Hamstrung by cheap oil prices, Exxon Mobil is evaluating cost-cutting measures across its massive oil-exploration and -production business, including job cuts, according to a memo sent to employees Monday.
“Unfortunately, we continue to see prolonged negative market impacts that require us to make further changes so we are best positioned to take advantage of market improvements when they occur,” the memo said. “The pandemic and resulting impact on our industry has been severe.”
The evaluation, referred to as “study work” in the memo, has already begun and is focused on high-cost countries, which likely includes the US, where Exxon is headquartered, according to an employee familiar with the matter. The memo doesn’t say how many roles may be cut or provide a timeline.
Exxon has about 16,500 workers in its oil-exploration and -production business, known as the upstream division, the person said.
Exxon’s efforts to shrink spending have resulted in moving some jobs overseas to countries with cheaper labor, including Malaysia, India, and Argentina, the employee said. The employee, who is familiar with Exxon’s staffing efforts, spoke on condition of anonymity for fear of retaliation. Business Insider has verified the person’s identity.
“Our study work continues on a country-by-country basis, and we will communicate any changes with our employees when it’s appropriate,” Ashley Alemayehu, an Exxon representative, said. “As for the overall workforce transformation and where work might be done in the future, no decisions have been made.”
The review follows several other tactics Exxon has deployed to cut costs since the coronavirus pandemic cratered demand for fuels, causing the price of oil to collapse. Today Brent crude, the international benchmark, is down about 30% since the start of the year.
Exxon is headquartered in Irving, Texas, and had about 75,000 workers at the end of 2019.
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Business Insider previously reported Exxon beefed up its performance-based cuts this summer, leading to the forced departure of 8 to 10% of the company’s US salaried workforce, according to more than a dozen former employees and additional leaked documents. Exxon also axed a handful of different benefit programs, including a generous retirement-matching program.
Exxon is evaluating its upstream division — focused on oil exploration and production — to identify further ways to shrink spending from “organizational efficiencies and lower activity levels,” according to the memo, titled “Update on tough decisions to ensure Upstream competitiveness in uncertain times.”
That includes weighing job cuts.
“As part of our commitment to transparency, we want to make it clear that these studies will include evaluation of appropriate staffing levels,” the document says. “We recognize these efforts bring uncertainty and anxiety.”
Before Exxon’s earnings call in July, which followed a reported second-quarter loss of more than $1 billion, the company had largely avoided any reference to near-term market-related job cuts.
The company changed its tone on the earnings call, saying it could be forced to cut jobs.
“Looking ahead to 2021, we see significant potential for additional reductions based on identification of further long-term structural efficiencies, reduced activity levels, and an evaluation of our workforce requirements, including the potential for further reductions in overhead and management positions,” Neil Chapman, a senior vice president, said in the call.
It appears that the potential job cuts are related to near-term market conditions, according to the memo.
“While we have been working to lower our costs, the dramatic impact of COVID-19 on demand has further accelerated our need to adjust spending plans,” the memo said.
Moving jobs overseas
Part of Exxon’s approach to shrinking spending is sending jobs overseas to cheap centers of labor, according to the employee and an additional worker, who also spoke on condition of anonymity for fear of retaliation. Business Insider has verified the identities of both workers.
Moving positions abroad isn’t a new tactic, but those shifts are now affecting more senior employees, including downstream engineers, according to one of the employees, who has direct knowledge of Exxon’s staffing process.
Monday’s memo said Exxon’s staffing evaluation would proceed country by country and that some studies would be finished “in the near term.”
“When you see each country announcement, please know that it connects back to our strategy and focus on becoming the lowest cost competitor,” the memo said.
This story was updated with a comment from Exxon.