UMW Oil and Gas Corporation (UMWOG) will be letting go of around 300 employees in Malaysia, mostly from it’s rig operations.
More than half of the company’s drilling rigs are idle and awaiting contracts.
This is due to business suffering as a result of low crude oil prices.
The company is embarking of a large cost reduction effort and the headcount cuts are part of the this exercise. According to UMW’s president, Rohaizad Darus, most of the people being let go are contractual employees. The firm has approximately 730 employees in total (including both permanent and contract workers).
It will also be lowering the compensation of remaining employees. For example, senior management remuneration has been lowered by up to 40%, as compared to 2014 levels.
There will be renewed a focus on making inventory management, vendor management, capital cost/allocation and general processes more efficient.
“We have made the necessary rationalisations via the reduction in manpower, re-negotiations with our vendors, and reduction in capital costs. We are looking at more reductions, and we have already saved some RM18 million in expenses during the first quarter alone.
We are going to try to reduce it by a little bit more, but it will be focused on the contract staff and not permanent ones. This includes non-renewals of existing contractual personnel.
We try not to impact the lower (level) workers, because we understand the rising cost of living in this country now and we do not touch managers and below.
We need to ensure that we are efficient in terms of cost, to operate at the best level, and are able to offer competitive prices.” – Rohaizad Darus (President, UMW Oil and Gas).