Employees of Smith Somber Over Layoffs

The mood was somber Friday outside the Smith International Inc. plant in Irvine, one day after the oil services company confirmed plans to lay off about 700 employees at its tool division.

“Some people in there have been taking it pretty hard, “ said a Smith employee as he and a co-worker drove out of the headquarters facility of the Smith Tool division. Upset employees have broken bathroom mirrors and scrawled graffiti on company walls, his companion said. Both men declined to give their names.

A television news crew interviewed employees as they drove out of the plant during the lunch hour. When one young employee was asked what his plans were, he answered with a grin: “I’m off to a new job.”

Seniority Mentioned One worker, his safety goggles drawn over his forehead, said the plant’s employees had expected the force reduction. “It (the company) depends on the oil business,” and employees have been only too aware of the industry’s problems, he said.

Although the employees interviewed said the company has not told them who would be laid off, they said they expect the cuts--which are to begin Feb. 8--to be made according to seniority. Smith International employs about 9,000 workers; the tool division employs about 2,600.

Smith International declined to comment Friday.

The Newport Beach-based oil services company said Thursday that its decision to cut back its work force was prompted by slackening demand for drill bits as oil and gas companies shut down rigs in response to falling energy prices. The company also cited sluggish demand due to uncertainty over the Treasury Department’s recent proposal to simplify the tax structure.

The plan, in part, calls for eliminating the oil depletion allowance and scrapping some deductions for drilling costs. Analysts say the plan, if enacted by Congress, would cost the oil industry billions of dollars.

The company said Thursday that it expects the layoffs to be temporary.

Meantime, oil industry analysts said Friday that they were not surprised by the planned layoffs at Smith Tool, which is the nation’s largest maker of drill bits. One analyst who asked to remain anonymous said the planned layoff is a “prudent one” as Smith tries to keep inventories low to reflect slack demand.