Baker Hughes follows OKC layoffs with more in Houston

  • April 24, 2020

 

A week after Baker Hughes Co. announced the layoff of more than 200 workers at its Oklahoma City operations, the company said it would lay off more than 180 people in Houston where it is headquartered.

The layoffs are expected to commence on June 15, according to a Worker Adjustment and Retraining Notification Act letter filed with the Texas Workforce Commission on April 22.

The affected employees work at Baker Hughes’ completions and well intervention business. The company is closing a manufacturing plant on Navigation Boulevard, and its operations will be moved to a plant on Emmott Road in northwest Houston.

“While unprecedented market conditions have made the decisions related to the Navigation plant closure more urgent to speedily execute, the fundamental market forces that contributed to this closure were already in progress prior to the fourth quarter 2019,” the company said in the letter. “These decisions are always difficult, and we are making them with the utmost sensitivity to how they affect our employees, customers and communities.”

Baker Hughes isn’t the only oil and gas company to perform layoffs in recent months. The entire oil and gas industry has come under enormous pressure as social distancing in response to the Covid-19 pandemic slashes demand for transportation fuels. At the same time, OPEC member states and other producing countries have ramped up production, driving up crude oil supply globally.

Baker Hughes is making moves to better position itself in the new reality. The company has reduced its capital expenditures by more than 20% compared to total 2019 capex spending, and it is moving forward on a restructuring plan that involves making cuts to its organization to better match the expected market, CEO Lorenzo Simonelli said in the company’s latest earnings release. Such cuts usually also mean reductions to headcount, though Baker Hughes declined to comment on specifics when the restructuring was first announced. The company also cut jobs in Oklahoma last week.

“To navigate this challenging environment, we have taken decisive actions in an effort to cut costs, accelerate structural changes, and deploy technology and optimize processes that can lower costs for our customers,” Simonelli said.

The supply overhang got so severe that oil prices briefly dropped below zero — meaning suppliers had to pay other companies to take their oil from them — for the first time ever. Job cuts associated with the crisis are likely to come in two waves. The first wave is associated with the cessation of some portion of the industry’s operations and typically involve layoffs among field personnel. The second phase will come later, when companies go bankrupt and much-anticipated consolidation sweeps across the sector. Layoffs in that wave will hit hardest among corporate support staff, engineers and other technical employees — the kinds of people who work in Houston, in other words.
It was April 15 when the company announced the layoffs of its 234 workers in the Oklahoma City offices.  At the time, the company hinted that more job cuts would be coming at some of its other office locations.

Jerry Bohnen