UK to absorb 1,500 job cuts in Kvaerner Oil & Gas restructure

The UK is expected to bear about half the 3,000 job cuts Kvaerner announced this week it would make over the next six months in its oil and gas division. While the company said the cuts would be worldwide, the UK and Norway each account for about 6,500 of the division’s 13,500 employees. `The majority […]

The UK is expected to bear about half the 3,000 job cuts Kvaerner announced this week it would make over the next six months in its oil and gas division.

While the company said the cuts would be worldwide, the UK and Norway each account for about 6,500 of the division’s 13,500 employees. `The majority of the job losses will be here in the UK, and Norway,’ said Syd Fudge, chief executive of Kvaerner Oil & Gas.

Fudge said a significant proportion of the lay-offs simply reflected the cyclical nature of the offshore business with employment at fabrication yards dropping off as contracts were completed.

Fudge admitted, however, that there was also `restructuring of overheads’ as part of the Kvaerner group’s continuing efforts to restructure following a disastrous year, during which the company went into the red for the first time in 30 years and saw its share price collapse.

Fudge added that the company also had to respond to structural changes in the industry, which was already experiencing a fall in demand for large, fixed offshore platforms.

The rationalisation in the oil and gas division is expected to involve the closure of one of Kvaerner’s two big offshore fabrication yards in the UK – Methil in Scotland and Port Clarence on Teesside.

Senior managers in the division have suggested for some time that they wanted to reduce the company’s construction capacity in the sector to concentrate on more high-tech – and profitable – areas of the offshore arena, such as sub-sea metering and communications systems.

Jim Kyles, GMB convener at Methil, said the yard, which employs 600, was working on three contracts and there had been no talk of redundancies.

He pointed out, however, that the outlook was not so good at the Teesside yard. `I know Port Clarence runs out of work at the end of the month.’

The 500-600 workforce will then fall to less than 100 within a month and remain at that level until at least early 2000.

A company spokesman in London confirmed the Teesside yard would not be able to sustain even a core team over the next four to five months and conceded that closure of one of the yards was possible.

However, he said details of exactly where the cuts would fall would not be available for a few weeks.

Some are bound to be made at Kvaerner O&G’s design and engineering offices in London, Croydon and Aberdeen, which currently employ about 400.

The rationalisation of Kvaerner’s engineering operations follows the announcement earlier this year that it was pulling out of shipbuilding – a move that put 1,200 jobs at the Govan shipyard on the Clyde in Scotland on the line until GEC Marconi took over the operation.

Kvaerner still has a further 11 shipyards to sell or close to complete its exit from shipbuilding.