The US power sector is staring down the barrel of a labor shortage of crisis proportions. With workers in all aspects of the industry retiring faster than new recruits are replacing them, the industry has a lot of work to do to position itself as a magnet for new talent.
“There are a number of different things confronting the energy industry, not unlike any industry that requires specific technical skills,” Joe Johnson, a talent management expert with PA Consulting Group, told Breaking Energy.
One major hurdle to replacing retiring employees is a significantly smaller talent pool. Johnson said that there are 71 million people in the US retiring in the next five to seven years, and just 42-43MM to replace them. “In the US, the number of students graduating with engineering degrees is about 10% of what it was just 20 years ago,” Johnson said. While some of that change is attributable to demographics, “most students pursuing technical degrees pursue them in computer science as opposed to engineering”, he said.
“There’s a significant gap in terms of people who are ready to step into those roles,” Johnson said.
Source: Center for Energy Workforce Development, Gaps in the Energy Workforce Pipeline 2011 Survey Results
Johnson identified another obstacle he pointed as disintermediation in the utility industry. “The energy industry is going the way the telephone industry went 20 years ago,” Johnson said. “What we’re seeing is alternative energies coming online and utilities not being able to control emerging technologies.”
He added that a slew of new energy start-ups focused on alternative energies like fuel cells, solar and wind “tend to attract the younger, technically-degreed people because of the potential to be on the cutting edge and share in major upside”.
What kind of labor is lacking?
Skilled workers – with knowledge of electrical, chemical and mechanical engineering, as well as physics, and other scientific disciplines – are one major area of talent shortage for the power sector. And this is made all the more pressing by the complexities of integrating distributed wind and solar generation into the grid. “You’re looking at different conversion energies,” Johnson said.
He gave the example of wind farms, which tend to be located in sparsely populated areas located at the outer edges of the grid. “At the very far end of the transmission grid, that’s where the wires are the smallest. So you have to be able to re-egineer your transmission grid to accept that power.”
But Johnson stressed that engineers are not the only part of the industry that needs to be staffed up. “In the utility industry, it’s a broad array of skills that’s really required to drive energy, and they’re all acutely short.” He said utilities are also concerned about the scarcity of pipe fitters, welders, electrical journeymen, experienced drivers and pole men. “A lot of tradesmen are not out there right now, which will create significant problems in terms of being able to maintain the grid.”
The industry also needs softer skills – lobbying, government and legal. “As much as we like alternate energy, being able to take over hundreds of acres of fields to put in solar arrays is problematic,” Johnson said.
What can the industry do about it?
On area of focus for the utility industry must be rebranding. “The utility industry hasn’t been that attractive to new graduates,” Johnson said. “They’ve got a brand issue in terms of being able to attract talent, and there’s not that much talent out there – it’s a double-edged sword.”
In the regulated utility industry, change can be hard to achieve. And many utilities have unions that further restrict a company’s ability to adapt to a changing market, Johnson said. But company structures must be retooled to better suit the new environment in which utilities operate.
“The solutions for energy companies are very diverse and require input from multiple sectors, so if you run a top-down operation, historically you don’t have competitive information flow up as well,” Johnson said. “It’s thinking differently about what leadership’s role will be in transformation, where the leader is much more a facilitator.”
Some utilities have begun to invest in replenishing the talent pool. Johnson noted that there are many research and internship programs that aim to drum up interest in the field targeting college students across the country, as well as younger potential recruits.
“The leading-edge utilities have realized that you have to start before college, working with secondary schools on science fairs, summer programs, etc to interest enough kids so that when they go to college, they choose engineering,” Johnson said. “The really good ones are actually starting in 9th and 10th grade.”
Joe Johnson has had significant experience as both a leading consultant, operating with Boards and senior teams and as a top level HR executive. He has been a consultant for over twenty years, prior to which he served as Chief Operating Officer for Nabi Biopharmaceuticals. He has led talent strategy and process projects in both the public and private sectors for clients such as Amgen, JP Morgan, Ford Motor, Johnson & Johnson, Ahold, ExxonMobil, Apple, and Microsoft.
