Smith Plans New Cuts in Tool Division Staff
Smith International Inc. plans to lay off yet another chunk of the work force at its Irvine tool division, marking the third time in three months that its payroll will be chopped. This time, the company said, the bulk of the layoffs will be from among its management and salaried employees.
Company officials also said that next week Smith International will move its headquarters from its luxurious leased offices in Newport Beach to smaller facilities in that city.
The ailing oil services company told employees at its Smith Tool Division Friday that the new round of staff cutbacks will be announced March 29. Although the company would not confirm the size of the expected layoffs, the magnitude “will not be anywhere near” the 700 workers who received pink slips in January, said Paul J. Russell, the company’s vice president of corporate communications.
“At this point, no one in the organization knows the exact number,” Russell said. One company source, however, said about 200 employees would be laid off.
In late February, Smith laid off 31 of its 95 corporate headquarters staff.
Smith International is one of Orange County’s largest civilian employers, with a work force of about 3,000. Worldwide, Smith has about 8,250 employees, compared with a peak of 13,000 workers in late 1981. The payroll slipped to 7,200 employees in mid-1983, but began to climb in 1984 and rose to nearly 9,000 workers until layoffs began again in January. The last round of cutbacks at Smith Tool was primarily among hourly workers.
Smith has been devastated by a worldwide oil drilling slump that analysts say may only worsen in 1985. Charles R. Bureker, an analyst at Sutro Corp. in San Francisco, said that although the layoffs are a tough decision, they are prudent. “Smith doesn’t drag its feet. The company has acted quickly in the past to reduce personnel when it’s apparent the business isn’t there. It’s better to have a company with fewer employees than no company at all.”
But he said that Smith--and other oil service companies--face the prospects of a bleak 1985. “This will be another year of bloodletting,” Bureker said. He projected that oil drilling activities will decline for a second straight year.
Smith told its tool division employees about the planned layoffs one week early so that some of them could begin preparing for the worst. “The last thing you’d like is to have a worker go out and buy a new car or a new house and get laid off three days later,” Russell said. He said the layoffs are the company’s attempt to “reduce costs in response to market conditions.”
The headquarters move and staff cutbacks are the latest evidence of Smith International’s ongoing financial struggles. Besides the oil drilling slump, the company spent millions during the past year in an unsuccessful quest to take over Gearhart Industries Inc., a Texas high-technology oil services company. In the settlement of that battle, Smith agreed to sell back its Gearhart shares for $80 million, less than half of the $163 million it spent in acquiring its stake in Gearhart.
