Oil industry officials were fearing a new wave of layoffs on Tuesday after Norway’s large oil service firm Aker Solutions announced that as many as 500 employees will be losing their jobs. The large-scale layoff will affect full-time Aker workers at the company’s Oslo headquarters at Fornebu and at company operations in Stokke, Moss and Tranby.
Aker Solutions management blamed the cuts on a lengthy period of low activity and lack of new contracts for the company, a result of its own oil industry customers cutting back after oil prices took a dive. Since August of last year, the price of a barrel of Norway’s North Sea crude oil has fallen from USD 110 a barrel to around USD 50, and last week it dipped as low as USD 43 before recovering.
Per Harald Kongelf, chief of Aker Solutions in Norway, stated that oil companies are reducing their investments and postponing various projects, and that has led to a “marked downturn” in activity in the Norwegian oil service market over the past year. Newspaper Dagens Næringsliv (DN) noted that Aker Solutions saw its second-quarter operating profit fall from NOK 472 million last year to NOK 376 million this year.
Employees working in Aker Solutions’ Norwegian subsea operations will be hardest hit. The cutbacks will be made through natural attrition, some transfers of subsea workers to other divisions within the company, and layoffs. Of Aker Solutions’ total of roughly 16,000 employees in 20 countries, around 8,000 work in the subsea sector, around 3,000 of them in Norway. That means the looming job cuts amount to subsea staffing reduction of around 16 percent.
Employees were called into meetings on Tuesday and company officials admitted they can’t rule out a need for even more job cuts later. Another 500 jobs have disappeared at Aker Solutions elsewhere in Norway along with 400 outside Norway.
Knut Sunde of trade association Norsk Industi warned that the new cuts at Aker Solutions, which follow a steady stream of layoffs at other, smaller firms, mark the start of a new wave of staff reductions at Norwegian companies. “We see that unemployment is gradually sneaking eastwards,” from the West Coast heart of Norway’s oil and offshore industry, Sunde told dn.no.
Sunde thinks this is “just the beginning” of an even bigger wave of job losses, on top of the roughly 24,000 jobs that already have disappeared in the oil and oil service industry.
“Since oil prices have stayed low all summer, we will see a new wave of layoffs this autumn,” he said. “And the times when this only hit (the southern counties of) Agder and the West Coast are over.”