Aker Solutions might temporarily lay-off as much as 6650 of its 16,000 employees. The company has also initiated an early retirement program and frozen all salaries including that of executive management. ‘The first months of 2020 have been unlike anything we have previously experienced,’ CEO Luis Araujo says.
‘The Covid-19 pandemic, coupled with the sharp drop in demand for oil and gas, has caused significant disruption to the global economy and left societies around the world grappling with new ways of working and living. The global energy sector has been hit particularly hard and at Aker Solutions we are doing our utmost to mitigate the effects for employees, customers, shareholders and other stakeholders worldwide,’ says the CEO.
The company has implemented a number of measures to ‘protect the safety and wellbeing of its employees, while also mitigating substantial operational disruptions.’
Aker Solutions has already demobilized about 3000 contractors in Norway, including 700 non-Nordic contractors from Egersund and Sandnessjøen, to comply with new national and customer restrictions. 6000 employees have received notice of potential temporary layoffs while as per April 1st, 400 employees in Norway and 250 in the UK have already been laid off. The company did not specify the length of the layoffs.
Cost and investment cuts
The company has also taken additional measures to protect its balance sheet by further reducing costs and investment expenditure.
‘While it is too early to predict the long-term impact on financial markets and industrial activity level, the current market situation is expected to have an adverse impact on both activity, financial performance and structure of Aker Solutions in 2020,’ said Araujo. ‘A large part of the planned project sanctioning activity in the oil industry will most likely be postponed or cancelled in 2020 unless governments are introducing significant fiscal stimulation to aid in the recovery.’
The company will, therefore, reduce its investments, especially in the Subsea business, and cut costs by initiating an early retirement program as well as introducing salary freezes for all personnel including executive and senior management.
*This article has been corrected: a previous version stated temporary layoffs could reach nearly 10,000 but this number mistakenly included the 3000 contractors which are not employed by Aker Solutions directly.
This article first appeared on Project Cargo Journal, a sister publication of SWZ|Maritime.
