The drop in oil prices has forced ExxonMobil to evaluate cost-cutting measures which include job cuts. According to Business Insider ExxonMobil released a memo on Monday saying, “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 suggests that the company will be looking at high-cost countries, which would likely include the US. There is no specification on how many jobs could be cut or the timeline for the process.
ExxonMobil has previously denied reports that it was considering layoffs. However Gizmodo has reported that ExxonMobil is, “planning for contraction into 2021 and could target cutting jobs in the U.S. and outsourcing them overseas where labor is cheaper.”
An ExxonMobil employee told Business Insider that some jobs have been moved overseas to countries with cheaper labor, including Malaysia, India, and Argentina, in an attempt to reduce costs.
According to Fox Business, ExxonMobil has already declared a voluntary lay-off program in Australia. This comes after the company has decreased capital spending by 30% this year alone.
Ashley Alemayehu, an Exxon representative told Business Insider, “Our study work continues on a country-by-country basis, and we will communicate any changes with our employees when it’s appropriate.”
This review comes at a time when ExxonMobil has used several cost cutting methods. Most recently the company declared it would suspend the 401(k) matching program. They have also been accused of laying people off through a “Performance Improvement Plan” (PIP).
Reuters reported, that ExxonMobil was pursuing a spending increase prior to the pandemic in order to boost oil output and turn around decreasing profits. Clearly Coronavirus made this plan impossible.
Prior to an earnings call in July, ExxonMobil had avoided talk of job cuts. However, with a second quarter loss of more than $1 billion, according to Business Insider, ExxonMobil has been forced to confront the reality that jobs cuts will need to be considered.
Neil Chapman, a senior vice president, stated during the July earnings call, “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.”
Several employees have speculated that ExxonMobil’s goal is to ship jobs overseas where labor costs are significantly less expensive. One employee told Business Insider that outsourcing is now starting to affect more senior employees.
Want to learn more about ExxonMobil? Check out our article on XOM PIP: https://techstaffer.blog/2020/08/03/exxonmobil-uses-performance-reviews-to-justify-job-cuts/
Learn about ExxonMobil’s loss of 401(k) matching here: https://techstaffer.blog/2020/08/05/first-exxon-layoffs-now-loss-of-401k-matching/
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