Knowledge Transfer

Now is the time to invest in skills

THE widening skills gap and ageing workforce is a hotly-debated topic in the world of engineering and chemical engineering. This has become ever more apparent, with many industries being forced to look at innovative ways to tackle the problem. The landscape and needs of these sectors are changing quickly, highlighting the need for quick and effective training, and for skills to be improved and invested in via enhanced training methods using emerging technologies. It is also important that these skills change, to meet the needs of current and emerging industries.

What is changing in industry and how can we bridge the skills gap? The ongoing move towards further automation and digitised working practices in Europe and the US is quickly changing the nature of the skills required and creating a skills deficit. This is especially true for chemical engineering, where it requires fewer staff to run and operate a plant day-to-day, but requires new wider skill sets to build and support the plants. In the future, this could be further compounded by technological change such as Industry 4.0 whereby whole supply chains are linked top to bottom. One idea is that end user consumption data will be fed directly back up the supply chain to the production systems. Increasing plant reliability also plays a huge role in a loss of skills within the industry. Issues that used to be commonplace are now seen far less frequently.

In the UK, the ageing workforce is an urgent issue that is compounded by the global trends in skills and labour. According to the UK Parliamentary Office of Science and Technology (http://bit.ly/2F0wIeE), by 2020 a third of UK workers will be over 50, and within 20 years it’s estimated that nearly a quarter of the UK population will be over 65 and looking for retirement. It appears that an ageing population and, as a direct result the workforce, is a global trend. The over-65s are estimated to be 8.5% of world population in 2015, growing to 12% globally by 2030 (http://bit.ly/1rhf7Xq). Participation of over-65s in the labour market, however, is lowest in higher income countries, so this goes to show that people are leaving the labour market.

According to an online 2016 salary survey (http://bit.ly/2EntHnH) just under 40% of respondents across many engineering sectors are over 50. By comparison, engineers under 30 make up only 12-15% of the workforce. There is some good news though, certainly in terms of chemical engineering – there has been a surge in undergraduate university applications in the UK, peaking in 2015 at just over 23,000 applications (http://bit.ly/2BsOrM9). This has resulted in new technically advanced departments setting up around the country. 2016 and 2017 did, however, both result in an approximate 12% drop in applications. This could be due to a negative image of the industry or possibly the current volatility. It does show though that there are tough times ahead of us, but there are still very good numbers of new engineers out there compared to ten years ago where applications were in the 8,000-10,000/y range. The down side of new talent is that there can be a significant lead time until these people are leaders and decision makers.

By 2020 a third of UK workers will be over 50, and within 20 years its estimated that nearly a quarter of the UK population will be over 65 and looking for retirement

Geopolitical changes have also had a large effect on the chemical engineering labour markets. One obvious example of this is the large drop in global oil prices during 2016. This has led to a significant drop in upstream oil and gas production employment globally, with an estimated 120,000 sector and related jobs lost in the UK between 2014–2016 (http://bit.ly/2h5h0rf). This means there are a lot of people with excellent process and chemical engineering skills looking for work. It’s down to other sectors to capitalise on this opportunity before these people move on. It’s not all bad news though, this same change is having some positive effects on other industries. The downstream petrochemical industry has in recent years seen good adjustments  based on falling feedstock prices and increased economic growth. Renewables have also been benefiting during this challenging period. Quarter 1 2018 has seen a recovery in global oil price (US$70/bbl at its peak) and new project work is being announced again, for example the North Sea Penguins field redevelopment (http://go.shell.com/2CjMZZj). This is evidence of a renewed confidence in the industry. Some companies are de-mothballing and expanding some of their operations that have been uneconomical to run for a very long time. A perfect example of this is the INEOS European expansion programme (http://bit.ly/2EZ0AYR) where they are increasing production of propylene and ethylene in Europe by importing US shale gas to support a growing demand for propylene and ethylene derivatives. These projects require skills that are less abundant than they were just a few years ago. It is vital that industry addresses the issue right away while projects are getting underway.

There has been a lot of change from within industry in recent years in relation to skills, but it’s more driven from a competence assurance for health and safety compliance. This has meant that skills and standards have improved overall, but this has mostly served to bring everything to a basic standard. Solving the skills gap issue will require organisations to move beyond this and will require upfront investment. It is an unfortunate truth that training and skills are often one of the first things to be cut when a company experiences harder economic times. In the past this wouldn’t have been as much of a problem, but now getting new skills into a company is vital to recovery.