BP’s Chicago Workers Face Layoffs, Moves
By David Greising, Chicago Tribune
Oct. 19–In announcing to 3,300 Chicago-area employees that most of their jobs soon will be relocated or eliminated, BP PLC on Thursday made clear that a global streamlining of the oil giant marks the end to BP’s efforts to maintain a functional regional headquarters in Chicago.
In an e-mail to North American employees Thursday, BP executives officially spelled out what oil industry insiders had long expected: Houston wins out over Chicago as BP’s North American headquarters. Once the former home of Amoco Corp., Chicago now is a victim of a bottom-line approach at BP, which has lagged behind rival oil giants at a time of record-high prices.
There is one glimmer of positive news for Chicago: Some 1,000 jobs related to oil trading will move downtown. BP in recent months has scouted several locations, including newly vacant space at the Chicago Mercantile Exchange Building and an undeveloped site at 601 W. Monroe.
“Houston is the headquarters of BP in America and home to over 7,000 BP employees,” said the opening line of a memorandum to employees from BP North America chief Bob Malone and two other top BP officials. “Over the next two years BP in America will consolidate its functional activities there. The move will eliminate the cost and complexity associated with maintaining functional centers in Houston and the Chicago suburbs.”
Of the 3,300 jobs in the Chicago area, BP plans to move most support and staff positions to Houston. Several hundred jobs in the operating lines of the company — refining, pipelines, retail, marketing and chemicals — likely will remain in the area, according to a source knowledgeable about BP’s plans.
Naperville facility stays
BP’s landmark Naperville research operation, which specializes in developing new kinds of fuels, will remain in operation. However, the handful of BP’s owned and leased properties in Warrenville, Lisle and Naperville likely will be vacated during the two-year relocation process.
The companywide restructuring marks a turnabout from nearly a decade ago when BP acquired Amoco during a frenzy of industry consolidation. The structure that BP attempted, with dual North American headquarters and sometimes overlapping lines of business, proved too difficult to manage.
“BP’s performance has materially lagged our peer group in the last three years,” said Chief Executive Tony Hayward in a memo to BP employees on Oct. 11. “It has been poor because we are not consistent and our organization has grown too complex.”
In the restructuring, BP is folding its gas, power and renewables business into its two main operating lines: exploration and production, and refining and marketing.
BP had nearly 6,000 employees in the Chicago area at the time of the merger, including nearly 2,500 at its Chicago headquarters in the Amoco Building, now called Aon Center. Initially, more than 1,000 jobs in refining, marketing and chemicals were shifted to Chicago from Amoco’s former regional headquarters in Cleveland.
“There will be some layoffs and relocations associated with reorganizing our business, but there are no head counts or targets,” said BP spokesman Scott Dean. Company executives are developing more specific plans, he added.
Possible downtown sites
In downtown Chicago, commercial real estate circles were buzzing with news of BP’s decision to move its trading operations into the city.
BP has looked at a vacant trading floor at 20 S. Wacker Drive, home of the Chicago Mercantile Exchange, but that space may be too small, sources said. Meanwhile, the company is known to have looked at vacant properties at 601-625 W. Monroe St. and 645 W. Madison St. and a building at 240 W. Randolph St., real estate sources said.
“I think BP will end up going to a new development where they really can collaborate on the design of the building,” said Tom Saletta, senior vice president of Fifield Cos., who has presented BP with a proposal for sites on Monroe Street.
BP’s companywide streamlining is an acknowledgment that a string of executive-office scandals, oil spills and other disasters have distracted the company and interfered with its ability to maximize opportunities presented by oil prices approaching $90 a barrel.
The company’s longtime chairman, John Browne, was forced to step down earlier this year after admitting company resources were used to support a business venture by Browne’s former male companion.
In North America, BP still is reeling from the fallout from a 2006 oil spill at Prudhoe Bay, Alaska, an inability to get a huge Gulf of Mexico oil platform online and a 2005 explosion in Texas City, Texas, that killed 15 people.
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dgreising@tribune.com
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