IHS Chemical Week


Where is the talent needed to support the US shale boom?

12:51 PM MDT | July 17, 2013 | By ANDY TALKINGTON

The shale gas boom currently under way in North America presents one of the most promising opportunities within the US petrochemical industry in more than 30 years. With new technologies and extraction processes at our disposal, America is finally able to tap into a 50-year supply of natural gas resources in parts of Texas, Michigan, North Dakota, and a block of land from the tip of Tennessee north to New York. As a result, natural gas and the liquids associated with it have finally reached a price that enables the US chemicals industry to more effectively compete on a global level and to support reinvestment economics for a variety of building block chemicals. Additionally, gas-to-liquids and export liquefied natural gas investments are just around the corner.

Recognizing this tremendous economic opportunity, the industry is resurging and focusing on local expansion. America already possesses a more diverse and efficient pipeline distribution system for natural gas than any other country in the world. Gas-related assets that went idle back in the early 1990s because of soaring gas prices are coming back online, and the transportation infrastructure is expanding. Because natural gas and associated liquids are so cheap relative to oil, and are foreseen to stay this way, the US petrochemical industry plans to invest over $50 billion during the next five or more years to build new plants to support the boom. There’s just one problem: We lack the local talent we’ve had in the past to sustainably support these new assets.

The shortage of technical talent and quality skilled labor within the US petrochemical industry has been a topic of conversation since the mid-1990s, and with the investment in new assets outside the US still strong, an insufficient pipeline of US talent persists. The good news: The technical talent needs have not been greatly affected since communication technology now enables new product ideas and process improvements to be developed and disseminated globally through the click of a mouse. The real crunch affects the operational side—the mechanical, electrical and chemical engineers who physically support the plants, as well as the highly skilled operations and maintenance personnel who run them.

Baby boomer engineers are retiring in greater numbers without younger talent ready to replace them. There has been a declining focus on technical and trade education schools in the United States, as well as the declining interest of students targeting process industry jobs versus other sectors. Because of the stagnant growth of the US chemicals industry and its cyclicality for the past two decades, many chemical engineers have opted to move into other more exotic and more stable fields, such as biomedical, pharmaceutical, and food science. For similar reasons, infrastructure and oil and gas investments have attracted skilled labor and operational talent. In sum, the system is stressed.

As we move forward in building these new chemical plants, the gap in operational talent will continue to grow. Companies will be forced to look at different options to attract, train, and retain them.

First, companies will have to rely on further leveraging technology to operate and support expanded plant operations surrounding brownfield expansions. Greenfield projects will not have this advantage.

Second, companies will have to focus on expanded responsibilities for less experienced personnel. This means stretching employees beyond their current responsibilities, as well as tapping into younger, less experienced talent, which creates greater risk. Additionally, attracting operations and maintenance personnel from other industries and teaching them needed skills and processes will be a challenge. However, there are few operational assets as complex as a petrochemical plant, so existing skills are likely less transferrable.

Third, and probably the most disheartening, companies will have to tap into talent outside of the United States. The majority of the growth activity within the global petrochemical industry for the past 20 years has occurred in places such as India, the Mideast, and China, where numerous plants have been built. As a result, these regions are home to greater depth of skilled labor and/or have been able to easily import them. Furthermore, these parts of the world produce more chemical engineering graduates than the United States and therefore have even more chemical talent to add into the pipeline. American companies will have to offer higher salaries and other incentives that reposition the United States as an attractive place to pursue a chemicals career. For overseas students who already come here to pursue degrees relevant to the industry, companies will have to find ways to encourage these individuals to remain in the United States. Based on current immigration policy, this might be easier said than done; just look at the battle the high-tech industry has fought for importation of international talent.

Despite these proposed remedies, the next 10–15 years are going to be incredibly tight when it comes to talent requirements. While the technical and skilled labor shortages are clearly definite challenges, they will not deter the industry from moving forward with its plans to build the proposed $50 billion in chemical assets. As awareness grows around these new facility investments, the hope is that it will renew interest in the field among current US chemical, mechanical, and electrical engineers, as well as those in college pursuing similar degrees. After all, with a 50-year supply of natural gas now at our disposal and the resurgence of the US chemicals industry, we’re talking about a career and a quarter’s worth of talent openings just waiting to be filled.  

- Andy Talkington, managing director/global chemicals practice at Korn/Ferry International

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