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Steel tube and pipe: Higher and hiring

Keywords: Tags  hiring, Alan Beulieu, Institute for Trend Research, Josh Cole, Crowe Horwath, Michael Portnoy, PricewaterhouseCoopers, worker retention shale gas

The ongoing boom that shale gas extraction has created for the steel tube and pipe sector has not come without its downsides, including issues of overcapacity, import competition and political fallout. But another problem that often has been overlooked is a lack of sufficient skilled labor to help steelmakers cope with production. 

One of the side effects of mills ramping up now is that qualified personnel are becoming harder to find. “Specialty skills are especially rare. Pipe mill operations—those people are tough to find. Heat-treat expertise in particular is one of the hardest to find,” said Buddy Brewer, chief executive officer of Borusan Mannesmann Pipe U.S. Inc., the Houston-based subsidiary of Turkey’s Borusan Mannesmann Boru Sanayi ve Ticaret AS.. 

Alan Beaulieu, president of the Institute for Trend Research, a Boscawen, N.H.-based consultancy, said at a Metals Service Center Institute conference last fall that “bidding wars” for qualified workers will lead to wage inflation. “You need to be using 2014, an off year, to get ready for what’s coming on the other side,” he said. That might mean expanding, de-bottlenecking or acquiring key staff. “Whatever your constraint is ... fix it in 2014 because you are not going to have time in ’15, ’16, ’17 because of all the right things going on in this country.”

There are strong concerns over the attraction and retention of employees. Some steelmakers have expressed worries about having enough available experienced, qualified managers, engineers and other staff. Some experts and consultants say these concerns seem legitimate under current circumstances.

“There’s always a fight for good talent,” said Josh Cole, a principal and the manufacturing and distribution performance services leader with Crowe Horwath LLP’s performance services group. “And the metals industry traditionally has had an uphill climb for young talent when competing with other industries. Many of the larger metal organizations use their size and scale as a means of attracting and retaining top talent, offering more diverse roles and leadership opportunities given the breadth and depth of their organizations.”

“Despite still-high unemployment in many advanced nations, skilled workers are often difficult to find and require efficient recruitment and retention policies,” said Michael Portnoy, an industry analyst with PricewaterhouseCoopers LLP’s industrial products practice. “We believe that this is a legitimate concern, and there are a number of strategies that can be implemented. These include competitive salaries as well as providing the employee with the opportunity for training, early responsibility and ownership of projects.”

Steelmakers do have diverse strategies they can employ to attract qualified staff and leadership.

“Some of the leading metal companies have leadership development or rotational programs, which help to not only attract recruits but also to find the right role for the right individual,” said Andrew Callaghan, a manager in Crowe Horwath’s performance services group. “Exposure to different responsibilities and areas of the business help to ensure there’s a good match between the employee and the position. Companies are also beginning to create a total rewards strategy, recognizing that employees are looking for more than just a paycheck.”

Once such employees have been identified and hired, companies can take steps to retain them despite the competitive job market in the steel tube and pipe sector. “Traditional approaches will work in this segment as well,” Sean Gaffney, an industry analyst with PricewaterhouseCoopers’ industrial products practice, said. “Competitive salaries and benefits and a flexible work-life balance go a long way in helping to retain valued employees.”

Retention can be a challenging assignment because unhappy employees won’t hesitate to look for greener pastures.

“Given the competitive job market, the work doesn’t stop after a new hire joins. A recent study showed that a significant percentage of employees quit in the first year,” Cole said. “Companies that want to avoid new-hire turnover should have a formal onboarding program with coaches and liaisons at various levels of the organization to monitor progress, provide constructive feedback and ensure the new hire understands the path for advancement.”

A large part of success in this area does indeed rest in solid training, analysts said.

“Companies striving for increased retention should also re-evaluate the level of training and development opportunities they provide,” Callaghan said. “Educational programs with tuition assistance are becoming increasingly popular, as they not only improve employee skills but can also deliver a measurable return on investment.”

Company legacy also is an issue for many steelmakers. As the current generation of longtime leaders and employees starts to retire, a new group of workers are entering the workplace. “The newest entrants to the workplace are looking for meaningful work and opportunities to grow,” Gaffney said.

The challenge in responding to the needs of younger workers will be making adjustments in attitudes toward technology and its uses as well as lifestyle issues—such as more flexible schedules—that remain important to this group of prospective employees, analysts said.

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