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    Expert's Opinion

    ‘Demographic Donut Effect’ Creates Global Shortage of Experienced Professionals

    ‘Demographic donut effect’ creates global shortage of experienced procurement, supply chain and manufacturing leaders in process and chemicals.

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    09.01.15
    A severe shortage of experienced professionals across the supply chain in the 30-45 age bracket will exacerbate succession crises in process and chemicals companies across Europe and the United States, according to global research commissioned by specialist supply chain executive recruiter, Proco Global.

    Proco Global’s research function interviewed senior executives across the process and chemicals sector, from firms accounting for a combined total of $184bn in annual revenues and supporting more than 200,000 jobs worldwide. Interviews revealed mounting concerns about succession in highly specialised process and chemicals supply chain teams, with too few middle-management candidates rising through the ranks to replace  a generation of senior professionals due to retire in the next five to ten years.

    While the collapse in the oil price has stirred hopes that layoffs in the energy sector could help other specialty sectors find qualified people - especially in the United States and the Baltics – process and chemicals sector executives are increasingly recognising that there are far too few qualified individuals to meet demand over the next decade. In response, some companies are offering increasingly generous wage and benefits packages to their own people in a bid to retain talent. This is leading  to sharp disparities in salary levels, with an increasing number of candidates ‘priced out’ of the rest of the market and unable to find other roles.

    The situation is reversed in the Asia Pacific region. Unlike in the west, where a graduate recruitment slump in the 1990s has resulted in too few experienced supply chain professionals in the 30-45 age bracket to meet demand, there is no such shortage of talent. However, it is felt that many candidates from Asia Pacific may have been overlooked because of imperfect English language skills, and may need additional development and support to ensure they can thrive in global positions both inside and outside the region.

    Other key findings (by region) include:

    United States – ‘chemicals supply chain salaries up to 20 percent higher than other industries’
    •  The oil price drop has raised hopes that companies in other chemicals sectors will be able to recruit top talent across the supply chain, luring them away from Texas and the Oil and Gas sector to other parts of the country which have struggled in the past decade to pull recruits from this area due to the amount of employment opportunities.  Since there is no income tax in Texas, however, many are reluctant to move out of state
    •  Due to the shortage of qualified chemical engineering talent at the mid to senior level, it is hard for companies with remote locations to attract the talent necessary without offering above average salaries.  One chemicals executive said they faced having to pay more to attract the right talent, with salaries for suitable candidates that work across the supply chain 15-20 percent higher than for similar roles in the food industry.
    •  Process and chemicals majors with ties to the oil industry are braced for significant knock-on impacts as a result of the oil drop, and as a result are looking to restrain spending even as upward pressure on salaries increases.

    Europe – ‘candidates more likely to relocate to a new country than another city’
    ·         European executives are increasingly prioritising succession, but admit they are struggling to build the right supply chain teams and are concerned about the next decade, when many will retire
    • Salary increases are low, at 2-4 percent a year, in response to budget restrictions. Staff turnover is low in the European operations of many major chemical groups, and what turnover there is has been driven by retirements.
    •  Staff turnover remains very low, but this is expected to change as economic recovery provides more confidence to switch jobs

    Asia Pacific – ‘job-hopping candidates makes retaining the best home-grown talent a challenge’
    ·         Over the past decade, most if not all process and chemicals sector growth has been driven by this region, and consequently supply chain issues within recruitment are opposite to those in the United States and Europe
    ·         The last 5-10 years has seen a number of larger process and chemicals organisations enter the marker to develop their organisational capability. The supply of talent is less than demand and has encouraged people hopping between hobs every few years.
    ·          In parts of Indonesia and Thailand, the market is so active that candidates are known to sign contracts and not turn up on day one, having taken a better offer elsewhere
    ·         Many large organisations have moved away from hiring expats to staffing their China operations with local talent Tailored career development programmes are being put in place by provide better career opportunities for talent from China and Asia Pacific, which often include some time spent in Europe or the United States

    Sarah Hicks, Business Director of Proco Global, said:

    “Over the next ten years, there will be a significant number of senior operations people retiring, specifically across Germany, Switzerland and the Benelux region, and these companies often do not have anyone coming through behind them. High calibre process and chemicals professionals across the supply chain are in short supply across Europe and North America, which means they are in very high demand. So high, in fact, that companies may need to consider wage increases, or start looking beyond Europe to meet their needs. They need to make supply chain succession a priority now, if they haven’t already.

    “This shortage means that options will really start to open up for talent from Asia Pacific who are interested in secondments in the west. Attitudes are shifting, and companies are willing to dedicate more to developing global careers for their best people in locations such as China, Singapore and Indonesia.

    “In general, candidates are showing less flexibility on location – although they tend to be more willing to move to a new country rather than a new location within their own country. Some companies are willing to offer incredibly generous packages to hold onto their best people – recognising how scarce they are. On the flip side, that means that when these candidates wish to move, they find themselves disappointed that prospective employers are restricted by salary bandings.”
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