The shortage of suitably trained staff could lead to increased costs, cancellation of projects and curtailed inward investment in the UK energy sector
With the oil and gas industry booming and offshore renewable energy on the rise it is no surprise that British subsea companies are reporting strong growth prospects for the next five years. However, there are clear signals that skills shortages could constrain that growth, curtail inward investment and lead to increased use of migrant workers.
Subsea UK is an industry body that represents the subsea sector, which employs around 40,000 people and generates over £5bn for the UK economy. The body has just conducted a survey of its 200 members to gauge the situation with regards to skills and development.
'Only a few years ago the subsea sector faced an acute skills shortage which not only constrained growth, but also caused costs to significantly rise,' Alistair Birnie, chief executive of Subsea UK says. 'After very challenging economic times, the industry is once more climbing the growth curve, but if the UK sector is to continue to lead the way around the world and be competitive, we must close the skills gap and not wait until we are all dipping into a limited pool of resources.'
This survey reveals that over 90 per cent of companies are forecasting growth in the next five years with 96 per cent reporting that this growth is or would be internationally focused.
'What is alarming in the findings is that two-thirds of firms are looking for experienced and skilled people rather than taking on new recruits and developing them,' he adds.
'This is not sustainable and will only result in pushing up prices and reducing our competitiveness.'
'We have always got to be positive, it is far better to talk about the positives than the negatives,' David Edwards, chief executive of the Engineering Construction Industry Training Board, says. 'There is a risk of a shortfall which means we won't have the capability to do things; that will mean we may have to cancel projects and it might even deter inward investment.
'However, companies will always find a way around a problem and [will do] any number of things... to make [this] happen. But there is always a hidden cost in this. If there is an undersupply of skilled people in one part of the market they will have to pay more and rob them from another part of the market, which just moves the problem somewhere else.
'It just creates unnecessary turmoil but, in the supply and demand market, that is a fact of life. If we could get a bigger pool of talent that is portable there is enough work out there for everyone – we just need to organise it better.'
David Binnie, managing director of OPITO Group, the oil and gas industries skills and training body, shies away from emotive phrases, but it's hard to avoid the severe implications in what he is saying. 'Phrases that focus on the negative create a similar image in my mind as the words frequently used to describe the UK's oil and gas industry – 'mature', 'declining',' he explains. 'These phrases are usually followed with a 'but' and a more positive tone around what we can do about it.
'In my experience, the listener never gets past the 'but', and rarely hears the opportunity. The objective for me is clear; we need collectively to increase the talent pool available from which the companies within the industry can compete.' But he emphasises the need for urgent action.
'Even as we speak, we are seeing evidence that the demand of appropriately skilled people is outstripping supply. A number of vacancies are not being filled, inter-company competition is increasing, and costs are starting to rise. In the words of some, the industry is starting to modulate, or self-correct, because the supply pool of skilled people is not big enough.
'[It is the] natural behaviour of a market system, some say – a market system that is difficult to do anything about. However, overcoming that difficulty and increasing the supply pool of talent available to the industry is critical if projects are not to be delayed or cancelled.'
The demand for experienced skills in the short and medium term clearly points to an urgent need to increase the talent pool through mechanisms such as transformation programmes, bespoke training provision, and attraction of relevant skills from other sectors. However, activity levels in other regions and sectors are also increasing. It appears that the most difficult vacancies to fill are those for engineers – graduate and chartered – and managers.
Binnie stresses, however, that it is important to recognise the oil and gas industry is not alone in seeking talent. Indeed, the conventional power, nuclear, emerging renewable and broader construction sectors are all on the hunt for similar skills.
'From what we can gather, the combined resource demand from the power, nuclear, chemicals and renewable sector will be at least as much as from oil and gas, if not more,' he says. 'This is great news from a country perspective, as it supports the notion of private sector growth with the opportunities to drive recovery; however, it signals an even greater need to increase the supply pool of talent across the industry.'
Boosting home-grown talent
According to the IET, over a third of engineering companies report a lack of confidence in recruiting enough suitably qualified professionals to meet their business needs. Although this is an improvement from 2009 and 2008, it is not marked enough to plug the skills gap, as demand for these skills is set to increase.
Around 20 per cent of science-related professional jobs in the UK are filled by immigrants to the country. This is a sure sign that skills gaps are already significant and could become unmanageable with large-scale projects such as new nuclear power stations. As such, the UK will struggle to build a green economy without a step change in the number of young people pursuing STEM careers. This change must come within the next couple of years.
'Unless we see a dramatic change in the number of young people progressing into STEM courses and then careers, the UK will struggle to deliver the new technology and infrastructure needed for a green economy,' Paul Davies, Head of Policy at the IET says. 'The new 14-19 diploma in engineering is a big step in the right direction, which is why the IET was instrumental in creating it, but more still needs to be done.'
The IET helps to fill the skills gap by showing young people how exciting and rewarding careers in STEM can be. Hands-on activity days – the 'Faraday Challenges' – are run in over 200 schools across the UK every year by the IET. But numerous schools have to remain on the waiting list for the Faraday Challenge due to a lack of corporate sponsorship.
Oil and gas challenges
'I know that some may see a different priority, but I believe that attracting and retaining the required talent will be the key success factor in us delivering the opportunities presented to us,' Binnie says. 'Whether, delivering major projects, driving the technological advancement which will unlock smaller more demanding reserves, developing processes to ensure our safety and environmental performance is second to none or creating innovative commercial deals which maximise the life of existing assets, the capability of our people will have to increase, not diminish.'
The recent economic downtown has resulted in some easing of the situation but that is expected only to be a temporary respite. 'We have definitely had some setbacks because of the economy, there is no doubt about it,' David Edwards says. 'Immediately before the recession set in we were forecasting growth in the current time period, but that has all slipped back.'
One common complaint from employers is that graduates are not trained in the right disciplines. 'There are a lot of people out there but my question would be [over whether] they are the right type of people,' Edwards says. 'We just have to hold firm, be optimistic and wait for the boom to come forwards. In the meantime people need to keep improving their knowledge base to become more employable.'
'The expectations of graduates today are different. I don't like people saying 'in my day' but I'm going to say that, well, in my day you undertook a very focused programme – you did maths, physics and chemistry at school, there was then a very narrow group of subjects that you could do at university and you did one – they were quite broad-based subjects. What tends to happen now is that you have a common core in, say, mechanical engineering but then they have bolt-ons that have a degree of specialism. But are those bolt-ons always targeted appropriately?'
He points to the nuclear industry as a case in point. With the nuclear new build programme gathering pace there is a pressing need for nuclear engineers. But Edwards claims that nuclear engineering is 99.9 per cent conventional engineering. 'It's just being marketed as a nuclear engineering degree,' he says. 'It risks sending confusing messages out to the market.'
Another hurdle that nuclear, along with oil and gas, needs to overcome is its lack of green credentials. Many graduates see the renewables sector as more rewarding, both financially and philosophically. 'Certainly the oil and gas industry has done a lot to overcome its poor perception,' Edwards claims. 'I think that people are now recognising them as value enhancing careers.
'Nuclear has gone through a cycle; when we were an industrialised nation nobody really thought about it, it was just important to do. Now we have a lot of other issues to deal with such as the environment, safety so I can see why it is seen not to be good or safe, but actually more people are killed in the oil and gas industry than the nuclear industry.'