Thursday, December 18, 2014

Guest post: A comment on the 2014 Employment Outlook issue of C&EN

CJ here -- Frank wrote in with a comment about this year's Employment Outlook issue in C&EN, focusing on Susan Ainsworth's survey of industrial demand. It has been very lightly edited. 

It's the winter season and everyone's busy these days, trying to finish work up before the end of the year and also preparing for the holidays.  Even CJ's been busy this November and December.  While he highlighted a couple interesting articles in the Nov 3rd edition of C&EN, there was a treasure trove of employment-related information in an edition where the cover article was entitled Employment Outlook.  I thought that issue deserved a more attention and have condensed many pages of articles into a shorter (but still lengthy) guest post for CJ.

The cover story is that the job market is starting to look up and that chemists should anticipate slow growth in 2015. However, as the article Pockets of Opportunity (pg 16) highlights, the growth is occurring in niche areas, primarily petrochemical and contract manufacturing areas.  In a September speech Secretary of Labor Thomas Perez indicated that economic relief is coming because "manufacturing in the U.S. is coming back, growing faster than at any point in the last 15 years” (pg 10), a statement that holds given the expansion plans for the chemical industry.  Numerous plants are at various stages of development, including:
  • an ethylene cracker and derivatives and also a possible gas-to-liquid for Sasol in Louisiana (pg 9)
  • an ethane cracker and polyethylene plant for Badlands NGL in North Dakota (pg 14)
  • an ethane cracker and two polyethylene units for Chevron Phillips in Texas (pg 17)
  • an ammonia plant and also a potential methane-to-propylene complex for BASF in Texas (pg 18)
  • two plant expansions for Clariant in Louisville and Texas (pg 18)
  • expansion of a specialty additives facility for Altana in Connecticut (pg 18)
These projects are primarily fueled by the fracking and horizontal drilling to access more shale deposits in the US, and the American Chemistry Council predicts these projects will create 61,000 jobs in the chemical industry over the coming decade (pg 14).  US GDP is expected to grow 2.2% and 3.1% for 2014 and 2015 respectively (3.2 & 2.7% for UK, 0.8 & 1.3% for EU, 7.4 & 7.1% for China, pg 12), including predictions that chemical manufacturing employment will increase 1.1 & 0.2% in 2014 and 2015 (pg 13).  3rd Quarter numbers were favorable across the board, with the titan and large employer Dow outperforming analyst expectations to a 6% profit margin and DuPont meeting expectations with a 6.4% profit margin (pg 7).

This positive outlook is supported by ACS 2014 data which shows increases in full time employment (91.9%) and decreased unemployment (2.9%).  Furthermore, Jamie Stacy of Kelly Services and Josh Albert of Klein Hersh international, both talent search firms, speak positively of job prospects, since demand for chemists and other scientists in pharma and biotech is "much stronger than it was a year ago" and "hiring in chemistry is really coming back. It's a robust time." (pg 16)  On the UIUC campus two career fairs sold out within hours and more companies are coming to campus to recruit in the fall.

But this picture sounds a bit too rosy to me.  Paul Hodges, chairman of International eChem, fears that the petrochemical sector is suffering from irrational exhuberance, since while capacity might increase the demand for these products is not that high right now (pg 14).  Further, the ACS survey indicates that salaries are stagnant in current dollars, which means they are losing spending power to inflation and therefore decreasing in 'constant dollars.'  If you get down into the specifics, the Employment Outlook seems to still be bleak.
  1. Pharma is estimated to have cut 9,923 jobs for the first three quarters this year. (pg 13)  Allergan plans to cut 1500 employees by the end of this year and Amgen intends to cut 4000 by 2016 (pg 10).  Lily announced back in January plans to cut R&D spending by $1 billion.
  2. GSK has hired 2 dozen chemists worldwide in 2014, which represents "a considerable increase relative to 2013" (pg 16).  This is because "GSK recognizes that chemistry is central to drug development...chemistry will continue to be an area for recruitment."  One needs only to point to the recently announced layoffs of ~900 employees in Research Triangle Park, NC to question their previous statements.
  3. Genentech plans to hire 35 new scientists in biochemistry and chemistry by the end of 2014 (pg 17).  And they have been active on C&EN Jobs and have shown up in the Daily Pump Traps.  However they seem to be asking anyone and everyone to apply so they can choose the best applicants.  "Genentech will be focused on finding M.S.- or Ph.D.-level scientists who are fresh out of school or who have up to eight years of industry experience. The firm will also consider Ph.D.s with postdoctoral experience. Among those recruited will be candidates with expertise in analytical chemistry, discovery chemistry, formulation, process chemistry, and biochemical and cellular pharmacology." (ph 17)
  4. Merck is "currently hiring in areas of strategic interest, across multiple scientific disciplines" and continuing to offer 26 PostDoc research fellowships.  This is after announcing cuts of 8500 and 7500 employees, half of which are expected to come from R&D. 
  5. Chevron Philips plans to hire 50 Chem Engineers worldwide, despite having a desire to support an "aggressive growth strategy as well as replace our retirement-eligible workforce" (pg 17)
  6. Huntsman plans to cut 900 jobs after acquiring another TiO2 producer. 
Cambrex, a contract manufacturing organization who is actively recruiting chemists to meet demand, considers candidates who have a BS in chemistry, extensive experience in a laboratory environment, knowledge of analytical instrumentation, a strong chemistry theory foundation, and a proven ability to handle multiple projects effectively. (pg 17)  Stacey of Kelly Services also sees increased demand for BS-level positions: She sees increased opportunity for chemists in quality-assurance and quality-control roles. “We are also observing a large need for analytical chemists who have varied instrumentation expertise,” she says, adding that B.S.-level chemists are more in demand than those with M.S. or Ph.D. degrees in those roles. (pg 16)
Clearly what we have here is a STEM shortage, not enough BS-level chemists to fill all these positions.  The ACS statistics would seem to disagree, with the unemployment among 2013 graduates with a BS sitting at a recent high of 14.9%.

And Stacey has more interesting things to say about the current job market (again emphasis mine):
Stacey says there’s been strong demand for chemists in the temporary-staffing market, something she does not interpret as bad news (?!?). The emergence of this trend is less a sign of companies’ aversion to hiring full-time employees and more a reflection of a new workplace paradigm, she says. “More employees want to work on their terms and that may mean working as consultants or doing temporary project work for multiple companies. And more companies across many businesses see the value of a workforce they can flex depending on their immediate business needs,” she says. (pg 16)

Maybe it might be just me, but I would rather have a stable full-time job to part-time contracting work.  Certainly people would prefer some work to no work, but please don't pretend that this current employment situation is due to employee preferences and not companies' aversion to hiring full-time employees.

I think the most positive piece of information in the issue, on top of the chemical industry having an all around good third quarter, is that 3M "plans to bring on 2,200 new hires in the U.S. in the next five years with an emphasis on high-growth geographies and on R&D and sales." (pg 18)  I hope their plans come to fruition.

In the end, I think that Martha Moore, senior director for policy analysis and economics for ACC, really hit the nail on the head.  "If you've got the right skills and you’re in the right geographic location, it could be a good opportunity.” (pg 15)  To me it looks like the right skills include engineering and a proclivity for Texas.

Frank, current grad student

CJ here again. Thanks to Frank for his worthwhile thoughts. 

16 comments:

  1. I see by the acs policy positions: http://www.acs.org/content/acs/en/policy/publicpolicies.html
    that the ACS is still seeking to "encourage talented people to enter science and engineering fields." In light of the current hiring environment, I would love for the ACS to at least consider tempering this stance. Acknowledging, as the President-elect does, the difficult employment environment while simultaneously advocating for encouraging more people to enter the field is irresponsible.

    If the ACS were really interested in encouraging the best and brightest to enter science and engineering fields, I can't imagine a better method than acting to improve the wage and hiring situation or at the very least drawing attention to the difficulties rather than papering over them.

    ReplyDelete
  2. •an ethylene cracker and derivatives and also a possible gas-to-liquid for Sasol in Louisiana (pg 9)
    •an ethane cracker and polyethylene plant for Badlands NGL in North Dakota (pg 14)
    •an ethane cracker and two polyethylene units for Chevron Phillips in Texas (pg 17)
    •an ammonia plant and also a potential methane-to-propylene complex for BASF in Texas (pg 18)

    By my count, that's about 8 total chemists and an army of chemical engineers.

    •two plant expansions for Clariant in Louisville and Texas (pg 18)
    •expansion of a specialty additives facility for Altana in Connecticut (pg 18)

    Both of these sound like they might actually involve chemists to some degree, though it depends on what Clariant hopes to accomplish through expansion (merely increasing volumes, or new stuff?).

    ReplyDelete
    Replies
    1. I thought a lot of these plans were driven by the feedstock price for American chemical producers being lower (using natural gas sources) vs European and Asian (using oil-based sources) facilities. Is that advantage still around if oil prices drop?

      Delete
    2. "By my count, that's about 8 total chemists and an army of chemical engineers."
      That's probably the single thing I was the most naive about as a new graduate, sending lots of resumes to "chemical companies" that don't actually hire chemists!

      Delete
  3. Good summary by Frank. I think by this point, it should be added that the low oil price will kill the shale boom if it continues well into the next year. And all this talk about 'some' shale fields being profitable at 45 a barrel is garbage. It doesn't take into account transportation costs and many other things. They are all going to go bankrupt. For that matter, if all the Russian companies go bankrupt due to the exchange rate of the ruble collapsing, who do you think is holding all that dollar denominated debt? ...

    DOOOOOOOOOMMMM!!!!!!!

    ReplyDelete
  4. Haha, GSK is so nice hiring 24 chemists in one year and laying off 900.

    ReplyDelete
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