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Old 05-10-2020, 12:32 PM   #1
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Staff layoffs don’t make sense unless you are expecting this to fundamentally change Your operation going forward. You need about a year to pay for severance and the cost of hiring and training a new person to break even on a lay-off.

So if you expect to need the people within a year you keep them on. The payback is shorter for contract staff.
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Old 05-10-2020, 12:34 PM   #2
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Staff layoffs don’t make sense unless you are expecting this to fundamentally change Your operation going forward. You need about a year to pay for severance and the cost of hiring and training a new person to break even on a lay-off.

So if you expect to need the people within a year you keep them on. The payback is shorter for contract staff.

This is completely true. All the contract staff were easy pickings to cut costs. You know this when you sign up for it though.
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Old 05-10-2020, 10:21 PM   #3
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Given Suncor's Q1 results, I wouldn't be surprised if they did mass layoffs if this situation continues for the rest of Q2 and first part of Q3
Their goal is to keep all their staff gainfully employed.

If their roles have been diminished, Suncor has advised they will be redeployed or retrained in other business units or roles.

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Old 05-10-2020, 11:36 PM   #4
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Staff layoffs don’t make sense unless you are expecting this to fundamentally change Your operation going forward. You need about a year to pay for severance and the cost of hiring and training a new person to break even on a lay-off.

So if you expect to need the people within a year you keep them on. The payback is shorter for contract staff.
Lots of companies had/have fat to trim. Usually it farthest from the wellhead. This time around it will be everywhere but still mostly farthest from the wellhead.

Also, I think this will fundamentally change how Businesses in this sector are run that will lead to savings greater than the severance packages that are handed out.

What is going rate for severance, 3wks per yr worked? So if the average worker in a layoff has 7 years that is 21 weeks or just shy of 5 months. Add the overhead of the worker at another 50+% and after 3.5 months you are net positive in theory. Just an example obviously.

Also other savings considerations as well.
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Old 05-11-2020, 08:18 AM   #5
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Lots of companies had/have fat to trim. Usually it farthest from the wellhead. This time around it will be everywhere but still mostly farthest from the wellhead.

Also, I think this will fundamentally change how Businesses in this sector are run that will lead to savings greater than the severance packages that are handed out.

What is going rate for severance, 3wks per yr worked? So if the average worker in a layoff has 7 years that is 21 weeks or just shy of 5 months. Add the overhead of the worker at another 50+% and after 3.5 months you are net positive in theory. Just an example obviously.

Also other savings considerations as well.
Also lets be honest here, a lot of O&G companies are over staffed. I think a lot of companies are figuring out they can run leaner and farm out some work to 3rd parties if need be for sometimes cheaper than in house.
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Old 05-11-2020, 11:04 AM   #6
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I work for one of the big ones here Canada. A lot of fat was trimmed back in 2015. And just now on an all-employee call the President has said there will in fact be layoffs coming up. They want to minimize it, but there will be layoffs.

All contractors have already effectively been removed, and now the focus is on employees.
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Old 05-11-2020, 11:16 AM   #7
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Also lets be honest here, a lot of O&G companies are over staffed. I think a lot of companies are figuring out they can run leaner and farm out some work to 3rd parties if need be for sometimes cheaper than in house.
I am in meetings sometimes where there are 10+ people on a call and lots is discussed but not much actually said. People like hearing themselves talk. Usually the direction is already decided on in the field and the folks on the call are just trying to play catchup or want to be kept in the looop, or want to add 'processes' which in turn add more costs. Sucks, but the glory days of the boardrooms full of $150k 'Central' folks are done. Also so much is getting outsourced, and a lot of it overseas right now, looking for anywhere to cut costs, even if it means more headaches trying to get good/accurate delivery from them.... Its still cheaper.
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Old 05-11-2020, 11:28 AM   #8
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I am in meetings sometimes where there are 10+ people on a call and lots is discussed but not much actually said. People like hearing themselves talk. Usually the direction is already decided on in the field and the folks on the call are just trying to play catchup or want to be kept in the looop, or want to add 'processes' which in turn add more costs. Sucks, but the glory days of the boardrooms full of $150k 'Central' folks are done. Also so much is getting outsourced, and a lot of it overseas right now, looking for anywhere to cut costs, even if it means more headaches trying to get good/accurate delivery from them.... Its still cheaper.
Has this Pandemic taught us nothing?
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Old 05-11-2020, 11:29 AM   #9
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Has this Pandemic taught us nothing?
All about costs my friend.
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Old 05-11-2020, 12:15 PM   #10
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All about costs my friend.
Yet it's not even overall cost that is being considered. I continually see decisions made that may reduce the cost to the particular unit performing the task but probably adds to the overall cost to the operator because of negative implications to other groups. But it's considered a success, the group has been successful in reducing their cost for whatever it is they are doing.
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Old 05-11-2020, 12:25 PM   #11
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Yet it's not even overall cost that is being considered. I continually see decisions made that may reduce the cost to the particular unit performing the task but probably adds to the overall cost to the operator because of negative implications to other groups. But it's considered a success, the group has been successful in reducing their cost for whatever it is they are doing.
That's been the MO of the Oilpatch forever though. No one cares about down the line costs or other groups costs.
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Old 05-11-2020, 12:28 PM   #12
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Working in IT/IS for as long as I have, any company that is sending IT offshore to save cost is in for a rude awakening. It'll end up costing the company more and they will get far less, then if they just kept it local.
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Old 05-11-2020, 12:44 PM   #13
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Tough to compete with that lower cost model, especially with a lot of customers transitioning away from traditional IT to cloud services where they won't need traditional IT or IT strategists.


We're also still seeing a lot of development heading off shore.
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Old 05-11-2020, 01:10 PM   #14
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Tough to compete with that lower cost model, especially with a lot of customers transitioning away from traditional IT to cloud services where they won't need traditional IT or IT strategists.


We're also still seeing a lot of development heading off shore.
It's not a lower-cost model, it just looks like it is a lower-cost model. If it costs you $85k to develop an application locally, and instead you end up paying $25k for an offshore provider, but they take 4 times as long to deliver (if they ever do), you aren't saving money.

The client I have worked with, I have rarely seen success stories from offshoring any part of IT.

Just recently, I watched a gaming studio that I am a fan of, find out all the art for a mobile game they developed was stolen from other games.
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Old 05-11-2020, 01:30 PM   #15
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Its not just IT you can farm out. You can farm out things like engineering in the city here and come out ahead vs doing it in house.
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Old 05-11-2020, 10:42 PM   #16
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It's not a lower-cost model, it just looks like it is a lower-cost model. If it costs you $85k to develop an application locally, and instead you end up paying $25k for an offshore provider, but they take 4 times as long to deliver (if they ever do), you aren't saving money.

The client I have worked with, I have rarely seen success stories from offshoring any part of IT.

Just recently, I watched a gaming studio that I am a fan of, find out all the art for a mobile game they developed was stolen from other games.
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Old 05-17-2020, 09:26 PM   #17
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Talking to a friend whatever that works at a company that rhymes with Dovstoyausky. There's just been a stead stream of layoffs happening, but its easier to keep it quiet because everyone that can is working from home so there's no taxi lineups or people walking out of the building with boxes.


There's very little activity happening as I think she said they're just shutting down sites.


She was pretty pessimistic about things, and the feeling is that the promise from the Federal Government of help for oil and gas in hours or days isn't going to come and there's a lot of frustration about that.
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Old 05-19-2020, 08:54 PM   #18
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Paramount let go at least two asset teams recently, Tangle Creek had layoffs a couple weeks back, and Keyera is set to conduct massive layoffs tomorrow.
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Old 05-19-2020, 09:14 PM   #19
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Point Loma is has gone under. Not huge but another one to go.
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Old 05-20-2020, 12:44 PM   #20
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Paramount let go at least two asset teams recently, Tangle Creek had layoffs a couple weeks back, and Keyera is set to conduct massive layoffs tomorrow.

I can confirm it wasn't a good day today... and the bloodshed continues this afternoon for the other half of the organization
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