Wednesday, 3 February 2016

Retrench during Oil Crisis! Why?

The current oil crisis is definitely one of the worst the world had seen in many decades. Oil price free-fall from more than $100 per barrel late 2014 to less than $30 a barrel during the start of 2016 in what is described by many as a year of annus horribilis! 

The downturn in the industry had resulted in widespread retrenchments. Even the usually resilient Keppel had recently announced to slash more than 6000 direct staffs in the O&M division. Over the last few months, I also heard so many ex-colleagues/friends being shown the exit door. 

Our company is not spared

The company I work for is not spared. Although our core business is not in O&G, a big part of the revenue is still derived from this important sector. Retrenchment announcements began last year affecting the Western Hemisphere.  Despite our company's extremely strong balance sheet and not a public listed company, the management announcement of layoff is because they anticipated a more severe downturn and wanted to have a faster reaction time. The layoff plan was hampered by the strong unions though and talks are still ongoing. 

Retrenched 



Back home, last week was an emotional one. Local colleagues were asked to leave due to the lack of jobs in their department. That said, our company is benevolent enough to offer alternative employment options but all turned down due to job scope mismatch. They took the retrenchment options instead! 

Look for signals before things happened

There are symptoms before you become sick. Similarly, unless you commit a grave mistakes, retrenchment usually does not happen abruptly. You can sense it way before. Facing the precipice of decline in the industry, I had already predicted this predicament for those affected in our local office way before. In fact for those colleagues laid off, it has been quite a while since they were preoccupied with serious work! It was not even a small fraction of what they were employed to do. They should have already realised it early last year, but it was not the case. Me being obnoxiously sensitive by nature sensed the impending issue and consequently provided many hints to them. Sadly, it was not reciprocated with action.  

Over-optimism 

I suppose this is human nature. During the onset of a crisis, over-optimism often overshadows the cruel reality. Most people tend not to anticipate and take appropriate measures early. You will hear things like:

"Don't think so much lar.... things will turn out just fine!" 

Or 

"It's never gonna to be me!"  

Or some will say "no problem lar... I wait for retrenchment package!"

For those at a younger age and only few years in the company I really ponder why they adored the retrenchment package so much! 

Expect the unexpected 

Part of the blame has to attribute to my company top executives who visited several times last year projecting the positive future of this office. When industry outlook becomes gloomier each day, the pretty picture once painted will also fade away. 

Hence, always expect the unexpected. Stop believing everything your bosses say! 

Do something much earlier? 

Feeling indifferent to the oil crisis, one colleague who was axed had recently bought a new car. Another was learning driving and already started looking for a new car to buy back! The worst of all, is their manager who manage to keep his job, just bought a new car even after he knows that his staffs will be all laid off. When I asked him why at this time? He said "he cannot resist the personal temptation!"

The even more sorry state are those being axed are super nice people really. Furthermore they are intelligent people graduated with good degrees and masters. Yet, it's remarkable to me to know how people is not only oblivious to imminent crisis, they can even make some really unwise distasteful decisions prior! 

Wisdom? 

By the way, the good news is those who left without job with family burdens do not seem worry at all. They are still joking and said "find another job lor!" Undoubtedly, it's great to be positive. My question is "can we at least do something before this happen?" 

Who to blame? Industry, company or to some extend ourself? 

My wife ask me what advice I gave to the staffs who left. I told my wife nothing. This is because I normally like to give advice prior to disaster taking place! 

Have a long term plan

This is not the first time for me to see people leaving during a crisis. In 2009 during the GFC, several more drastic ones took place in my previous company. It left me wonders if one day that will happen to me in a corporate world too? 

This is precisely why I already started charting my long-term future plans both financially and mentally years back, in case I become the victim one day. Last year in anticipating a severe downturn ahead, I had made several decisions, which I feel help to prepare me both mentally and financially. 

Adding value is critical

First, I had taken on more work scope even with no pay rise last year. Refer to my article last June here, where I mentioned I had assumed a bigger responsibility without increment.  Subsequently I had also made proposal to our highest management to optimize our business. Not a business plans to layoff people definitely. 

Be mentally prepared always

Secondly, I told my wife to be mentally prepared in case I were to go, even when the chance is really slim considering the amount of work I had on hand. 

Prudent man prepares

Finally, after the stock market crash in Aug last year, I already did my sums and keep more cash as hedge against the potentially unpredictable predicament. Refer here

You ought to be a paranoid (but a confident and smart one). Count your cards early before the crisis unfolds. Then by the time the storm comes, you not only can weather the storm, you can even find great opportunities during a crisis! 

Stay tuned to part two where I will discuss how I manage to find opportunities in the last few crises in my life.

Tough times do not last, tough people do!



22 comments:

  1. well,
    i feel blessed that even i am sick, but i still able to keep my work.

    ReplyDelete
    Replies
    1. Hi Yeh - definitely, different pple have diff sets of problems. To me, u r always more than blessed and will continue to be. :-) Happy CNY.

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  2. Rolf,

    What does not kill us will make us stronger.

    My first brush with retrenchment was with Montgomery Ward.

    This 100 year plus retailer first went into Chapter 11 and then bankruptcy... I survived 2 rounds of retrenchments. It was surreal as Singapore economy was booming then. Jumped ship to IKEA before they finally closed down the Singapore office 1 year after I left...

    Then at IKEA, when the regional head office was relocated from Singapore to Shanghai, I lost many colleagues. Its a strategic move that I saw coming and positioned for it. I was already in Shanghai for 1.5 years when the news broke.

    Now Maersk is also relocating their regional head office from Singapore to Hong Kong...

    Life is never static. Adapt and roll with the punches.

    ReplyDelete
    Replies
    1. Hi Jared,

      You are a weathered veteran in the corporate, you sure know. I totally agree with you that what does not kill us make us stronger!

      Corporate is unpredictable. Survival and political skill is part of the must learn other than the work itself. Many just do not understand.

      Crisis is the best time to learn. The most worrying is not crisis, but the inability to see it coming at all, without any counter action and mental preparation!

      It is already a known fact that HQs are relocating away from SG. Just within last year, many major O&G companies such as Mcdermott, Technip and Subsea 7 already announced relocation to KL. And other companies in other sectors are also relocating APAC HQ to Shanghai or HK.

      Fret and cry? Not quite the correct stance! Adapt like u say or do something early so that when the day comes, is the day u activate ur path B!

      Happy CNY.

      Delete
  3. That's the reason we try very hard not to get into debt and live within our means.
    I retrenched myself at the age of 53.
    My wife faced retrenchment more then 4 or 5 times in her office.
    Thank GOD when she finally got retrenched, when she was already 60.
    She got 2 years retrenchment benefits just coincidence timing for her retirement at 62 - No need to work till 62 where she most probably will be retired by company.

    We can never tell when we will be retrenched.
    You may be the most valuable worker for your company but if the company doesn't make enough money.......
    That's life.

    ReplyDelete
    Replies
    1. Hi temperament,

      From ur situation, retrenchments not always bad! Ur living within means already set a backup foundation always.

      If after retrenchment, u feel confused n loss, then my suggestion is STOP LOOKING for a job that urgently, if u can afford for awhile.

      I have an ex-colleague who in is late 50s I heard sold his house or take on more debts to start a biz after retrenchment. He feel the need of the comeback and "bu fu!"

      Not that it is wrong to start ur own, but if u r confused n not calm in a crisis, it is often the time u will commit the biggest wrong decision in life!

      Sometimes down period is also a good time to reflect and not rush into a wrong decision.




      Delete
    2. Ha! Ha!
      Ya! i stopped completely at 53 after some very hard thinking.
      i mean i dared to stop earning a living except my stock investing.
      i had come to conclusion my family can survive quite nicely.
      My family could still afford a car at that time till now.
      Shalom, Amen.

      Delete
    3. It takes lot of guts to stop, in order to go even further. It's better to stop urself than others force u to stop.
      猴年大吉,身体安康,万事如意,新年快乐!!!



      Delete
  4. Rolf,

    Hope for the best and plan for the worst! I am sure you came out stronger now.

    Cheers!

    ReplyDelete
    Replies
    1. Hey Richard,

      Yes, and do something about it! Like what Jared says, what does not kill u makes u stronger!

      Delete
  5. Rolf,

    Nice article. I can agree with the part about "value adding" so that we are not easily on the to go list.

    But even a captain have to bail
    In a sinking ship

    For people who are seemingly in an "iron rice" bowl job, they seem to forget about pay cut. Many are thinking the worst is no
    Bonus ...

    ReplyDelete
    Replies
    1. Hi SI,

      Thanks. Yes, bottom of the list, but not entirely spared! Ok... over-pessimism is distasteful also! :-)

      I have dual views on the iron rice bowl job who many of my friends are in. The good is u are so-called shield, the bad is if u start to hate ur job or boss n u r so specialized, u will have tough time gg to work. And often, exposure is reserve for higher management who need to be "older"!

      This I get feedback from many of my Frds. But Teacher is different. The focus should be doing good to the next generation. And that is the only govt job I will consider!

      Delete
  6. Hi Rolf

    Seems like your colleagues all aiming for early retirement. They don't seem to be bothered much.

    Wisdom, wisdom...

    The way you wrote has made the manager who bought a new car like an evil person. haha. personal temptation...i reserved my comment

    Seems like this is the most major O&G hit in the past 50 years or more?

    ReplyDelete
    Replies
    1. Hi FD,

      Happy CNY. Early retirement, I do not know, but they are definitely top in the retrenchment list, which is not so good!

      U n other people say this is the worst Oil Crisis ever, n I tend to agree. Even all the veterans in their 60s seem to be caught unaware and hit hard!

      The manager who bought a new car, on the contrary, is a very kind hearted person. But sometimes the lack of wisdom can lead to decisions being no different from evil!

      Delete
  7. Hi Rolf, hopefully you also have a back-up plan e.g. work on self-employed basis etc, because depending on a company to stay employed especially in your industry is quite difficult. Even if you do add value, you try your best, sometimes things just end with retrenchment. Time to think what else you can do on your own and start building the credentials for that too. My 2 cents' worth :).

    ReplyDelete
    Replies
    1. Hi YP,

      Thanks for ur two cents. Appreciate it.

      Thankfully, I am not unaffected and in fact never been so busy in the last 3 years. I m quite lucky I m now in the frontline and any value or potential value added is more visible. That said, I am still cautiously optimistic.

      I agree with u that back-up plan is impt. And even more impt is the plan must be made during the good times, not when crisis is nearing.

      Having additional taps of income is also impt. Knowing more people/bosses in the industry also provides other back up plans.

      After this job, I do not think (hopefully) I will ever work for someone else again, even if I do, I will want to be a major shareholder. Pray! haha...

      Delete
  8. And yes, thank you to all of you who drop by. I wish all of a Happy and Prosperous Monkey year ahead.

    ReplyDelete
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    ReplyDelete
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