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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