As layoffs become the energy industry’s main response to low oil prices, a handful of producers are aiming to trim personnel costs without pink slips by spreading the pain among their employees.
Companies including Occidental Petroleum Corp. and Canadian Natural Resources Ltd. are employing hiring freezes, caps on bonuses, and even across-the-board wage cuts to preserve jobs. They and others that already have reduced payrolls—including many drilling and well servicing firms—are reluctant to slash further, say energy-industry experts.
In part, they’re trying to avoid the type of skilled worker shortages that followed mass job cuts in prior downturns. But it’s also because their businesses can’t succeed without sufficient staff, especially if the downturn in oil prices reverses course....Seems like a wise policy; perhaps they've learned from previous years:
...The last time Occidental disclosed large staff layoffs was in 1998, when it shed hundreds of jobs and cut its head-office workforce by half. That was during another period of mass layoffs in the oil industry stemming from low crude prices and consolidation.
Those cutbacks led to a dwindling number of petroleum engineers followed by what some described as a “lost generation” that left the energy industry exposed to shortages of high-skilled professionals a decade later.
“Everybody that went through this before all knows it really hurt oil companies in terms of not having a generation ready to move into management positions,” said Dan Hill*, who heads Texas A&M University’s petroleum engineering department. As students graduate, “We’re encouraging companies to hire them as technicians for half of what they’d earn as petroleum engineers,” he said...Best wishes to folks in the oil industry; wage cuts and job loss are no fun. I wonder when pharma will take a lesson from the oil industry?
*It is worth noting that Dan Hill has been featured on the blog before, back when West Texas Intermediate was going above $100 a barrel ($46/barrel today) and he was warning their undergraduates that the petroleum engineering field was cyclical. Well done, sir.