Market Overview

Exxon To Layoff 1.9K In US, Slash 15% Global Workforce

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Exxon To Layoff 1.9K In US, Slash 15% Global Workforce

Exxon Mobil Corporation (NYSE: XOMannounced plans to cut its U.S. headcount by 1,900 on Thursday as a part of the reorganization initiative spurred by a drop in oil prices and setbacks from the COVID-19 outbreak.

What Happened: Exxon could slash almost 15% of the global workforce through voluntary and involuntary programs. The company will provide a severance package and placement support to all employees separated through the involuntary program.

The company's management offices in Houston, Texas, are the primary target of the reduction.

According to the Wall Street Journal, big oil producers and service companies' combined job cuts across the sector could impact more than 50,000 positions.

Exxon anticipates that the layoff program could continue through 2021, eliminating around 14,000 positions, including employees as well as contractors, WSJ reports.

Why Does It Matter: Since 2018, Exxon shifted its core strategy to increase oil production. It has made sizeable investments in Guyana, Brazil, Texas, Antwerp, Rotterdam, Singapore, and in the U.K. But in the face of the pandemic, these strategic investments have backfired.

James Henderson analyst Noah Barrett said that these job cuts could be structural changes in the sector instead of a cyclical -- WSJ.

According to Barrett's analysis, even after vaccine development and the pandemic subsiding, there is a possibility of reduced demand for oil due to growing emphasis on renewables.

Price Action: XOM shares closed 4.4% higher to $32.97 on Thursday.

Image Courtesy: Wikimedia

 

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