Chevron Announces Global Workforce Reduction for Cost Optimization
To enhance profitability and streamline operations, Chevron Corporation plans to reduce its global workforce by 15-20% over the next year. This move is part of the company's strategic efforts to achieve cost savings and boost earnings.
Chevron employed 46,500 individuals worldwide at the end of 2023, indicating that the potential reductions could impact up to 9,000 employees. The company's headquarters recently relocated from San Ramon, California to Houston, Texas, and it aims to generate $2-$3 billion in structural cost reductions by 2026.
"Chevron is taking necessary steps to simplify our organizational structure, enhance execution efficiency, and position the company for long-term competitiveness," stated Vice Chairman Mark Nelson in a recent statement.
The staff cuts add pressure to the US oil and gas industry's employment figures, which remain approximately 10% below pre-pandemic levels despite record-high domestic production. Consolidation, technological advancements in drilling, and a management focus on profitability have contributed to workforce reductions and slower hiring.
Since 2019, Exxon Mobil Corporation has trimmed its global workforce by 17% while ramping up production, resulting in stronger stock performance relative to Chevron over the past three years. Chevron has made strides in recent months with robust growth from the Permian Basin and the commencement of its Tengiz project in Kazakhstan.
CEO Mike Wirth emphasizes the company's commitment to cash flow generation and measured spending on new ventures in the years ahead, potentially mitigating the need for additional staffing. Post-2030 growth is anticipated through Chevron's $53 billion acquisition of Hess Corp., which holds a 30% non-operated stake in Exxon's significant Guyana discovery.
Despite market fluctuations, Chevron remains committed to supporting its employees during this transition. "Responsible leadership necessitates these steps to enhance our long-term competitiveness for our workforce, stakeholders, and communities," Nelson added.