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100,000 Layoffs And Counting: Is This The New Normal?
Submitted by Andrew Topf of Oilprice.com
This time a year ago, the oil industry's biggest problem was finding a way to deal with the “retirement tsunami” about to crash down on it as older oilfield workers hung up their cork boots to enjoy freedom-55. Now, with oil prices still in the doldrums, many of those same workers are lucky to be hanging onto their jobs, while others have been booted from the payroll as an ugly wave of layoffs takes hold.
One of the worst-affected areas is the Canadian oil sands, where a higher per-barrel cost of production than conventional sources has oil companies scrambling to cut capital expenditures and in several cases, put long-term projects on ice.
On Thursday one of the region's big players, Husky Energy, announced that about 1,000 construction workers employed by a contractor at its Sunrise oilsands project, would be issued pink slips. The bad news for the workers came a day after Husky said that it had started to produce from the $3.2 billion, steam-assisted gravity drainage (SAGD) Sunrise operation, which it co-owns with BP.
The layoffs by Husky followed Suncor's decision in January to cut 1,000 employees and Royal Dutch's Shell's announcement that it will shed close to 10 percent of the workforce at its Albian sands project – around 300 workers.
The Canadian Association of Oilwell Drilling Contractors, which closely tracks drilling activity, said in February that up to 23,000 jobs could be lost as the number of rigs fall. Since the price started dropping last September, about 13,000 positions in the Alberta natural resources sector, mostly oil and gas, have been eliminated, according to Statistics Canada.
The bloodletting among the oil majors and their vast web of ancillary services has of course extended to the United States – which appears to be taking far more casualties than Saudi Arabia in the battle for marketshare. In January oilfield services giant Baker Hughes said it will lay off 7,000 employees, about 11 percent of its workforce; that number was rivalled only by its competitor, Schlumberger, which let go 9,000 workers. Shell, Apache, Pemex and Halliburton are among major oil companies to issue recent pink slips to the growing army of unemployed oil workers. In the U.S., the worst pain is, not shockingly, expected to be felt in Houston. Assuming a one-third reduction in oil company capital expenditures this year and 5 percent in 2016, the hydrocarbon capital of the world could lose 75,000 jobs, in a city that has added 100,000 new positions every year since 2011, said a professor at the University of Houston.
The oil jobs nightmare is in fact spreading like a cancer. According to Swift Worldwide Resources, “the number of energy jobs cut globally has climbed well above 100,000 as once-bustling oil hubs in Scotland, Australia and Brazil, among other countries, empty out,” Bloomberg reported recently. Examples include foreign-trained engineers whose promise of employment at LNG plants in Australia have evaporated as projects get delayed; development projects halted in Brazil resulting in the closure of international schools and the relocation of workers; and 8,000 Mexican workers left without paycheques after Petroleos Mexicanos slashed contracts and purchases, Bloomberg said.
Of course, industry defenders say the oil and gas business is boom and bust by nature, and most veteran oilmen have gone through many a cyclical downturn and lived to fight another day. The question of whether or when the oil price will recover and all those laid-off workers are rehired is best left to the prognosticators. In the meantime, there is a danger in oil companies cutting too deep, according to oil and gas industry recruiters. They say firms that lay off too many workers will put pressure on older workers who may opt for early retirement. That could leave companies in the same situation as the 1980s, when an oil downturn meant few businesses hired and new graduates went into other more promising fields, leaving a serious talent gap.
“They will be very careful about reducing staff, because they’ve seen cycles like this before where commodity prices are weak for a certain period time, they lay off employees and they’re not well-positioned to get access to high-quality talent,” said Mike Rowe, vice president of exploration and production research at Tudor Pickering Holt, an energy investment and merchant bank, in a story run by CNBC on how the layoffs could come back to haunt the industry.
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“the number of energy jobs cut globally has climbed well above 100,000"
can i haz job multiplier?
dont worry about it TSA and DHS hiring em
Probably not, most of the oil workers are white guys and you know what Jew Robert Reich says about that.
"dont worry about it TSA and DHS hiring em"
Actually it will be the ReadyReserve.
Like the SA, "Brownshirts," the out of work and angry masses will be swooped up in a violent torrent to be used against the rest of nation in support of The Party's, neo-cons', rise to dictatorship, and in service of the FEMA camps.
"Never waste a crisis," especially a manufactured crisis.
The banksters need to repay us.
http://www.freerepublic.com/focus/f-news/2485607/posts
I just came back from Midland, Texas. It "looks" bad to me. All the material yards are full of drill string,pipes, LOTS of pumping units setting in many yards unassembled. the big kicker: ROWS upon ROWS of drill rigs yard by yard idle and lined up. I saw one yard alone with about 40-50 rigs idle. The smaller companies have 10 rigs and most of those yards have 4-6 in each of those idled. My idle rig count in Midland is approximately 120+. There werw only 1500 igs running in the US 2 years ago at the highs. So it is WORSE than what they are telling us.
Another tell tale: RV dealers are completely full and having sales.
As you drive around the area, the wells pumping are being shut down in the lower production or expensibe wells. Some of those fields have a one pumper running and the 10-20 are not running.
After a 10 year "boom" it looks like things are winding down, at least in Midland. I have not seen it like this. Usually there is a shortage in places to live so they live in RVs, and there is always a material and equipment shortage. It appears to me that is over.
Those speculating that oil goes higher, is kidding themselves, but when it does go higher, it will take our heads off, because we are loosing a huge amount of infrastructure and companies and capital that willl have to re replenished.
NOTHING form the oile patch supports this last "bump"or any rixe in oil prices until it bottoms. At least not in the REAL world of metal, sweat and oil.
Thanks for your observations.
But low oil prices are unambiguously good...
FUBAR.
Well, if the propaganda about low unemployment numbers actually meant a rise in real industrial output based on raw materials and energy ... but low oil prices hardly matter to an HFT computer other then as something to front run and skim. Re-industrialization takes much more time then merger-buy outs and asset stripping. Invest in popcorn and butter, and watch the show.
The new normal is when the BLS stops including layed-off oil-field workers in their numbers, just as they leave off the terminally (stopped looking for work) unemployed.
To the 8000 Mexigrants:
Its all good in the land of Oz. Just cross the southern border. Stop by your nearest social security office and collect benefits. They also help you get free money for food every month and as a special promotion they are allowing free health care. It is so fucking awesome being a Mexigrant in the 21st century. The trick is to not know any taxpaying American. If you do then your fucked.
Send your kids ahead and win the lottery!!!
Only 8k? I bet its more like 8 million by summer.
it won't be long now
Fear not green horns! This will be seen as a positive for the markets as now, through layoffs, the companies are cash heavy, can pay out bonuses to the stock holders AND the BLS will show lower unemployment as these poor bastards are no longer counted since they will receive govt handouts!!!
Come join us for free at www.gunsgrubandgold.com
We are going to top...............
Makes you wonder how the oil industry ever made money before $90-100/bbl oil?
Great point. Oil was at a few dollars a barrel early on and oil men made millions. All about how much more difficult it is now to find and extract, no low-hanging fruit left.
Iran has sweet crude and the bankers want it all.
It's just a coincidence that they need to be invaded.
Because they hate our freedom.
What freedom?
Unemployment rate for the sector rose 2.6% to 8.6% Jan to Feb.. up 5.8% since Nov 2014.
http://www.bls.gov/iag/tgs/iag21.htm#workforce
The cold-blooded economist in me will say: good.
Just like elevator attendants were put out of their low-value-added jobs by automatic buttons, so, too, are these workers now free to pursue more productive activities.
Yeah . . . they can join the army!!
Will be needed soon to suppress the riots in urban areas
What Difference Does It Make....the market will go up! BTFD. This is a one way market of insanity!
Time for a another NEW gov agency- potholerepair.gov
https://www.youtube.com/watch?v=sjb3nh9BxOE
Boom-bust, bubble-pop, ramp'n-slide economy!
When value is fungible and money intangible, labor is along for the ride.
We have several companies located at our port that manufacture drill-pipe, derricks, and field equipment. We just got word last week to expect some serious bloodletting. The steel distributors are also pulling their hair out over falling demand and ordering minimum annual guarantees only. We're already expecting a significantly lower year on inbound water tonnage and outbound rail/truck tonnage. I'm already having to decide which cap-ex projects to kill or put on hold as a result of expected lost tollage and wharfage revenue. Someone mentioned on another story that it feels like they are living in an Ayn Rand novel. I don't think I could have picked a better allusion.
'100,000 Layoffs And Counting: Is This The New Normal?'
Yes. at the very least the new normal for the US.
not to worry as there will be 120,000 part-time jobs across local walmart, macd, etc to fill the gap.
Immigration bigotry is alive and well as always on ZH. I have an idea. Put a poncho, take a few shots of tequila, put on and a sombrero and go to these .gov offices and tell them your name is Juan Garcia and you heard you could get free stuff on ZH. Then come back with your experience and share it with us all.
Most of the complaints made by anti-immigration activists regarding the status of illegal immigrants from Mexico to the United States are based on exaggeration, misconception, myths and outright lies. As with most things, many of the complaints are real for a very small number of illegal immigrants, but by and large, they do not apply to most of the illegal immigration into this country.
Further, those who oppose illegal immigration tend to focus their rhetoric on emotional issues, such as claims that illegal immigrants are "taking our jobs" and "threatening our security;" but the evidence they provide in favor of these claims is very scanty, and they only seem to have one "solution" of the problem, viz., "kick the wetbacks out," which if there were no other objections to it would cause major damage to the U.S. economy.
Myths and facts about immigration to the United StatesOh.....do tell
Fuck You very much. Immigration is and will destroy the culture of america. Balkanization is where we are headed and the destruction of the free spirited self made independent american is exactly what your ilk want. So go fuck yourself
Damn...who knew Obama was one of our newest ZH posters?
Pleased to meet you. Hope you guessed my name...
'More For Me' Soetoro (but you can call me Barry, or Choom Boi, or...)
(this transmission brought to you by the Tides Foundation, funding 'La Raza' for years and years)
Oh Jesus Christ!
Have you sir ever been a blue collar worker? Do you realize that non-union trade jobs pay about the same in $/hr that they did 30 years ago?
Have you even considered that adding 30M blue collar workers who don't pay taxes and who consume government services may have had a downward impact on wages.
THe only people spout crap like you are people who live in bubbles and aren't competing with or living amongst all this vibrant diversity you seem to love. Have you ever heard of La Raza? I don't believe La Raza likes diversity too much, and if they took over you'd be one of their first examples of what happens to pussy ass motherfuckers that can't or wont defend what's theirs.
So kindly fuck off and take that shit back to Jezebel.com or whatever slimy pit of Social Justice from which you came.
And yeah, I downvoted you. I wish I could downvote your ass 1000 times.
35Years and going. Real Wage Stagnations have been reported to occur from the late 70s.
hey fuck stick, my grand parents crossed the border in the 1920s and busted their ass in a legal immigration.
What Obama and these illegals are doing devalues all my grandparents did
These workers need to leave the workforce. They are making the unemployment rate look bad.
What are you crazies talking about BLS says that unemployment is negative 92.4% nearly 200% full employment. Nancy Pelosi said so they created 500 million jobs in the U.S. /S
Nuts ;) http://youtu.be/y-zpvAS4yMg?t=7m30s
I am at ground zero in the industry and you ain't seen nothing yet. The collateral damage will be more than you expect. Wait until the CDS SHTF. The ZIRP Fed induced miss-allocation of capital is the pebble (brick) that has been cast into the pond and the ripples will be coming to a shore near you- soon...But after all it is low gas price "tax break". LOL...
More than 40% of fracking rigs were fake in the first place, barely anyone was "pretending" to work there, There was obviously no production from them therefore so far there was only moderate loss of jobs and increase, instead of decrease of production, but it will change soon.
Top producing sites doubled or tripled output volumes to make up for 60% PRICE COLLAPSE now in range of $30-$35 which means most of wells will be depleted in 9-12 months causing permanent destruction of the sites due to too high rate of production. Those companies, which already ran out of oil or gas, hide this fact and desperately trying to sell shares in last gasp of breath before liquidation. They were shut out of credit market at least 6 months ago. The oil giants already left most of fracking fields keeping few still producing anything for show, while secretly turned into green fanatics supporting various legislatures to ban fracking, just for cover of their reversal of investment strategy.
Honest take on the shale ponzi scheme I found at:
https://sostratusworks.wordpress.com/2015/01/15/the-shale-game/
My granddad was a tool pusher, my dad was a rig superintentdent and owned a small consulting company. I've been directional drilling since I got out of college in 2004.
Two years ago I got out of drilling and opened a production based third party inspection company (inspecting frac gate valve internals and selling new imported replacement parts from China (where probably 75% if not higher frac and flowback valves are made).
The directional company I use to work for is dying a horrible death right now. My business is booming. Everyone is producing all they can which means money in the bank for me, while no one is actually buying. Thanks to Tyler and ZeroHedge opening my eyes years ago to the perverse incentive structure that belies the global marketplace, I've been able to find a spot under the Central Bank money tree and it's going to rain untill it all blows up.
And I moved to a BFE in a van down the river in 2009 before I even found ZH.
Thank you sir. Working out nicely.
Adaptability has always been a survival trait :-) .
Yeah, only way to make payments is pump for all it's worth on anything that's producing. If the output drops as fast as I've been hearing that's sort of like jumping off a tall building and counting how well it's going on each floor passed. Being down wind of the CDN oil sands, I've got mixed feelings. It never made sense by EROIE , destroys some really nice wilderness ( been there ) and the cleanup bills will get passed along to everyone else, a government program at it's finest. My province has put all it's chips into fracing, guess what. If anything, proves a talent for getting elected has no correlation to any ability to do anything else, and maybe an inverse relationship in terms of taking advise ... /after all they have to be smarted then everyone else since they are running the show. /sarc
OK, we all knew this was coming.
How do I trade this?
if you can trade credit/ mortgages - short houston!
Brazil is bringing in its 1 year old P-58 platform for "routine maintenance. http://economia.estadao.com.br/noticias/geral,petrobras-paralisa-platafo...