EPC firms, their clients and technology vendors need to act now to blunt the coming skills crisis in piping design, advises Bill Beazley, SPED Executive Director. Dr. Beazley made his comments in a keynot address, "The Skills Crisis in Piping Design" at Valve World 2013, June 25th in Houston, TX. Dr. Beazley's full comments are listed below:
The Skills Crisis in Piping Design
Valve World 2013
William G Beazley
Society of Piping Engineers and Designers
First, I would to thank Valve World 2013 and its two Co-Chairs, Ron Merrick and Claire Dwyer both of Fluor, for inviting me to speak to you today.
The cycles of boom and bust common to the process industry send mixed signals to high school seniors and others deciding their professional path in life. Despite the $15 Billion in announced petrochemical plants in Texas alone, and projected construction of gathering and transportation pipelines, a labor shortage is predicted in crafts, trades and design technicians.
Today, I’ll cover this crisis for piping design though four questions. First, what is piping design? Second is there a skills crisis? Third, why is there a skills crisis? Finally, what can we do about it?
First, design, piping or otherwise, is the creation of highly quality assured product definition data. Not just data creations, designs are quality assured. If you are an engineer you apply physics and chemistry to assure designs. If you are a piping “DESIGNER” you apply the “ilities,” e.g., fabricatability, constructability, operability, maintainability, inspectabiliy, etc. As a designer, you have to anticipate multiple users of the data and the plant it creates. To be a good designer, i.e., simultaneously anticipating the needs of many and satisfying most, you have to have deep knowledge about these user disciplines.
Is there a crisis? As one of the many CAPEX professions, piping design continues to be a highly prized and compensated profession. SPED’s estimate is that, worldwide, there are 100,000 piping designers (or engineers practicing as piping designers.). Pipers make from starting wages of $2.50/hr in India, up to $125 an hour or more with critical experience, in active and competitive locales. There are “movie stars” and there are “extras”. Just like in the movies, the big buck stars bring in the moviegoer while the extras fill in the battle scenes.
In piping, as in other disciples, decisions are frequently made with multi-million dollar consequences. You don’t put the second string in for the game deciding plays, so, contracts are won with and value is delivered by the key players. Key players have the knowledge and experience to do it right the first time. Who really tells the client that, ”I’ll have some know-nothing newbie do the initial layout, then get my experts to fix it later?” You can’t inspect in quality.
The National Petroleum Council (NPC) Global Oil and Gas Study Working Document #23 on Human Resources (July 18, 2007), says, “a new college engineering graduate requires approximately 10 years of experience and training to attain the necessary credentials to provide technical innovation and leadership… Designers in EPC typically require a three- to four-year investment, heavily focused on in-house training utilizing design technology.” This is a huge investment, so it’s just been cheaper to keep bidding up the pay for older staff and whistle past the graveyard.
The crisis is that these key players, these experts, these graybeards are getting older and older. Yes, we’ve said that for years but the EPC firms just throw more money at pipers to drag them out of retirement. It is an easy way to go. The pipers get big bucks for a few more years and the EPC companies avoid facing the inevitable: They are hollowing out their value added expertise that lands the contracts in the first place. If they rent their expertise, eventually, they will not own it.
“False,” they’ll say, “we own the patents, the past designs, the management systems, the internal standards that make our designs the best.” But what will that mean when no one is around who designed that plant, can use the software with deep understanding, or select the standards appropriately for just the right conditions? Powerful tools in the hands of fools are like fancy race cars with student drivers.
Some EPC’s see the danger but others do not. After years of bottom line punishment by Wall Street, corporate bean counters cut training to the bone. Cutting out training in EPC companies is like cutting out maintenance in a plant. Nothing happens at first but later the problems begin cascading to disaster. There was always a stack of laid off pipers on your desk to pick from, so why bother?
Besides, doesn’t our community college system keep churning out fresh graduates? Yes, they can produce graduates with generalized training with a discipline focus. This discipline focus often tracks research fads, like solar power, global warming or mechatronics. It can take up to a year just to change the outline of a course and years to alter a degree plan. SPED has never had a fresh college graduate pass it lowest Professional Piping Designer Certification test without additional training or experience.
The rough cause and effect system looks something like the table below:
More Foreign Outsourcing
Less Detailing Available for Apprentices
Higher Starting Salaries
Less Room for Novices (Low Value Added Workers)
Higher Senior Salaries
Less Mentors Available
Higher Hiring Standards
Less Demand for Those without Experience and Preparation
More Application Preparation Required
More Reliance on Student Funded Education
More CAPEX Boom and Bust
Unclear Signals to Entrants and Trainers
More Reliance on Education System
More Generalized Skills
Rising CAPEX Activity
More Demand for Specific Experience
Declining CAPEX Activity
More Layoffs of Specialists
Client Emphasis on Quality
Experience and Credentials Help
Client Emphasis on Schedule
Client Emphasis on Cost
Prior Work and Automation Helps
The effect is that entrants alternately see huge salaries and massive layoffs, newbies face huge barriers to entry in the field and educators cannot forecast opportunities for programs. Employers are forced to choose between huge training cost burdens at site or fractional training costs overseas. Do you blame them for investing where eager and inexpensive workers are, even if the clients are not?
Clients of EPC firms should ask, “How can you manage my project when you can’t manage your own workforce? How secure is my project data when it’s up in the cloud and raining over several countries?” It’s project kickoff at 8:00 AM Monday morning. Do you know where your people are? Do you know where my data is? CNET says of the $200.3 million blockbuster, "The Avengers." that it had “a pirated copy of the film in circulation an entire week before it hit theaters.” Why design it when you can steal it? When labor is cheaper, bribes are cheaper, too.
What shall we do to head off this endless cycle of mixed signals, an aging workforce and increasing barriers to entry? I’ll focus on just four areas
- 1.Improved opportunity signaling to entrants and students
- 2.Just in time training
- 3.Reward Credentials
It’s easy and cost effective to improve opportunity signaling to entrants and students: Just let them see you. One way is hire them on as interns for the summer or part time work. They get a look at you and you get a low cost look at potential recruits. Consider taking the 12th man pledge, where every 12th man on each team is a soon to be credentialed intern or fresh graduate. When they see what you do, they’ll want to do what you do.
Another approach is to incentivize or subsidize employees to serve as instructors at local institutions. Rather than viewing teaching as the last refuge of the incompetent, view it as candidate recruiting, community outreach, and corporate goodwill. Teaching tells entrants that your field is understandable, learnable and fun.
For busy employees, training must be done “Just-in-time.” The proliferation of cheap video hardware and software makes it very cost effective to publish tips and briefs about anything. Vendors, are you listening? Videos are not just for features and benefits but for how to design, specify, install and repair. Screen recorders can capture “How-To’s” for important applications, explanations and other subjects. Video clips with be the new corporate knowledge base.
For that critical hands-on training, professional development should occur on-site. This can range from the “supplier fair” to the demo van and the “lunch and learn.” There is nothing like getting your questions answered by a live person and forming relationships for future consultation.
And let’s not forget the critical role of mentors. This is precisely the mechanism of knowledge transfer that makes task experience possible: Most of the industry specific knowledge is NOT contained in textbooks. It is passed from professional to professional through one-on-one advice, criticism and guided work assignments. The best corporate cultures emphasize staff development. Pipers should teach other pipers.
Make it a visible policy to reward credentials. You get paid for what you can do and credentials document that. Credentials earn credibility with clients when business is good and insure diversity for market share when things turn south. An employee in school means free access to what they know until graduation.
Besides formal courses and degrees, don’t forget Certification. A certification is a formally tested set of skills and knowledge. The test is the key: Just attending a workshop is not enough. Certification means that candidates have shown they have the listed skills on tasks or test or both. Credentialed staff is more employable. Staff Credentials gets contracts.
Certified skills have another benefit. It puts a floor under expectations of staff competence. Those stupid, newbie questions go away and the mentor’s and checker’s job gets a lot easier. You get more knowing nods in meetings, more correct execution of tasks. SPED estimates that PPD Certification is worth a year of on-the-job training. Everyone is singing from the same sheet of music.
Finally, don’t forget to automate. Automation of tasks and techniques is the surest way to capture knowledge in usable ways. It is a capitalistic response to outsourcing to “high-value centers” in the developing world. The answer to low cost labor is no cost labor.
And while productivity improves with powerful software and hardware, it requires power users to run it. We are replacing several “B” and “C” players with a handful of “A” players. Recruit them, train them and reward them. Investors know that you can love stocks but they will not love you back. With people, you can.
Taken together, these steps can impact the skill shortage we confront today. Thank you for this opportunity to speak on this subject.
I would be happy to take a few questions.