Chevron Ax Falls Again on 1,500 Jobs : Restructuring: The oil giant will cut 28% of its headquarters staff and 500 more at its computer-communications unit.
Chevron Corp. said Monday that it will cut 1,500 jobs, including 28% of its headquarters staff in San Francisco, as part of a restructuring of its domestic operations begun two years ago.
“This is the last big one,” Chevron spokesman Mike Libbey said of the job cuts, which the oil giant said should produce annual savings of $235 million.
About 1,000 jobs will be eliminated at Chevron’s headquarters, and 500 will be cut at Chevron Information Technology Co., a San Ramon unit that oversees computer and communications operations for the company.
Most other U.S. energy companies have also been trimming assets and laying off people as a result of low oil prices. Chevron Chairman Kenneth T. Derr last January announced plans to eliminate 2,500 jobs by the end of 1992. The company has far exceeded that goal.
So far this year, Chevron has eliminated 5,500 jobs through early retirement programs and 1,100 involuntary layoffs. About half the jobs to be cut in San Francisco and San Ramon are positions that are now unfilled. A company spokesman estimated that fewer than 750 workers will lose their jobs as a result of Monday’s announcement.
Chevron will employ 50,000 people worldwide after the latest changes are completed.
“The future requires smaller internal service organizations that spend less,” Derr said in a statement.
Meanwhile, at the annual meeting of the American Petroleum Institute in New York, Derr told Bloomberg Business News that he expects crude oil prices to continue to drop this year--averaging $20 to $21 a barrel on the New York Mercantile Exchange--because of low demand and high production by the Organization of Petroleum Exporting Countries.
“There’s more production out there than the world can use and nobody’s economy is doing very well, so demand is very soft,” Derr said.
Chevron eliminated 700 jobs this year at its Port Arthur, Tex., refinery, and reorganized five oil and gas research and technology units into one. The company, the largest U.S. petroleum products company, has also been selling its least cost-effective fields and steering more investment overseas, including the huge Tengiz field in Kazakhstan in the former Soviet Union.
Industry observers said Chevron’s latest moves were not unexpected.
“I guess nothing surprises me now in the oil patch,” said Ron Londe, an analyst with the investment firm A. G. Edwards in St. Louis. “It seems to be a pretty far-reaching and sweeping restructuring . . . (but) the uncertainty of the whole energy outlook is driving these energy companies.”
Londe and others in the industry do not expect oil prices to improve until at least 1995. “But there’s still a lot of water to go under the bridge before we get there,” Londe said.
Chevron’s stock closed Monday at $67.25, up 50 cents in New York Stock Exchange trading.
