Chemical companies are finally starting to see the light after a decade of struggling for survival. The future is looking bright with forecasted growth rates the highest the industry has seen in more 
than 20 years. Billions upon billions of dollars have been pledged in support of new chemical plant projects around the world and Exxon Mobile Corporation chairman, Rex Tillerson predicts, “Global chemical demand will grow at a faster pace than GDP” (ExxonMobile). With the chemical industry back in the game, so to speak, executives can finally start to relax and enjoy the ride, right? Wrong. A new threat is looming on the horizon with the potential to seriously jeopardize projects and the progress of the industry as a whole. The issue now keeping chemical CEOs up at night is the limited supply of skilled labor.
Availability of talent is a top CEO concern
In its 17th annual global survey of CEOs, PricewaterhouseCoopers (pcw) found that the availability of key skills was one of the top five most pressing concerns of CEOs in the chemicals industry. (Other concerns were volatility in economic growth, capital markets and exchange rates, as well as energy costs.) Skilled labor is becoming increasingly difficult to find. Market drivers affecting the availability of qualified talent for chemical companies include:
- International competition. As chemical companies continue to expand globally, they now face competition for skilled workers from across country borders. For example, Canada’s Oil & Gas Industry is competing for the same workers as United States companies and they are willing to pay well to attract qualified talent. As a result, the labor shortage is no longer just regional but global as well.
- Worldwide operations. International chemical companies often must establish operations in close proximity to their customers. This requires hiring from the local talent pool or relocating existing workers. In both scenarios, addressing cultural diversification and differences can increase the complexity of workforce management.
- Aging workforce. In many of the world’s developed countries, retirement-age employees from all types of industries are exiting the workforce at a faster rate than qualified workers are being hired to replace them. According to Ernst & Young, both Japan and Europe have more people exiting the workforce than there are workers prepared to enter it. More specifically, by 2030, the labor gap in Europe is expected to reach 8.3 million workers and by the end of this decade, countries such as Russia, Canada, South Korea and China will also have more retirees than new hires. This labor gap not only leaves companies with a lack of manpower, but older workers take with them valuable tribal knowledge gained from years on the job. Again, according to the survey by pcwPwC, more than 50% of chemical CEOs are concerned about the impact pending retirements will have on their workforces.
- Evolving skill sets. Despite a growing number of college educated workers, many global chemical companies are having a difficult time finding employees with the needed skill sets. This is partly due to the rapid, and continuous, deployment of advanced technologies throughout the company. For example, the explosion of data and its real-time application at a plant site requires a different level of knowledge than needed by workers just a few years ago. Another factor in the labor shortage is that although educational access is growing worldwide, not enough students graduate with the skills desired by global employers.
Part 2 of this blog will talk about how technology-based strategies can be used to close the talent gap.