Workers know they won't all be part of the new Halliburton

News that two of Houston's energy icons had reached a merger deal made for an anxious start to the work week for employees facing well-founded fears that a projected $2 billion in related efficiencies will include job cuts.

Neither company has revealed details about how many or what kinds of jobs might be eliminated, leaving room for speculation among nervous workers and analysts.

"There's going to be some overlap in responsibilities," said Kurt Hallead, an analyst at RBC Capital Markets. "You don't need two people to have one role."

Together, Halliburton and Baker Hughes have about 15,000 employees in Houston and 136,000 employees worldwide.

The companies haven't said how much of the $2 billion in what they call "cost synergies" would come from job cuts.

"Basically, the mood is nobody knows what's going on," said one Baker Hughes employee who works in equipment manufacturing and requested anonymity for fear of repercussions. "We all know the CEO's going to be taken care of... but for the people that make Baker run and go, we are worried about our jobs and what this means."

In a private interview on Facebook, he said Baker Hughes sent an internal memo to workers notifying them of the deal, but it didn't address concerns about employment.

Another Baker Hughes employee, who also asked not to be identified, said via private message on Twitter that Monday brought "a lot of questions and uncertainty" at work.

Other workers also took to social media to express their worry about what the transaction means for their careers.

"Great - now I get to worry about layoffs for the next year or so while we merge," wrote one person who identified himself as a Baker Hughes employee on the Internet forum Reddit.

The companies have said they don't expect the deal to close until the second half of 2015.

Layoffs are common in the wake of corporate mergers when companies work to boost earnings of newly combined businesses by scrapping overlapping positions.

When Chevron and Texaco merged in 2000, the companies announced 4,000 layoffs. Exxon and Mobil announced 9,000 layoffs when they merged in 1998.

Employee 'churn' possible

Hallead said it's too early to know the prospects for employees of the two companies. In addition to job cuts, the businesses are likely to face some employee "churn" over the next year, as workers seek new jobs rather than risk getting laid off.

The deal could have "significant ramifications" across the area's employment landscape with hundreds or thousands of skilled workers open to career moves, said Keith Wolf, managing director of Murray Resources, a Houston recruiting and staffing firm. He said some employees already might be in recruiters' cross-hairs.

"In the short term, the newly combined company will need to placate employees who are suddenly nervous about losing their jobs," Wolf wrote in an email. "Many of these folks have probably anticipated as close to lifetime employment as you can hope for in this day and age. You don't expect to wake up one day to learn that your Fortune 150, 100-year-old employer has been sold."

Anthony Love, an independent accountant who previously worked for Baker Hughes and lost his job in 2009 when oil prices sank, said he's contacting Baker Hughes employees to offer his services in helping them establish themselves as independent consultants.

"The handwriting is on the wall," Love said. "They know it's coming."

Cuts likely to start here

Workers most likely to suffer job losses are those in back-office functions, said Bill Gilmer, director of the Institute for Regional Forecasting at the University of Houston. Those cuts could be especially pronounced here in Houston. "It's two Houston-based companies merging, so whatever efficiencies they talk about are obviously going to start here in the Houston area," Gilmer said.

Jobs that support the corporate infrastructure - including investor relations, accounting and human resources - are at risk of elimination because the merging companies both have people in these functions.

"You don't need two HR functions, you don't need two accounting functions, and you don't need two marketing functions," said Patrick Jankowski, vice president of research at the Greater Houston Partnership.

Workers in field operations at the core of both businesses, like those who manufacture equipment or work on hydraulic fracturing crews, aren't as likely to lose their jobs as those who work in corporate functions, he said.

Jankowski said immediate job cuts aren't likely, but the companies might slow their hiring as the transaction proceeds. "If they know they're getting ready to merge, they're probably going to reevaluate their current hiring needs," Jankowski said.

Halliburton's top man dismissed that notion. "Remember, both companies are growing, and growing companies always create opportunities for good talent," CEO David Lesar said on a conference call with analysts Monday. He added that Halliburton alone is looking to hire 21,000 workers this year.

Lesar's job is secure, as the deal puts him at the head of the merged company.

Better outlook in long term

Robert Mackenzie, an analyst at Iberia Capital Partners, said that while cuts are coming, the new company may boost hiring long-term.

"This isn't your typical industrial merger, where two companies move to cut costs and save money by firing people," he said.

But for now, the companies will need to focus on keeping workers motivated as they face uncertainty. "That's a always a challenge when there's a risk of job cuts," he said. "It really taxes your management ability."