Turnover of Millennials and Other Workers Challenge North American Chemical Companies as Retirement Surge Looms, New Survey by Accenture and American Chemistry Council Reports
By Business Wire News
COLORADO SPRINGS, Colo.
North American chemical companies face workforce turnover issues, which if not resolved, could mean more unplanned operations disruptions, more hiring and training costs and more efforts to maintain safety – reports a new survey by Accenture (NYSE:ACN) and the American Chemistry Council (ACC). The survey was released today at the Council’s annual business meeting.
Chemical companies face a shortage of experienced workers and must replace a substantial number of retiring baby boomers in the coming years. More than 20 percent of the chemicals workforce is approaching retirement in the next three to five years, said 40 percent of respondents.
If the aging workforce issue is not resolved in the next three to five years, 86 percent said the chemical industry’s profitability will suffer significantly. This includes 49 percent of chemical companies that agree and 37 percent that strongly agree with this point of view at a time when industry expansion is expected to continue in North America.
Furthermore, only approximately one quarter of North American chemicals companies retained 90 percent or more of their millennial employees hired in the past three years. Most saw a 30-50-percent attrition rate among millennials. This compares with a recent Accenture Strategy study showing that new university graduates expect to stay on the job for more than three years.
“Abundant supplies of domestic natural gas from shale have moved the U.S. from being a high-cost producer of key petrochemicals and resins to among the lowest cost producers globally, creating a period of unprecedented growth,” said ACC President and CEO Cal Dooley. “We currently have more than 262 new chemical projects announced that are valued at over $161 billion. For the first time in more than a decade, the U.S. chemical industry is once again creating good, high-paying American jobs and it’s vital that we be able to attract and retain a talented workforce that helps us continue to drive economic expansion, innovation, and global competitiveness,” he added.
Executives interviewed noted that chemical companies have effective knowledge transfer programs and can hire millennials with non-technical degrees and train them in the technical knowledge to do the job. The challenge for some is keeping millennials for long, productive careers in an industry considered “old,” despite its track record of tremendous innovation.
“Companies in all industries have a range of generations in their workforce,” said Julie Sweet, Accenture’s group chief executive – North America. “We find that across generations, employees all want interesting work, an opportunity to make a meaningful contribution and a balanced life. By focusing on transparency, providing a hyper-personalized employee experience centered around these values, and providing a feedback loop to keep close to their people, companies can attract and inspire the best people across the generations.”
Most chemical firms compete with peers for personnel, filling open positions mainly by hiring from other companies in the industry. This makes for a limited talent pool and fierce competition. More than half (52 percent) of chemical companies reported hiring professional talent from competitors. This compares with US Bureau of Labor Statistics data (from May 2015) showing that two-thirds of chemistry, chemical engineer and material science graduates, fields desired by chemical companies, work in other industries, including government agencies and energy firms.
Exacerbating the workforce challenges is the so-called “missing middle” of workers ages 35 to 54. This is also a tight labor pool from which to recruit and replace retiring workers with valuable expertise.
“Now that innovation in the U.S. energy sector has created a surge in demand for chemical professionals, particularly skilled craft and technical workers, the industry needs to work collaboratively to close the growing gap,” said Peter Cella, incoming ACC chairman of the board and President and CEO of Chevron Phillips Chemical Company. “Awareness is a critical first step, but we also need to work closely with our schools, communities and government leaders to ensure resources are in place to prepare tomorrow’s workforce.”
“When you sum it all up, we are fighting the war for talent on many fronts,” said Inga Carus, ACC board member and chair of Carus Corporation. “We must not only hire the right people as older workers retire and transfer their knowledge to a younger work force, we must bridge the gap with millennials and get them excited about what we do with chemistry as we develop new products to meet the needs of their generation.”
Another challenge is that new technologies are changing the face of the chemical industry workforce. Nearly two-thirds (63 percent) of respondents said that half or more of the workforce is changing compared to three years ago due to the advent of new skills, automation, robots and cognitive agents. Most (78 percent) expect further change due to digital technologies automating jobs, causing moderate (56 percent) to significant (22 percent) workforce reductions, though more skilled support jobs will be needed.
“While all of these workforce issues exist, 60 percent of chemical companies said they are adapting to digital technologies, but with some resistance,” said David Yankovitz, managing director and chemical practice lead for Accenture. “They also recognize a greater need to embrace digital technologies to gain a competitive advantage. So as the industry overcomes this resistance and advances a people-first mindset to bolster the workforce, success will come in many areas from the production plant to the back office to the market with new products and services.”
The survey of more than 500 chemicals industry respondents, including 100 C-suite participants, was conducted in April-May, 2016. The U.S. had 393 respondents and Canada had 112, with company headquarters worldwide. More than 80 percent of the companies represented in the survey had annual revenues of more than $1 billion; 23 percent had more than $5 billion.
Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 373,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.
About the American Chemistry Council
The American Chemistry Council (ACC) represents the leading companies engaged in the business of chemistry. ACC members apply the science of chemistry to make innovative products and services that make people’s lives better, healthier and safer. ACC is committed to improved environmental, health and safety performance through Responsible Care®, common sense advocacy designed to address major public policy issues, and health and environmental research and product testing. The business of chemistry is an $801 billion enterprise and a key element of the nation’s economy. It is the nation’s largest exporter, accounting for fourteen percent of all U.S. exports. Chemistry companies are among the largest investors in research and development. Safety and security have always been primary concerns of ACC members, and they have intensified their efforts, working closely with government agencies to improve security and to defend against any threat to the nation’s critical infrastructure.
Guy Cantwell, +1 281-900-9089
Matt Corser, +44 755 784 9009
American Chemistry Council
Patrick Hurston, +1 202-249-6506