As oil prices continue their downward slide, most investors and firms are understandably eying prices, revenues and exploration costs.
All that makes sense, as there is a good chance some oil firms will face liquidity crunches and restructuring over the next year. In the longer term though, there is another specter that could be equally damaging to oil and gas firms—a shortage of skilled labor.
During the 2008 recession, many manufacturing firms cut way back on labor and costs everywhere they could, as demand plummeted and customers started asking for lower prices. Fast forward a few years though and demand has returned.
What has not returned are many of the skilled laborers that were instrumental to the manufacturing industry’s success, Oilprice reported.
Many of the industry’s best workers moved on to other fields or retire in the intervening years since the recession. As a result, manufactures complain frequently about a lack of available skilled labor. The same thing could happen in the oil and gas industry.
Oil and gas executives already lament the lack of proper training being imparted by colleges and universities for entry-level employees. The exodus from the industry is only going to exacerbate that problem. Every field in the industry from geologists on down, is seeing layoffs and cutbacks.
In the short term, these actions might be unavoidable. But if the downturn continues for more than a year or so, many of these workers may move on to new fields. If that happens, the industry could find that those workers are lost for good. Further, it appears that as the decline intensifies, the structure of the industry may change.
Outsourced workers employed by contractors, but working for exploration and production firms could find themselves without a job as firms look to cut costs by bringing functions in-house. This type of upheaval is going to create a lot of movement in the industry and many workers may exit and look for more stable occupations in future.
There is clearly a real problem here for firms in the long-term and no easy solutions.
That said, there are a few things firms can focus on doing to maintain their talent pool. First, firms should be looking beyond the current crisis and continuing to engage with universities, colleges and training programs.
Second, firms should look for ways to keep their best and brightest talent. Even if a particular job function is being cut severely, perhaps some of those employees can be used in other functions around the firm.
Third, where possible, firms should bite the bullet and ask employees to take a pay cut or benefits cut across the board in lieu of layoffs.
These steps can help ensure a company manages the downturn and is prepared to take advantage of the upturn whenever it arrives.
