Cutback Plan Dulls Mood at Chevron : Widespread Concern Over Move to Trim Jobs, Delay Pay Hikes

SAN FRANCISCO —  The weather was sunny but the mood was decidedly bleak Friday at the Chevron garden plaza that separates the company’s twin headquarters towers in this city’s financial district.

Lacking specific details from top management, lunching workers formed clusters to swap gossip and trade rumors about the company’s plan, announced Thursday, to eliminate as many as 9,100 employees from its worldwide work force of 61,000 over the next 12 to 15 months.

Even those who professed confidence that they will keep their jobs were dismayed by Chevron’s decision to defer, indefinitely, wage increases for white-collar employees. The move follows wage increases averaging just 3% in 1985 as Chevron struggled to digest Gulf Corp., acquired in 1984.

Oil Price Decline Hurts

“What’s so frustrating is that we seem to be going in the opposite direction of the country, which is booming,” said a lawyer, who asked to remain anonymous. “The stock market is up, inflation and interest rates are down, and here we are facing layoffs and wage freezes.”

He acknowledged that much of the optimism in securities markets can be traced to the collapse in oil prices since November, the prime culprit in the woes of Chevron and other oil companies. “I guess somebody has got to get hurt for the rest of the country to get ahead,” he said.

The San Francisco area, which accounts for nearly one-third of Chevron’s 51,000 domestic employees, will be especially hard hit by Chairman George M. Keller’s decision to ask his subordinates for plans to eliminate between 10% and 15% of the company’s jobs.

Managers have been asked to present their plans, which sources say will likely include the elimination of entire departments and the consolidation of others, no later than April 15. “That’s when the real horse trading will begin,” one middle-level manager said.

“There appears to be a sense of urgency that was lacking in other cost hold-downs,” another veteran manager added. “April 15 is just a month away, and that’s fast for a big, hidebound organization like this.”

Even as employees speculated what groups and operations would be hardest hit, company spokesmen emphasized that the size of the cutbacks hadn’t been set in concrete.

“There’s an OPEC meeting in Switzerland this weekend, and that could have an impact” if oil ministers decide to sharply reduce their output to prop up collapsing petroleum prices, a spokesman said.

Payroll Down 20%

But most employees seemed resigned to major--and painful--staff reductions. “They’ve already weeded out a lot of people” as a result of the consolidation with Gulf, noted one middle manager. Indeed, the combined company’s payroll is down more than 20% from its level of 78,000 at the time of the merger.

Some left when their units were sold; most of the others were close to retirement and opted to take sweetened severance and early retirement benefits.

“There just isn’t that much fat left,” he added.

Much of Friday’s gossip at Chevron had former employees of Gulf suffering the brunt of the next round of staff shrinkage. “Most of the managers in the company today are Chevron people, and it will be hard for them not to favor Chevron workers,” an employee said.

“When the names start getting bandied about, most of them are of Gulf people,” he added. “You hear things like, ‘we didn’t really want that guy, we didn’t really need that guy.’ ”

Moreover, many holdovers from Gulf haven’t had the chance to prove themselves to their new managers.

And, while Keller has said that the cutbacks will be across the board, employees assume--with some justification, say industry analysts--that most paring will come “upstream”--industry parlance for exploration and production areas.

“My colleagues in the research area feel pretty safe,” said one middle manager. “We’re trying to come up with ways to make refineries more efficient, to cut costs.”

Chevron’s Bay Area payroll includes some 3,600 San Francisco headquarters employees as well as nearly 11,000 in Contra Costa County. The Contra Costa County contingent includes refinery, chemical plant and research workers in Richmond, Ortho agricultural research workers in San Pablo, travel card accounting employees in Concord and 3,400 office workers at the 10-building Chevron Park complex in San Ramon.

Many San Francisco headquarters employees speculate that the San Ramon complex will be hard hit, as it includes geologists and other exploration employees and computer and telecommunications workers.

In the Southland, Chevron’s $3.2-billion expansion project in Kern County will likely be targeted for big reductions in staff and contract workers, though spokesmen said such speculation is premature.

Meanwhile, at Chevron’s oil field research unit in La Habra, the company plans to lay off 75 of the division’s 731 workers, according to Jim Irvin, the unit’s president.

“Across the board there’s concern. But another way to look at it is the cup will still be 90% full,” Irvin said.

Still, even the company’s usually upbeat public relations people seemed to be bracing for the worst. “I’ve done sportswriting before,” quipped spokesman Mike Marcy when asked about the impending cutback.