Suncor to eliminate up to 15 per cent of staff; 2,000 jobs could be affected

Eufemia Didonato

© Provided by Calgary Herald The Suncor Energy Centre in downtown Calgary. Suncor Energy has announced plans to eliminate up to 15 per cent of its workforce, a move that could affect up to 2,000 jobs and which prompted Premier Jason Kenney to plead with the federal government as well […]

a large building: The Suncor Energy Centre in downtown Calgary.

© Provided by Calgary Herald
The Suncor Energy Centre in downtown Calgary.

Suncor Energy has announced plans to eliminate up to 15 per cent of its workforce, a move that could affect up to 2,000 jobs and which prompted Premier Jason Kenney to plead with the federal government as well as energy companies themselves to do all they can to staunch the economic bleeding in Alberta.

Calgary-based Suncor — which is one of the country’s largest oil and gas producers, with approximately 13,000 employees — confirmed Friday it will reduce its workforce by five per cent in the next six months, and by between 10 and 15 per cent over the course of the next year and a half.

Spokeswoman Sneh Seetal said employees were informed of the restructuring Friday morning via a conference call with company CEO Mark Little.

“These are never easy decisions,” Seetal said. “We shared that information with employees this morning and made the commitment to treat people with dignity and respect through this time.”

Seetal said the company has been transforming itself in recent years to rely more on data and technology to improve its efficiency, such as using autonomous trucks at its oilsands operations, and had anticipated these changes would lead to a smaller workforce.

“The unprecedented drop in oil prices, the continued impact of the global pandemic and economic slowdown, as well as continued market volatility, have accelerated those plans,” she said. “These would be permanent structural workforce reductions. We’re looking at how we can operate more efficiently.”

The job losses will take place across the organization and the country and will be accomplished through a combination of voluntary buyouts, early retirements and layoffs.


“We are going to take a wide look at things. We will be looking at voluntary severances, early retirements,” Seetal said. “I couldn’t in all honestly give you a specific number, because we don’t know that yet. In the case of where there may be some retirements, we would first look to see if there’s any internal candidates we could redeploy to that role.”

Kenney said Suncor’s announcement underscores Alberta is in nothing less than a state of “economic emergency.”

“The government of Canada would be moving heaven and earth if we saw layoffs of this scale in the central Canadian manufacturing industry,” the premier told reporters on Friday. “This truly is a jobs crisis and an economic emergency and it deserves to be responded to here in Alberta the same way it would be in Ontario or Quebec.”

Kenney said he is once again calling on the federal government to “do no more harm” to Alberta’s oil and gas sector, adding Ottawa should press the pause button on its proposed Clean Fuel Standard, which Kenney said will make Alberta energy companies uncompetitive on the global market. He also once again slammed changes to the environmental review process put in place by Bill C-69, saying the result has been investor uncertainty at the worst possible time.

However, Kenney also pleaded with oil and gas companies themselves to do all they can to avoid layoffs.

“I don’t think any of us should be surprised if there are additional layoffs from other companies that are hemorrhaging cash right now,” he said. “I would implore them to do everything they can to keep their workforce intact. To recognize that they’ve made big profits in the past for their shareholders based on the hard work of those employees.”

Suncor Energy cut its capital budget earlier this year by $1.9 billion, and reduced its prized quarterly dividend in May by 55 per cent. It also scaled back some operations at its Fort Hills oilsands mine.

Suncor posted a first-quarter net loss of $3.52 billion, including a $1.8-billion non-cash asset impairment charge, and then a $614-million net loss in the second quarter.

Alberta’s NDP Opposition pointed out that according to Suncor’s second-quarter report, the company’s net earnings in the prior year quarter included a one-time deferred income tax recovery of $1.1 billion as a result of the UCP government’s corporate tax cut. The UCP has lowered Alberta’s corporate tax rate to eight per cent from 12 per cent in an effort to attract business investment and create private-sector jobs.

According to Suncor’s second-quarter report, “net earnings in the prior year quarter included a one-time deferred income tax recovery of $1.116 billion associated with a staged reduction to the Alberta corporate income tax rate of 1% each year from 2019 to 2022.”

“Jason Kenney made a bad deal. Suncor received over a billion dollars from the UCP’s $4.7 billion corporate handout and they’re not hiring, they’re firing,” said NDP Leader Rachel Notley in a statement.

Oil and gas producers have slashed billions of dollars from their capital budgets since the start of the COVID-19 crisis and the global oil price crash.

Royal Dutch Shell said Wednesday it would lay off up to 9,000 people worldwide as it deals with the fallout of the COVID-19 pandemic and begins restructuring to hit its goal of net-zero emissions by 2050.

British energy giant BP announced in June it would cut around 10,000 jobs, also as part of its net-zero emissions plan.

Earlier this week, Calgary-based TC Energy confirmed it is also restructuring its Canada Gas Operations and Projects team, though the company declined to specify how many jobs would be affected.

In general, the oil and gas industry has been faced with lower prices and the inability to attract outside capital into the sector, said Jackie Forrest, senior director with ARC Energy Research Institute.

She noted Canadian industry cash flow levels are expected to fall to $13 billion this year from $53 billion in 2019.

“The lack of external capital and prices at this level I think will motivate more cost-cutting from the industry,” she said. “The pressure at these prices is pretty severe.”

In a statement, Mary Moran, president and CEO of Calgary Economic Development, said her organization is working to find new and emerging opportunities to spur growth and job creation in the city, in the face of continued energy sector struggles.

“Unfortunately, I am worried we may see more cuts with increased consolidation with low oil prices and constraints on supply,” Moran said. “It will continue to have an impact on our workforce and downtown office space vacancy rates and it’s only been made worse with COVID-19.”

With the decline in oil prices, Suncor’s share price has dropped by 64 per cent this year, closing Thursday at $15.50 in Toronto — and off from $28.57 seen in early June.

On Friday, credit ratings agency Moody’s downgraded the province of Alberta’s long-term debt rating from Aa2 to Aa3. The ratings agency said in a release the downgrade reflects a forecast of “multiple years of material deficits and an elevated debt burden, as well as a structurally weaker credit profile as a result of the continued twin negative economic and fiscal shocks on the province from weak oil prices and the coronavirus pandemic.”

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