Productivity and Skills Get Thorough Exam

Blueprint identifies improvements for U.K. engineering construction sector.

By Seán Ottewell, Editor at Large

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Last year’s industrial dispute at Total’s Lindsey oil refinery, Immingham, U.K., threatened to put the nation’s center for chemical processing on investors’ blacklists (See Process Flare-up Leads to Blacklist Fear).

Realizing the danger this posed to one of the U.K.’s main employment and exporting sectors, the government called in not-for-profit industrial relations expert Whitehall & Industry Group (WIG), London, U.K., to conduct a thorough review of productivity and skills in the engineering construction sector. WIG completed the task and published its 44-page “Changing to Compete” report (see www.bis.gov.uk/wp-content/uploads/publications/Gibson-Review.pdf).

The review sought to answer two fundamental questions: do U.K. productivity and skills in engineering construction lag other industrialized countries, particularly the United States and Continental Europe, regardless of the productivity position of the industry?; and what more should be done to put the industry and workers in a good position to compete for business and jobs in the U.K. and internationally?

With the large anticipated future growth in workload, there will be a more general skills shortage.

Evidence in the review suggests that productivity of engineering construction projects in the U.K. is very variable —  up to 30% better or worse than average. This variability far exceeds the gap between the U.K. and other countries. However, for construction, repair and maintenance of oil refining, chemical and pharmaceutical plants, productivity of projects in the U.K. between 1998 and 2008 lagged the U.S. Gulf Coast by 11% and continental Europe by 5%.

Technical skills of the U.K. workforce are as good as those in other countries, but  there are concerns about quality and number of supervisory staff available as well as availability of some craft trades, experienced planners and project managers, the review found.

The second question is particularly important. The need to move to low-carbon sources of energy, plus a pressing need to reduce carbon emissions makes it vital that projects are completed on time, on budget and are of good quality. To overcome problems that have dogged the industry, the review says that a Capital Projects Clients’ Group should be established by March 2010 to drive improvements in performance of U.K. projects. Also, it says that the brief of the Engineering Construction Industry Association (ECIA), London, should be expanded to promote use of best practice on productivity and a program of activities established with its members by June 2010.

The ECIA is the principal trade and employer association for the U.K. engineering construction industry; its 300 members employ 50,000-60,000 personnel including plant designers, planners, project engineers and managers.

With the large anticipated future growth in workload, there will be a more general skills shortage —  it’s estimated around 30,000 extra job opportunities will appear by 2014-2015. The review recommends that the skills shortage should be addressed by industry, clients and government by doubling on-site apprentices from 500 in 2009 to 1,000 by 2011 and increasing the number of training places offered on engineering construction projects.

Interestingly, while the review heard strong views from the workforce about foreign workers undercutting U.K. terms and conditions — one of the major factors driving the original Lindsey dispute — it didn’t find any evidence this is the case. Nevertheless, the review welcomes further moves in the recent agreement between employers and unions to ensure transparency in application of terms and conditions.

The review also recommends the U.K. Department of Energy and Climate Change should set out, in its planned 2050 Vision document, potential scenarios for progressive decarbonization of the power sector and roles that might be played by different types of generating plants consistent with security of supply and transition to a low-carbon economy, backed as far as possible by a stable regulatory framework to facilitate such investment programs.

“The changes that will need to happen to achieve better productivity are complex and interrelated but are largely to do with better management of projects and improving the relationships between employers and employees and their unions,” writes Mark Gibson, WIG chief executive in the report’s introduction. “Other industries in the U.K. have faced similar problems and have been able to overcome them and emerge in much better shape.

Engineering construction has to do likewise and could benefit from a greater willingness to learn from other sectors and its own successes. The changes recommended in this report are important if the sector is to take full advantage of the new nuclear, other power generation and large industrial projects over the next 20 years.”


Seán Ottewell is Chemical Processing's Editor at Large. You can e-mail him at sottewell@putman.net.
 

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