Aker’s cuts are concentrated in its Norwegian subsea sector. About 500 permanent positions at facilities in Fornebu, Stokke, Moss, and Tranby in Norway may be affected, the company said.
“Activity in the Norwegian offshore services market has declined considerably over the past year as oil companies scale back spending and postpone projects,” said Per Harald Kongelf, head of Aker Solutions’ Norwegian operations. “This has made it necessary to reduce capacity in parts of our business.”
The adjustments come in addition to capacity reductions announced earlier this year of as many as 200 positions in the company’s subsea services business in Ågotnes, Norway, and about 300 positions in its Norwegian maintenance, modifications, and operations unit. Outside of Norway, the company is reducing capacity by about 400 permanent positions this year, again primarily in the subsea area.
Aker Solutions has about 16,000 permanent employees in approximately 20 countries. About 8,000 employees are in the subsea area, of which around 3,000 are in Norway.
The geosciences firm, which described its cost reduction initiative as “aggressive,” said it believed the program will more appropriately scale its operations to the current commodity price environment.
The cost reduction initiative is expected to result in an approximate 25% decrease in the company’s global workforce and is expected to be substantially completed by the end of the month. ION expects to incur $5-6 million in termination costs.
Under this new plan, the company expects to reduce annual operating costs by approximately $40 million. Such cost savings will consist primarily of payroll reductions and reductions in discretionary spending associated with a smaller workforce, as well as additional cost control measures. When combined with the cost savings undertaken since December 2014, the company will have achieved a total estimated annual savings of $80 million and a 50% reduction in its workforce. The cost savings initiatives were across all groups within the company, but the company is maintaining key capabilities in all its groups, including ocean bottom, and its readiness to rescale the business as revenues increase.
“The difficult cost reduction initiative we are undertaking today is necessary to prudently scale the company during this period of significantly decreased revenues, which we believe will extend into 2017,” Brian Hanson, CEO of ION Geophysical commented. “We are an asset light company and have the ability to adjust our cost structure to align with revenue levels. When commodity prices and consequently the business’ revenues recover, we will rescale our workforce to meet the demand.”
On its corporate fact sheet, ION Geophysical says it currently has about 1,000 employees globally.
A spokesperson for the E&P company confirmed to Offshore that “10% of our global workforce to be impacted through workforce reductions, with the largest percentage occurring in North America.” The company cited the implications of lower business prices as the driving factor behind its workforce reduction.
ConocoPhillips currently holds a global workforce number of 18,100, employing 3,753 workers in Houston. The expected reductions will be more than 500 of its Houston employees.
This is ConocoPhillips' second round of announced job cuts this year. In Between Jan. 1 and June 30 2014, the spokesperson told Offshore that 1,000 employees exited the company due to job cuts. At the end of 2014, the workforce was numbered at 19,100.
Earlier this year, the company said that it was cutting its deepwater exploration spending and reducing its capex. However, in its statement, it said that the workforce reductions were necessary to becoming a "stronger, more competitive company."