For those who are familiar with the Oil Sector, is is old news that it is facing its hardest crisis over the last decade.
That resulted in holding off investments and, as consequences, we had no orders coming in.
All project based production suppliers are exposed to that kind of risk. What does one do when it comes to a situation like that?
We had to find a solution that would make us weather the crisis and it involved for sure some sort of cost reduction measures.
Many people think of layoffs as the easiest solution for times like that. If you are looking short term, they may be right, but for a situation of highly specialized production process, re-hiring would be an issue and the related costs for training new personnel was also not something that we could overlook.
Again we had a poor working relationship with the union. Due to the issues facing the relationship between workforce and management, there was a risk that employees would leave or strike at some point. It was especially troublesome if an order were to come in at some point.
We choose to layoff the extra workforce and negotiate with union a “positive” bank of hours, in which employees would still get their full pay during those months but those hours would be used after as “overtime” for when order came in with no extra payment for it.
That allowed us to save in transportation, canteen, water and energy in the beginning and overtime later on and to save 100,000 USD over the year.