CALGARY – Suncor expects to move quickly to complete its merger with Petro-Canada and trim overlap between the two companies, its newly minted CEO said Tuesday.
That includes addressing the issue of job cuts at the two companies, which employ about 12,500 people. In an exclusive interview with the Herald, George candidly admitted there will be layoffs, but refused to say how many.
“I don’t want to commit to a number and have to change it later. I expect to be in a position to tell you in two to three weeks,” he said.
“What I’ve told employees is that they’ll know first. As an employee, that’s about respect. What I’m trying to do is humanize this process.”
While most Albertans were enjoying the long weekend, the new CEO of the combined Suncor and Petro-Canada was poring over reams of data and figuring out ways to assemble the individual pieces of Canada’s largest integrated oil major, which officially came into existence at the stroke of midnight on Friday.
“You have to remember, until Friday, there were parts of these companies that we couldn’t have access to,” he said.
“There are sections that we did not have access to data.”
“What we haven’t had time to do is to take a really good look around at what may or may not fit,” George said.
The final shape of the company will be determined over the next 100 days or so, when George and his new management team will decide which assets will form the basis of the merged company, whether to keep Petro-Canada’s international operations and what development projects will take priority.
In addition, it will be required to sell 104 retail gasoline outlets in southern Ontario, in accordance with the Competition Bureau’s July 22 decision to formally approve the $20-billion merger with conditions.
In late September or early October, George will present a capital budget to Suncor’s board of directors that is expected to eliminate some $1 billion of direct spending and $300 million of operating expenditures.
That document will indirectly address the issue of job cuts as the companies seek to streamline administration and staffing levels.
The Suncor CEO has been meeting with groups of employees to outline a strategy in what he described as an attempt to “humanize” the process of eliminating positions.
“What we told employees is that everybody should know whether they have a position in this new company and, if so, what it is and, if not, when they will be leaving the company.”
Last week Petro-Canada chopped about 50 senior executive and managerial positions ahead of the formal closing of the merger on Friday.
But Gil McGowan, who heads the Alberta Federation of Labour, said the various unions that operate Petro-Canada’s Edmonton refinery and Suncor’s Fort McMurray upgrader have been assured there will be no layoffs for unionized hourly employees.
“In these mergers it tends to be executives and senior managers that become redundant,” McGowan said.
“We’re not anticipating any significant layoffs among hourly employees. Regardless of the corporate structure, the newly expanded company is going to need the same number of people to run the refinery and the upgrader.”
Levi Clarke, who heads Local 707 of the Communications Energy and Paperworkers union, which represents 2,900 oilsands workers in Fort McMurray, said Suncor officials assured him there would be no job cuts at the mine or upgrader.
“They talked to us very early,” he said. “It’s a good thing to know that your members aren’t going to be affected by such a big undertaking.”
Shares of the new company began trading in New York on Monday, where they promptly gained seven per cent. On Tuesday they lost 71 cents US to finish the day at $33.94. The Canadian shares will begin trading in Toronto later this week. On Tuesday they each gained about five per cent on the Toronto Stock Exchange; Suncor gained $1.60 Cdn to close at $36.44 while Petro-Canada jumped $2.20 to $46.69.
Justin Bouchard, an oilsands analyst with Raymond James in Calgary, said Suncor — as the largest Canadian energy company, with a market capitalization of about $40 billion — is now a “must-own” for institutions and investment funds. “The only question is whether you’re overweight or underweight,” he said.
Calgary Herald, Tues Aug 4 2009
Byline: Shaun Polczer