Dear business, industry and community friends, welcome to our February edition of BIC Magazine. As we begin 2016, we want to wish each of you a healthy, happy and prosperous new year. Even though the price of oil is less than $38 a barrel and could go lower, not everything in the energy sector is doom and gloom. Having worked in industrial construction and the energy business since 1963, I have found even in the most challenging times there are some companies that turn adversity into opportunity while others have to cut back, lay off or even shut down.
In most businesses there will always be highs and lows, and there are things each of us can do to help ourselves and our companies in times of both prosperity and challenge. For those of us who have faced and faltered or prospered during challenging times before, we know very well experience matters. Also, the more positive our attitude and the more skills we develop (including management and communications) as individuals, the more likely we are to keep a job where we are presently employed or to find another job elsewhere.
As an energy entrepreneur, I learned many painful lessons in 1982 I vowed to never repeat when my first business failed. I learned those who hire and train the best folks and have the best products and services; the best management, operations, marketing and sales strategy; the strongest network; access to the latest news and the best information; and the most diverse are the folks who will not only survive but in many cases prosper.
In reviewing the challenges and opportunities ahead in 2016, oil is hovering around $30 a barrel, and many experts expect it to go lower. Many OPEC countries including Saudi Arabia have said they will not reduce production, and many companies especially in the upstream sector are cutting back, laying off and in some cases facing bankruptcy. Drilling rigs are being stockpiled, and home prices in areas that once faced housing shortages are dropping. Thoughts from energy experts include:
- According to industry consultant firm Graves & Co., over 250,000 people have been laid off globally, with oilfield service companies accounting for 79 percent of these losses.
- Analysis by The Texas Alliance of Energy Producers says a new round of layoffs may be on the way, with a conservative estimate at 56,000 job cuts in Texas.
- Cuts are not limited to upstream and are also taking place in midstream, where Enbridge recently laid off 500 people and TransCanada may be issuing pink slips, too.
- According to the Bureau of Labor Statistics, Louisiana is hurting on the upstream side, with the oil patch showing the lowest number of jobs since 1990.
Now for the good news and suggestions on how to best face the challenges in the oil industry:
- For the first time in 40 years, the U.S. is exporting oil. Thanks to new technology and the use of fracking, we have access to more oil and gas than we knew about 10 years ago. This will make us less dependent on foreign oil, much of which comes from countries that are unstable or in some cases enemies of democracy.
- While the upstream sector of the oil industry is facing cutbacks and layoffs, the downstream sector is still expanding, creating many construction jobs. Low oil prices are also playing a part in the expansions in the midstream and downstream sectors.
- Talent is still essential. According to Philip Tenenbaum, the head of energy at HR firm Mercer, companies are focusing on developing leadership internally by seeking younger, more tech-savvy individuals with more skills.
- Companies are focusing more on hiring and recruiting individuals with career development and soft skills training than those with raw technical skills.
- Retirement is also playing a role in strategic planning and recruiting, as some energy companies especially in the upstream sector have 80 percent of their key folks retiring in five years.
A recent article from RTS Financial features tips including having a backup plan, analyzing cash flow, setting realistic goals, staying liquid, reducing cost, knowing when you need capital, managing risks and getting advice from reliable sources. We strongly suggest you consider a few others, including diversity. Ecoserv, the front cover sponsor of this issue, is a great example. If your company has the capability to serve multiple sectors of the energy sector, you may want to do it. If you don’t presently have that capability, you may want to consider hiring and recruiting folks from other sectors or buying a company in other sectors to expand your portfolio and capabilities. BIC Recruiting and IVS Investment Banking can help you in both of those areas.
Also, having an excellent marketing strategy and a strong sales team is always important and even more important during challenging times. I have found the companies that continue to invest in marketing campaigns and hiring or recruiting the top sales executives when others are cutting back not only do better during challenging times; they are also in a much stronger position when times are better. Here at BIC Alliance we don’t just talk the talk; we walk the walk. In 2015, we expanded into a new building in League City, Texas, and hired more folks in production, sales and marketing, and recruiting. We are also expanding BIC Recruiting to place fractional energy management and marketing executives and top executives in production, refining and chemical plants.
At BIC Alliance, we are strong believers the cornerstone of our success is our faith and commitment to helping others succeed. We learned about the importance of diversity over 20 years ago when we launched BIC Recruiting and IVS Investment Banking to better serve our 300-plus marketing partners. In 2005, we launched BIC Media Solutions (BMS) to provide additional ancillary services like custom publishing and event planning and promotion, and have expanded into media investments including film, TV and videos. We are also in the process of producing an inspirational book and TV series, “Rock Bottom and Back.” Additionally, we have expanded our digital and social media capability to provide more ways to read BIC Magazine.
In this issue, we include insight from Alex Epstein, the founder of the Center for Industrial Progress and the author of “The Moral Case for Fossil Fuels;” Barry Klein, general manager, Shell Deer Park; David Frinsco, president and CEO, WTMC; Michael Cox, vice president of Specialty Services, Austin Industrial Inc.; and Aaron Shermer, vice president, Great River Industries.
We also bring you topics on staying ahead in 2016, including new-age technology, improving craft and field productivity, having an effective EPC strategy, cutting costs and improving predictability, and more.
Valentine’s Day is Feb. 14 and a great time to let our loved ones and others know how special they are. My wife Bodi and I will celebrate our 49th anniversary. We begin every day by thanking God for our blessings and looking for ways to share our blessings with others. Whether it is in times of prosperity or challenges, those who make God, family and others first will fare better than those who think primarily about themselves.