Suncor Energy says it will cut 10 to 15 per cent of its workforce over next 18 months
KENNEY'S BOONDOGGLE HE GAVE THEM BILLIONS
TO SAVE JOBS HOW'S THAT GOING
CALGARY — Oilsands and retail fuel giant Suncor Energy Inc. says it will eliminate as many as 1,930 jobs over the next 18 months as a result of cost-cutting to deal with low oil prices and market volatility.
© Provided by The Canadian Press
CEO Mark Little told employees on a conference call Friday morning the company will aim to reduce total staff by 10 to 15 per cent over the next 18 months, starting with a five per cent cut over the next six months, spokeswoman Sneh Seetal said.
The Calgary-based company had 12,889 staff at the end of 2019. Five per cent would equate to 644 positions and 15 per cent would equal 1,933.
"A few years ago we began to fundamentally change how we work, taking advantage of improved data technology, business processes, all with a view to improve our overall cost structure, accelerate free cash flow and strengthen our competitive position," said Seetal, referring to what was dubbed the "Suncor 4.0" program.
"We always anticipated this transformation would result in a smaller workforce over time and one example ... is the implementation of the autonomous haul trucks (driverless trucks employed at Suncor's oilsands mines).
"That said, the unprecedented drop in oil prices, the continued impact of the global pandemic and economic slowdown, as well as continued market volatility, have accelerated those plans."
The cuts are to be made across the entire organization, Seetal said, and will also affect Suncor's ranks of contracted workers, although she was unable to provide those numbers.
Employees will be offered voluntary severance, early retirement and may potentially be redeployed if their jobs are eliminated, she said.
"What's happening in Alberta today is nothing less than an economic emergency," said Alberta Premier Jason Kenney at a news conference on Friday.
"The government of Canada would be moving heaven and earth if we saw layoffs of this scale in the central Canadian manufacturing industry."
He called on Ottawa to "hit the pause button" on implementing a clean fuel standard opposed by many in the oil sector, as well as delaying ratifying the UN declaration on the rights of Indigenous people because of its potential creation of uncertainty for oilpatch investors.
“It is unfortunate to hear of additional job losses in the industry. The reality of the current situation is grim and taking a toll on the industry and on Canadians," said Tim McMillan, CEO of the Canadian Association of Petroleum Producers.
CAPP, which estimates more than 28,000 direct and 107,000 indirect jobs have been lost in the sector so far this year, says the federal government should implement a plan for national economic recovery that includes taking advantage of an expected recovery in global oil and gas demand.
The news comes a few days after Royal Dutch Shell announced it would eliminate between 7,000 and 9,000 jobs worldwide by the end of 2022, a move expected to potentially result in hundreds of job losses among its 3,500 workers in Canada.
In June, BP, which has a smaller workforce in Canada, said it was cutting around 10,000 jobs from its global workforce to cope with the impact of the pandemic.
Suncor put projects on hold and cut its 2020 capital budget by $1.5 billion to a range between $3.9 billion and $4.5 billion in March to deal with lower oil prices.
At the time, a spokeswoman said the cutbacks would result in fewer jobs for contract workers and could "potentially" hit employees as well.
Suncor's operations include oilsands development and upgrading, offshore oil and gas production, petroleum refining and retail fuel sales under the Petro-Canada banner.
Suncor shares rose on the Toronto Stock Exchange by as much as 2.6 per cent to $15.91 on Friday but remained at about one-third of their 52-week high of $45.12.
With a file from Bob Weber in Edmonton.
This report by The Canadian Press was first published Oct. 2, 2020.
Companies in this story: (TSX:SU)
Dan Healing, The Canadian Press
'This truly is a jobs crisis,' says Kenney as Suncor announces it will eliminate up to 15 per cent of staff
The cuts will take place across the organization and the country, through a combination of voluntary buyouts, early retirements and layoffs
Author of the article: Amanda Stephenson, Chris Varcoe • Calgary Herald
Publishing date:Oct 02, 2020 •
Suncor Energy Centre building in downtown Calgary on Friday, Oct. 2, 2020.
PHOTO BY AZIN GHAFFARI/POSTMEDIA
Suncor Energy has announced plans to eliminate up to 15 per cent of its workforce, a move that could affect up to 2,000 jobs and which prompted Premier Jason Kenney to plead with the federal government as well as energy companies themselves to do all they can to staunch the economic bleeding in Alberta.
Calgary-based Suncor — which is one of the country’s largest oil and gas producers, with approximately 13,000 employees — confirmed Friday it will reduce its workforce by five per cent in the next six months, and by between 10 and 15 per cent over the course of the next year and a half.
Spokeswoman Sneh Seetal said employees were informed of the restructuring Friday morning via a conference call with company CEO Mark Little.
“These are never easy decisions,” Seetal said. “We shared that information with employees this morning and made the commitment to treat people with dignity and respect through this time.”
Seetal said the company has been transforming itself in recent years to rely more on data and technology to improve its efficiency, such as using autonomous trucks at its oilsands operations, and had anticipated these changes would lead to a smaller workforce.
“The unprecedented drop in oil prices, the continued impact of the global pandemic and economic slowdown, as well as continued market volatility, have accelerated those plans,” she said. “These would be permanent structural workforce reductions. We’re looking at how we can operate more efficiently.”
The job losses will take place across the organization and the country and will be accomplished through a combination of voluntary buyouts, early retirements and layoffs.
“We are going to take a wide look at things. We will be looking at voluntary severances, early retirements,” Seetal said. “I couldn’t in all honestly give you a specific number, because we don’t know that yet. In the case of where there may be some retirements, we would first look to see if there’s any internal candidates we could redeploy to that role.”
Kenney said Suncor’s announcement underscores Alberta is in nothing less than a state of “economic emergency.
“The government of Canada would be moving heaven and earth if we saw layoffs of this scale in the central Canadian manufacturing industry,” the premier told reporters on Friday. “This truly is a jobs crisis and an economic emergency and it deserves to be responded to here in Alberta the same way it would be in Ontario or Quebec.”
Kenney said he is once again calling on the federal government to “do no more harm” to Alberta’s oil and gas sector, adding Ottawa should press the pause button on its proposed Clean Fuel Standard, which Kenney said will make Alberta energy companies uncompetitive on the global market. He also once again slammed changes to the environmental review process put in place by Bill C-69, saying the result has been investor uncertainty at the worst possible time.
However, Kenney also pleaded with oil and gas companies themselves to do all they can to avoid layoffs.
“I don’t think any of us should be surprised if there are additional layoffs from other companies that are hemorrhaging cash right now,” he said. “I would implore them to do everything they can to keep their workforce intact. To recognize that they’ve made big profits in the past for their shareholders based on the hard work of those employees.”
Suncor Energy cut its capital budget earlier this year by $1.9 billion, and reduced its prized quarterly dividend in May by 55 per cent. It also scaled back some operations at its Fort Hills oilsands mine.
Suncor posted a first-quarter net loss of $3.52 billion, including a $1.8-billion non-cash asset impairment charge, and then a $614-million net loss in the second quarter.
Alberta’s NDP Opposition pointed out that according to Suncor’s second-quarter report, the company’s net earnings in the prior year quarter included a one-time deferred income tax recovery of $1.1 billion as a result of the UCP government’s corporate tax cut. The UCP has lowered Alberta’s corporate tax rate to eight per cent from 12 per cent in an effort to attract business investment and create private-sector jobs.
According to Suncor’s second-quarter report, “net earnings in the prior year quarter included a one-time deferred income tax recovery of $1.116 billion associated with a staged reduction to the Alberta corporate income tax rate of 1% each year from 2019 to 2022.”
“Jason Kenney made a bad deal. Suncor received over a billion dollars from the UCP’s $4.7 billion corporate handout and they’re not hiring, they’re firing,” said NDP Leader Rachel Notley in a statement.
Oil and gas producers have slashed billions of dollars from their capital budgets since the start of the COVID-19 crisis and the global oil price crash.
Royal Dutch Shell said Wednesday it would lay off up to 9,000 people worldwide as it deals with the fallout of the COVID-19 pandemic and begins restructuring to hit its goal of net-zero emissions by 2050.
British energy giant BP announced in June it would cut around 10,000 jobs, also as part of its net-zero emissions plan.
Earlier this week, Calgary-based TC Energy confirmed it is also restructuring its Canada Gas Operations and Projects team, though the company declined to specify how many jobs would be affected.
In general, the oil and gas industry has been faced with lower prices and the inability to attract outside capital into the sector, said Jackie Forrest, senior director with ARC Energy Research Institute.
She noted Canadian industry cash flow levels are expected to fall to $13 billion this year from $53 billion in 2019.
“The lack of external capital and prices at this level I think will motivate more cost-cutting from the industry,” she said. “The pressure at these prices is pretty severe.”
In a statement, Mary Moran, president and CEO of Calgary Economic Development, said her organization is working to find new and emerging opportunities to spur growth and job creation in the city, in the face of continued energy sector struggles.
“Unfortunately, I am worried we may see more cuts with increased consolidation with low oil prices and constraints on supply,” Moran said. “It will continue to have an impact on our workforce and downtown office space vacancy rates and it’s only been made worse with COVID-19.
With the decline in oil prices, Suncor’s share price has dropped by 64 per cent this year, closing Thursday at $15.50 in Toronto — and off from $28.57 seen in early June.
On Friday, credit ratings agency Moody’s downgraded the province of Alberta’s long-term debt rating from Aa2 to Aa3. The ratings agency said in a release the downgrade reflects a forecast of “multiple years of material deficits and an elevated debt burden, as well as a structurally weaker credit profile as a result of the continued twin negative economic and fiscal shocks on the province from weak oil prices and the coronavirus pandemic.”
