Asia Oil, Gas Layoffs Mount as Industry Recovery Stays Elusive
Staff layoffs continue to rise for most Asian companies – including shipyards in Singapore, Malaysia and South Korea – operating in the sector, in line with falling revenues caused by a dearth of fresh contracts due to cutbacks in capital spending.
In Asia, job losses are particularly glaring in the region’s offshore sector as major shipyards accounted for a large part of the world’s construction of newbuild rigs, floating production systems, offshore structures and offshore support vessels (OSV).
With many international oil and gas firms as well as national oil companies trimming capital expenditures for two consecutive years, thousands of workers employed by major Asian shipyards have been made redundant.
“2015 saw roles in upstream [sector] disappeared or gone quiet. There was a lack of investments and a reduction in drilling regionally and globally,” Mike Wilkshire, Hays’ plc Singapore-based Business Director for Construction & Property, Oil & Gas and Life Sciences told Rigzone.
“While operational rigs continued [with their contracts], drilling contracts on completion are not renewed or renewed for short term only or mothballed,” he added.
Singapore Yards Right-Size Offshore Workforce
In Singapore, the drying up of offshore, particularly rig, construction orders has led to layoffs at Keppel Offshore & Marine Ltd. (Keppel O&M) and Sembcorp Marine Ltd., the world’s most prominent builders of jackups.
“Since 2015, we have been taking active steps to manage costs and right-size our operations,” Keppel Corp. Ltd. CEO Loh Chin Hua said July 21 when releasing the firm’s second quarter financial results.
Keppel slashed its global direct workforce by 10,900, or 30.9 percent, of the 35,300 employed by the company at the beginning of 2015. Of these, 6,000 were laid off last year, figures from Keppel’s 2015 annual report showed, while another 4,900, equivalent to 17 percent, of the remaining workforce were released in the first half of 2016.
Keppel’s subcontract workforce declined too, tracking job losses experienced by permanent staff.
According to its 2015 annual report, Keppel downsized its subcontract headcount by 7,900 last year, which made up 24 percent of the 32,917 that had worked indirectly for the company before the cuts were implemented. Another 670 subcontract staff were made redundant in the first half of this year, a development that underscored the continuing absence of new orders, bringing the total that were retrenched to 8,600 since January 2015.
“Beyond natural attrition, we will look at ways to reorganize and streamline our yards and resources to become leaner and more efficient. For example, we can look into integrating our engineering resources across the different units in the Division. If necessary, we may also mothball yards with low work volumes,” Loh said as he elaborate on Keppel’s plan to ride out the storm.
Unlike Keppel, local rival Sembcorp Marine did not provide any data on job cuts. The company declined to respond to Rigzone’s query on the size of the layoffs as well as the types or roles that had been made redundant. Singapore’s Business Times (BT), however, reported July 29 that the shipyard has trimmed its headcount by 6,000 since mid-2014.
Speaking during the release of Sembcorp Marine’s second quarter financial results July 29, CEO Wong Weng Sung said the company would continue “to rigorously optimize its manpower requirements.”
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