- Exxon is cutting costs and shrinking its workforce to stay afloat amid the worst oil downturn in a generation.
- Here’s everything we know about the cuts, from layoffs to reduced employee benefits.
- Do you have information about Exxon? Reach out to this reporter at [email protected] or through the encrypted messaging app Signal at 646-768-1657.
- For more stories like this, sign up here for our weekly energy newsletter.
Exxon Mobil, the nation’s largest oil company, is losing money like never before.
For the first time on record, the firm reported a loss three quarters in a row, from January through September. Analysts expect the company to lose money in the last three months of 2020, as well, according to Bloomberg data.
The obvious culprit is the coronavirus, which sapped demand for gasoline and jet fuel, causing the price of oil to plummet. But Exxon’s market value began falling years before the pandemic, driven down in part by souring investor interest in fossil fuels.
Now down in market value more than 35% from the start of the year, Exxon is cutting costs. The result is big headcount reductions and other measures. Here’s everything we know so far.
Exxon is trimming its global workforce by 15%, which includes steep cuts in the US and Europe
As Business Insider first reported, Exxon is slashing its global workforce by 15%, or 14,000 people, through 2022, relative to the company’s headcount in 2019. The cuts include both contractors and employees.
- Up to 1,900 of the job cuts will be in the US, including at least 723 from the Houston area. Click here for a timeline of the reductions and insight into how Exxon will decide which workers to lay off, as revealed by leaked documents we obtained.
- Another 1,600 jobs or so could be cut in Europe. We explain which roles are at risk here, and you can read the letter the firm’s CEO, Darren Woods, sent employees following the cuts here.
- Exxon also said it would lay off about 300 workers in Canada, starting in December, according to a public press release and an internal memo we obtained. The cuts are involuntary and most of them will take place by February of 2021, per the memo.
- In addition, the company launched a voluntary redundancy program in Australia. It’s not clear how many roles the program will impact.
- Part of Exxon’s approach to shrinking spending is sending jobs overseas to cheap centres of labour, we reported.
The firm used its employee-ranking process to cut workers in the weeks after oil markets crashed
In April, Exxon quietly made a change to the way it ranks employees, forcing managers to dub a larger chunk of employees as poor performers, putting them at risk of being cut.
- Leaked audio from an internal meeting suggests not all employees placed in that category were, in fact, poor performers. That’s why workers we spoke to called the change to the ranking system a layoff in disguise.
- Exxon’s performance-based cuts, initiated this summer, put as much as 10% of the company’s workforce at risk of losing their jobs. You can find all the details of the ranking system and the April change here.
- The government of Singapore is probing Exxon’s labour practices after employees raised concerns about the company’s performance-based cuts.
Other changes to curb spending
Exxon has said publicly that it began restructuring years before the pandemic drove down the price of oil, in part, to curb spending. In the last few months, however, the firm has made a handful of other changes to cut costs.
- Over the summer the company suspended a handful of employee benefits including its matching program for retirement savings, as Business Insider first reported.
- Earlier this year the company slashed its capital spending budget for 2020 by $US10 billion, or 30%, down to $US23 billion. Next year Exxon plans to spend even less.
What we’re watching
- The job cuts Exxon has announced so far were determined by workforce reviews Exxon has been carrying out on a country-by-country basis. The company could announce results from additional reviews soon.
- While Exxon has curbed spending, the firm’s “dividend sustainability remains challenged absent higher commodity prices,” Morgan Stanley said in early November. We’ll be keeping an eye on the dividend.
- Exxon is placing a huge bet on Guyana, a small South American country with big oil resources. Expect continued focus there (partly because oil production is cheap).
- The company will likely report fourth-quarter earnings in late January. Investors will be watching to see the scale of loss that it reports for the full year.
Do you have information about Exxon? Reach out to this reporter at [email protected] or through the messaging app Signal at 646-768-1657.
This story was originally published on November 6. We updated it to include new information on cuts to the firm’s workforce and budget.
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