More layoffs in the petrochemical industry were announced this week, and analysts expect the trend to continue as oil prices lag, supplies remain heavy and the industry refines its operations for a more cost-effective future.
Chevron is the latest to announce Houston-area layoffs with 950 jobs, or approximately 12 percent of its current Houston workforce. Baker Hughes and Halliburton have cut 13,000 and 14,000 jobs company-wide, respectively. Both companies say they are responding to the current economic environment and that the layoffs are not connected to their pending merger.
"With market conditions remaining challenging, we have taken decisive actions to strengthen our revenue and reduce our cost structure companywide to improve profitability and remain competitive in this environment," said Baker Hughes spokesperson Melanie Kania in a written statement to KHOU 11 News. "Throughout 2015, we have lowered spending across the business, closed or consolidated facilities and made the difficult decision to reduce our workforce. We've made efforts to minimize reductions through alternative cost-cutting measures when possible and impacted employees will be eligible for severance benefits. Even as we take these steps, we remain focused on our employees, safety and delivering for our customers."
"This is nothing like the 1980's," said energy industry watcher Barbara Shook, Senior Reporter-at-Large with Energy Intelligence. Shook has been covering the Houston energy industry for more than 40 years. While she predicts more job cuts are likely ahead, she sees an industry that has moved decisively and proactively to avoid a 1980's massive boom-and-bust.
"Everyone expected that one to go on forever and ever," Shook said of the 80's era bust, one of many she has covered in her four decades as a reporter and analyst. "People were a little more cautious this time, just not wholesale cuts of numbers, but just the more selective process."
As for a feared economic trickle-down impact for the Houston economy, other experts, like the University of Houston's Adam Perdue, Ph.D., say a shift in petrochemical jobs will help lessen the overall blow.
While the majority of job cuts represent a downturn in upstream operations and drilling, a boom of sorts is underway in the manufacturing complex along the Houston Ship Channel.
Perdue, a research economist with the Institute for Regional Forecasting, predicts $60 billion in manufacturing investment in the greater Houston area between 2014 and 2018, including specialized construction jobs to expand the infrastructure and facilities for growing oil supplies.
"Once some of the new industrial plants are built that will take the natural gas liquids and more natural gas, that will ease the situation some but it won't fix it," Shook said.
A fix that Houston has sought through boom and bust -- and survived -- many times before.