Thousands of job cuts in the global oil and gas industry are an unfortunate but necessary step in making sure firms can survive the current downturn, Wood Group chief executive Bob Keiller said yesterday.
Speaking after Aberdeen-based energy service giant Wood Group’s latest annual meeting, Mr Keiller said he knew only too well about the devastation that can be caused by the loss of someone’s employment.
He added: “Of course it has a huge impact on people and their families.
“It is the toughest aspect of any senior management role.”
Mr Keiller, who’s own family has experienced the impact of redundancy and the loss of self-esteem which often follows, said: “I am brutally and acutely aware of the human impact it can have.”
But it is also impossible to ignore the impact of the recent plunge in oil prices, he said, adding: “Companies have no choice but to let people go if they want to survive and provide jobs in the middle and longer-term.”
He said there were “too many moving parts” to current market conditions to say with any degree of certainty if the industry-wide job cutting has reached its peak.
But the launch earlier this year of the Scottish Government’s Energy Jobs Taskforce to support people trying to find work and the creation of a new regulator, the Oil and Gas Authority, “should help to unlock different problems” and improve economic viability within the industry, he said.
Wood Group recently launched a consultation with about 380 staff, of whom 80 are expected to lose their jobs, in its PSN business as the result of a review aimed at cutting costs. It is anticipated a further 12 roles will go in the company’s Wood Group Kenny subsidiary.
Yesterday’s AGM, which attracted a small protest over Wood Group’s involvement in a new power station in Israel, coincided with a trading update highlighting “resilience” and news of a new five-year contract with a potential value of nearly £160million
The AGM statement said: “We are confident that we can deliver SG&A (selling, general and administration) cost reductions of over $30million (£19million) in 2015 and anticipate that full-year ebita (earnings before interest, tax and amortisation) will be broadly in line with analyst consensus.
“We remain confident of delivering good growth as market conditions improve.”
In the UK North Sea, the group sees “longer term opportunities focused on improving operating efficiency and late-life asset management.”
Mr Keiller said the company had felt the impact of a falling rig count in the US shale market but this was offset by maintenance activity, which made up more than half of its onshore work in the country.