Workforce Future

Growth projections in the ethanol industry are being scaled back in response to the slowdown in new plant construction. As the current generation of ethanol companies mature, locating highly-skilled employees may be challenging.
By Tom Bryan and Craig A. Johnson / Photos By Craig A | June 02, 2008
Kristi Jean doesn't work with biofuels. She is seated, and on the screen in front of her are enlarged images of black and white cubes. The only sound in the room comes from a medium-sized cooling fan. "This is sugar," she says, magnifying the image, then closing it and opening another. "This is Splenda," she says, pointing at what looks like a fuzzy worm but in crisp detail. "That's what happens with the addition of just a little chlorine."

The machine next to her is an electron microscope, the newest piece of hardware available to students entering the Wahpeton-based North Dakota State College of Science's Biofuel's Technology Program. Jean is the program director for the counterpart program in nanoscience technology. Students entering the biofuels program study alongside students in nanoscience in the hope that developing an understanding of one another's field will generate inquiry and advances in both fields.

This kind of "cross-pollination" is intended to lead to greater awareness of the broad range of skills needed in modern and future ethanol plants. Students graduating from the program will be prepared to enter an industry that will increasingly look toward "lean manufacturing." Companies will likely be searching for employees with a broad skill set and the capability to not only understand the science and engineering behind the manufacturing processes used, but also have the ability to work with their hands in the operation, calibration and repair of the equipment used in the industry.

According to Michael Burke, program director for the biofuels technology program, students preparing to enter the ethanol industry need to be prepared for the industry's mutability. "This industry is going to change with time, as we move from starch-based to cellulosic-based [ethanol]," he says. "There is an understanding today that what is in place now isn't going to be the focus five years from now."

Finding Talent
AGRI-associates Inc. recruiter Dick Johnson sees education as a vital component in developing a strong workforce. "This industry is not doing an adequate job of producing people of plant manager caliber," he says. "The people coming up through the ranks, generally, are not college educated. They're local young people who are hired to come in and run the plant, they're trained by Fagen Inc. and ICM Inc. personnel, and they have high school degrees for the most part. The plant manager should to be a chemical engineer, and have someone with a biology or microbiology degree in the lab," Johnson says.

One difficulty stems from the way new plant operators start out in the field. Production managers tend to come up through the ranks, beginning their career on 12-hour shifts as part of a 16-person team operating a typical 100 MMgy plant. The ethanol industry needs to not only attract new college graduates with chemical engineering degrees, but then convince them to work for $12 to $20 an hour while they learn the plant, Johnson says. In addition to the 12 production team members, there are four shift supervisors, one production manager and one plant manager. This leaves limited avenues for advancement to management position.

According to Johnson, another problem is that many students can't seem to stay in school. "[Schools with ethanol production curriculums] have trouble keeping students in school for two years," he says. "Companies are coming in after the student has only been there a year and pulling them out. That's an indication of the advantage seen by the employers to that kind of training."

Tom Branhan, chief executive officer of Glacial Lakes Energy LLC in Watertown, S.D., echoes Johnson's concern over not finding and developing talent. "Overall it's getting harder and harder to find qualified people to run these plants. And it's getting harder to retain those people. With so many new ethanol plants, people are jumping ship looking for better situations."

One way to combat this problem is to hire locally, which Branhan says Glacial Lakes tries to do whenever possible. "What we've done here is go to hiring local folks who are more apt to stay in the area because they have roots here, and putting a lot of time and effort into training those people," he says. "This includes sending them to technical schools and classes. What you're doing is to train those people, bring them up to speed, you pay them well, give them decent benefits, and you hope that their roots—a wife that works here, family in the area—keeps them here."

Glacial Lakes goes further than most when it comes to investing in employees. In order to realize the greatest return on their investment, the company will hire a plant manager in advance. "We'll hire a plant manager a year before we let him go into a new plant," Branhan says. "They have to train here, at Watertown in our corporate office for a full year, before we'll let them go and operate a facility. That's not easy for a grassroots plant, obviously, since they don't have a plant to train in."

The investment in the plant manager is the most important for Glacial Lakes since much of the plant's success hinges on their competence. However, the company also looks to build a solid team to surround this person. "We'll hire an operations manager six months in advance and a maintenance manager at that same time. Then they'll go to the new plant a month, or month-and-a-half before it starts up. By the time they leave here they're highly competent and highly trained. If they're not, we have plenty of time to make a change. Secondly, they take our culture. They know our culture from being here a year. And thirdly, when they go to a job fair they know the kind of people they need."

Local, Local, Local
If the general managers of Wentworth, S.D.-based Dakota Ethanol LLC and Goldfield, Iowa-based Corn LP characterize industry norms, turnover has been less of a concern. "To be honest, I haven't had to do much hiring because we have a very stable workforce," says Scott Mundt, general manager of Dakota Ethanol. "I guess that lack of turnover has kept me out of the hiring marketplace."

Mundt and his managers understand the importance of employee retention strategies, but he credits a simpler factor for their success. "What we provide is a good job for this area," he admits. "We're a good addition to the economy here, and these are interesting and competitive jobs."

Wentworth is a tiny community—officially only a couple hundred people live there—that is seven miles from Madison, S.D., and 40 miles from Sioux Falls, S.D. Most of Dakota Ethanol's employees live within 20 miles of the plant, Mundt says. Likewise, Corn LP's staff is comprised almost entirely of local people. "We have really been fortunate in our ability to hire qualified local people," says Brad Davis, the general manger. "Quite frankly, there are a few exceptions, but we have had the best luck hiring local people who have never worked in the ethanol industry and training them in. … I think that's one of the reasons we haven't suffered like some companies do with turnover."

But there are exceptions. Davis says Corn LP has at times hired experienced ethanol plant employees for specialty positions. "Some positions you just can't train in quickly," he says. "You need them to hit the ground running."

While Mundt was not employed by Dakota Ethanol when the plant started up in 2001, Davis was on board with Corn LP well before the plant started up in late 2005. The plant's management team—plant manager, maintenance manager, etc.—was put in place before the other 35 or so employees were hired, Davis says, explaining that Corn LP usually keeps between 37 and 39 people on staff. "We run on coal," he explains. "That means we need three or four more people than a typical plant our size."

Reputation is Everything
Every new ethanol plant must quickly prove to locals that it is an upstanding employer. However, as part of the Golden-Eagle Co-op, Corn LP was "a bit of a different animal," says Davis, who manages both the ethanol plant and the cooperative that owns and operates it. "We already had an established reputation," he says. "People knew we were a good place to work and we had that going for us from the start. … On the other hand, we hired the entire staff of the ethanol plant at startup, and we didn't transfer any employees out of other positions at the cooperative. They were all new hires."

It is also becoming increasingly common for ethanol plants to hold job fairs prior to their startups. Davis says Corn LP didn't exactly hold a job fair, but it did put on a program introducing the company to the community. He says the event was a sort of an "ethanol 101" seminar combined with information about the ethanol plant and the cooperative. "We talked about ethanol production, the dangers, the myths … and we explained our culture—what it already was and what we thought it would become," Davis says. "Being already established as a cooperative we were able to really tell people with confidence what kind of company they might be working for."

Davis says job fairs and pre-startup hiring programs are effective because they give employers and potential employees a chance to get familiar with each other. The key, Davis
says, is to make the process easy and straightforward for job candidates. "We let them know exactly what was going on," he says. "They walked away knowing how our hiring process worked, from applications to interviews to hiring. By the time someone got their resume in to us, they totally understood the program and they knew it would be a certain amount of days before they would be contacted. It wasn't a job fair, perhaps, but it was a big information meeting and it was great to have."

The challenge of hiring and training an entire staff is now well behind Corn LP and Dakota Ethanol. Today, they're focused on the art of employee retention. With 162 ethanol plants now on line in the United States—nearly 20 starting up since the beginning of the year—and another 42 under construction, some producers might be concerned that their competitors will be "picking off" their managers and operators. But while Davis and Mundt had distinctly different views of "headhunting," neither feared that they would lose people to the practice as the industry's build-out to 200-plus facilities continues. "We think [headhunting is an] absolute taboo," Davis says. "We don't do it. You're robbing Peter to pay Paul. It's a chain reaction that increases the wage factor by X … and if you're not careful you can increase various salaries 30 percent to 40 percent by playing that game, trying to pick off employees from your competitors. I do not believe we have ever hired someone that way."

However, that's not to say Corn Plus hasn't hired people that have worked at other ethanol plants previously. "We have advertised jobs and brought someone in from a plant in another state or a long ways away," he says. "But we haven't actively gone out to a nearby facility and taken an employee. What we have done is different than if someone is living in an area where they could potentially work at three different ethanol plants and never leave the community they're living in. Three ethanol plants within an easy commute … a person could work them pretty well if the plants allowed themselves to be worked. So we think that's taboo and we don't touch it."

While Mundt is not a strong advocate of headhunting, he sees the practice virtually inevitable in a growing, competitive industry. "I am never one to stand in the way of someone who is going to improve themselves or improve their career," he says. "And if that means employees with some ethanol background end up moving from one plant to another—hopefully in a vertical promotional type of move—I think that's good."

Mundt says the fear of losing employees to new ethanol plants that have come on line since the start of 2008 doesn't keep him up at night. "We've had some new plants come on line in the region and it really hasn't been a big issue," he says. "Some people have expressed interest, and I have been open to it if people can improve their career or their life situation. I certainly don't want to stand in the way of that. So far, we've been lucky with low turnover."

Davis essentially shares Mundt's confidence when it comes to employee retention. He knows Corn LP is a good place to work, and he's lost few if any employees to headhunting so far. "The possibility of losing employees is always a concern and anyone in management that chooses not to believe that it could affect them is probably going to get picked off," he says. "Given that you are competitive in the areas of reimbursement, which includes wages and fringe benefits, then there is absolutely nothing more important than your culture and the reputation of your company, and to treat your employees with respect. They absolutely have to enjoy coming to work. If you've got that, you have little to worry about. … As we all know, job satisfaction is not 100 percent reimbursement. There are so many other things that are a part of that. At the same time, that doesn't mean you can risk being uncompetitive in the job market either."

If and when ethanol plants do lose people, hiring locally is always ideal. Dakota Ethanol only loses about one employee a year. When that happens, Mundt says he relies on resumes that come from referrals, walk-ins and advertising in the local media. "We just screen through resumes and search for the best candidates," he says.

Both Mundt and Davis say local employees are loyal, reliable and often ready to start working immediately. "We've been lucky where we really have not had the need for a specialty person that we couldn't find locally," Davis says. "They've all been trainable positions and people who could be hired locally."

But as all employers in small towns know, hiring locally has its drawbacks. Employers in these communities say they often feel like the "low-hanging fruit" has already been picked. "Honestly, you really do have to be careful with the candidates that are out there," Davis says. "There's sometimes a reason why certain individuals are not working. So you're always looking for those employees that have the potential to be great employees, you know, great finds for the company."

Big Picture
Jobs at U.S. ethanol plants for the most part, seem to be fixed. With the exception of a few title differences, there does not appear to be much variation in positions from plant to plant. And despite the innovation that's taking place at many of these facilities, newly created positions are few and far between. "We're not seeing those new positions here," Mundt says. "The tasks that need to be accomplished by ethanol plant employees these days have remained pretty consistent. Typically plants our size—50 MMgy—have 35 to 40 people. A 100 MMgy plant might have 50 to 60 people. But it's remarkably similar in the staffing. Sometimes you'll see things tweaked a little bit in the departments but overall it's pretty consistent. You just don't hear about a 50 MMgy plant being run with 25 people, and likewise you don't see them being run with 70 people; 40 is kind of where it's at. Not much is changing in that respect. Although job titles and functions may vary—and some people wear several hats—the workforce is fairly standard and unchanging. It's a 24/7 operation that is really focused on one thing—ethanol production—and we're able to do that with relatively few people."

As one would assume it's easier to find good ethanol plant employees in the Midwest, where the facilities are concentrated, than on the East or West coasts, where many people are still unfamiliar with the renewable fuel and few plants exist. Mundt says being in the heart of ethanol country puts Dakota Ethanol in a strong hiring position. In the Upper Midwest, the available workforce, like vendors and service providers, are simply comfortable with ethanol plants. "That's something we even see from the suppliers and service providers we buy equipment and services from," he says. "They are starting to see higher levels of expertise—technical expertise and knowledge about ethanol production—and that's a benefit to this industry," Mundt says. "When you're novel and new and on the outskirts of the Corn Belt, I would look at that as more challenging."

Almost nothing is more important to the reputation of the workplace as word-of-mouth. It's important that employees enjoy their jobs and tell people about it. "We have 175 people who work between the ethanol plant and the cooperative," Davis says. "Those people live in the surrounding communities and attend church and school meetings together, socialize in restaurants and bars and frankly it's hard to attend any function where at least part of the conversation doesn't turn to work. Negative conversations about a particular workplace can devastate you. Positive ones will help you. It's extremely important."

Like any good business, the ethanol industry must remain cognizant of its greatest asset: people. Creating a solid team takes time and money, surely, but putting employees together is not enough. Developing their skills, honing them and turning them into the best team possible are the single greatest challenges for any company.

Tom Bryan is editorial director and Craig A. Johnson is plant list and construction editor for Ethanol Producer Magazine. Reach them at tbryan@bbibiofuels.com and cjohnson@bbibiofuels.com or (701) 738-4962.