Luxembourg-based subsea engineering firm Subsea 7 S.A. (Oslo Børs: SUBC) on Tuesday announced major cuts to its global workforce and fleet amid abysmal business and economic conditions in the oil and gas market and a declining workload.
Subsea 7 says that the cuts will reduce its global workforce by approximately 2,500 jobs by early 2016, down from the 13,000 worldwide employees reported at the end of 2014.
The global fleet will also be reduced by up to 11 vessels, based on a mixture of non-renewal of charter vessels and either disposal or stacking of owned vessels. The reshaping of the fleet will be phased in over the next 12 months, commensurate with the projected global workload, the company said.
At the end of 2014, the fleet consisted of 39 vessels with a further five under construction.
Jean Cahuzac, Chief Executive Officer, said: “These cost reduction plans will allow us not only to adapt to present market challenges but also to maintain our competitiveness and the long-term viability of our business. This will enable us to emerge stronger once the downturn ends. Reducing employment is not a decision we take lightly but one that is necessary in today’s difficult oil and gas environment.
“Deepwater oil and gas production remains a significant market with long-term growth potential. While implementing the restructuring of our organization, we remain committed to preserving our core capabilities and investing in key enabling technologies to deliver cost-effective solutions to our clients through all stages of the oil price cycle,” Cahuzac added.
The company says that consultation with employees and employee representatives have already begun and will continue to take place on a local basis and consultation processes have begun in Norway and the UK.