Unocal Studies Ways It Might Cut Costs, Staff
Unocal Corp., hard-hit by forces plaguing the oil industry, has begun a belt-tightening review of its 920-employee headquarters staff that could bring layoffs by the end of the year.
The news was not unexpected in the wake of a 97% drop in second-quarter earnings for the Los Angeles-based energy company, as well as anticipated lower staffing needs as it continues to reduce its sprawling operations.
“Do we have duplication, do we have two different departments that really do the same thing?” is the central question, spokesman Barry Lane said. “The study is not necessarily to reduce staff but to improve the efficiency of all our operations.”
Unocal will bring in McKinsey & Co., the New York-based management consulting firm, to assist an in-house task force. A similar study at the company’s research center in Brea, completed in July, yielded cost savings of 20%--made in large part by laying off 100 of 780 employees. Unocal has more than 17,000 employees in all its divisions.
Workers were told in an Aug. 2 internal memo that “the purpose of this study is not to reduce staff or get people to work harder” but to improve efficiency. The process “will rely on ideas generated by all employees.”
Most oil companies serving the West Coast have been hard-pressed by competitive prices for gasoline, depressed natural gas prices, high exploration costs and the prospect of major investment to meet future clean air standards. Atlantic Richfield Co. announced job cuts of 1,500 employees last week.
Unocal has been shrinking and restructuring operations for several years now:
* The first move, in December, 1988, was the sale of its 13-acre Los Angeles corporate headquarters property.
* In 1989, the company entered into a joint venture with Venezuela Petroleum Holdings Inc.--an arm of that nation’s state-owned oil company--that took over Unocal’s Chicago refinery and Midwest marketing and distribution assets.
* The company closed a refinery in Beaumont, Tex., later the same year.
* About the same time, it sold Obed Mountain coal mine, a Canadian operation.
* In 1990, it sold its $322-million Norway oil and gas holdings.
* Last April, in a move to help streamline its marketing system, the company began the shutdown of 278 of its 1,500 gasoline stations in California.
* In June, it suspended operations at its $650-million Parachute Creek, Colo., shale-oil project.
Unocal’s one big buy during this period has been the $340-million purchase of Prairie Holding Co., consisting primarily of Texas oil and natural gas fields and exploration rights.
Unocal now has five facilities and divisions on the block: L.A.-based Molycorp Inc., a mining interest; its gas stations and distribution system in the Southeast states; the 150-facility Auto/Truck Stop network, and a chemical distributor and polymer coating manufacturer, both based in Illinois.