As oil price slump continues, companies get creative with staff schedules to avoid layoffs

FINANCIAL POST via Calgary Herald ^ | 08.18.2015 | GEOFFREY MORGAN

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As oilpatch layoffs mount and companies struggle to retain staff, Trilogy Energy Corp. has been able to keep its staff and cut costs at the same time.

This summer management at the oil and gas producer asked employees to work a four-day week and apply for work share coverage, a form of employment insurance, through Service Canada. Trilogy confirmed its eligible employees recently received government approval for their work share compensation after applying back in May.

“Reducing hours, we thought, was a better alternative than laying off staff,” Trilogy president and chief operating officer John Williams said.

The Calgary-based company, controlled by billionaire Clay Riddell, took the same approach in the last oil price downturn, which began in 2008, asking employees to take unpaid Fridays off between the May and September long weekends, as the company adjusted then, as it is adjusting now, to the fall in oil prices.

According to Jim Fearon, vice-president with recruitment firm Hays in Calgary, many oil and gas companies in the Canadian energy sector have taken the same approach as Trilogy to manage the commodity price collapse.

“The alternative is that you don’t do anything and the only way to manage your employee costs is to cut headcount – and that’s happened,” Fearon said, citing the thousands of layoffs announced by Canadian energy sector companies this year.

Fearon said some companies, which need employees in the office every day, have chosen instead to send employees home at 3 p.m. instead of 5 o’clock in an effort to manage through the oil price collapse.

The West Texas Intermediate oil price fell to a new six-year-low on Wednesday and closed at US$40.80 per barrel – down from roughly US$60 per barrel for much of May and June, and a long way from the US$100 per barrel price oil fetched a year ago.

“We’ve also seen other companies have a reduction in pay, say by 10 per cent, with the same hours but with the promise that when the market picks up at the other end, that they’ll reimburse them for that 10 per cent,” Fearon said.

He added that strategy has been effective so far in retaining employees, given the promise of a reward when oil prices and profits return.

Williams said the majority of Trilogy employees, who will return to full-time hours in a few weeks, “were very positive about” the company’s decision to reduce hours, “they said, ‘I would much rather do this than lose my job.’”

Since the oil price rout began last summer, many large oil and gas producers based in Calgary have announced mass layoffs, including Suncor Energy Inc., Cenovus Energy Inc., Talisman Energy Inc. and others. The oilfield services associations supporting those producing companies have predicted tens of thousands of layoffs as a result.

According to Trilogy’s most recent annual information form, the company employs about 190 full-time staff, and Williams said staffing levels have remained around that number.

Trilogy posted a $35 million net loss for the second quarter of this year, down sharply from the same period last year when it reported net earnings $37 million.

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