Shell to Slash US Workforce, Mostly in Houston
Shell, faced with falling profits, plans to cut 5,000 jobs. (image: memrieconomicblog.org)
According to an article published on Tuesday in the Houston Chronicle, Royal Dutch Shell has announced it will slash hundreds of jobs located in Houston and the surrounding region.
The primary departments affected by this decision are financial and other support divisions, with many of these jobs being shipped to India and the Philippines to cut costs. As we reported earlier, Royal Dutch Shell’s earnings dropped by 62 percent in the third quarter, a trend followed by other oil majors. The shrinking profits have been caused by the downturn in the worldwide economy, which has caused a drastic decline in oil demand.
Oil refiners, in particular, have been hurt. Refineries around the world are operating well under capacity, holding record levels of supply while waiting for demand to return. Many analysts have forecasted bad times ahead for firms that have major stakes in refining operations.
Shell has been undergoing a major reconfiguration since July, when Peter Voser was installed as new Chief Executive Officer. Shell expects to cut 5,000 jobs, or roughly 10 percent of its workforce, by the end of the year. Management positions have so far shrunk by 20 percent.
Many have speculated that this marks Houston’s continuing fall from grace as the capital of the world’s energy markets. Barton Smith, an economist from the University of Houston, said “we talk about Houston being the energy capital of the world, but it’s lost some of that edge, especially in the manufacturing sector.”
However, all is not lost for Houston. While some financial and manufacturing jobs are being shipped overseas, many more could be created as various projects in the Gulf of Mexico, the Canadian oil sands, and North America’s many emerging natural gas fields come to fruition.
