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Interview

with David Doig, Chief Executive, OPITO

31.10.2008 / Energyboardroom

Although OPITO has a long history, it has reinvented itself quite recently. How did this process come about and where did the initiative come from?

The reinvention came from the realization that the industry had changed dramatically from $10 oil in 2000 to $60 oil in 2004. The industry realized that its behaviour was based on market demand but such a major change in product price had made a significant change to future plans and opportunities. Basically, this unpredicted and swift change had caught the industry with inappropriate levels of infrastructure, plant, and people. What the industry decided to do was realize its responsibility and take full ownership: to deal with the issues itself, and understand them much quicker, rather than relying on outside help.
At this point, what industry did was look to its traditional skills body called OPITO and morph it into a wider, bigger and stronger entity called OPITO, the Oil and Academy. In the oil and gas industry, there is no other OPITO anywhere in the world, and I can say that with confidence because I’ve traveled the world extensively. OPITO now has 44 people, with plans to double continually increase the size of the organization to ensure it can address the needs of the industry. It is an employer and trade union owned entity and is completely self-sustainable in financial terms due to it robust business model which reflects that of the employers which own the company.
The organisation has been reconstructed into a global player from around the year 2000. Unlike almost all skills organizations it operates like a business so it looks and feels like its customers. This which may sound a bit strange, because normally, and particularly in the UK but also elsewhere, skills bodies are funded through a levy system or government money. I believe this model has flaws because if your funding is assured, it does not implant real business drivers for success and delivery of quality on time products and services against market need. OPITO, on the other hand, only exists on its ability to satisfy its customers – its employers. We sit and listen to what the issues are and develop products, whether they are standards, development frameworks, quality assured learning provision, career events or skill testing tools, and put together a project plan, cost everything out, and get the job done. Then, when our customers use what we have developed they pay for it.
In short OPITO must get the product right, the offering right, and deliver to the market at the right time against employers’ needs, and then they pay us back. In real terms with over 100,000 people trained to OPITO standards in 2007 and an international market of 25 countries out with the UK, OPITO has demonstrated how it adds value to the industry and employers within it.
OPITO does not use the word “profit”, but instead “surplus” because it’s a not-for-profit organization that reinvests its surplus to solve pan industry skills and workforce issues. There’s an internal governance model that constantly reassesses if our pricing is right, e.g. our registration (OPITO holds the global data base of industry training records) prices have been frozen since 2000, with OPITO preferring to increase market share rather than raise prices this makes sure we add value not cost.. In that way, OPITO is actually driven by the business, with customers telling us what they need. If customers come to you, tell you what they need, and you deliver it, that’s a utopian business model. That’s where a lot of suppliers get it wrong, in providing products that are late or too expensive, but because at OPITO our customers do it all for us, the organization ticks all the boxes. Also in this way, everything developed by OPITO is used by its customers.
OPITO does not train anybody, but sets all the industry standards and manages the industry’s modern apprenticeship schemes, for example. The industry recognized in 1999 that if they didn’t replenish the specialist, technical workforce, this would affect platform production and may even mean early shut downs Employers (once again) took ownership of the challenge and subsequently OPITO manages the industry apprenticeship technician scheme on behalf of the industry. With over £60 million of direct investment on apprenticeships through this scheme in six years, the industry has now added over 900 very highly skilled, trained and qualified young people to the workforce and the business threat has been mitigated.

With the oil industry currently booming, there is constant talk of challenges related to shortages of skilled labour. In your estimation, how serious are these challenges and in what areas are they most acute?

There’s not an answer to how serious it is, and no clearly articulated answer in all of Aberdeen. Is it a shortage of particular expertise at a particular moment in time? It could come down to needing geoscientists to understand a given issue, but they aren’t available at a given time. Or, is it the fact that the industry partners are all trying to do things at the same time? It could be the issue of a lack in a small number of very specialized skills, or a high number of blue collar skills. In the latter case, there’s an issue because the industry tries to do all its work in a set period of time, to capitalize on good weather, longer daylight, etc. Another aspect to consider is when the pipeline and infrastructure shuts down; it’s not just one company that feeds into the pipelines, but multi-assets going into each pipeline. Therefore, rigs from many companies may need 200 people each all at the same time. As these examples illustrate, the shortage often comes down to really a planning and timing issue. Or maybe it’s just a fact of the business and we need to accept that and mange it best we can.
Some people consider that in past years, oil booms tended to be regional, which allowed different resources to be mobile throughout the world. But now, with unprecedented global demand there is full capacity throughout the system and no end in sight for the coming years.
There was almost no investment made in workforce at $10 oil. And why would there be? It didn’t make business sense. In previous years, there were other industries in the UK – shipbuilding, mining – which don’t exist anymore. The oil and gas industry doesn’t have an issue of attraction. There’s a big long list of people trying to get in. But there’s an issue of skillsets, and transforming people with a given skillset to the ones needed.

Is it difficult to get the younger generation involved, who may be exposed to the new wisdom of environmental issues and an uncertain future for the “declining” hydrocarbon sector, despite attractive compensation packages?

I don’t think so. The apprenticeship scheme I mentioned takes on about 110 people every year, and this program is 15 times oversubscribed. I’ve heard older people say some of the things you describe, but not the younger generation. I’ve never heard about one young person talking about the industry in terms of sunset, ageing, or environmentally unfriendly. OPITO recently bussed in 500 young people to an exhibition centre and set up a series of interactive challenges, and we ran workshops on IT, accountancy, HR, and all engineering aspects, and included models of subsea ROVs and other pieces of technology. We made the offer to the schools, and not one attendee had a bad thing to say about the industry. It could also be argued that peak oil was reached the day the first barrel was recovered and recoverable resources have been declining ever since
Our Apprentices are employed by us for four years, and afterwards we facilitate their employment with major companies and contractors. We pay them £22,000 on their last year, and when they leave they pick up anywhere from £45,000 – £50,000 per year for 146 days’ work, with two or three weeks off. If you look at the cars they’re driving and the flats they’re living in, they will tell you they’ve got it all: a great job, great qualifications, lots of money in the bank, a nice house, and not a penny of student debt. And that’s at a technician level. At a graduate level, there is absolutely not an issue of getting graduates to come into the industry. I’ve spoken to so many companies whose biggest challenge is attracting the brightest graduates and they are very successful at doing this.

Oil and gas is a global industry, and although there are good universities in Aberdeen, they don’t produce enough graduates to fill the positions required here. How competitive is Aberdeen as a hub for the industry?

I think Aberdeen is very competitive internationally, although it still has a long way to go. If you win contracts overseas, part of the quid pro quo is to do something with the indigenous population. We’ve done that in Scotland, and now the Scots know more in some areas than the Americans for example, which is why so many people from the North Sea are leading deep water projects in the Gulf of Mexico. What is being seen here, because of the quid pro quo issue, is that people are coming here for university and work experience. And Aberdeen is becoming a melting pot of cultures and nations. On a technical level, there’s no need to come to Aberdeen, because that training is available in most local environments. However, at a university level, a qualification coming out of a renowned UK university carries more recognition than one from say an unknown university in India, for example. And without making a judgment on this, it’s a fact: a Heriot-Watt degree in science carries a lot of weight and is very prestigious.

OPITO began by creating standards for the UK and the region, and has since progressed to creating standards internationally. How did this evolution take place?

I joined OPITO in November 1999 with a background as a business unit manager with a major contractor. When I joined the organization, with oil at $9 per barrel, OPITO was doing business in one country outside the UK. Financial flows constrained the organization. Oil and Gas UK, which was called UKOOA at the time, had to underwrite OPITO to ensure its continued viability. We were in some serious difficulty and certainly not in control of our own destiny. What I did was to put a business case together for the then-CEO on how to grow an organization that would be protected against downturns in the UK sector, and to globalize the business. Fortunately the incumbent CEO and board were visionary and supported this move. From then, very simply it was a matter of explaining the value proposition to employers. If they want to develop their workforce to act safely, operate efficiently, and can be put on a plant and you know they are going to do the right thing, not harm anybody including themselves, and they’re going to manage environmental issues themselves, that’s a good thing. And all this is coming from a not-for-profit organization owned by the oil and gas industry of which you’re a stakeholder. People began to say, “This is brilliant”, because they could see the possibility of developing a set of global training standards frameworks. We know because of the things done with quality assurance and our regulation processes that two things will happen. First, we always engage with employers, so standards will always be right for the business. And then, we make sure it’s regulated. And it doesn’t cost the companies and employers anything, until they get something from it.
As a positive side effect, OPITO standards drove the creation of better technical and safety training facilities – and this wasn’t funded by operators, but rather by the commercial training providers. What was done, in effect, was that employers collectively, as an industry, decided to always accept people trained to a certain standard, effectively closing the market. So then, only the high-quality training providers can that have made a serious investment in their people and facilities get access to a sustainable and financially attractive business. This investment can be measured in millions of pounds, but the technical and safety training providers are prepared to make this investment to get access to the market through the OPITO Approved network. And that explains the story of going from one country outside the UK to 24, and from less than 35,000 people trained to over 100,000 trained last year alone. For example, you can’t work offshore in Australia, Brunei, Indonesia, the Philippines, or Thailand unless you’ve got an OPITO certificate, so OPITO has added value to the market while improving the skills base.
This all sounds pretty good, but OPITO is not doing enough, because the 100,000 figure should be 500,000, and it shouldn’t be 24 countries but 100. So last year, I proposed changes to the board, because whilst we had been very successful in servicing the market, we had come to the classic business case point of reaching a time of consolidated financial returns, but recognized that if we didn’t invest in customers we could be criticized for not reinvesting in local areas where OPITO had been seriously adopted.. In this scenario, the proper response is to take a step back, make the necessary investments, and grow. What was found was that the more people involved themselves with OPITO and bought our products, the more they asked for. At a certain point, servicing all this activity from Aberdeen became too onerous. As a result, last year the board sanctioned the opening of OPITO Asia-Pacific in Kuala Lumpur, and OPITO Middle East and Africa, in Abu Dhabi. OPITO put expats in there with a remit to create what has been done in Aberdeen in five years and underpin the businesses with local labour. Eventually, OPITO plans to enter the Americas, although the market may not be ripe at this time. The US is difficult to fully understand, with the Coast Guard, and Department of Mines and Mineral Resources as regulators, not to mention a commendable and pioneering mindset that separates America from “ROW” – rest of world. The Latin American market is also difficult to enter because of the language barrier, although OPITO has done some missions to Brazil. I suspect it will take about three years until the organization has fully entered the Americas. The plan is for corporate OPITO to be based in Aberdeen, and to join it with a global employer led board, taking a global view of standards, global qualifications, and global workforce development.
OPITO is all about adding value and not cost, and the business model is the envy of so many other industries who would love to get to that place where they have full employer support and leadership that can deal with their issues and have an organization where the conversation doesn’t start with “What can we afford to do?”, but rather, “What do we need to do?” There’s a big difference in that conversation, and the more we work with employers, the more product we sell, the more financial power we get. In the last 18 months, OPITO has gone from 19 to 44 people, and we’re going to grow again. And it’s all about business demand, because we don’t want to have people employed and waiting for something to happen. OPITO must continue as an industry leader and make things happen.

Aberdeen is recognized as a hub for subsea and deepwater, but do you think the city is synonymous with training excellence for the world?

The backbone of OPITO’s growth was the perception, rightly or wrongly, that Aberdeen and the North Sea are perceived as places where everything is high quality, and everybody really knows what it’s all about, with the best engineers, etc. Whether it’s true or not, I don’t know – but it’s pretty close to it. Although sometimes us locals feel people should be more aware of this excellence, they aren’t always aware. We must not assume every one knows about us and will welcome our involvement. We cannot expect to gain market entry as our right we need to work extremely hard to build and grow our markets. It’s always important to be humble not arrogant in the international markets and my key message is: we have no right to anything, so let’s build long-term, value-adding relationships. Nonetheless, as an organization, we’ve had some great success, but are still not doing enough and I don’t think I will ever say we are. But we’re trying to do more – the academy is only eight months old.
Looking at areas of improvement, there’s not a big issue of graduates, but what we could get better at are graduate development programs, and one project we are looking at in that regard is an degree program that requires students to spend more time in the workplace and applying their learning to the degree e.g. in their tutorials, dissertations, etc.. It’s quite innovative compared to a typical university experience. The overall strategy is to increase the feedstock of young people who have an interest in science, engineering, and technology. OPITO is doing that in schools with engineering clubs and the development teacher training materials designed by teachers with our support. The reason we are keen to fund this type of development is to help make the science subjects more interesting for the kids and the teachers alike. The challenge is to have access the young people with the right education. Then when it comes time to choose a career, the oil and gas industry will compete with every other industry for the fresh talent.
Down the people supply chain, OPITO is again making some good investments, and ones not necessarily directly related to oil and gas.
To make it happen, OPITO provides funding, just to increase general interest in education. The “Energise your future” and “Go Explore your future” Campaigns are great examples of this.
This type of work is complementary to other initiatives aimed at getting the message out about what the oil and gas industry offers, so then people can make their own decisions. Then, when people eventually get into the workplace, OPITO has all the development frameworks to develop individuals, of which apprenticeship schemes are an example. Another example is how OPITO built transformation programs, with the aim of transforming skills from other industries and backgrounds, such as electrical or mechanical. OPITO is multi-faceted, right down the supply chain to those who are actually in the workplace.

Looking toward the future, what’s coming down the pipeline for OPITO?

Overall, OPITO facilitates a versatile and valuable skillset: get a training license in New Zealand, and you can work in Asia, the Persian Gulf, Russia, the UK, to the Gulf of Mexico.
We are managing the introduction of new pan industry basic safety training standards as the industry seeks to continue improving safety in the industry. We expect 50,000 people to undergo training and assessment to the new standards in 2009 so this is a massive project for us with significant responsibility for getting it right and on time.
Our work in schools colleges and universities will never be done nor will our work in letting people know that this industry offers real long term self fulfilling career and lifestile opportunities
OPITO is pioneering, has recognized the existing problems which affect every global region, and that’s why other countries are looking for help from us, from South Africa, to Mexico, to Indonesia, to Thailand. And OPITO wants to contribute even more, because we’ve got a lot to do right.
It’s said that a wise man learns from his mistakes, and real wise men learn from others’ mistakes. We have learned a huge amount over the years and have applied that learning into world class standards and learning products. But we will never be done speaking to the global players. OPITO is owned by the industry, and will be there for the industry, when they want to use it.

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