Aker Solutions: Job cutting measures set in motion in Norway

Aker Solutions, a Norwegian oil services company, on Friday set in motion its workforce reduction process whereby up to 900 positions will be lost from its maintenance, modifications and operations (MMO) unit across Norway. 

After it failed to secure the maintenance and modification contract award for Statoil’s fields in Norway in December 2015, the company informed of the consequences that would have for its workforce capacity and organizational structure of the MMO business in Norway.

The company said on Friday it was streamlining the Norwegian MMO business to one regional unit from previously four, affecting management and staff from Tromsø to Stavanger.

Depending on future work levels, as many as 900 permanent positions may be impacted at facilities in Stavanger, Bergen, Kristiansund, Trondheim, Tromsø and Sandnessjøen as well as offshore, Aker Solutions said. The workforce reductions will be made through regular employee turnover, reassignments to other parts of the company and redundancies, the company further explained.

The oil services company also said that a process to implement about half of the reductions will start immediately. Remaining adjustments will depend on work levels throughout the year. The company has previously reduced capacity in its Norwegian MMO business by about 1,300 permanent and temporary positions since July 2014 to adjust to a market slowdown.

“These measures are painful but necessary to strengthen the competitiveness and longer term potential of our Norwegian MMO business, which has suffered from a sharp drop in activity in Norway’s offshore services market,” said Luis Araujo, chief executive officer of Aker Solutions.

“The more streamlined business will support leaner processes and bolster overall operations. It will build on the company’s core strengths in the MMO area, particularly within more complex modifications projects, the company explained,” said the Norwegian company.

“We see significant opportunities ahead in the Norwegian modifications segment, where our experience and know-how are second to none,” said Per Harald Kongelf, head of Aker Solutions’ Norwegian operations.

MMO market to continue to be challenging

There has been a substantial downturn in investments in the Norwegian oil and gas market since 2014. Aker Solutions noted it expects the MMO market in Norway to continue to be challenging in 2016. Work volumes will also be impacted as the company’s long-term maintenance and modifications framework agreement with Statoil expires in the first half of this year, Aker Solutions reminded.

As a result, the company’s prefabrication workshop in Sandnessjøen will be temporarily shut down for about three years. MMO operations in Tromsø will also be terminated, though some employees in this strategically important northern location will likely be kept on as part of the company’s Arctic Hub. These employees will join Aker Solutions’ Engineering and Front End Spectrum teams.

“Market conditions are challenging, but I am confident that the steps we are taking now to streamline operations, reduce costs and focus on our key strengths will enhance our position in MMO, also internationally, where we have been winning business and expanding in countries including Canada, the UK and Brunei,” said Araujo.

Aker Solutions has about 16,000 permanent employees in some 20 countries. About 5,000 employees are in the MMO area, of which approximately 3,600 are in Norway.