The Hovensa refinery on St. Croix, one of the largest employers in the territory, announced Thursday it is laying off 90 workers, approximately 7 percent of the oil company’s roughly 1,300-person workforce.
The news was announced in a Hovensa press release Thursday.
An additional number of contractor layoffs may also take place this week, according to the V.I. Department of Labor, but the number and timing are not known.
“Even though this number is far below the anticipated worst-case scenario … it certainly is a blow for the economy and even more devastating for the employees and the affected families," V.I. Labor Commissioner Albert Bryan said on receiving the news.
The 90 affected employees will continue to receive full pay and benefits for 90 calendar days, until their employment with the company ends on June 8. The employees, who are being placed on administrative leave effective immediately, were told of the actions Thursday.
According to the Department of Labor, all affected employees were nonunionized and not entitled to bumping rights, which allow senior union employees being laid off to replace junior employees in positions for which they are qualified.
After the 90-day leave, the employees will be terminated and given severance pay according to the V.I. Plant Closing Act. Employees will also be given an option to receive an additional severance package in accordance with Hovensa policy.
The company blamed the reduction on the need to improve its performance and address economic challenges.
"The reorganization aligns the size of Hovensa’s workforce with the reduced capacity of the refinery and eliminates nonessential activities," the news release from executive secretary Virginia Rounds said.
Hovensa announced plans in January to close a number of older, less-efficient processing units on the west side of the refinery, reducing the refinery’s crude oil distillation capacity from almost 500,000 to 350,000 barrels per day.
At that time the company said it anticipated some "workforce adjustments," but had not yet determined what its needs would be.
“Reducing our workforce is a difficult but essential step to improve the company’s performance and competitiveness at a time when Hovensa and the entire U.S. refining industry face serious economic conditions,” said John George, the company’s Interim Chief Operating Officer.
“Hovensa has been part of the fabric of St. Croix for many years,” George said. “These changes will allow us to continue to have a strong base for the jobs, tax revenues and other economic benefits the company provides as the largest private employer in the U.S. Virgin Islands while maintaining those initiatives and investments that are critical to safety, reliability and environmental protection.”
Hovensa is jointly owned by subsidiaries of Hess Corporation and Petroleos de Venezuela S.A.
Hovensa at peak capacity can refine 495,000 barrels of oil a day and produce 175,000 barrels of gasoline. It is among the 10 largest refineries in the world, fourth largest in the Western Hemisphere.
In a December news story in the Source, refinery spokesman Alex Moorhead reported that “Hovensa has had significant operating losses for the past two years. These losses reflect difficult conditions facing the refining industry that are expected to continue for the foreseeable future."
At that time he refused to speculate on possible job losses, but Labor Commissioner Bryan said he thought they were possible.
The Department of Labor’s Rapid Response team will conduct a series of informational sessions along with workshops to prepare employees for job hunting and related activities during the course of the 90-day administrative leave.
The Rapid Response team consists of individuals from various government agencies that collaborate when notices of closing and layoffs are received by the Department of Labor.
Teams will meet with the employees to provide information about unemployment insurance options, retraining and development of new skills, emergency assistance, housing assistance, resume preparation, child support, health care, COBRA, and veterans’ assistance.
The department also reminded the affected employees that they will not be eligible for unemployment benefits until the end of the 90-day period. Labor will announce workshops where they can register for unemployment in a comfortable setting.