By Russell Ray, Chief Editor, Power Engineering magazine
Many of the men and women running America’s power plants are nearing retirement.
Every sector of the energy industry is expected to lose a large share of its work force as millions of experienced professionals, baby boomers born between 1946 and 1964, become eligible for retirement over the next few years. Thus, the power sector will need more than 100,000 new skilled workers by 2018, according to industry associations and consulting firms. But attracting new talent has become an arduous undertaking as the industry faces a shortage of qualified workers and increased competition for college graduates.
The Nuclear Energy Institute estimates that 39 percent of the nuclear workforce will be eligible for retirement by 2018, which means the industry must hire 20,000 new workers over the next four years to replace those retiring workers.
Is the power generation industry prepared to compete with other industries for a new generation of skilled workers? What’s more, does the industry have a plan for training and knowledge sharing?
There are about 78 million baby boomers in the U.S. They represent 28 percent of the U.S. population and 68 percent of the existing work force.
About 40 percent of the work force at America’s electric and natural gas utilities will be eligible for retirement in the next five years. About 20 percent are eligible now. Who’s going to replace them?
|About 40 percent of the work force at America’s electric and natural gas utilities will be eligible for retirement in the next five years. About 20 percent are eligible now. Who’s going to replace them?|
According to the Department of Labor, as much as 50 percent of the nation’s utility workforce will retire in the next five to 10 years. The challenges associated with replacing the technical and institutional knowledge of these professionals will be significant. Hard decisions must be made soon to preserve intellectual property for the future.
To further illustrate the sense of urgency, here are some eye-opening statistics compiled by the Center for Energy Workforce Development, a nonprofit consortium of electric utilities and associations:
- Almost 62 percent of utility employees have the potential to retire or leave over the next decade
- Nine percent are “ready to retire now” based on current retirement assumptions
- By 2015, 36 percent of employees in positions that the industry deems as critical may retire or leave for other reasons and another 16 percent will exit by 2020
The good news is the industry is forming partnerships with universities and other organizations that are designed to tap the nation’s pool of talented younger workers. The bad news is electric utilities are losing workers at an increasing rate, according to a report from PricewaterhouseCoopers.
The voluntary turnover rate at electric utilities rose from 3.9 percent in 2010 to 4.9 percent in 2012. For high performers and tenured employees, the turnover rate increased from 2.7 percent in 2010 to 3.7 percent in 2012. The 2013 report also found that the turnover of utility employees during their first year was significantly higher, rising from 2.3 percent in 2011 to 5.5 percent in 2012.
“This has created a turning point for utilities precisely because they have had so many decades of stability,” the PwC report found.
|Georgia Power is building two new reactors in eastern Georgia at Plant Vogtle. Vogtle units 3 and 4 are now under construction and are expected to be up and running in 2017 and 2018. Photo courtesy: Georgia Power|
Other industries are more equipped to retain employees, the report found. Electric utilities should rethink their approach to employee retention “as they confront the increasing turnover of newer and high performers, as well as the accelerating loss of experienced employees due to retirement.”
As the economy improves, PwC expects that first-year turnover at utilities will continue to increase, and so will the cost. “If we assume, for example, that for every 1,000 new employees, 100 or so leave, at a cost of $2,300 to $3,600 per hire, that translates into significant cost – not to mention productivity losses,” the report found.
The growing number of retirement-eligible employees, rising turnover costs and the generational shift in utility personnel are driving a loss of productivity in the power sector, according to the report.
“Traditional ‘word-of-mouth,’ on-the-job training of utility workers is not sustainable,” the report said. “More than ever before, work processes and procedures should be documented and continuously improved.”
The PwC report also indicated that while the number of retirement-eligible employees has stabilized at about 20 percent, the number of retirement-eligible executives rose 50 percent between 2011 and 2012.
Forcing older employees to delay retirement or to remain as contractors can help utilities mitigate a mass departure of older workers. But this approach can lead to bigger problems because it can discourage innovation, the report found. Older, more experienced workers are less likely to push for change because there is not enough incentive to offset the risk to themselves. “Why, for example, would a worker who’s been successfully doing things ‘my way’ for 20-30 years change tack now, particularly if he or she only has a few more years until retirement or is back on the job as a contractor?” the report asked.
Establishing a program for transferring knowledge is an essential element for dealing with “brain drain.” Veteran utility workers tend to pass valuable institutional knowledge orally, rather than documenting and updating the information systematically. This intellectual capital is often lost when the worker retires because there is no formal program to capture their know-how.
“Their departure can impact efficiency and create risk for the utility, especially as they typically go before replacements can be effectively on-boarded,” the report found. “Those replacements, moreover, arrive with very different attitudes and professional expectations. What seasoned workers have traditionally seen as a step up on the corporate ladder, today’s young employee is more likely to see as a resume builder.”
Student Enrollments Down
Because of the generation gap in nuclear training, electric utilities, government agencies and vendors such as Westinghouse and General Electric are desperately seeking nuclear engineers and other qualified professionals.
But the nation’s universities aren’t graduating nearly enough people to meet demand. In 2013, undergraduate enrollment in U.S. nuclear engineering programs was about 1,990, down 9 percent compared with 2012 and the first decrease reported since 1999, according to the U.S. Department of Energy. Graduate student enrollment was about 1,515 students, down 5 percent compared with 2012. The estimated number of undergraduate and graduate degrees earned in 2015 will be about 1,080, well below what is needed.
NEI predicts that up to 20,000 workers will be needed in four years to fill the gap created by retiring workers in the nuclear sector.
South Carolina Electric & Gas (SCE&G) is building two new reactors in South Carolina, and Georgia Power is building two reactors in eastern Georgia. In addition, the Tennessee Valley Authority plans to reactivate the Watts Bar 2 plant in southeastern Tennessee by the end of 2015. Thousands of workers have been deployed in the Southeastern U.S. to build these new projects. Once they are operational, thousands more workers will be needed to operate them.
“We’re going to bring on about 800 workers to support the staffing of our operating plants,” Jeffrey Archie, SCE&G’s chief nuclear officer, told CNBC. The two reactors being built at the utility’s V.C. Summer plant are expected to be up and running in 2017 and 2018, respectively.
Utilities across the country, including Spokane, Washington-based Avista, expect to have job openings for engineers, computer technicians, managers, lineworkers and other skilled utility workers in the next five to 10 years. The Spokesman-Review reported that at least 25 percent of Avista’s 1,600 employees will be eligible for retirement within five years. By 2024, that figure jumps to 40 percent.
The exodus of older employees is creating job opportunities in a field with “good wages for a long-term career,” Diane Quincy, Avista’s director of leadership and organizational development, told the newspaper.
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