Smith Plans to Lay Off Another 700 Workers
Smith International, staggered by falling oil prices and a $200-million patent infringement judgment against it, is laying off about 700 employees in Irvine and consolidating six of its 10 worldwide divisions, according to company sources.
The Newport Beach oil services company refused to make any official comment Tuesday on pending layoffs.
However, employees at the corporation’s Smith Tool division in Irvine, which makes oil drilling bits, said a notice about the coming staff reduction there was posted Friday. And, over the weekend, 32 vice presidents in four division were laid off, according to sources within the company.
The company, which has been suffering because of a severe decline in oil and gas drilling, was dealt another blow earlier this month when a federal judge decided that Smith had infringed a Hughes Tool patent on a drilling bit and ordered Smith to pay more than $200 million in damages.
‘Valentine’s Day Massacre’
The latest job reduction follows the layoff of 357 employees at Smith’s Irvine-based tool division Feb. 14 in what company insiders call “the Valentine’s Day massacre.” Smith Tool now intends to lay off about half of its remaining Irvine work force, according to a company official who asked not to be identified. In less than a month, total employment at the Irvine facility will have been slashed to about 690 from 1,750 workers.
“It is very demoralizing,” the company official said of the layoffs. He said that, as of Tuesday, some department heads were still deciding which positions to eliminate and that not all affected employees had been told. “This time, the cuts will be deeper and impact more management than in the past,” he said.
Two-Stage Layoff
The layoffs will occur in two stages, he said, with salaried employees scheduled to leave this coming Friday, followed by hourly employees a week later. He said all employees will receive severance packages ranging from three days to more than a month of salary, depending on position and length of service, and a 90-day extension of health benefits.
Meanwhile, a manager at Dyna-Drill, another Smith division in Irvine that manufactures oil drills, said Dyna-Drill employees this week also were told to expect layoffs as the result of a corporate reorganization. The official said that Smith International announced to its employees this week that Dyna-Drill and three other Houston-based divisions--Servco, Datadril and Drilco--will be merged into a single division called Smith Drilling Systems. The newly consolidated division will be headquartered in Houston.
The source said he expects that “at least 50%” of Dyna-Drill’s 900 employees worldwide, including 144 in Irvine, will receive pink slips. He said staff cutbacks will also occur in the other consolidated divisions.
Times staff writer Carla Lazzareschi contributed to this story.
