This chapter focuses on growing opportunities for engineers starting early in the professional field. The convergence of Baby Boomer demographics, rising demand for electricity, and the state of America’s electricity infrastructure are shaping up to create a major job market in the United States for early-career engineers. The convergence points to a need by the power industry to hire thousands of new engineers by 2030. Large investment numbers are cited for the nation’s transmission and distribution grid that links generators, motors, computers, light bulbs, and everything in between. The chapter also discusses various challenges such as high percentage of industry workers reaching retirement eligibility. Coupled with those retirement concerns is the industry-wide expectation that electricity demand nationally is expected to grow in spite of the economic slowdown. The power companies’ observations reveal different approaches to their engineering workforces. Some lean toward new engineering school graduates. One reason for the expectation of growth in the transmission and distribution businesses is the ongoing development of smart grid technology, which will permit embedded metering, automatic load redistribution, and ultimately time-of-day pricing.
The convergence of Baby Boomer demographics, rising demand for electricity, and the state of America’s electricity infrastructure are shaping up to create a major job market in the United States for early-career Ш HflK engineers.
The convergence points to a need by the power industry to hire thousands of new engineers (and perhaps hundreds of thousands of other workers) by 2030. Given the long time horizon, however, the ways in which these career opportunities will work out for engineers are marked by many questions. Although basic career requirements can be summarized from discussions with power-generation companies and industry associations, no one is willing to predict when jobs will open up, or where the money will come from to finance the future of electricity in the U.S.
America’s electricity infrastructure appears in need of a massive overhaul and rebuild. To accommodate an ever-increasing demand for electricity and new smart grid technology on the horizon, the electric utilities foresee about $500 billion worth of projects running through 2030 and beyond. Similarly large investment numbers are cited for the nation’s transmission and distribution grid that links generators, motors, computers, light bulbs, and everything in between.
What’s more, 45 percent of engineering jobs in the power-generation business “could become vacant” by 2013, according to the Center for Energy Workforce Development. The projection is based on demographics—the huge percentage of Baby Boom engineers now nearing retirement age, plus normal attrition and staff turnover.
The center, a Washington, D.C. non-profit, was founded in 2006 by the Edison Electric Institute, the American Gas Association, other industry associations, and many utility companies across the country. Launched when the utilities’ demographic situation was first recognized, the center’s primary focus is education and training for all power-generation job classifications, including engineers.
The average utility worker is 48 years old, about five years older than the median age for all U.S. workers. According to Margaret M. Pego, chief human resources officer and a senior vice president at Public Service Enterprise Group in Newark, N.J., that puts her company and other energy providers in an uncomfortable position. “The energy industry is one of the first to feel the effect of Baby Boomer retirements,” she said.
The utility industry got into this demographic bind with deregulation in the 1980s. As power prices fell, revenues dropped and margins shrank; tens of thousands ofjobs were eliminated. Subsequent mergers, downsizing, and hiring freezes pushed tens of thousands more out of the industry. Between 1990 and 1997, for example, after most deregulation, employment in “electricity services,” which includes power-generation, fell 19 percent from 454,000 to 368,000, according to the Bureau of Labor Statistics’ Monthly Labor Review of September 1999.
According to the Edison Electric Institute, there are about 32,000 engineers of all types in fossil-fueled power generation and in transmission and distribution. Just to make up for expected retirements and attrition, about 15,000 engineers will need to be hired. If and when the U.S. electricity infrastructure is rebuilt, two to three times as many engineers may be needed. The report, “Power Engineers and the Electric Utility Industry,” is a few years old, however. It was presented to the National Science Foundation Workshop on Nov. 29, 2007, before Great Recession started.
Mary Miller, vice president of human resources with the Edison Electric Institute, the industry association for investor-owned utilities, pointed out that the high percentage of industry workers reaching retirement eligibility is not the only challenge. Coupled with those retirement concerns, is the industry-wide expectation that electricity demand nationally is expected to grow in spite of the economic slowdown, she said.
When the recovery and expected expansion get under way, “we will need electrical and power-systems and nuclear engineers first,” Pego said, “Then, as the power systems area expands with more transmission lines, the smart grid, and more generation sources, civil engineers, mechanical engineers, computer engineers, and linemen will be added.”
A spokesman for the Edison Electric Institute said, “All our estimates of engineering openings are based on the workforce development data...We need electrical engineers and nuclear engineers and the skill sets thereof. EIow many in each category, and where, really depends on how the companies are focused when the retirements occur.”
When will jobs open up? It’s anybody’s guess.
Where will the money for expansion come from? Again, no easy answers. Estimates of capital needed range well into the hundreds of billions of dollars. Credit has tightened for everyone and utility credit ratings have slipped.
The recession has caused unprecedented back-to-back drops in yearly U.S. electricity output. Output fell by 1 percent in 2008 and 3.7 percent last year, the steepest drop since 1938. From 1998 through 2007, however, electricity production grew an average of 1.4 percent a year. The Department of Energy, in the Short-Term Energy Outlook update for June from the Energy Information Administration, has forecast a 3.1 percent increase this year and another of 0.9 percent for 2011.
The back-to-back drops hit utility revenues hard. Hiring freezes followed, along with more layoffs, delays in project starts, and outright cancellations. Many believe cutbacks have not yet run their course. At the same time the power-generation industry is restructuring as companies seek to optimize their fleets by fuel, to stress operating efficiencies more than ever, and to seek a balance between regulated and unregulated operations.
Whom the Utilities seek
Aggregate numbers such as 45 percent of a workforce hide as much as they reveal. To fill in the details, Mechanical Engineering interviewed key people at representative utility companies.
Despite the current cutbacks, hiring freezes, and other uncertainties, “longer-term, the utility industry’s demand for mechanical engineers will stay strong,” said Mark Gray, vice president for engineering services and chief engineer for generation at American Electric Power Corp. AEP, based in Columbus, Ohio, is one of the largest U.S. generating companies. It operates 80 generating stations in the U.S with a total nameplate capacity of 38,000 megawatts.
Gray has corporate responsibility for all engineering in the company’s generating plants. His team has just over 300 engineers, technicians, designers, and administrative staff. Of them, about 160 are graduate engineers, and 85 to 90 are MEs. Individual power plants, he noted, are staffed mostly with MEs and electrical engineers plus a growing number of chemical engineers.
A common question is whether today’s senior engineers will be replaced one for one as they retire. Gray says no, not in numbers and not in tasks. “There is going to be some reduction in staffing,” he said, including reduced workloads with standardization, automation, and newer engineering technologies. (This was explored in an article, “Positions of Power,” in the January 2010 issue, which is available online at www.memagazine.org.)
In the future an increasing number of engineers “may not necessarily be AEP employees,” Gray said. “We will use more and more contract services such as architectural-engineering firms and consultants in general. We will also bring back our retirees when their expertise is needed.
“Ten to 20 percent of AEP engineers are already contracted as needed,” he said. Terms vary from three or four months to a few years. The company calls the practice “variabilizing,” because it accommodates changing needs and adjusts staff levels according to workloads.
“There will likely be more contract engineering staff since more of the engineering work will be variabilized to reduce costs,” Gray said.
Smaller payrolls aside, “using skilled outsiders has other benefits,” he said. “They bring in experiences from other utilities and industries, and they share with us best practices from other companies.”
Even as a head count reduction proceeds, “AEP is determining which skills we must keep in-house to maintain the highest level of safety and reliability,” Gray said. “The skills we maintain in-house will be those we cannot find on the outside when we need them or because it takes too long to find and hire people with those skills and get them up to speed.”
Having fewer full-time engineers is an opportunity for those on staff to advance. “As our most senior men and women retire, less-experienced engineers will have to step up to new responsibilities,” Gray said.
According to the director of human resources for AEP, Tracy Elich, “There is a lot of opportunity for engineers to step up into leadership positions at earlier points in their careers. These newer people are ready for the challenges. They already are asking us for more responsibility.”
From an operations standpoint, the engineering situation is different at Xcel Energy Inc. in Minneapolis. Pamela Graika, general manager of operations, reported that the outlook for mechanical engineers at her utility is “pretty good.” As with the rest of the industry, “at least 40 percent of our engineers are eligible to retire in the next five years,” she said. “There are not enough available engineers yet to replace all of them.”
According to Graika, “We’ve been developing a workforce plan for five years, bringing in new engineers, continuing to hire.” Xcel Energy normally meets all its needs with recent engineering-school graduates.
Everyday tasks for MEs in utility companies revolve around keeping power plants running for 40 to 60 years. "At Xcel Energy, that translates into a continuous ННВДНННДО engineering need for maintenance," Pamela Graika said. "Programmed maintenance systems are in use throughout operations. We constantly analyze, monitor, and replace or repair machinery. At one typical smaller site we recently found we use about 1,200 electric motors." This site has two coal-fired plants and one natural gas-fueled combined-cycle plant.
Xcel Energy considers all its power plant engineers "systems engineers," Graika said. "They are responsible for the day-today operations of one of a plant’s major systems: boilers, turbine generators, control systems, air pollution controls, and so on. They daily review readings and test results such as operating rates, vibration readings, thermal data, equipment status, and heat rate calculations, plus trends in allot these. Our engineers are at their desks only a small fraction of their time."
Renee Spino at FirstEnergy Corp. pointed out that "engineers will always be responsible for improving the efficiency of our machinery, boilers, and rotating equipment," the turbines and generators that produce electricity. "Our MEs do a lot of inspections and audits," she said. "Their analyses go into recommendations for everything from improving day-to-day operations to designing and specifying power plant enhancements."
For MEs accustomed to manufacturing, these tasks differ significantly from those in factories. In manufacturing, changes in output are often unpredictable, operating levels vary daily, and production systems are frequently reconfigured.
At the most fundamental level, most manufacturing is discrete-output is counted in units and leaves the plant in boxes or pallets. Power generation is the quintessential process industry. Its output goes out by wire, no packaging needed—in a flow tallied by meters.
"We don't make equipment," said Mark Gray at American Electric Power. "We develop power production systems. We specify and buy the equipment, install it, make it all work together, and then maintain it."
As engineers, he said, "we live with our creations, and they refine our thinking every day." The MEs "create new systems and processes to meet the changing load demand more efficiently and make engineering enhancements to improve operating flexibility or safety. That makes them problem solvers with sound root-cause analysis skills to restore or increase operational reliability and efficiency."
“We also look for results-oriented managers who have good track records,” Graika said. She is responsible for Xcel Energy’s three coal-fired plants, three refuse-derived fuel plants, and three combined-cycle natural gas plants. The utility has a generating capacity of about 16,500 megawatts, nearly all of it from coal and natural gas. Three nuclear reactors at two plants (Prairie Island and Monticello) generate a combined 1,600 megawatts.
FirstEnergy Corp. has been steadily hiring mechanical engineers—48 in the past two years, said Renee Spino, manager of recruiting. As of May 2010, the Akron, Ohio, energy company employed 375 MEs. FirstEnergy is always on the lookout for experienced project managers and, in general, more seasoned engineers, she said.
But future ME head count will be as unpredictable. “Like everyone else,” Spino said, “we are trying to work smarter and more efficiently. We anticipate that new technology will play a role in holding down head count in many areas of our operations.”
Southern Company “currently employs approximately 500 people who have been formally trained as mechanical engineers,” said Kim McFadden Harris, recruiting consultant and team leader in talent acquisition. They focus on project management, equipment maintenance, plant operations, and design. “While most operations areas prefer EEs, we have found that for most engineering positions MEs have all the necessary skills,” she said.
Southern Company has 43,000 megawatts of generating capacity in 73 fossil-fuel and hydroelectric plants.
Its Southern Nuclear subsidiary operates six reactors at three sites; it has asked the Nuclear Regulatory Commission for licenses to build two more.
Harris and her team actively recruit and hire engineers from other industries. “We look for transferable skills from the military, manufacturing, automotive, and chemical industries,” she said. “Naturally we emphasize project management skills, demonstrated leadership, and solid technical skills.”
Upwardly Mobile MEs
Operations and human-resources managers at power-generation companies point out that mechanical engineers are upwardly mobile in nearly all areas of their companies.
"Getting hired in as a mechanical engineer here is the first step in a very varied set of AEP career paths,” said Mark Gray, engineering manager at American Electric Power. “Some MEs do detailed project budgeting and scheduling. Their knowledge and experience make them invaluable for tracking real-world costs and timeframes. Engineers with MBAs take their project/ process management skills to many different areas within operations. AEP management is primarily engineers."
Joining as an ME is a good career move at Xcel Energy, too. "More than 50 percent of Xcel Energy managers are MEs and, overall, 70 percent of utility operations engineers are MEs," said Pamela Graika, operations manager.
According to Kim Harris, recruiting team leader at Southern Company, "Outside of traditional engineering roles, MEs serve as project managers, operations and maintenance managers, and plant managers."
What emerges from these comments is the companies’ very different business situations and their common-sense responses. Power markets in America’s “industrial heartland” are softening as manufacturing in general and the automakers in particular adjust to new realities in their operations and outlooks—and demand less electricity. Farther south, growth continues as manufacturing migrates and foreign automakers and suppliers open and expand operations. Hence much of the proposed new generating capacity is in states such as Georgia and Texas.
The power companies’ observations also reveal different approaches to their engineering workforces. Some lean toward new engineering-school graduates. They find them through ongoing relationships with engineering schools and through internships. Expanding companies, however, need seasoned project managers with strong track records. The nuclear power industry prefers veterans of the U.S. Navy’s nuclear-powered submarines and aircraft carriers.
It is not only power generation that will need to grow. Industry analysts also predict a big expansion of the U.S. power grid.
Most transmission and distribution jobs go to electrical rather than mechanical engineers. But, transmission and distribution units collectively employ hundreds of MEs in equipment design and management. Many are approaching retirement age.
One reason for the expectation of growth in the transmission and distribution businesses is the ongoing development of smart grid technology, which will permit embedded metering, automatic load redistribution, and ultimately time-of-day pricing. The smart grid will also make it more efficient to integrate power from new solar and wind projects in remote areas.