The oil and gas industry has been in a downward spiral for the last year and it doesn't show much sign of stopping anytime soon. Barring some event in the middle east or a rapidly changing weather pattern, oil and natural gas should remain at relatively low prices.
Working in the industry myself I find it interesting how companies are reacting to these market forces. Production continues at a fairly high level keeping prices depressed. In turn companies profit are evaporating and the primary solution is to cut costs. What costs the most? The employees!
The easy solution is to stop hiring, reducing the workforce but asking those that remain behind to continue to produce at the current levels. The leaders of these companies who are protected with golden parachutes, high salaries and massive stock options and from my experience usually come out unscathed from the down cycle. The common worker is put into limbo.
The leaders discuss how many people can be released and then talk about how many of these employees will be sitting around waiting to be rehired when the cycle returns to normal oil prices. The reality is the newer worker won't be there waiting for you in 6 or 12 months. The inevitable consolidation in the industry will also destroy a number of jobs. It is no longer the 1980's or 1990's where a workforce with very few skills have the ability to sit around and wait to be rehired.
The industry talked about the "big shift change" for the last several years and how the lack of talent hampered growth, now they discard talent in order to make sure they meet quarterly estimates so that some fund managers and a few executives can continue to profit.
What is needed is more investment in the people, it is a cyclical market. The same employees you lay off today are the ones you will be begging to hire tomorrow.
Working in the industry myself I find it interesting how companies are reacting to these market forces. Production continues at a fairly high level keeping prices depressed. In turn companies profit are evaporating and the primary solution is to cut costs. What costs the most? The employees!
The easy solution is to stop hiring, reducing the workforce but asking those that remain behind to continue to produce at the current levels. The leaders of these companies who are protected with golden parachutes, high salaries and massive stock options and from my experience usually come out unscathed from the down cycle. The common worker is put into limbo.
The leaders discuss how many people can be released and then talk about how many of these employees will be sitting around waiting to be rehired when the cycle returns to normal oil prices. The reality is the newer worker won't be there waiting for you in 6 or 12 months. The inevitable consolidation in the industry will also destroy a number of jobs. It is no longer the 1980's or 1990's where a workforce with very few skills have the ability to sit around and wait to be rehired.
The industry talked about the "big shift change" for the last several years and how the lack of talent hampered growth, now they discard talent in order to make sure they meet quarterly estimates so that some fund managers and a few executives can continue to profit.
What is needed is more investment in the people, it is a cyclical market. The same employees you lay off today are the ones you will be begging to hire tomorrow.
No comments:
Post a Comment