HOUSTON, TX – Exxon Mobil Corp. announced Thursday the company will be cutting its global workforce by roughly 15% over the next two years, an unprecedented move by North America’s largest oil explorer as it struggles to preserve its dividends.
The cuts will include approximately 1,900 U.S. jobs, primarily within its management office in Houston, as well as an undisclosed number of positions around the world.
"The workforce reductions are the result of ongoing reorganizations and work-process changes that have been made over the past several years to improve efficiency and reduce costs. These actions will improve the company’s long-term cost competitiveness and ensure the company manages through the current unprecedented market conditions. The impact of COVID-19 on the demand for ExxonMobil’s products has increased the urgency of the ongoing efficiency work.
The company recognizes these decisions will impact employees and their families and has put these programs in place only after comprehensive evaluation and thoughtful deliberation. Employees who are separated through involuntary programs will be provided with support, including severance and outplacement service," the company said in a statement on Thursday afternoon.
According to Exxon the total reduction will affect about 14,000 people, split between employees and contractors. The figure includes all U.S. job cuts, as well as layoffs and retirements previously announced in Europe and Australia, and any future reductions in Canada or remaining industries.
Additionally, some of Exxon’s rivals are also cutting thousands of jobs in response to the ongoing pandemic-induced demand slump including, BP Plc who plans to cut 10,000 jobs, Royal Dutch Shell Plc who will cut as many as 9,000 roles and Chevron Corp. who has recently announced around 6,000 position reductions.
Exxon’s in-house workforce stood at 74,900 people, as of Dec. 31,2019 according to data compiled by Bloomberg. However, the fact that the company is cutting jobs at all is a sign of a weakened financial position compared to its former long standing status as the S&P 500 Index’s largest company less than a decade ago.
However, this year’s discrepancy has been particularly difficult because it has directly affected refining, which is usually a cushion in times of low oil prices, and due to the fact that it came at a time when Exxon was already increasing borrowing to fund a larger expansion program. Shortly after the company was forced to retreat on these plans back in April after reducing capital spending by $10 billion, and delaying or scaling back most of the companies major projects.
Overall the companies stock has taken a hit near 54% this year as Its dividend yield is now more than 10%, indicating that investors are anticipating a cut. However, Exxon maintained a quarterly payout on Wednesday, and is now expected to post its third consecutive quarterly loss when it reports earnings tomorrow afternoon.
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