For Unocal Workers, Anxiety Fades but Upheaval Still Awaits

Times Staff Writer

CNOOC Ltd.'s withdrawal Tuesday from the bidding for Unocal Corp. lifts the pall of uncertainty that had hung over the California oil company’s worldwide workforce for months, leaving workers distracted, anxious and ripe for poaching by headhunters and rivals.

El Segundo-based Unocal noted in a recent regulatory filing that it had been operating under a cloud of takeover speculation since January and that the additional delay and uncertainty of a possible buyout by CNOOC would “impose difficulties in retaining and motivating” the company’s 6,500 employees.

Now, however, CNOOC is out of the running, and Unocal shareholders are expected to approve Chevron Corp.'s pending $17.5-billion cash-and-stock deal at a shareholder meeting next week.

That could be welcome news for employees, according to employment recruiters and others who have contact with Unocal’s workforce.


“I would expect that there’s a big sigh of relief ... because Chevron is a known and CNOOC is an unknown,” said Tim Taylor, a professor and recruitment coordinator in the petroleum and geosystems engineering department at the University of Texas in Austin. “I think now things will calm down a bit.”

Even so, Unocal employees -- who have have been reluctant to discuss their concerns because their employer has prohibited them from talking to the media -- are likely to face significant upheaval in the coming months, whether through job cuts, relocation, reassignment or the installation of new bosses.

Chevron, the nation’s second-largest oil company, has said it will lay off an unspecified number of Unocal’s workers. Although the layoffs are likely to be spread across Unocal’s global operations, the hardest hit area is expected to be the company’s headquarters staff in El Segundo, where 128 corporate employees work. Chevron, based in San Ramon, Calif., has said it will not keep that facility.

“A final decision on the number of jobs that will be cut has not been made, but we have made it clear that the vast majority of Unocal employees will be needed in the combined company,” Chevron spokesman Donald Campbell said. “This is not an exercise in cutting people to attain savings.”


Chevron, with 47,000 employees, has offered 71 Unocal employees supervisory and management-level jobs over the last few months, and 66 of them have accepted the positions, Campbell said.

An additional 500 offers have gone out over the last few days. “We’re adding more people to that list as quickly as possible,” Campbell said.

Unocal spokesman Barry Lane said Tuesday that Chevron was continuing a transition and integration process it started months ago.

“Many, many people are getting offers from Chevron,” he said. “There’s every indication that Chevron is going to absorb a good proportion of the Unocal employees.”


If that’s true, it marks a huge departure for Chevron and the oil industry -- and it represents the strongest sign yet that oil companies such as Chevron are already feeling the pinch of an industry-wide talent shortage that has been looming for years.

It was Chevron that shed more than 4,500 jobs in the aftermath of its 2001 merger with Texaco Corp. Similarly large payroll cuts followed BP’s acquisition of Amoco and Arco, as well as the deals that created ConocoPhillips and Exxon Mobil Corp.

Given that history, it has been more than a little unusual to hear Chevron Chairman and Chief Executive David O’Reilly pledge that job cuts would be minimal after the Unocal deal.

Instead of currying favor with Wall Street by promising big post-buyout savings through layoffs, O’Reilly told analysts in April that he expected yearly pretax savings of more than $325 million from the “synergy” of the two oil companies -- to be wrung mostly from overlapping operations in the Gulf of Mexico, Thailand and “within corporate and support functions.”


Taylor, the University of Texas professor, said the statements by O’Reilly reflected a tightening market for petroleum engineers and other workers -- a shortfall that has grown more pronounced as record-high oil prices have spurred new exploration projects.

Indeed, as the fight over Unocal dragged on, rival companies stepped up efforts to steal away Unocal’s employees, according to a former Unocal manager who has kept in touch with his former colleagues.

Unocal’s change-of-control plan has limited their success thus far, according to the former executive, who asked not to be identified because he still works in the industry. Under the plan, which is available in some form to all Unocal workers, a laid-off Unocal employee with five or more years of service can receive four months’ salary, plus enhanced retirement benefits and credit for additional years of service. Those with fewer than five years of service get a less valuable payout.

“There are several head hunters going around Unocal actively pursuing people,” the former Unocal executive said. “I’ve got my eyes on a couple [of] guys. The only thing keeping them there right now is that severance package.”