Employee Pay Slashed by 5 Percent at Baker Hughes


A new furlough plan is to blame for a 5 percent cut in pay for workers at Baker Hughes. The Houston energy giant’s program was meant to lower costs and the need for job cuts, but current employees are feeling the effect of the plan on their paychecks.

Baker Hughes says the cuts aren’t permanent, that they will only occur from the pay period starting September 11 through the last paycheck of 2016. In an internal memo obtained by the Houston Chronicle, Baker Hughes offered holidays in exchange for the loss in pay. The holidays given are for October 10, November 23, December 23, and December 28.

The same memo outlined the furlough program as a plan that would “help Baker Hughes reduce the need for additional layoffs and to achieve the cost savings needed to enable profitable growth.” Workers that will not experience a pay cut include executives and global operations workers in the U.S. Some workers in human resources, chemicals operations, and information technology are also excluded from the cut. According to Baker Hughes’ memo, most employees in a leadership position are included.

Melanie Kania, spokesperson for Baker Hughes, said in a statement, “These efforts will allow us to lessen the need for additional workforce reductions while remaining focused on serving customers and maintaining safe, compliant operations.”

Though known as the third biggest energy services firm in the world, Baker Hughes had to eliminate 3,000 jobs in the second quarter of this year. The cut brought the number of jobs cut over the last year and half to 26,000 in total: 23,000 via layoffs and 3,000 more gradually through attrition. In the first quarter, Baker Hughes cut 2,000 jobs and 18,000 in 2015. The company now employs around 36,000 people worldwide, a much lower number than the 62,000 employees reported before the oil downturn started at the end of 2014. Locally, Baker Hughes counted 5,700 workers, but this number may have changed since the second quarter’s round of elimination.

The second quarter also saw a posted loss of over $900 million by the company in spite of $3.5 billion check made out to Baker Hughes from Halliburton after the firms failed to follow through with a merger. The merger agreement expired at the end of April 2016.

Baker Hughes has suffered just as other companies have amid the oil bust, but CEO Martin Craighead seems less optimistic than others. In a call with analysts at the end of July 2016 he said, “I don’t subscribe to the hopeful commentary that gets thrown around a lot,” he continued, “We don’t expect to see a meaningful recovery in the second half of the year.”

As a means of stabilizing after the unsuccessful merger with Halliburton, Baker Hughes has regrouped and decided to center their attention on equipment sales and technology. With this refocus, the company hopes they won’t have to send more employees to the oilfield.

In May of this year, Baker Hughes confirmed a plan to lower annual costs by $500 million by the end of 2016. Executives also said that the third quarter of 2016 would include increased focus on cutting even more costs.

By Briana Steptoe.

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