Number of oil jobs lost still a mystery

Nearly a year after price slump began, industry keeps exact statistics quiet

As the oil collapse tosses Houston’s economy into upheaval, folks across the energy capital of the world have watched the flurry of pink slips with anxiety, many pondering the same questions.

How many jobs have been lost to falling oil pric- es? How many more energy workers will wind up on the chopping block before the industry recovers?

Several months since the layoffs began, nobody knows exactly how many jobs have disappeared in Houston and across Texas amid a global crude slump that shows no signs of budging. Economists, analysts and recruiters have scoured complicated government payroll data for clues, drawing conclusions from opaque company news releases, and spitting out an almost comical range of guesses.

The Texas Alliance of Energy Producers, an industry trade group, says Texas has shed more than 28,000 energy jobs since December, but doesn’t have a guess about Houston. Outsourcing firm Challenger, Gray & Christmas

says it’s far worse — 67,252 jobs, although not all the cuts are within state lines. A local investment bank firm puts the job losses at 50,000 in Houston alone.

A reliable count of job cuts would provide better insight of the oil slump’s impact on Houston’s economy. By some estimates, one energy job generates four jobs in unrelated industries. When oil and gas jobs start disappearing, other sectors could struggle, too, said Parker Harvey, senior economist for Workforce Solutions, a public job services and training organization serving the Houston/Galveston region.

“That’s why it’s troubling not being able to pinpoint the total number,” Harvey said. “It creates an ambiguity as to what to expect.”

The mystery of energy layoffs starts with the companies who are making them. Most of them say as little as possible about it.

The largest oil and gas companies based in the U.S. must disclose major layoffs, but aren’t required to reveal many details, including where the cuts will be made.

For example, oil services giants Schlumberger, Halliburton, Baker Hughes and Weatherford announced plans to chop thousands of jobs this year across the globe. But these firms, each with a major presence in Houston, won’t say which countries or markets would see the bulk of the cuts.

Their response to such queries are punctuated by a similar refrain: “Detailed information on employee reductions by specific geographic locations and by business is competitive information and therefore unavailable,” Halliburton said in a recent statement.

Meanwhile, most small, privately owned companies have said nothing about efforts to pare back their payrolls, even as their ex-employees line up for unemployment assistance.

Incomplete data

Among the major firms that are paring back, multinational oil company Chevron has provided the most detailed information about its plans, announcing in July that it would chop 1,500 jobs across the company, including 950 of its 8,000 Houston-area employees. The first workers are leaving the company this month.

Some experts who rely on these announcements to draw conclusions about job cuts acknowledge the data is incomplete. The announcements don’t include the “huge silent community” of independent contractors, staffing businesses and small subcontracting companies that drive the industry, said Tobias Read, CEO of energy recruiting firm Swift Worldwide Resources.

“These workers are often the first to be let go, and typically don’t get reported in corporate layoff statistics,” he said.

Energy companies in recent years have outsourced several business functions, including payroll, personnel and janitorial services, replacing in-house workers with contractors, who are common targets during downturns, said Bill Gilmer, director of the Bauer Institute for Regional Forecasting at the University of Houston.

“The oil producers and services companies know they are in a business with a lot of volatility and it’s easier to lay off a contractor than it is to lay off your own people,” he said.

Also missing from the corporate layoff tally are the people have been forced out through early retirement, another common tactic used to slash jobs, Read said.

“They are trying to take people out of the business and reduce head count without doing a layoff, so they don’t have to report it,” he said. “But those are people who are genuinely losing their jobs.”

Government jobs data can be as unreliable as information from the private sector.

Petroleum economist Karr Ingham said he used payroll data from the Texas Workforce Commission to tally up a total of 28,300 job losses since layoffs began in earnest in December, but he notes that the exact number is likely much higher, perhaps as high as 35,000.

Payroll data lags behind, and often gets revised months later, which means it could take a year to 18 months more before Houston has a better understanding of the toll the oil slump took on local workers. Another limitation of payroll data is that it doesn’t neatly categorize oil-related jobs.

Positions across the sector fall under a constellation of classifications outside of the traditional mining category — from fabricated metal manufacturing, which includes factory workers who make oil patch equipment, to professional and business services, including petroleum engineers and other oil and gas workers with corporate jobs. These are the jobs that largely drive Houston’s oil industry.

“What it boils down to is that these jobs are spread across several different industries,” Workforce Solutions’ Harvey said.

Without knowing precisely how many oil and gas jobs have disappeared in Houston, economists and analysts have a difficult time comparing this downturn to prior busts.

When Jack Simunek lost his job in June at a Houston company that builds and maintains pipelines, the oil industry veteran suddenly found himself on Houston’s unemployed rolls in the golden age of his 43year career.

Simunek, 64, wasn’t ready for retirement, so he started attending a weekly ministry for job seekers at North West Bible Church in Spring where he’s seen the crowds of attendees grow larger each Wednesday morning.

“It seems like a lot more people are coming than are finding jobs,” he said.

To Simunek, this downturn feels like Houston’s worst rough patch since the 1980s collapse that tossed the city into upheaval and claimed tens of thousands of jobs, a sentiment increasingly voiced by the city’s growing ranks of unemployed workers.

Grim outlook

Some oil and gas firms that already pared back are looking for more ways to pare back, raising the spectre that more layoffs are on the horizon.

Domestic benchmark crude has been languishing below $50 per barrel for weeks, and analysts are predicting any meaningful recovery might not take hold until 2017.

In late September, Halliburton laid out a plan in an internal memo to “flatten” its North American business by eliminating multiple layers of management. The company declined to say how many additional jobs will be eliminated, but the decision will certainly affect Houston-area workers where the company is headquartered. Schlumberger said Friday it will cut additional jobs in the fourth quarter, but declined to say how many.

As capital investments rapidly dissipate across the industry, the spending cuts will drive people out of work from the largest multinational oil companies to the private mom-and-pop services shops in Houston and across the world, Read said.

“We’re going to see deeper job losses from the top to the bottom of the industry,” he said.