Baker Hughes to cut pay to curb job losses
FARMINGTON — Baker Hughes Inc., the third-largest oil field services company in the world, plans to temporarily lower some of its employees' pay later this month.
The Houston-based company, which has offices in Farmington, will institute a 5-percent pay reduction for certain employees starting Sept. 11. Those cuts are expected to continue for the remainder of 2016.
Melanie Kania, a Baker Hughes spokeswoman, confirmed the pay cuts today . Kania said the pay reduction program is part of the company's overall cost-cutting, which is necessary because of record low oil and gas prices on the commodities market. She declined to specify whether local Baker Hughes workers would be subject to the pay cuts.
“In response to challenging industry conditions, Baker Hughes has implemented a temporary 5-percent pay reduction for certain U.S. employees during the last 14 weeks of 2016, while providing those employees four additional paid holidays," Kania said in an emailed statement Tuesday. "These efforts will allow us to lessen the need for additional workforce reductions while remaining focused on serving customers and maintaining safe, compliant operations.”
The news follows the company's earlier plans to layoff an undisclosed number of workers in June.
When Baker Hughes cut 67 local jobs in November 2015, Kania told The Daily Times that the company had 250 employees still working in New Mexico. Kania said she could not update that number by the deadline for this story.
Baker Hughes' second quarter saw revenue of $2.4 billion, a decrease of $262 million, which is down $1.6 billion, or 39 percent from the same period last year, according to a July 28 press release. Those decreases were caused by "activity declines in the market and increasing pricing pressures," according to the release.
Martin Craighead, Baker Hughes' chairman and CEO, said that during the second quarter, the company paid down $1 billion in debt and, with continued reorganization and cost-saving strategies, the company aims to strengthen its ability to maintain its commitments to its customers and shareholders.
The company has also shed thousands of companywide jobs since 2015.
Craighead said a lack of oil and gas drilling activity in the U.S. amidst the prolonged "bust" cycle in the energy sector remains a challenge.
“In the second half of 2016, excluding the seasonality in Canada, we do not expect activity in North America to meaningfully increase, as our customer community requires a more sustained oil price improvement before committing to any material increase in spending," Craighead said in the release. On the other hand, activity internationally is expected to continue to decline in most countries, with a steeper decline in markets with higher lifting costs. As a consequence of this outlook, we expect pricing to remain challenging."
James Fenton is the business editor of The Daily Times. He can be reached at 505-564-4621.