Just a few months ago oil and gas companies of all sizes and business profiles were scrambling to hire and retain new workers.
As oil prices began their steep plunge large companies that operate in Canada announced major layoffs along with a reduction in capital spending, investments and operational activities like drilling.
The list of companies cutting human resources includes Suncor that announced plans to cut 1,000 jobs from its oil sands project.
In addition Haliburton is axing 1,000 jobs from its global workforce of 80,000.
Baker Hughes which Haliburton is acquiring this year is slicing 7,000 jobs from its global payroll of about 60,000 employees.
Schlumberger also announced plans to cut 9,000 employees or about 8 per cent of its global workforce as the domino effect of cutbacks takes hold.
A percentage of all these job cuts by international operators will affect Canadian workers and lessen the need for temporary foreign workers.
Temporary foreign workers were being hired to fill jobs that no Canadians were available to fill. That’s no longer the case as the layoffs in the industry pile up.
Let’s hope Canadians are hired now to replace temporary foreign workers that are no longer needed as much as they were previously.
The large jobs cuts by these giant companies also question how valuable skilled workers really are to the oil and gas industry if they can be let go so easily.
Trying to hire them back when oil prices recover is a lot harder than some of the available options first.
No company can make any money without experienced workers.
Letting labour go to satisfy shareholders or balance sheets won’t do the bottom line any good in the long term when the next labour crunch looms.
Oil and gas companies need to extend their horizons longer than the next quarter. They tend to rely too much on three month increments to measure their operating periods.
A lesson from the previous recession is to plan to retain workers or they will find full work in some other industry that needs the same type of skilled workers.
Job sharing, a shorter work week and pay cuts are all better than not having any workers when times improve for companies as they will.
Similarly for workers, a job is better than no job especially when the situation may not be long term.
It’s widely expected that the downturn in oil prices is not due to an economic recession as the previous slowdown was.
It seems to be all about OPEC producer Saudi Arabia seeking to regain market share lost to North American rivals.
What this means is all those laid off workers can easily find jobs in other sectors across Canada as the oil industry feels the brunt of the economic pain.
Small- to mid-size companies lay off workers too, but they try hard to keep everyone busy in order to be busy when prices recover.
These companies can also use the opportunity to replace some of their less desirable employees with more skilled workers that have been laid off by the large companies.
When the recovery takes hold they will be better positioned than some of their competitors.
There must be other ways to cut costs that ridding yourself of your most valuable asset – employees.
The obvious ones are, restricting travel, focusing on core activities, leasing equipment, and reaching out to international markets and asking employees to take vacations now.
Less obvious ones might to catch up on planning for the next wave of expansion and even construct new buildings with available labour and lower cost materials.
Before laying workers off think at how you can keep them on. Someone has to be there to turn off the lights.