Steel moves a step closer to retirement ‘bomb’

Posted

Jan 03, 2017 | 10:23 AM | Dom Yanchunas

NEW YORK — Now that 2017 has begun, the U.S. steel industry finds itself one year closer to a potentially devastating wave of retirements that could wipe out its vital leadership and knowledge base.

Companies and recruiters have realized for years that the steel community has a demographics problem: a soon-to-depart crowd of Baby Boomers unsure of who will fill their shoes.

Donald R. McNeeley, president and chief executive officer of Romeoville, Ill.-based Chicago Tube & Iron Co., has studied the aging work force and calls the gap “a bomb that’s coming.”

Companies need to wake up and realize that they must develop their younger generation of talent into a pipeline of fresh executives and supervisors, he said. That means aggressive recruitment, investment in technical education, a commitment to mentoring and projecting a positive image of the steel industry.

“In five years, 50 percent of our industry will be eligible for retirement,” McNeeley said, referring in particular to upper-level management. “The math would suggest that the pipeline is inadequate to fill the critical leadership positions that are opening.”

On the mill side of the equation, among the notable recruitment programs is Chicago-based ArcelorMittal USA LLC’s “Steelworker for the Future,” which includes classroom and on-site training and mentoring.

The American Iron and Steel Institute and Association for Iron and Steel Technology (AIST) Foundation offer the Ferrous Metallurgy Education Today (FeMet) initiative, which supports scholarships and internships. The Steel Engineering Education Link (StEEL) is another scholarship program.

At the moment, steel’s personnel crunch is mostly in mid- to senior-level management positions, according to Gary Fruchtman, managing partner of WorldBridge Partners LLC and a specialist in steel-industry recruitment searches. An underappreciated problem is the challenge of filling openings for line supervisors.

“There’s no question it’s deepening, and the mills haven’t quite woken up to that issue,” he said.

The market is tight for floor positions ranging from blast furnace and rolling mill supervisors to area managers of steelmaking and coke production to metallurgists, Fruchtman said. Recruiters have little choice but to try to entice a person away from an existing job at another mill.

“It’s a zero-sum game,” he said. “If I take from ABC mill for XYZ mill, then ABC mill has the same problem.”

Steel, as with other manufacturing industries, is competing for a smaller pool of young people to begin with, and fewer still are interested in industrial work. Teachers, parents and news media portray steel as a withering livelihood, according to McNeeley.

“They were told, ‘Will the last person in American industry please turn out the lights.’ It was negative, negative, negative,” he said. “Then it went from negative about our industry to complete apathy, (and) apathy is worse than hatred.”

Younger people are usually more interested in computer, financial or legal careers, which amazingly seem to have better images, Fruchtman said. That has worked to steel’s disadvantage, but the industry also can leverage some of those interests in surprising ways.

“For kids coming out of college it’s hard to paint a sexy picture of the steel industry, but it has become a high-tech industry. That message is not getting through,” he said. “They think it’s about Rust Belt and dying industry and grit. Part of what the industry has to paint for young people is career advancement and work-life balance and safety. You have to paint it as an industry that will get you somewhere.”

The National Association of Steel Pipe Distributors’ (NASPD’s) website currently features a video called “Steel as a Career Choice” that promotes opportunities in the sector.

In that video, Rob Myers, sales representative at Katy, Texas-based B&W Pipe Inc., emphasizes that steel goods “will always be needed” and offer a good outlook.

“It is an industry where you know you can have a career for many, many years,” he said. “If you want an industry that can grow with your family, the steel pipe industry is the place to be.”

In an earlier NASPD video entitled “Great People, Great Opportunity,” Merfish Pipe Holdings LLC chief executive officer Gerald Merfish pointed out the “stability” and steady job prospects, even during economic downturns. The Houston-based company’s white-collar employees average 12 to 15 years in tenure, and blue-collar workers average about eight years, he said.

Both videos are available on YouTube and can be shared.

At Chicago Tube & Iron, about 10 years ago McNeeley and his other maturing colleagues started to become worried about who would steward the company’s future after the graying generation ultimately retires. While technology can reduce some labor functions, he has been most concerned about a younger generation growing up in a culture that doesn’t develop decision making and leadership skills.

“If you can’t find enough welders, you can put robotic welders in. If you can’t find office workers with the math skills, you can automate that process. You can’t automate leadership,” he said.

Chicago Tube & Iron broke a longstanding policy of not hiring people as their first job, according to McNeeley. Top management began systematically nurturing high-potential heirs-apparent and paired the younger staff with more seasoned colleagues, making it a point to invite the less experienced people to conferences, dinners and golf outings.

“We are making a big effort to have as much exposure as we can between the age groups,” Susan Hamilton, Chicago Tube & Iron’s vice president of administration, said. “How are you going to bring out the best in the next generation after you?”

Chicago Tube & Iron offers tuition reimbursement, in some cases at 100 percent, and now regularly recruits at college campuses near its service center locations. The company even enrolls up and coming colleagues at Toastmasters International programs to improve their public speaking and other leadership-enhancing skills, she said. All of this has proved to be critical as key members of the company’s executive team enter their 60s.

“In succession planning, we realize the problem is more imminent and maybe bigger than we were thinking,” Hamilton said.

Progress is also being made in enticing more minorities, women and other traditionally underrepresented groups to become interested in a career in metals, she added.

“The more we do to make steel more attractive, the more that will help with the diversity,” Hamilton said.

Dom Yanchunas
dom.yanchunas@amm.com

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