An employment problem bred of success | June 20, 2016 Issue - Vol. 94 Issue 25 | Chemical & Engineering News
Volume 94 Issue 25 | p. 27
Issue Date: June 20, 2016

An employment problem bred of success

Chemical executives are growing concerned about staffing their expanding companies
Department: Business
Keywords: employment, chemical industry, shale gas

Defying dire predictions, chemical companies are advancing a slew of expansion projects on the U.S. Gulf Coast without major shortages in skilled labor. Plants are being built on time, and thanks to low-cost raw materials extracted from shale, executives are anticipating robust sales when they start up.

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Work in progress
Survey respondents see staffing challenges for the chemical workforce.
Source: Accenture survey of more than 500 chemical company managers
A bar graph showing popular responses to a survey about the aging chemical workforce.
 
Work in progress
Survey respondents see staffing challenges for the chemical workforce.
Source: Accenture survey of more than 500 chemical company managers

But those same executives are being warned not to get complacent about finding the workers their firms need to prosper. Baby boomer employees are retiring, and replacing them with today’s millennials won’t be easy.

Growth in the U.S. chemical industry and replenishment of its aging workforce were intertwined themes at the American Chemistry Council’s annual meeting, held earlier this month in Colorado Springs.

ACC economists calculate that more than 260 U.S.-based expansion projects valued at some $160 billion are being built to take advantage of shale gas. Executives from leading chemical companies told reporters at a press briefing that their projects are on time, if not always on budget.

For example, Mark Rohr, chief executive officer of Celanese, said his company recently built a methanol plant in Clear Lake, Texas, in record time, although slightly over budget. Chevron Phillips Chemical CEO Peter Cella said his firm’s $6 billion ethylene cracker in Baytown, Texas, should open next year on time and on budget.

In contrast, Sasol recently disclosed that its massive petrochemicals project in Lake Charles, La., will cost $11 billion, $2 billion more than previously expected.

Both Rohr and Cella said one pinch point has been finding welders. According to Cella, Chevron Phillips got relief by importing temporary workers from the Philippines.

Yet Cella acknowledged that chemical companies got lucky because their growing need for craftspeople coincided with a downturn in construction in the oil and gas and mining industries. Harder to find may be the chemistry-knowledgeable office and lab workers that their expanding businesses will require. “We’re still worried about the future,” he said.

Cella, who is also the incoming chairman of ACC’s board, led his firm’s participation in a new survey of chemical industry workforce issues conducted by ACC and the consulting firm Accenture.

The survey attracted more than 500 respondents, including 100 top company executives, mostly from the U.S. and Canada. Among the findings, 40% of respondents said at least 20% of their companies’ workforce will be eligible for retirement in the next three to five years.

Susan Christensen, who heads Accenture’s talent and organization practice, explained that the impending bubble in retirements is in large part due to the chemical industry’s lackluster hiring of new workers in recent years. The result is an outsized pool of older baby boomer employees at many firms.

ACC’s midyear economic report, released at the meeting, backed up Christensen’s contention. The report notes that employment in the U.S. chemical industry declined continuously from 1999 to 2011. But it has started to rebound, and ACC expects employment growth every year through 2021.

At the moment, chemical companies tend to poach workers from other chemical companies. According to Accenture, 52% of chemical companies report that competitors are one of their greatest sources of professional talent.

Firms that want to broaden their hiring pool to replace baby boomer retirees will need look to the millennial generation of people aged 16–34. But Accenture’s survey raises questions about how prepared chemical companies are to cater to that generation, which by and large doesn’t see the chemical industry as a “cool” place to work.

Indeed, only about one-quarter of North American chemical companies retained 90% or more of their millennial employees hired in the past three years, the Accenture survey finds. Most saw a 30–50% attrition rate among millennials. In contrast, a separate Accenture study shows that 69% of new university graduates expect to stay in their first job for more than three years.

At a roundtable convened by Accenture, executives talked about the challenges of attracting the millennial generation to their companies. Jerry MacCleary, North American president of the German polymers maker Covestro, said fully 50% of the workers at his firm are from the baby boomer generation. The millennials who will replace them have different values.

“Millennials want to make a difference,” MacCleary said, “not just in their jobs but in the communities where they live.”

Covestro’s response is a corporate social responsibility program called i3, for ignite, imagine, innovate. Among other things, the program encourages skills-based volunteerism, in which employees apply their expertise to solving challenges facing nonprofits.

Inga Carus, chairman of the specialty chemical maker Carus Corp., urged ACC to support the creation of a nationally accredited chemical operator program. She noted that a rival trade group, the Society of Chemical Manufacturers & Affiliates, is already behind the plan.

Carus said her firm’s own response to the workforce challenge includes starting an apprenticeship program modeled after systems popular in Europe.

“It’s a difficult time for the industry,” Carus said. “We must make it more attractive to millennials.”  

 
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Comments
Robert Buntrock (June 28, 2016 4:18 PM)
Interesting development. The survey seems to have been confined to the chemical industry. I wonder how the results would have been from the pharmaceutical and petroleum industries. Mergers and other upheavals in those industries may have led to different results. Also, a survey of employees in all three industries, current and former, would also be interesting.

Staffing "problems" are often the result of business decisions by management and the resulting negative publicity. This could be a prime reason for students not taking STEM courses in the first place and not pursuing careers in these industries upon graduation. Since the survey probably preceded the Dow/DuPont merger, the results would have probably been even more drastic. Think those surviving companies will have increased staffing problems? You bet.

Having lost three jobs in my career in the chemical/petrochemical/petroleum industries, I speak with experience. As for the mores of millenials, we in the Boomer and pre-Boomer generations had similar dreams and missions when we were in that age group. We were often thwarted by the necessity to put our noses to the management mandated grindstone. Again, I speak from experience. On one interview for my 2nd job, I encountered a manager who ran his group like a wannabe Grad School tyrant advisor with no acknowledgment of life away from work (I didn't get the job, thank goodness).

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