Small Business The Answer to Oil Producer Layoffs
Article in The SUN & Post Media By Founder Mark Oleniuk
As the daily price of oil falls, the livelihoods of people dependant on the oil sands grow increasingly affected. The oil industry’s historical inability to manage fluctuations in demand and maintain jobs for its workers is compelling some oil workers to build a better system reliant on small businesses.
It’s been a tough 18 months for resource industry communities. While the future looks bleak, it’s the best opportunity we have to learn from present and past mistakes. Our goal should be to put forth a model that works beyond a bust and can sail through and boom.
Although I was just a kid during the oil crash of 1986, during the boom I gained a great deal of experience working as an engineer.
Now I’ve witnessed the bust in the midst of maintaining my own small resource-related business. It’s times like these when businesses like ours are forced to think outside the box and use the resources we have more efficiently.
Canada’s west has seen its share of prosperity. In the early 2000s, analysts forecasted massive increases in the demand for oil. To keep up with volume demand and to capitalize on the high price of oil, producers sought to double or triple their workforce in a relatively short amount of time.
This created project teams with layers and layers of management directing a very large workforce to complete segmented, often monotonous tasks for exponentially high wages.
When oil prices were at their highest, producers would compete amongst one another to acquire and maintain the largest workforce in an otherwise under-populated Canadian north.
Organizations participated in lavish employee retention programs that practically took on the role of a parent to a newborn workforce.
When prices dropped and oil workers began to lose their jobs, stories about anger, hopelessness and lack of job security began to bombard Canadians’ smartphones and desktops.
While producers, OPEC and the Middle East were all contributing factors, The project environment in the oil sands as a whole had become inefficient.
During the good times, organizations didn’t slow down to ask whether they had the RIGHT people in the RIGHT positions. Instead, they just filled jobs with bodies, and placated them with incentives.
As resource companies scramble to cut costs by reducing the workforce, they risk massive talent deficits in the long and short term.
The pang of dwindling revenues is forcing different departments to communicate with each other in ways they may not have before; HR and core field teams are working together to extend time between shutdowns and to move talent where it’s needed most.
While this race towards improved efficiency can tighten producers overall management structure, the process is rushed and haphazard.
I firmly believe the entire resource industry could benefit from stronger training initiatives.
Looking back, there were huge gaps in quality control even when times were easier.
The response to the demand didn’t add up; people were being placed in positions without the right training or relevant experience.
There were holes in the hiring process. Improperly skilled workers were seeping into project teams and wasting time, money and resources
Leaner project management can prevent such gaps in the future. Having smaller, nimbler teams that employ project specialists from the outside can help producers reach their goals and creates a more flexible workforce receptive to changing project scopes.
Contractors can offer specialized skills, but also deploy training programs for internal employees. This way, the workforce will still be employed but won’t rely so heavily on the producers for direct employment.
While it’s a lofty goal to reorganize the entire resource producing landscape in Canada, the short answer would be to have more small and medium sized businesses work alongside big producers.
By creating stronger relationships with subcontractors, producers can help offset some of their costs, while using other knowledge resources to create stronger revenue sharing models than currently exist.
The current downturn in the resource industry gives us the opportunity to find more innovative ways to do things. If we continue doing things the “old way” we’ll inevitably face the “old mistakes”.
Because it’s when you feel the pain that you realize there’s a problem to solve.