ARCO Chairman and Chief Executive Officer Mike R. Bowlin sent a memo to company employees this past week preparing them for cost-cutting measures that will involve employee layoffs worldwide. The reason for the action, said Bowlin, is to ensure that ARCO remains profitable and independent, which he hopes will prevent the company from being swallowed up in the current merger and acquisition frenzy.
“Essentially we’re going to be adjusting our business plans across all of ARCO because we now expect oil prices to remain low for an extended period,” ARCO Alaska spokesman Ronnie Chappell told PNA.
ARCO Alaska is “fine-tuning” its “ongoing operations in Alaska and around the world,” he said. “We expect this process to result in some work force reductions worldwide and in Alaska.”
The company, said Chappell would have more definite numbers regarding layoffs and other cutbacks by mid-to-late October. ARCO Alaska’s capital budget, however, has been tentatively reduced by approximately 10 percent, from a spending level of $550 million in 1998 to $500 million in 1999.
“Five hundred million is still a lot of capital,” said Chappell. “It’s more than twice what we spent in Alaska in 1994, 1995 ... and 1996. ... and almost twice what we spent in 1997.” ARCO Alaska’s capital budget was $152 million in 1994; $124 million in 1995; $188 million in 1996 and $274 million in 1997. “We’re still spending at very high levels,” he said.
ARCO’s capital program will continue to be designed to achieve “no decline after ‘99,” said Chappell. When asked if the company was still looking at “incline after ‘99,” he said the concept of incline has always been a “stretch goal.”
“We’re still very, very excited about our future in Alaska and our capital plan reflects that,” said Chappell.