- Exxon has cut costs and is shrinking its workforce after one of the worst years in the company’s history.
- Here’s everything we know about the cuts, from layoffs to reduced employee benefits.
- Do you have information about Exxon? Reach out to this reporter at [email protected] or through the encrypted messaging app Signal at 646-768-1657.
- For more stories like this, sign up here for our weekly energy newsletter.
Exxon Mobil suffered a historic blow in 2020, as the pandemic dried up demand for its products at a time when the company’s stock was already in decline. For the first time ever, Exxon reported four straight quarters of loss amounting to more than $22 billion for the full year.
Exxon, the nation’s largest oil company, devoted much of its attention last year to slashing costs so it could regain its footing. The company reduced its capital budget by almost $12 billion and lowered its operating expenses by $8 billion, partly by cutting workers and employee benefits.
Exxon’s market value has fallen about 15% over the last 12 months, and there could be more cuts to come. Here’s everything we know so far.
Exxon was restructuring before the pandemic hit
The firm reorganized its downstream division in 2018 and the upstream division in 2019. That year, Exxon also established a new business unit – Global Projects – focused on project development.
When the price of oil crashed, Exxon said those changes helped, but further cuts would be needed.
“I wish I could say we were finished, but we are not,” Woods said in an email to employees in October. “We still have some significant headwinds, more work to do and, unfortunately, further reductions are necessary.”
Today, Exxon is organized into nine business divisions. It’s not clear to what extent the company’s core structure changed in response to the spending and workforce cuts, though Exxon formed a new business this year focused on low-emissions technologies after investors pressured the company to do more to address climate change.
Exxon is trimming its global workforce by 15%, which includes steep cuts in the US and Europe
As Business Insider first reported, Exxon is slashing its global workforce by 15%, or 14,000 people, through 2022, relative to the company’s headcount in 2019. The cuts include both contractors and employees.
- Up to 1,900 of the job cuts will be in the US, including at least 723 from the Houston area. Click here for a timeline of the reductions and insight into how Exxon will decide which workers to lay off, as revealed by leaked documents we obtained.
- Another 1,600 jobs or so could be cut in Europe. We explain which roles are at risk here, and you can read the letter the firm’s CEO, Darren Woods, sent employees following the cuts here.
- Exxon also said it would lay off about 300 workers in Canada, starting in December, according to a public press release and an internal memo we obtained. The cuts are involuntary and most of them will take place by February of 2021, per the memo.
- In addition, the company launched a voluntary redundancy program in Australia. It’s not clear how many roles the program will impact.
- Part of Exxon’s approach to shrinking spending is sending jobs overseas to cheap centers of labor, we reported.
The firm used its employee-ranking process to cut workers in the weeks after oil markets crashed
Last April, Exxon quietly made a change to the way it ranks employees, forcing managers to dub a larger chunk of employees as poor performers, putting them at risk of being cut.
- Leaked audio from an internal meeting suggests not all employees placed in that category were, in fact, poor performers. That’s why workers we spoke to called the change to the ranking system a layoff in disguise.
- Exxon’s performance-based cuts, initiated last summer, put as much as 10% of the company’s workforce at risk of losing their jobs. You can find all the details of the ranking system and the April change here.
- The government of Singapore probed Exxon’s labor practices after employees raised concerns about the company’s performance-based cuts.
Other changes to curb spending
Last year Exxon made a handful of other changes to cut costs.
- Over the summer the company suspended a handful of employee benefits including its matching program for retirement savings, as Insider first reported.
- The company slashed its capital spending budget for 2020 by almost $12 billion, down to $21.4 billion. This year Exxon plans to spend even less.
- Exxon has lowered its annual operating expenses by $8 billion, the company said. $3 billion of that was from “structural reductions,” indicating that it’s likely tied to workforce cuts. The firm plans to cut an additional $3 billion in structural expenses by 2023.
Morale has taken a hit
- Executives were not forthright with employees about the toll the downturn would take on its workforce and, at times, came across as insensitive when they did communicate about job cuts, current and former employees told Insider.
- Experts who study worker sentiment said that unhappy workers produce lower quality work and could make it harder for the company to recruit top talent in the future.
Do you have information about Exxon? Reach out to this reporter at [email protected] or through the messaging app Signal at 646-768-1657.
This story was originally published on November 6. We updated it to include new information about the decline in morale.
Powered by WPeMatico