilities, artificial intelligence (AI) learning, and others. These technologies are having impacts on productivity and efficiency of their operations, but are they also beginning to have impacts on industry workforce.
Many of today’s CPI workers are required to work both with digital technologies and with the process side of the business to make decisions. This is driving some companies toward making digital technologies into a common foundation for all engineering functions. “Companies are experimenting with ways to establish understanding of algorithms, machine learning, data science and other areas as base competencies,” Accenture’s Rogers-Whaley says.
Tobias Scheele, senior vice president of software for Schneider Electric (Rueil Malmaison, France; www.schneider-electric.com) says that today’s work environment requires a new kind of engineer with interdisciplinary knowledge and skills. “The requirements for the workforce are different now: in the past, workers could concentrate in one area and just be good at one thing, but now, they have to be good at a number of things,” he says. “Digital tools need to support that.”
“Digital technologies are helping with workforce enablement and a shift toward the knowledge worker,” Scheele says. “The challenge now is to make data usable in making decisions — how do you make mobility ‘smart’ and how do you make information available to operators?; how do you push operational data down to field and to workflow solutions?” Scheele says. “If digital technology and know-how can allow workers to take their tools and software applications with them, there is a reduced need for re-learning and re-tooling,” Scheele says, but “we must be careful not to lose technical rigor.”
Schneider Electric’s strategy is to take a platform approach, where the focus is on a 360-degree view of an asset, where several integrated platforms cover the full asset and exchange data with each other. “Overall, we need to reduce complexity, reduce the number of apps and replace them with a common platform approach… that can react to changes and trigger activities automatically,” Scheele says.
“Positive results are starting to come out of the use of digital technologies,” says Accenture’s Rogers-Whaley. “The proliferation of data from the field is allowing for interesting work and engaging projects for engineers, and companies using their own internal systems with digital technologies to engage and connect their own workers and provide a better user experience.”
Schneider’s Scheele says a lot of new workers are naturally drawn to this approach, and actually want their jobs to be more interdisciplinary. He cites an example of a young EPC (engineering, procurement and construction) engineer who used Schneider’s SimCentral product to solve an engineering problem involving piping equations with Bernoulli’s fluid flow principles. The solution required programming, and the engineer was able to utilize SimCentral’s platform approach to achieve a solution without formal programming training. “You don’t need to be a programmer to devise a solution, Scheele says. “You can use the tools and tutorials available to solve engineering problems.”
Companies are starting to make significant investments into attracting employees from sectors outside the CPI. Cross-pollination of ideas from other industries, and a “melding” process between cultures of different industry sectors is ongoing, Deloitte’s Morrison says. “There is a recognition that companies need to bring different types of workers with different expertise into their organizations,” he says.
Employment opportunities and salaries
Amid low unemployment (4.1% in the U.S. economy overall) and robust demand for workers, engineering salaries in the CPI are holding at high levels. Along with the need to replace retiring workers, another factor in the solid demand has been the wave of capital spending in the U.S. related to the availability of low-cost shale gas.
Stephen Barnes, assistant professor of economics at Louisiana State University (LSU; Baton Rouge, La.; www.lsu.edu) says that “as these projects are coming online, there will certainly be an uptick in demand for the permanent workforce. Some of those construction workers who helped build these new facilities (or expand existing facilities) will be able to move into permanent positions, but there will also be an uptick for workers at the higher end of the skill distribution: engineers (especially chemical) and business/office positions to manage these facilities.”
He adds “That comes on top of a demographic profile that will generate many opportunities for workers as we replace current workers moving into retirement. These trends will lead to wage growth as firms compete for workers and create great opportunities for those interested in moving into this line of work.”
An informal survey of Chemical Engineering readers seems to support these assertions. The unemployment level for the 900-plus survey respondents actually fell to 1.3% from 2.1% in a similar survey last year. The average annual salary for North American respondents rose to $131,500 from $131,000 in 2016.
Of the respondents, 51.2% held bachelor’s degrees, while 37.3% held master’s degrees and 10.7% held doctoral degrees. 57.6% of respondents reported working for a chemical manufacturing company, 25.7% worked for an engineering, procurement and construction (EPC) company, 4.0% were independent consultants and 6.5% worked for a university or government laboratory.
Other results from the survey include that 63% of respondents said their companies were “somewhat” or “greatly” affected by retirements, versus 37% minimally or not at all affected. Similarly, 64% of respondents said their company was “somewhat” or “greatly” affected by a shortage of skilled trade workers, versus 35% minimally or not all affected.
CPI companies are not necessarily blazing new trails on pay practices, Deloitte’s Morrison says, but the CPI in general will be fast followers of what has been successful elsewhere. There seems to be a willingness to explore team-based incentives, multi-year incentives and other new mechanisms of compensation, Morrison says.
Programs to boost skilled trade workers
The lack of skilled craft labor availability has been an issue for the CPI, among other industry sectors for the past several years, especially in regions where there are a large number of major capital projects, such as the U.S. Gulf Coast. Indications are that the issue will remain, but investment continues to be made in developing the future workforce for skilled trade functions.
Mark Truchan, director of craft services at Fluor Corp. (Irving, Tex.; www.fluor.com) says “I believe that the demand for qualified highly skilled craft will remain high,” especially in the U.S. and especially with regard to highly skilled specialty welders and pipefitters, “because of the number of years of experience needed to become experts in these specialties.”
The construction industry is seeing a large number of retirements, which is creating vacancies for the next generation of craft professionals,” Truchan says, and “while it has tapered somewhat, the outlook for capital industrial construction projects is still very strong.” Coupled with low unemployment rates (near 4%) in the U.S., the situation “creates significant industry-wide challenges to find available people to work on large projects,” he adds.
While present conditions indicate that current workforce issues are likely to persist for the foreseeable future, Truchar says he is “confident that the investments we are making in training craft professionals will enable us to attract and develop our future workforce.”
Fluor has implemented a number or programs to address the challenge. “Fluor training programs — including our pre-employment, tuition-free craft training and our after-hours training at our jobsites — will continue,” Truchan says, and a recently launched program called Elite Craft Corps has been set up to meet the needs of specialty welding and pipefitting. The Elite Craft Corps is a 70-person team that represents the best personnel in terms of quality, safety and productivity, Truchan explains. The Corps boasts some of the industry’s lowest weld reject rates and highest productivity levels, he says. The group proactively deploys to construction sites to provide their in-demand services. For example, after completing a critical scope at project site in Texas, they have now mobilized to Florida to support a project there, Truchan says.
Terry Gillesio of Rockwell Automation (Milwaukee, Wis.; www.rockwellautomation.com) agrees that the skills gap in the CPI and related industry sectors is still present. “Both Rockwell itself as well as its customers have experienced this skills gap in the CPI,” he says.
Rockwell Automation recently announced collaboration with Cuyahoga Community College (Tri-C; Cleveland, Ohio; www.tri-c.edu) on an industrial training program to help meet the needs of today’s advanced manufacturing jobs.
Tri-C’s new Manufacturing Technology Center for Excellence in Cleveland aims to combat the “convergence of workforce challenges facing manufacturers, including changing technologies, evolving skill sets, an aging workforce and a lack of interest in manufacturing jobs.”
The center includes an integrated manufacturing line system that replicates the products and technologies found in many modern manufacturing facilities. The program is available as a workforce training and certification class for workers currently employed in industrial operations that need upskilling, as well as students enrolled at the college who are interested in pursuing careers in manufacturing.
The Manufacturing Technology Center for Excellence currently has four different certification programs, including safety, quality practices and measurement, manufacturing production and processes, and maintenance awareness.
“We really wanted to focus on interdisciplinary training with a range of different skills sets,” said Alicia Booker, vice president of manufacturing, Tri-C. “We know manufacturing jobs aren’t siloed anymore, so we are providing hands-on training and skill development to help prepare students joining the workforce for integrated and advanced technologies out on the plant floor.”
“The skills gap is an issue that affects every industrial operation today,” said Govind Sundararajan, business director for field labor and training, Rockwell Automation. “This sort of hands-on training and upskilling will be key to helping fill that gap.”
Another university-industry program related to skilled technical training has been set up by Praxair, in collaboration with Ivy Tech Community College in Indianapolis, Ind. Praxair Inc. (Danbury, Conn.; www.praxair.com) announced an expansion of its Praxair Skills Pipeline Workforce Development Program with Ivy Tech. The expanded program will offer instruction, career support and professional development opportunities to approximately 50 students training to become advanced manufacturing technologists. After completing the one-year curriculum, students earn a certificate in industrial technology in addition to a number of other skills-based certifications. The program is being funded through a $100,000 contribution from Praxair’s Global Giving Program, with a conditional training grant of approximately $100,000 from the Indiana Economic Development Corp.
Other examples of these industry-college models abound, such as a partnership between Ranken Technical College in north St. Louis, Mo. and Emerson Automation Solutions (St. Louis, Mo.; www.emerson.com). Ranken’s new Manufacturing Incubator facility contains a production line with process control instruments from Emerson.
A different new program aims to support the education of skilled workers at the high school level. Harbor Freight Tools (Calabasas, Calif.; www.harborfreight.com) launched a program this year to award teachers who instruct students in skilled trades at the high school level. Ten winners of the Harbor Freight Tools for Schools Awards were announced recently. The company gave a total of $510,000 to ten teachers from across the U.S. as part of the program.
“Skilled trades are vital to the economy, but there is still a stigma associated with this work,” says Robin Kramer, the director of the awards program at Harbor Freight. “Further, professional development programs for these teachers are not great, so we are trying to support that.” This is the first year the prizes were awarded, but the company is trying to use the awards as a way of growing centers of excellence for teaching skilled trades, from which others can learn.
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