More Layoffs Coming in the Oil Patch (CVX, SLB, XOM, COP, BP)
January 9, 2009 by Douglas A. McIntyre
Chevron Corporation (NYSE:CVX) already gave its severe earnings warning and we have already seen layoffs coming out of Schlumberger Limited (NYSE: SLB). [] and its dragging down share prices for the other oil majors. Interestingly, Chevron has bounced back a little, as has Exxon Mobil Corporation (NYSE:XOM), but ConocoPhillips Corporation (NYSE:COP) and BP plc (NYSE:BP) continue lower.
In addition to a weak profit outlook for the quarter, there arenow more than concerns about job losses in the oil patch. Certainly cutting expensesis one way to boost profits, and big oil is a big employer. Thefollowing chart shows total employment for the past three years:
2005-07
2007 2006 2005 % change
Chevron 65,000 62,500 59,000 +10.2%
Exxon 107,100 106,400 106,100 +1.0%
ConocoPhillips 32,600 38,400 35,600 -8.4%
BP 97,600 97,000 96,200 +1.5%
The numbers include employees of company-owned service stations. Acouple of other notes: Chevron’s increase in 2006 is partially due toits acquisition of Unocal; and ConocoPhillips’s increase in the sameyear is due to its acquisition of Burlington Industries.
Chevron’s increase is relatively huge compared with the others, andChevron employees might be looking over their shoulders. And while theothers may not be lean, mean, fighting machines, they do appear to havemanaged employee growth better.
The other side of the coin is the shortage of experienced talent in theemployment pool. Oil companies have for some time been complaining thatits work force was aging and retiring and that there was not enoughnew, trained talent available. That’s when crude oil prices were high.
Now that prices are down, we’ll see how serious big oil is aboutholding onto its talent, both old and young. Even if the companies shedall their high-paid executives, that would not generate as much profitas a $30/barrel crude price increase.
Paul Ausick
January 9, 2009
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