Oscar González
Board Member

Human Resources and the Industry Downturn

Thu, 09/28/2017 - 14:31

Human capital in the oil and gas industry has been on a roller-coaster ride since the Energy Reform was passed. Oil prices fell from US$100/b to US$30/b between July 2014 and February 2016, causing a massive slowdown of activity. Oscar González, Human Resources Director of Grupo R and board member specialized in the oil and gas industry of the Mexican Association for the Management of Human Resources (AMEDIRH), says that as a result, human resources departments need to adapt. “On the one hand we are firing people and on the other we need to figure out how to train new people for new contracts.”

When the Energy Reform was initiated, policymakers claimed it would generate 130,000 new jobs. “All the companies went crazy wondering where they were going to find 130,000 people,” González says. “The next year we noticed that far from 130,000 new jobs being created, 40,000 people were going to be made redundant.” Now, with new areas opening in the oil and gas industry, such as logistics, production and sale of oil, which were once the sole domain of PEMEX, human resources departments need to carry out a re-engineering process. “Companies need to do their own logistics, their own storage and sell the product themselves,” González says. “This has led us to create new positions and new profiles and to seek people in the labor market who do not exist.”

Companies in the industry are looking for professionals from outside the oil and gas sector to fill roles that did not exist earlier, González says. “We are looking for people at companies from other sectors, who have all the necessary expertise, and combining them with people who are leaving PEMEX who have a great deal of experience,” he says. “Then we are doing a kind of cross-training in which people from PEMEX and people from outside the oil and gas industry are trained together, resulting in an interesting mix.”

González estimates that 10 percent of all companies are training personnel for new functions within the industry. Among the most difficult areas is offshore, where training periods can span years. “Training for the whole operational part of offshore takes a lot of time,” says González. “We are talking about periods of five to 10 years because people  cannot have important operational jobs if they do not pass a complete cycle of training, with years of working on drilling crews. For companies, this is a double cost. We need the people who are working but behind them there are also more people being trained, meaning companies end up paying double salary for one job,” says González. Industry human resources associations have been pressing for lower experience requirements for some jobs, he says

But not everyone has been so fortunate. From the moment the price of oil started falling to the beginning of 2018, approximately 100,000 jobs were lost in the oil and gas industry in Mexico, González says. “Most of the people who work in this industry are from different parts of the country, not only from Ciudad del Carmen or Villahermosa. Of these 100,000 people, easily 70 percent went back to their states of origin to look for work in areas such as construction or painting. The rest are still in the oil and gas value chain.”

The layoffs also had a significant impact on indirect jobs, leaving cities such as Poza Rica, Villahermosa and Ciudad del Carmen resembling ghost towns. “Before the downturn in oil prices, there were people everywhere in red and orange overalls. After 2014, in Ciudad del Carmen many houses abruptly went up for rent,” González says. “The same thing happened in Poza Rica and other cities that are dependent on the oil and gas industry.”

González expects the recovery of the sector to be slow. “It will take at least eight to 10 years for the promise of 130,000 new jobs to be fulfilled,” he says. “But I do think that we will be adding about 30,000 new jobs over the next couple of years.” With the new emphasis on efficiency and productivity, new skills are required. “We need people who have more experience in terms of projects,” says González. “For example, project management is something that was not valued much in the industry. Now, all companies need to find two or three project managers to carry out efficient projects.” He adds that with more independent players, the Federal Tax Administration (SAT) has become increasingly important, creating a demand for lawyers and accountants specialized in the Hydrocarbons Law