UPDATE: BP announces layoffs in Houston following Baker Hughes, Haliburton & Schlumberger

UPDATE: January 28,2015

BP confirmed Wednesday that slumping oil processes have necessitated layoffs at its Houston office, but did not indicated how many would be laid off. Baker Hughes and Haliburton have already announced downsizings; a not unexpected move due to their pending merger. Schlumberger announced mid-January that it would lay off 9,000 employees, 8 percent of its workforce, globally.



ORIGINAL STORY:

GREATER HOUSTON, Texas -- As crude oil prices continue to drop, so does the employee count at oil-related corporations. Oilfield services provider Baker Hughes announced Tuesday that it plans to lay off approximately 7,000 employees; the equivalent of about 11 percent of its workforce, despite posting record revenues of $6.6 billion for the fourth quarter, making $24.6 billion for the full fiscal. This is up 6 percent from the fourth quarter of 2013, and up 10% over 2013.

Likewise, Haliburton, which is acquiring Baker Hughes for $34.8 billion making it the eleventh largest oil and gas deal in the last 20 years, also indicated that layoffs were imminent, even though fourth quarter revenue rose 14.8 percent to nearly 8.8 billion from $7.6 billion from the fourth quarter of the previous year. For the full year, revenue rose 12 percent to $32.9 billion.

Both companies cited falling oil prices with the more than 50 percent drop since the summer peak, but the pending merger would have also resulted in a workforce decline due to duplication of effort, and the $19 million in costs incurred by Haliburton related to the acquisition of Baker Hughes. Halliburton hasn’t disclosed a number of employees for their reduction in workforce.

Although no one knows what goes on behind closed doors, both companies may be downsizing prior to the merger for the purpose of expediency, and to simplify the process. This was predictable as it’s a common first step in mergers.

Schlumberger announced last week that it will cut 9,000 employees, approximately 8 percent of its global workforce, fueling the fire and giving rise to the speculation of an economic downturn.

Suffice it to say...it’s a vicious cycle. We’ve seen it before, and it won’t be the last time we’ll see it. Hopefully those who have endured more than one cycle, are better prepared for this one. Low interest rates have reduced mortgage payments, Health Savings Accounts (HSAs) will provide for health essentials, multi-level marketing opportunities have grown significantly, providing families with additional income, and downsizing packages are mainstream with major corporations. Most importantly, in 2014 the government allowed contributions to retirement accounts up to a maximum of $17,500. If you turned 50 last year, or you’re older than 50, additional catch-up contributions were allowed for as much as $5,500, for a total of up to $23,000. In 2015, the amounts will be higher. increased by $500, to $18,000. The catch-up contribution limit also increased, from $5,500 to $6,000, for a maximum contribution of $24,000.

Hopefully those who have weathered previous economic downturns, but who have had the misfortune of receiving a pink slip, took the necessary steps to be better prepared for this one.