Of Graduate Starting Salaries and the underlying message

While there are many different criteria that cause students to choose different careers, it is a reality that whenever the salaries for those working in the extraction of fossil fuels goes up, so does our enrollment.

So, this being the Olympic weeks, I won’t write a whole lot of comment on this but here are the current top 10 average starting salaries.


Given that the mining and petroleum industries were hit badly after the mid 80’s with a drop in demand for fuel, given the global availability of cheap oil, for 2 decades salaries and the need for graduates were both very limited.

Thus when the last upturn in demand came along, there were not a lot of qualified engineers in the system as it regrew, particularly those in the middle levels of management. And those of us who were around before the ‘80s are now moving into retirement so that there is a need beyond that which can be met by existing supply from the most critical disciplines at the Universities.

The numbers in the above table are averages, I have heard of more than one petroleum graduate starting at above $100k and mining engineers going out at around $85k, it all depends on the quality of the student, and which part of the industry they aim at getting into. But even in these tough times generally because of the lack of supply there is still a strong demand for graduates. Of course we are now starting to see some of the larger incoming classes starting to work their way through the system and start to graduate and meet demand – but I suspect that the top three will continue to be in that position for a while.

An international shortage

I am currently at a meeting in the Carpathian Mountains along with some 160 mining engineers from various parts of the world, and they are talking about what must be done in the future to ensure that coal can be mined effectively and efficiently to meet the coming demands for energy as other fuels pass their peak, and alternate sources of energy likely fail to meet the needs that society has for energy.

Most of the attendees are from Poland – a country that has one of the more detailed programs for educating the engineers that the industry needs. Within the comprehensive group of disciplines defined as mining, but including mining machines, robotics, geological engineering etc this country produces a significant part of the total number of global mining engineers that graduate each year. Yet even here academia is struggling to meet the needs that industry has for new engineers. We heard tonight that one company alone would like to hire 300 new engineers – which equates to more than the total graduating class in the country. But to also put that in context it is about equivalent to the total number of mining engineers that are graduated in most of the Western countries including Australia that also produce mining engineers. (The numbers do vary somewhat, however, depending on definition, since in Eastern Europe there are a sufficient number of sub-specialties that accurate counts between countries become more difficult because of problems of cross-discipline identification).

Why do they need these engineers – well consider that, apropos my post from last night on the gas from Turkmenistan, Poland is going to be one of those countries hurt if Russia cannot provide enough gas to meet the levels of import the country needs to meet demand. With little choice Poland must fall back on the resource that allows it to help itself.

Sitting on an estimated 140 years' worth of coal reserves, Poland . . . . which has a population of 38 million, generates 96 percent of its electricity in power stations fired by coal, much of it from the country's still-plentiful Silesian reserves in the south.

In contrast, the proportion in neighbouring Germany is 60 percent, and in France, 10 percent.
. . . . "Poland won't be in a position by 2020 to make significant changes to this dominant technology," said Wladyslaw Mielczarski, an expert from the European Energy Institute think-tank.

So what can the country do? Like so much of the rest of the world it is hard to attract students into this discipline, which still has the image of primitive force – despite the introduction of a variety of technological developments that have considerably “modernized” the field. Those that graduate are still finding enough job offers to go around – within the global market place.
But with demand for new engineers at about twice the supply rate the prospects for dramatic modernization and change are limited at best. Why ? Because there is not enough of a trained workforce with enough time to do the research. And mining is not a major research area of interest in many countries (The United States, for example, closed the Bureau of Mines and the support for research that the agency had, until then, provided).

Is the industry concerned about the problems of carbon dioxide? Well consider that it just sold a large quantity of carbon credits to Japan.

The European Union's largest coal miner Kompania Weglowa will sell carbon dioxide offsets to Japanese utility Chugoku Electric Power, Kompania Weglowa's chief executive said on Tuesday.

Kompania Weglowa will sell 944,000 tonnes of offsets, called Emissions Reduction Units (ERUs), over three years for about 8 million euros ($11.71 million), Miroslaw Kugiel told a news conference.

Yes the industry has problems, and this, one of at least three meetings on Mining Technology in Poland in the next ten days, is trying to bring together those that have chosen to address those problems with technical advances. But in much the same way as in other countries it is much more fashionable, at least publically, to talk about the risks of climate change, than it is to be concerned that the policies that are being put in place will deny the world the energy supplies that are available and that it needs in the short term to sustain society until realistic alternatives can be developed.

There seems to be, from conversations with participants, less money available for research to answer the problems that the industry has to solve. Even with enough reserves, Poland must mine thinner seams at greater depths, and the most productive technologies of today should perhaps be replaced since there may be better alternative methods for those changing conditions. But where is the money to fund those developments?

And who will there be to work on them, when the industrial demand for graduates exceeds (even today) the supply and so salaries rise, graduate student numbers fall, and replacements for faculty become much harder to find.

I suspect that very few, if any, commentators are aware, let alone care about these issues. But these are the problems that will control the fuel bills of the next two decades – and so commentators should be aware at least of the current damage being done to that future.

More thoughts on manpower and the Mining Industry

Yesterday I wrote about Paul Lang’s talk about the problems that the Mining Industry were having with recruiting new engineers into the business. Well today I was intermittently in the meeting as it continued with the comments of several more senior mining company officials, except only that, with faculty numbers being what they are, I had to leave to teach for part of the day. Nevertheless I did take into my class a valid comment by Bill Kennedy that in your daily life as an engineer you will use some 15% of what you learn in college – you will, however, be expected to know the other 85% (and I gave a personal example).

In the dinner this evening Diana Tickner of Peabody expanded a little more on the topic of the shortage of mining engineers at a time where the industry can anticipate little other than growth over at least the next decade. She noted that with the 129 mining engineers graduated in the US in the last year, and 110 in Australia there has been an inadequate replacement of retiring personnel, and thus starting salaries averaging $75,900 (high value being $84,500) have been needed to attract individuals and that there is sensibly zero unemployment in the US industry, and about 1.5% in Australia. This time around the industry has understood the benefit of retaining its skilled engineers (and the investment in that resource that the companies have made) and thus has not been laying them off in these tougher times, as they have in the past. And those that have left one job, have not found it difficult to find another. Those that now sit in the higher levels of the industry are only too familiar with the layoff strategies of earlier recessions, where holding 5 jobs in 10 years was not unusual, but which did not build company strength or company loyalty. This is one of the first recessions where she has seen this loyalty to engineering employees happen on a broader ranged basis. (Which is a comment – repeated by others – that the coal mining industry continues to see the future as very strong for their business. Essentially there is little else that can realistically replace the fuel on the scale that it is currently being used).


But to get students into industry is a matter of the perception that they have, of what the industry is. And in that regard, as I noted yesterday, the picture that the media paint of the industry, and the cries that are heard for its demise, cannot but impact the talent pool that is attracted to the industry. An earlier speaker today, Leigh Freeman talked, in part, of the contrast between the likely challenges facing, for example a PhD in EE of his acquaintance who spends his time doing research into a relatively small part of his field, and those who go into professions such as Mining, who face much greater challenges and who acquire greater responsibilities faster, and as a consequence are better rewarded. (Until that is you hit the management ceiling at around $180k where you move into a different market category where there become an increasing number of competitive individuals available, since you have largely passed above the threshold where it is technical capability that is most important, into the level where management and social skills are more valuable, and where, as a result there is much greater competition.)

Diana talked of the needs to recruit faculty – academia needs about 10 new faculty a year to fill positions, and yet there is an inadequate supply. Universities do not pay enough, and the rewards are lacking relative to the investment required to get that PhD so that the individual can be available to become a faculty member (see the starting salaries for a BS degree cited above). The industry needs not only new talent, but also new technology. But when the faculty numbers drop and student numbers rise (our freshman class may be the largest it has ever been) there comes less time available for research and innovation and the creativity required to solve the looming problems that come with meeting not only the energy but also the environmental needs that face the world.

Peabody, for example, sees an opportunity to generate biofuel to help retain the airliner fleets as conventional fuel sources deplete, but this will require the inputs and knowledge of a range of engineers. Their availability is becoming less certain.

In this regard I have been fortunate, as a researcher, to have worked in an area that saw the generation and growth of a new technology that is now one of the quiet revolutions that is changing the way that things are done in a number of industries. Yet the attitude of the mining industry to change was always such that it was difficult to get them to invest in such ideas. Others were more willing to provide larger sums of money more readily, so that while much the initial work was aimed at helping the mining industry, for the last 25 years it has been much easier for the research community working in this field to do work in other industries and to help them grow. Part of the lack of support came from the relatively low profits that parts of the industry made, but it has also been because of the conservative nature of the industry as a whole. In the current circumstance, it is hard to see the industry changing their general attitude to research, although with new generations and challenges coming along, perhaps there can be hope that such change will occur.

It will be interesting to watch and see how the industry changes. But it, and the Administration need to more deeply comprehend that you cannot mandate, nor can you legislate technical change. Without a period of investment in the research first, those changes cannot happen, because the answers will not have not been found. And without the presence of a sufficient and knowledgeable faculty it will not be as easy to know where to look for those answers.
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A neglected form of Administrative Insurance for the future

There is an almost rhetorical question that comes up repeatedly when one talks with those demanding strong action to reduce the possible outcomes of the change in climate that are claimed to be due to increases in greenhouse gases. It is that we cannot afford not to take out insurance in case the theoretical prognostications are correct. And the argument is often made that there is little downside to this.

I was at a talk by Paul Lang, who is the Senior Vice –President for Operations of Arch Coal tonight, and he spoke of a definite and clear downside that the general public is certainly not aware of, and very likely fails to even remotely understand the consequences of. It is this.

Some 50% of the electrical energy in this country is produced from coal. In the MidWest this number rises, to 85% in Missouri, as an example. But over 100 coal-fired power stations have been cancelled or postponed because of the general attitude to coal by the current Administration and the political climate engendered by the furor over the possible AGW effects. We, this nation and the world need energy. At the moment, other than ourselves, nations such as Russia, China, India and Africa rely on coal for significant portions of their energy supply. That demand is not going to go away, and in one of the few likely accurate predictions of the Wicks Report they anticipate that coal production will rise from 4 billion tons a year to 7 billion tons a year, in order to meet this demand.

To produce the coal that the world needs, the industry must have engineers. That supply is beginning to vanish. In a typical year at the moment the industry needs about 750 new mining engineers globally. (This is not just for coal, you name the mineral – it came out of the ground and some form of mining was involved in extracting it). But globally there are about 350 students graduating. The work force in the industry is aging (over 60% of those in the industry are getting close to retirement) and then there are those below 35 in age who relatively recently joined the industry. There is a “missing generation” between the two groups, marking the years when there appeared to be no future going to work in the fossil fuel industries.


The public relations exercises that we see today that tout the “Climate Change” message project a strongly negative image of the fossil fuel industries to the general public, discouraging students, both in the United States and abroad, from going after careers in the industries involved. The nation already has had a more general problem in that less than 6.2% of incoming college freshmen in 2007 were anticipating careers in engineering. This has however recently risen with 7.5% of 2008 freshmen expressing an interest in going on to an engineering job, but given the national need, that is still a pathetic percentage.

For the fossil fuel industry the numbers are smaller and with limited demand for places, at a time where other disciplines were flourishing, University Administrations put their resources where the demand was. As a result while there are nominally about 12 accredited schools of mining, there are viably only around 6 that have what might be considered an adequate to good program. Others have below minimal levels of the faculty numbers required to teach an adequate range of courses, let alone also do the research critical to the advancement of the industry.

To maintain an industrial standard of safety that has now been achieved; to keep the production cost levels down and thus meet the prices for the fuel and electricity supplies that society expects, rather than the prices that will stagger and halt future industrial growth, and to keep the nation out of continued recession requires that the industry be staffed by engineers who know what they are talking about.

Projecting an image of a “evil” industry that will be “taxed out of existence” is fine if there is a viable alternative – but what if there isn’t? It would seem that the Administration might want to consider “insurance” in case their ideas don’t turn out to be right. In case the nation really has to fall back on coal for a viable economic future. If all the billions of dollars that are now being spent to study and suggest steps to take to lower global warming have been put in place because of insurance in case the AGW argument is correct (Joe Aldy made that point at the EIA Energy Conference in April.) then it makes sense to take out similar insurance in case the argument is wrong.

Is that likely ? Are we going to see greater investments in technology to produce fossil fuels at a greater rate, so as to meet demand and help sustain the economic recovery? Somehow I suspect that this, more realistic sort of insurance is unlikely to happen. But we shall see.

In the meantime the world still needs more qualified engineers in the fossil fuel extraction industries than those industries can find and hire. Plans will therefore be delayed, needed research will not get done, (the historic record shows that giving money to the National Labs to find answers to fossil energy problems is a highly expensive way of trying to solve the problem.) We are, therefore likely heading into a really serious problem time - isn't that insurance is supposed to help get you through?
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