Are companies ready to break the cycle?

March 1, 2007
Executives say chemical industry must focus more on employee retention, according to Editor in Chief Mark Rosenzweig, in his monthly column.

Is a real change underway in how the American chemical industry treats engineers? For too long, many firms have considered technical staff expendable. So, we’ve had to deal with a regular routine: chemical companies facing economic and competitive pressures cut back on engineering personnel. They didn’t worry about the level of in-house experience and expertise, reckoning that consultants and outsourcing could provide the needed know-how. If business picked up or retirements made some holes too deep, the companies figured that getting replacements wouldn’t be too hard because plenty of engineers would be available or could be imported.

Sure, the chemicals business always has been cyclical and, with the cycles, came periods of firing and hiring. Now, as chemical engineers find opportunities in wider areas, that dynamic thankfully may be changing.

For instance, at mid-January’s teleconference of Chemical Processing’s Editorial Board, one member noted that he’s heard that lots of companies are now trying to lure back engineers that once had worked for them. That certainly makes sense because alumni already know the culture and have track records. Some firms are even lobbying engineering students to switch majors to chemical engineering, added another board member. Rest assured these comments didn’t come from people prone to Pollyanna-ish pronouncements.

Of course, such inputs could just reflect that we’re on the upswing in the cycle. Key chemical industry economic data — e.g., shipments and capacity utilization, as reported monthly in our Economic Snapshot — are trending in a favorable direction.

However, a survey commissioned by Deloitte Consulting provides another perspective — and certainly not a Pollyanna-ish one as far as challenges confronting the chemical industry.

The recently released report is based on interviews with 37 high-level people at 26 U.S. chemical companies. Almost one-third of the respondents called energy costs their companies’ top concern. Almost as many, 30%, cited growth and profitability as the main challenge, while nearly 20% put globalization first.

Traditionally, such pressures would presage staffing cuts. However, Tom Marriott, a partner at Deloitte, and its U.S. process manufacturing industry practice leader, describes a different dynamic. “One of the fastest growing and most competitive global issues is finding and keeping top talent. It is also one commanding a great deal of attention from chemical company CEOs and other high level executives. In fact, newly emerging industry groups are forming committees whose sole purpose is to address how to recruit, coach and maintain talented people. Therefore, retention is becoming even more imperative, both to recoup the substantial investment in training and to maintain power for sustained growth. Middle managers are now an increasingly cared for group…”

Marriott in particular cites the American Chemistry Council’s campaign to improve the image of the industry and to attract people to the field, and the National Association of Manufacturers’ Center for Workforce Success. He notes that retention efforts are extending all the way down through the organizations his firm has worked with. He credits two factors: companies emphasizing new product development as a key growth strategy realize how important R&D staff are for success; firms aren’t just recognizing but starting to address the impact of “boomer” retirements by paying more attention to developing and promoting younger staff.

Let’s hope we are seeing a real change. It’s certainly about time. With the current challenges facing the U.S. chemical industry, companies need to appreciate and retain their engineering expertise.

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