Aker Solutions is to "streamline" its maintenance, modifications and operations (MMO) unit in Norway from four units to one regional unit, the firm announced today.
The company said it was taking "necessary steps to reposition the business and enhance competitiveness in a market with unprecedented challenges."
The move could impact up to 900 permanent management and staff positions at facilities in Stavanger, Bergen, Kristiansund, Trondheim, Tromsø and Sandnessjøen as well as offshore. The workforce reductions will be made through regular employee turnover, reassignments to other parts of the company and redundancies, with a process to implement about half of the reductions starting immediately.
The company's prefabrication workshop in Sandnessjøen will be temporarily shut for about three years. MMO operations in Tromsø will be terminated, though some employees in this strategically important northern location will likely be kept on as part of the company's Arctic Hub. These employees will join Aker Solutions' Engineering and Front End Spectrum teams.
Aker Solutions already reduced capacity in its Norwegian MMO business by about 1300 permanent and temporary positions, since July 2014, to adjust to a market slowdown.
There has been a substantial downturn in investments in the Norwegian oil and gas market since 2014. Aker Solutions expects the MMO market in Norway to continue to be challenging in 2016. Work volumes will also be impacted as the company's long-term maintenance and modifications framework agreement with Statoil expires in the first half of this year. The firm lost out to a list of four firms who inked maintenance and modifications agreements with Statoil last month. However, it was selected as one of five firms to compete for modifications work.
"These measures are painful but necessary to strengthen the competitiveness and longer term potential of our Norwegian MMO business, which has suffered from a sharp drop in activity in Norway's offshore services market," said Luis Araujo, Aker Solutions' CEO.
"Market conditions are challenging, but I am confident that the steps we are taking now to streamline operations, reduce costs and focus on our key strengths will enhance our position in MMO, also internationally, where we have been winning business and expanding in countries including Canada, the UK and Brunei," said Araujo.
Aker Solutions has about 16,000 permanent employees in some 20 countries. About 5000 employees are in the MMO area, of which approximately 3600 are in Norway.