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Author's profile photo Manoj Narang

Building Human Capital in the Chemical Industry – Globalization of the Industry

The chemical industry is a capital intensive industry. It not only requires huge capital investments to setup large and complex plants, but it also needs to invest and build soft assets – its human capital – without which it  cannot run its expensive assets and execute business plans.

Building and enabling human capital is one of the key i/wp-content/uploads/2013/08/blog1_269170.pngssues confronting the chemical industry today.

The workforces which run and maintain chemical plants and bring out new innovations are in short supply today ( PwC 15thAnnual Global CEO Survey ).

The ageing workforce (the average age of a Chemist in the US is 47 years old) and the inability to attract new & younger workers to the chemical industry has led to severe skill shortages.  As there are many opportunities in other sectors, chemical industry jobs are often not considered by many when applying
for jobs. Also, due to the perception that chemical industry operations are detrimental to the environment, chemical enterprises are facing talent and key skill shortages. Developing the ability to identify, recruit, train and retain talent is the key to ensure profitable growth for a chemical enterprise.

To explore and understand how to build human capital in the chemical industry, we need to define and ascertain the key priorities of an HR manager in a chemical company. These key priorities are linked to factors which impact Chemical Industry profitable operations.

This blog series will explore these key priorities and will highlight current HR trends in the chemical industry.

Global Economic Scenario and the Chemical Industry

The chemical industry follows economic cycle – it is one of the first industries to be impacted by downturn. As a result, chemical firms tend to frequently restructure and rationalize their operations & workforce. It is observed (in the US & EU), that this restructuring & rationalization has led to reduced hiring, which has resulted in a workforce comprised of older and more experienced workers. This has led to increased staff costs in these regions.

Globalization and a Shift in Demand to Emerging Countries

The chemical industry attempts to locate itself near demand centers and areas which provide access to cheap raw materials. Hence, we find chemical companies expanding beyond their home locations into new geographies, setting up subsidiaries and joint ventures.

An HR manager of a global chemical company trying to define workforce practices and policies, will need to devise them in such a way that these policies not only meet local (regional or country specific) requirements, but are also aligned with the global standards.  A global chemical company can have core HR
& payroll processes, defined by the local regulations and requirements, but it needs to take a global view of its talent position. The talent management
practices need to be standardized across the company (globally). It needs to rotate employees across regions to create a workforce that is globally oriented and is also aware of key issues & requirements prevalent in a particular region.

Have you noticed these trends in the chemical industry? How have they impacted the way you manage human capital in your company? Use the comment
space below to share your personal thoughts and professional experience.

Or send us your thoughts to @SAP4Chemicals

Be sure to check back for part 2, part 3, and part 4!

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