Norwegian workers in the oil and offshore industry are facing more trauma, while the country’s economic growth is slowing to a crawl. Several companies are now cutting both salaries and jobs in an effort to stay afloat when demand for their goods and services is evaporating.
New figures from state statistics bureau SSB indicate the Norwegian economy is doing much worse than expected, reported state broadcaster NRK on Tuesday. Economic growth hasn’t been as low as it is now since 2009, and some economists are expecting that Norway’s central bank will need to cut interest rates down to zero during the course of the year, in hopes of stimulating an economy hard hit by low oil prices.
While many oil and offshore workers face more layoffs and paycuts, some companies are facing bankruptcy. Havila Shipping, based in the west coast community of Fosnavåg with offices in Brazil and Asia, confirmed to Dagens Næringsliv (DN) on Tuesday that it was stopping loan payments and ceding control to its banks.
The company, which has around 600 employees, was built up through the leasing of 27 offshore vessels it operates for subsea construction projects, anchor handling, platform supply and multi-field rescue recovery services. The dive in oil prices has severely damaged the vessels’ market.
Havila’s chief executive, Njål Sævik, told DN that the company didn’t meet its goal of coming to terms with enough of the holders of its unsecured bonds. There was “insufficient support” for the company’s revised restructuring proposal, the company stated in a press release, but Havila remained “fully committed” to maintaining operations and stated it would continue to pay its trade creditors. An extraordinary meeting of the company’s board was being called “to evaluate where we stand and the road ahead,” Sævik told DN. Havila’s shares, traded on the Oslo Stock Exchange, were under observation.
In another example of hard times in the offshore business, the world’s largest rig company Transocean, is cutting more jobs, also at its once-large office in Stavanger. The company, which recently won a major victory over financial authorities in Norway and an extraordinary apology after years of prosecution, already has cut its Norwegian division in half and now at least 230 more employees face layoff, because of a lack of work in the North Sea.
All employees in the Norwegian offshore shipowning company Olympic, meanwhile, are having to take paycuts. Olympic’s chief executive Stig Remøy called the paycuts an important means of securing jobs and strengthening the company’s position.
Olympic reached agreement for the salary reductions with its employees’ unions Norsk Sjøoffisersforbund, Norsk Sjømannsforbund and Det Norske Maskinistforbund. DN reported the cuts were already taking effect this week.
Last week, offshore giant Aker Solutions confirmed it was also cutting the pay of all remaining employees in its hard-hit division charged with maintenance, modifications and operations (MMO). Hundreds have already been laid off and now those who’ve been able to hang on are seeing their pay cut by between 5- and 10 percent.
Aker Solutions recently won some major contracts, but not enough to reverse the decline in overall business.
Aker Solutions claimed the cuts, which will affect around 3,600 of the company’s 15,000 employees, were necessary to make Aker Solutions more competitive to win more jobs. They’re due to take effect from March 1.