Mexican petroleum services giant Cotemar has recently been forced to lay off unprecedented numbers of its workforce. The cuts come on the heels of an historic glut of petroleum caused in part by massive new oil field discoveries and their exploitation across North America. The layoffs span Cotemar’s entire business line, including everyone from ship captains to chefs to heavy construction workers.
Cotemar’s sole client is state-owned oil company Pemex. This one-client model makes Cotemar and its stakeholders uniquely vulnerable to the whims of the international energy markets. In this case, it was the cancellation of merely one contract that spurned the dismissal of over 2,300 employees. But as bad as this is for Cotemar, it’s nearly the same across the company’s home state of Campeche. By most estimates, over 80% of Campeche’s economic activity comes directly from the petroleum industry. This over-reliance on petro-profits can lead to serious hardships in times of energy downturns. When one Campechano household member is laid off, it often coincides with others being laid off at the same time.
All told, Pemex has decommissioned two major oil rigs and plans to remove another three from its fleet in the near future. Servicing these rigs is the lifeblood of Cotemar’s service business and could continue to heavily impact its number of active employees into the future. A figure, widely cited by economists is that Pemex has cut over $100 billion from its operations budget in 2016 in response to the global fall of petroleum prices. Cotemar has thus warned that if these trends continue, there will be no choice but to continue the deep cuts to its employment base.
For its part, Pemex is currently facing a short-term liquidity crisis. Mexican crude is currently trading around half of the price projected by economists at the beginning of the year when its budget was being drawn up. Pemex is currently seeking emergency debt financing to stave off impending insolvency, an outcome that would spell certain doom for the many contractors, suppliers and employees who rely on the country’s largest economic sector.
Founded in 1979, Cotemar is a horizontally integrated petroleum services company serving its sole client, state-owned oil monopoly Pemex. Its talented workforce is comprised of a diversity of highly skilled workers ranging from logistics experts to mechanical engineers to helicopter pilots. They also manage crew accommodations on all Mexican oil rigs, many of which have been lovingly described as “floating hotels”. For more information, please visit Cotemar.com.mx.