Workers at Petro-Canada and Suncor won’t know until late summer or fall how the promised layoffs will affect the merged company, or how many jobs will be cut in the name of operational savings and elimination of “significant overlap.”
The creation of Canada’s largest energy company will bring together a combined workforce of 12,500 workers, including 3,500 in Suncor and Petro-Can’s headquarters in downtown Calgary.
The city’s oilpatch has already suffered hundreds of white-collar layoffs amid depressed energy prices, and it’s expected to absorb a lot of the staff reductions that come as part of the merger’s proposed $300-million cut to yearly operating expenses, analysts predicted.
Rick George, who will remain CEO of the new and larger Suncor, said executives won’t determine a”head count”or layoff total until after the proposed merger has been approved in four to six months.
“It’s not just that we’re going to put some number out and then try to achieve it,”he told financial analysts Monday in a conference call.
George said the company will act quickly to quell staff uncertainty once the merger actually happens.
“I don’t want to minimize the concern about jobs, especially in these difficult times.”
Outside the city’s Petro-Canada Centre, workers said they were instructed not to speak with the media.One employee said she didn’t know what would happen.
“I’m still confused myself,” she said, declining to give her name.
The last mega-merger in Calgary was when PanCanadian Energy Corp. and Alberta Energy Co. combined to form EnCana in 2002. Weeks after that deal, the new firm cut 310 jobs from a total workforce of 3,800.
Suncor’s proposed operational cuts amount to roughly three per cent of the companies’combined 2008 expenses, although spokesman Brad Bellows said not all savings will come through staff reductions.
Analyst Phillip Skolnick said the “overlap”George spoke of would likely be in divisions like engineering and management, rather than on the front lines at oilsands plants spread across northeast Alberta.
“On a labour level, you need the people who put the metal together to be there,” said Skolnick, of Genuity Capital. “I
can’t see really any cuts being there. It’s more head office.”
Gil McGowan of the Alberta Federation of Labour said cuts will likely be in the hundreds or low thousands, mostly in non-unionized office staff.
“Whenever you have one of these big mergers, the results aren’t pretty for employees,” he said.
In predicting the layoffs, George said the pain will be short-lived.
“I do want to underline that, in the mid-to long term, with the plans we have ahead of us, this merger will be a strong contributor to job creation as we pursue growth in ways that would not be achievable on a stand-alone basis,” he said.
Petro-Can and Suncor had each cut a small number of contractor positions in recent months, following decisions to delay oilsands expansions.
It’s unclear where in Calgary the massive company will be headquartered. Petro-Can employees occupy 40 floors in the twin towers of Petro-Canada Centre, which includes Western Canada’s tallest skyscraper.
Last fall, the oil company renewed its lease there with Brookfield Properties through 2028.
Calgarians derisively dubbed the granite building “Red Square” when it was built in the 1980s, a swipe at the federal Liberals who created the company during the oil-price shocks of the mid-1970s.
Suncor occupies part of Sun Life Plaza, a mere block away. The oilsands giant moved there after relocating its head office from Toronto in 1995.
Calgary Herald, Tues Mar 24 2009
Byline: Jason Markusoff