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The oil industry’s not so great crew change

The Great Crew Change - or the impending retirement of thousands of older oil workers has companies attempting to plug the gap by recruiting outside the industry, training younger employees and luring industry veterans to hang on longer. It has also forced companies into a delicate balancing act amidst the current industry downturn as thousands are laid off but companies are trying to hold on to hard-to-replace engineers.

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Three words are striking fear into the hearts of oil and gas executives across the world – Great Crew Change.

This is the year when nearly half of the workers in our industry retire. Unless they can be enticed – quite literally begged in some cases – to stay on. In Reinsvold’s annual Outlook Survey the number one issue facing executives over the next five years was how to cope with the retirement of key personnel – made up of the Baby Boomers, followed relatively closely by how to ensure that the industry was attractive to new entrants.

This is no easy task. A 2015 survey by the recruitment firm Hays found that 32% of people who took part had been laid off or made redundant. 93% of employers who took part said they’d reduced headcounts over the last 12 months. Another worrying response was to do with how many now sought work outside the oil and gas industry – 72%.

During the years between the early 1980 and 2000 the industry lost nearly half a million jobs. It came about as one portion of society retired and another – coping with the downturn in the market – sent their CVs elsewhere. In addition the Oil and Gas Financial Journal says as many as a quarter of geologists and engineers left the energy market.

The impact – as we’ve illustrated before – is that you are left in a situation where the extreme ends of the career ladder are people heavy but the middle is light. There is no surplus of mid-level professionals waiting in the wings to take over. Schlumberger said in 2013 that by 2016, we‘d be 15,000 engineers and geologists short. “There was a fairly significant amount of time when there wasn’t nearly as much recruiting as there should have been,” is how Robert Gruman sees it. Gruman, a partner at PricewaterhouseCoopers who advises companies on hiring, says now as a consequence, “there is a gap in leadership and management ranks across the industry as people retire.”

The efforts that have been made to address this – paying hand over fist for STEM grads in the US – don’t seem to be paying off. The US Census Bureau disclosed that in 2014 74% of those who get their bachelor’s degree in STEM majors don’t move into a career in STEM. It’s hard to advertise great salaries though when the news is day in day out reporting layoffs. Graves and Co, a Houston-based consultant, say more than 350,000 who worked in the oil and gas industry in 2014 were handed their papers, victims to the eye-watering collapse in oil prices. Constant low prices will mean global restructuring. Getting this right is essential – companies want to cut personnel but hold tight to their scientists and engineers. “Everybody that’s going through the process of downsizing their business right now is faced with this extra complication,” Robert Sullivan, management consultant for New York-based AlixPartners discussed with Rigzone. “Decisions that get made right now on how you right-size the company are going to have a huge impact when the market turns.”

The upside is if you’ve got the skills, the world is your oyster. As well as the big salary, millennial workers are offered enhanced benefits – more flexible work schedules, on-site gyms or more appropriate medical plans with lower premiums. Being outside the industry is not a disadvantage – one source says people from military backgrounds could find themselves courted, seen as having easily-transferable skill sets. Being outside the norm isn’t either – more women, more ethnic minorities.  Naturally there will be a trend of attracting international workers, particularly from Asia. Perhaps the school career advisers in the US could learn a thing or two from China where 41% of their university students graduate in science and engineering, compared to just 13% in America.

What is essential is that the mistakes made during the 80s downturn are not revisited. We don’t want to be right back in square one in 2036.  And remember – this is the time we all need to step up. It will be great for some of us.