January Management Training

My Take: The True Cost of Lost In-House Expertise

EP Editorial Staff | January 20, 2014

newjaneresizeBy Jane Alexander, Deputy Editor

Finding myself unexpectedly alone in an unusually quiet house the morning of New Year’s Eve, I did something that always makes me smile: I checked in with process-industry veteran Heinz Bloch. Wishing an old friend a prosperous 2014 wasn’t the only reason for my call. I also wanted to discuss issues raised in his recent Viewpoint column on how “tradition will fail you” (pg. 80, MT&AP, December 2013).

In that editorial, Heinz had decried what apparently has become an all-too-common equipment-reliability strategy in today’s plants: rejecting Best Practices and clinging to old specifications because “that’s the way we’ve always done it.” As he alluded, if nothing is done to counter this approach—which he links to diminishing numbers of readers, learners and thinkers in industrial operations—the asset-management capabilities of many facilities will continue on a downward slide toward calamity. Eager to know more about these problems, I asked him to provide some real-world examples. I was especially interested in the disappearance of in-house intellectual muscle and expertise from sites.

Heinz gets lots of feedback regarding his opinions (published and otherwise). Writing articles, presenting to standing-room-only audiences or simply engaging in small talk, he consistently strikes chords with reliability-focused end-users—some of whom later reach out to him with personal horror stories. I knew that he would have several to share. Here’s just one of them:

Two career automation specialists in the refining/petrochemical sector described the aftermath of several wholesale downsizings in their operations over the last 40 years. Those downsizings, they said, “had been justified by manager-executives who placed little value on bench-strength expertise in what they considered a mature industry.”That ill-advised overemphasis on the bottom line took off like a runaway train. As a consequence, entire in-house engineering divisions at the site vaporized. In the operating plant, contract employees became common in engineering, advanced process control, maintenance and laboratory services. The latter were outsourced, as were machine-shop tasks. Today, solid in-house subject matter experts (SMEs) are virtually non-existent around this company.

Hearing all this, I had to ask: When’s a bargain not a bargain? It’s a question industry should ask.

According to Heinz, the shortfall of in-house subject matter experts began to be felt around 1990. Since then, the grooming of SMEs hasn’t been viewed as a high priority by new generations of managers. Therein lies a big part of the problem.

Heinz acknowledges the availability of excellent contractors and consultants and the fact that hiring them may be attractive from a financial perspective. But he also believes financial decisions that put critical plant functions completely in the hands of outside resources often fail to take into account another important value proposition. It involves the significant returns that can be generated by synergies among knowledgeable, experienced, dedicated employees who are thinking and acting in solidarity with a company.

In his opinion, the bottom line is quite simple: “Best-in-Class companies got there with the help of SMEs. Any expectations to become Best-in-Class performers without SMEs are so unrealistic as to not even merit discussion.”

The risk of catastrophic failure, he concluded, will go up exponentially until industry returns to what he calls “square zero.” “That,” he said, “can only be achieved by reintroducing SME development and retention concepts in place 30 years ago.”

Having told you what Heinz thinks, I’ll now invite you to share your own opinions and/or stories with me. I look forward to your emailsMT&AP





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