Hundreds of Enbridge Inc. employees lost their jobs on Wednesday as the Calgary-based firm slashed 5 per cent of its work force in a bid to boost growth and competitiveness in a difficult North American energy market.
An Enbridge spokeswoman said about 530 employees were laid off – 370 in Canada and 160 in the United States.
The move comes as pipeline companies look for cost-cutting measures and mergers in an era of lower-priced oil and natural gas and an strenuous path to get shovels in the ground for new projects.
It follows two years filled with tens of thousands of layoffs in Canada’s energy sector.
One month ago, Enbridge announced a $37-billion deal to buy Houston-based Spectra Energy Corp.
The transaction, which will create North America’s largest energy infrastructure company, is set to close early next year.
However, spokeswoman Suzanne Wilton said the work force reductions are part of an organizational review launched earlier this year, and are “not related to the Spectra combination.”
“It is focused on what we need to do to achieve our strategy of growth and diversification, enhance our competitiveness, and allow us to capitalize on opportunities now and into the future,” Ms. Wilton said in an e-mail.
“Throughout this process, Enbridge is committed to treating people fairly and with respect. We are providing support to those leaving the company, as well as those who remain.”
Ms. Wilton added that roles for some employees have also been adjusted to reflect “structural changes.”
Enbridge had employed about 11,000 people, primarily in Canada and the United States, until this week. This is not the first recent round of job cuts for the company. In November, 2015, the midstream company announced a 5-per-cent cut of its work force, representing about 500 full-time jobs and 100 unfilled positions.
Company shares were up more than 1 per cent in trading on the Toronto Stock Exchange on Wednesday afternoon.
Even though Enbridge is not directly exposed to the effects of lower crude prices, the company – the largest transporter of Canadian crude to domestic and U.S. markets – has said it is “not immune” to the commodity price downturn. In recent years, pipeline companies have also faced greater environmental and regulatory scrutiny to proposed projects, a trend that has delayed and stymied new pipeline builds.
For instance, the prospects for Enbridge’s proposed $7.9-billion Northern Gateway pipeline remain uncertain as the federal government decides whether there is reason or a means to revive the project following a Federal Court of Appeal ruling that quashed its approval.
After a state-of-the-province speech in Calgary on Wednesday, Alberta Premier Rachel Notley responded to the news of the job cuts at Enbridge, saying she feels for all the families who will be affected.
Ms. Notley added that she is not yet ready to say the worst of the downturn is over.
“What we’re going to do is talk about the role of the provincial government in this, in terms of trying to ensure stability and a steady hand on provincial finances and provincial contributions – while working as hard as we can to create jobs and diversify the economy,” she told reporters.
“We know that in the energy sector, some companies are going to do what they need to do to remain viable.”
Enbridge competitor TransCanada Corp. also cut staff last month – but for a different set of reasons, company spokesman Mark Cooper said.
When the $10.2-billion (U.S.) deal for TransCanada to buy Columbia Pipeline Group Inc. closed in July, employees working for the merged company were told that staffing duplications and redundancies would be identified within 100 days.
Mr. Cooper said some workers lost their jobs last month. However, he declined to give any numbers. As of this week, TransCanada has about 7,700 employees.
“As to be expected with any merger of two large organizations, you’re going to need to adjust staff – just based on the ongoing business needs of the combined organization,” Mr. Cooper said of the deal that gave TransCanada a major position in a massive shale gas region in the U.S. Northeast.
He said the move has nothing to do with company performance or market conditions. “This was not part of any kind of structured layoff program.”
With a report from Jeffrey JonesReport Typo/Error