Farmington Job Losses - A cautionary tale (credit, house)

[sjbasin]

Well, the local paper has reported that one of the oilfield service companies has just announced a layoff and the closing of their division here. This announcement is sort of a harbinger of things to come. In the last month or so I've been hearing more and more about the slowdown in the patch. Several servicing companies have already laid employees off although it wasn't reported in the paper. When you drive around the county, you can see that there are way too many rigs stacked out and way too many pieces of equipment parked.

I've been through no less than three of these busts in 50 years here, and this one looks like it's already upon us. There's no way to tell how deep or how long it will be, but for anyone who is thinking of coming here without a secure job, be forewarned. It's going to get tough here. Best of luck to you.

[Cathy4017]

Originally Posted by sjbasin

Well, the local paper has reported that one of the oilfield service companies has just announced a layoff and the closing of their division here. This announcement is sort of a harbinger of things to come. In the last month or so I've been hearing more and more about the slowdown in the patch. Several servicing companies have already laid employees off although it wasn't reported in the paper. When you drive around the county, you can see that there are way too many rigs stacked out and way too many pieces of equipment parked.

I've been through no less than three of these busts in 50 years here, and this one looks like it's already upon us. There's no way to tell how deep or how long it will be, but for anyone who is thinking of coming here without a secure job, be forewarned. It's going to get tough here. Best of luck to you.

Yes. Very familiar. Having also grown up with the oil industry in Texas--and also seen 50+ years of boom-bust, it's not surprising.

People were complaining about high natural gas/oil/gasoline prices, and were saying that they'd never come back down again. I told them to give it some time, and it will bust again. It always does.

It will also come back. Your guess is as good as mine on that one.

[uggabugga]

i saw this story on the DT as well. weatherford, wasn't it?
OPEC has been slashing production like mad to get the price of oil back up, and it's bound to have an effect before too much longer. still, we're probably not going to see $4/gal. gas again for some time, as long as the world economy stays on a downturn.

[domino]

The oil industry operates on a big loop. Oil prices fall and the industry stops drilling, resulting in a reduction of supply which makes prices rise, which makes the industry begin drilling again, which increases supply, which eventually leads to falling prices, which leads to the industry cutting back again, which leads to a fall in supply, which brings prices back up, which encourages more drilling, which increases supply, which results in oversupply and falling prices, which leads to . . . you get the picture. The industry's slow reaction/overreaction to these events (recognizing oversupply and excess demand) is what causes these wild fluctuations in price, and boom and bust in the industry. Panic on the part of purchasers also contributes to thie wild price changes. It's a vicious circle. Successful companies position themselves to take advantage of the cyclical changes.

[Cathy4017]

Originally Posted by domino

The oil industry operates on a big loop. Oil prices fall and the industry stops drilling, resulting in a reduction of supply which makes prices rise, which makes the industry begin drilling again, which increases supply, which eventually leads to falling prices, which leads to the industry cutting back again, which leads to a fall in supply, which brings prices back up, which encourages more drilling, which increases supply, which results in oversupply and falling prices, which leads to . . . you get the picture. The industry's slow reaction/overreaction to these events (recognizing oversupply and excess demand) is what causes these wild fluctuations in price, and boom and bust in the industry. Panic on the part of purchasers also contributes to thie wild price changes. It's a vicious circle. Successful companies position themselves to take advantage of the cyclical changes.

The wise ones also learn to sock away funds during the good times...

[Lovehound]

Originally Posted by sjbasin

... for anyone who is thinking of coming here without a secure job, be forewarned. It's going to get tough here...

That applies to every place in the entire country.

[Minathebrat]

Weatherford, to their credit, is only shutting down one of 6 departments they have working in Farmington, and is offering positions to those who can relocate elsewhere. So, it's not as bad as it could be, which is nice to hear.

I also think companies are using this time to clean house while public sentiment is expecting it..not necessarily in this specific case, but just in general. All anyone has to do is cry "economy" and nobody bats and eye at layoffs, while in other times they'd be screaming from the rafters and demanding the inquisition.

[DOUBLE H]

Same thing going on where I am at in Grand Junction. There is a big 2 page story in yesterdays Denver Post about it. The word I heard a couple months ago was all the companies were cutting back 25%, but am afraid it will be more than that. Weatherford leads the pack on this.

[nmnita]

Originally Posted by Lovehound

That applies to every place in the entire country.

I agree, no one should be considering re-locating without a secure job, money to live on and complete knowledge as to what to expect. This has nothing to do with NM, it is the entire country. In fact NM hasn't been hit nearly as hard as many states, at least not yet..

Nita