Subsea 7 to Cut 3,000 Jobs Due to Downturn
Subsea 7 has become the latest offshore services company to announce job cuts related to the ongoing COVID-19 downturn, saying that it will lay off about one quarter of its workforce.
The company predicts that the overall reduction in its headcount will be about 3,000 employees out of a global workforce of 12,000. The layoff cycle will be completed by the end of the second quarter of next year, and it is expected that two-thirds of the reduction would affect the company's temporary workforce and one-third would affect permanent employees. Discussions with labor representatives and local consultation will start soon.
“Faced with a significant deterioration in the oil and gas market, we are taking swift and decisive action to address the elements under our control. These measures to reduce our cost base will help preserve cash and protect our balance sheet strength," said CEO John Evans in a statement.
In an addition, Subsea 7's fleet of 32 vessels will be reduced by up to 10 by not renewing chartered tonnage and stacking owned vessels. The downsizing of the fleet will take place over the next 12 months, tracking the gradual decline of the company's backlog as current projects are completed.
Taken together, these cuts will save about $400 million per year beginning in mid-2021. The company will also minimize its capex outlay in 2021-2022.
The cuts at Subsea 7 are the latest in a string of cost-cutting announcements in the offshore sector. In the North Sea, Maersk Drilling announced about 300 layoffs in April and another 150 in May. In the U.S. Gulf of Mexico oil patch, the Louisiana Oil & Gas Association indicates that its members have already laid off as much as a quarter of its workforce.