Home' Trinidad and Tobago Guardian : March 5th 2015 Contents MARCH 2015 • WEEK ONE www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG15
Since 2014, energy prices and
crude oil prices have fallen
by over 40 per cent. It is
understandable that this
development will make the
sector nervous about the
resulting implications. One
of the questions raised is:
how will this impact employment in the sector?
Last week, the Energy Chamber released the
results of the energy services sector survey (ESSS)
for Q4 2014. There was a marked decline in
levels of optimism in the energy services sector
and some fears about employment. In this regard,
the Energy Chamber deployed a second survey
with labour and employment as a primary focus.
While the results of this survey do not reveal
alarming trends of service companies cutting
labour in the short term, service companies did
indicate that overall they would be looking at
cutting costs as a measure in dealing with the
new economic environment.
At some point, however, this will have a knock-
on effect on labour. Services companies could
be hit hard by moves by oil and gas operators
to cut costs and to try to negotiate better terms
from suppliers in response to the fall in oil prices.
In the survey, 43 per cent said that the sector
maintained normal activity over the last quarter.
The majority of respondents however (57 per
cent) felt that sector activity had fallen below
normal activity while no one said that there was
When questioned further regarding declining
sector activity respondents expressed concern
over the potential threat of the non- renewal of
contracts within the sector. Other service com-
panies said that they were unable to secure new
contracts. Some respondents indicated that their
revenues were being affected and that they were
below projected revenue and therefore had to
revise their earning expectation and expendi-
The respondents were then asked if they had
to reduce their staff because of the economic
environment. Approximately 80 per cent of
respondents said they did not reduce their staff,
20 per cent said that they did have to reduce
Those companies that reduced their staff, on
average reduced their total staff by 9.7 per cent.
Permanent staff was reduced on average by 9
per cent and temporary staff was reduced by
7.5 per cent on average.
When asked to comment further, companies
that did not reduce their staff said that the
existing contracts maintained their manpower
requirements. One company said that they actu-
ally increased their staff compliment to accom-
modate projects while another said they tried
to keep all staff in anticipation that they would
recover in Q1 2015.
Companies that did reduce their labour force
said that overtime and casual employment were
also being tightly managed. One respondent in
particular said that, if the trend continued into
the second quarter of 2015 they would be forced
to make further staff cuts.
When asked if sector activity continues to
be below normal in Q1 2015 how it would affect
their staff count, 47 per cent of respondents
said that there will be no change to staff. However
the companies that indicated that they would
reduce staff, 27 per cent said that they would
reduce temporary staff, 23 per cent said that
they would reduce both temporary and per-
manent staff and 3 per cent said that they would
reduce permanent staff.
One company said that, "Staff cuts will be
delayed as much as possible and the non-essen-
tial areas will be treated."
The energy service companies were asked
other than changes to employment how has
the company responded to the economic envi-
About 52 per cent of respondents to the ques-
tion said they have implemented cost controls
and made attempts to reduce cost and expen-
diture in other areas. Eighteen per cent of respon-
dents said they are trying to diversify their serv-
ices; 13 per cent of respondents said they changed
their pricing to be more competitive, while 13
per cent said they engaged in more strategic
planning and four per cent said that they
Export of energy services
The recent plummet of oil prices has put
the issue of economic diversification in the
spotlight. To date, much of the discussion
about economic diversification in T&T has
been based on the premise that a diversification
strategy should be driven by the Government
support of new and emerging sectors.
The Energy Chamber firmly believes there
needs to be a focus on established firms who
are able to compete in international markets.
Over the years, numerous consulting studies
have identified the energy services sector as
having a core group of specialised and expe-
rienced firms who have a great potential to
be internationally competitive and break into
new export markets.
The Energy Chamber firmly believes that
the energy services sector should be at the
centre of any diversification strategy especially
given the uncertain economic environment
where the major customers of these service
companies will be looking at cutting back on
costs which will directly affect the opportunities
T&T energy services companies have strong
brand recognition in international markets and
have the capacity to be internationally com-
petitive. Leveraging on this the Energy Cham-
ber has led several outgoing trade missions
regionally and internationally with the idea
that once service companies are able to export
their services internationally they would be
better able to weather any economic downfalls
that they may face locally.
Currently the Energy Chamber is planning
its third trade mission to Ghana, for further
details on this trade mission please contact
the executive office at 6-ENERGY.
Falling oil prices
and the impact
Energy services sector...
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