Douglas-Westwood: Layoffs and Another Lost Generations

Douglas-Westwood (DW),UK's energy business strategy, research and commercial due-diligence services provider, commented on "Layoffs and Another Lost Generations?" in its May 4 edition of DW Monday.

The oil & gas industry currently suffers a shortage of mid-career professionals primed for leadership & supervisory roles, the legacy of the last oil price downturn in the 1980s to mid-90s. At that time the industry endured significant job losses, and hiring came to a standstill. As a result of the limited talent added, the group of individuals advancing into supervisory or eventual leadership positions in the oil and gas industry is notably small.

Since oil price started declining late last summer, layoffs in today’s industry are nearing 100,000 worldwide. Oilfield service companies Schlumberger, Baker Hughes, and Halliburton announced layoffs of around 20,000, 10,500, and 9,000 employees respectively, while E&Ps BP and Chevron each announced layoffs approaching 10,000 of their employees. According to a survey completed in January 2015 by Rigzone, 44 percent of the surveyed companies indicated that they plan to hire fewer workers over the next six months while 5 percent indicated they plan to completely halt hiring efforts.

Although the oil & gas industry employs numbers of low-skilled workers, the lifeblood of the industry is the variety of specialized engineers, technicians and rig crews who boast years of involvement in the field along with formal training or university degrees. Continuing widespread layoffs, frozen or reduced pay checks and the effects a lengthy downturn will have on the industry can dissuade such individuals from pursuing careers in oil & gas and encourage college graduates to move into more stable industries.

Just as the legacy of the 1980s-90s created a shortage of experienced workers – contributing to rising costs, execution challenges, and safety concerns – the numbers of lost personnel, both current and future, threatens the long-term capacity of the industry. To many in the business it feels like history is repeating itself.


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Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
kym | May. 8, 2015
It is sad when persons are put off due to money , as the companies attempt to keep profits high for the stake holders at all costs The industry is mainly run by burt out arrogant managers field based who mostly have no conscience to what they do to their crews Rig day rates being slashed and oil companies wanting it all their way. most of the industry experience will not return to the industry when everyone is crying for crew and the only persons are to blame are the peanut crunchers sitting behind their desks with absolutely no idea of what is what controlling the purse strings. it all boils down to the original service contract that the contractor signs with the client as the micro management and assumed power the client has needs to be stopped at the initial contract stage and every one to abide to what is written and just get on with what is needed Nabors is a perfect example of a company that just uses persons and has very bad senior management Aramco is a perfect example of a oil company with a sole aim on cutting rig day rates , they encourage the rigs company men to look for way to cut Rig day rate at all chances any company that employs americans is going to have serious problems as most of the crews and professionals will flood the market with day rates that are so low just so that a little bit of money will flow in and when the market returns to some sort of normal side , the global industry will have a massive crew sourcing problems , but they can always use the highly skilled Indian professionals who will work for near to nothing , millions of them then they will come and call expats when the mess needs cleaning up and our day rates this time will be triple to what they were before the greed and oil price down turn the good side of this is that a lot of back yard recruitment companies will be out of work and close down competition is good , working for peanuts is not , everyone should do what Pyramid Drilling are doing in Egypt , get persons to work on Bennevis and NOT pay them and just turn over the positions and do not pay them , what a great formula for the savings of money , doing over the crews , the supervisors and suppliers just top save money , they have no money and are trading Insolvent , so every one should be careful with this crowd who would want to enter the industry now and be screwed over at every possible chance by over the top operations managers and oil company Drilling superintendents that are little men on big power trips , my advice is seek out another industry and save what you can fpo a rainy days

Alec | May. 8, 2015
One of the hidden costs of layoffs is the damage to the credibility of leaders. We ask our professionals to be committed to the goals of the organization and to be willing to go above and beyond. But we show how much we are committed to our employees if slashing payroll is our first response to declining revenue. Commitment has to be a two way street.

Don Stacey | May. 5, 2015
You mentioned the manufacturing companies direct layoffs only. What most people dont realize is that consulting engineering firms, maintenance companies and support service companies associated to these large corporations, have had massive layoffs of very experienced personnel as well. This will harm the industry greatly unless the downturn is very short term in length and these firms start re-hiring the experienced workers very soon. These multi-national companies can only blame themselves for future shortages of experienced personnel and ultimately it can only be solved by them.

John | May. 5, 2015
I have been putting this exact argument forward to Oil Company managers and section heads for the last 20 plus years. This article is absolutely correct. The Oil companies have brought this upon themselves due to short sightedness and bottom line counting instead of looking at long term preventative measures in man management insurance. The question I ask now is, has this current downturn been engineered to force contractors to the wall and get costs down. Trouble is, when its time to get the workforce rolling again all those who have suffered yet another layoff will be settled into something else. We with the years of experience and knowhow are getting close to retirement and wont be bothered. You had better grab us while you can CEOs

James | May. 5, 2015
While this is not a good situation, this is not the 80s or the 90s for that matter in the magnitude of job losses. It is going to get better. I am not going to shed too many tears for the young guys as they have not faced the reality of working in a commodities based industry with its ups and downs. They need a little salt. I went through the 80s and the 90s mostly making it through the constant cutting. If you cant hack it and you dont have a love for what your are doing, go back to school and be a finance guy. If you are in it solely for the money, there is the door.

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