The chief executive of U.S. oil-field services company Weatherford International Ltd. defended the firm’s recent restructuring, which involved cutting 40% of its global workforce amid the slump in oil prices.
Bernard Duroc-Danner said that while some of the cuts followed a decline in business due to oil prices dropping to below $50, there was also a drive to reduce costs by shedding layers of management within the company. In an announcement in early 2015, he described the reorganization as cutting the number of “handshakes” between any employee and the CEO to just five.
Weatherford has shed 21,000 jobs world-wide since oil prices began to fall in June 2014, with North America accounting for 60% of that total. Despite the job cuts, global head count would still be around 50,000 by the end of the year.
We are looking to make every single function at Weatherford perennially efficient,” Mr. Duroc-Danner said in an interview with The Wall Street Journal earlier this week. “If we can change our cost structure perennially then this will help us when the oil price goes back up.”
Mr. Duroc-Danner said his company can’t compete head-on with the industry’s two largest players, U.S.-listed Halliburton Co. and Schlumberger Ltd., so instead it aims to focus on core competencies. He noted the second phase of restructuring is going to take longer to implement and will involve reining in noncore spending on research and development.
“We have curtailed some research and development, that’s a fact,” Mr. Duroc-Danner said. “What we are trying to is prioritize and focus on what is attractive, necessary and useful.”
(Source-wall street journal)