The current downturn will give the industry a chance now to put its money where its mouth has been on the subject of maintaining personnel. Nearly forgotten in the turmoil has been the whining mantra of the last four years, when leaders scolded themselves unmercifully about how their hire-and-fire mentality through the last major cycle created what's known now as the "lost generation" of the 1980s and translated into the "brain drain" of this decade. Despite signs that the industry is moving more cautiously now than it did in the 1980s on the job retention front, it is clear this recession still may force harder layoff decisions before the year is done.
"We have all learned the lessons of the 1980s, when the lack of attention paid to hiring new talent left us with a missing generation of managers and experienced professionals, not to mention an exceedingly poor reputation on campus," warned Schlumberger CEO Andrew Gould during an industry update February 10 at CERAWeek 2009.
Then he added: "If the investment in recruiting and training has been substantial since 2004, then the investment in retention must be just as substantial right now."
Gould's warning, however, came less than a month after his company announced plans to cut 5,000 jobs and service sector rival Baker Hughes announced 1,500 cuts of its own.
For a while, observers feared those announcements represented another knee-jerk reaction to the latest downturn that would resurrect the industry's "hire-and-fire" image from its response to the turmoil of 20 years ago.
Since that initial batch, however, the industry has been silent on the subject of widespread layoffs. "I'd give the industry a grade of B-plus or A-minus so far in resisting the temptation to slash and burn on job cuts," says Jeff Bush, president of Denver-based CSI Recruiting, which specializes in oil and gas industry employment.
"But," Bush warns, "how long they can hold out is anybody's guess."
The growth frenzy of the last four years has attracted more students to the sector, according to data compiled by Lloyd Heinze, a petroleum engineering professor at Texas Tech University. Heinze's figures indicate the US will graduate about 750 new petroleum engineers this year, compared with a low of just 200 in 1998 and 350 as recently as 2006. Without positions waiting in the oil industry, however, those fresh-faced graduates may take detours into other related fields, some observers fear.
Bush said PE grads had been snagging salaries of $85,000 to $95,000 with signing bonuses of $15,000 to $20,000 from some companies. But this year's crop may be disappointed.
In contrast with the 1980s, however, industry executives unanimously agree that this downturn will end with a renewed frenzy for expansion and they must have the staff available to take advantage. "Everyone is holding their breath in 2009," said Bush. "If there's no light at the end of the tunnel by year's end, we could be in for tough times again."
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