The executive summary of US consultants HSB Solomon and Associates, who examined Petrotrin, didn’t state the refinery should be closed but recommended organisational building blocks for Petrotrin to achieve its goal of becoming a top-performing business.
The summary of S&A’s February 5, 2018 report to Government on Petrotrin spoke of this and other recommendations to address workforce optimisation.
United National Congress Senator Gerald Ramdeen produced the 500-page report at a briefing yesterday at the Opposition’s Port-of-Spain offices.
“Nothing in the report says to close the refinery—the unions must know that. So the Prime Minister must now be man enough to call an election and see if he’ll win,” Ramdeen added.
Ramdeen produced the report after Government declined—in Parliament on Tuesday—to say if reports which assisted in its decision to close the refinery would be shared with the public.
Energy Minister Franklin Khan, replying to Opposition questions on what assisted them in making the decision, particularly cited US consultants Solomon and Associates as a First in Class performance improvement expert and McKinsey and Company Inc.
Yesterday, Ramdeen displayed S&A’s report, releasing the executive summary and introduction to reporters.
“This report belongs to the people—it cost taxpayers tens of millions,” he said.
In Parliament in June, the Energy Ministry confirmed HSB Solomon Associates was paid $7.4 million for company optimisation work regarding Petrotrin. McKinsey and Company Inc was also paid $28 million for a strategic review and transition.
S&A’s summary states Petrotrin retained the company for a workforce optimisation effort for its Exploration/Production and Downstream/Marketing organisations at Pointe-a-Pierre, Point Fortin and Santa Flora, to determine where opportunities exist to optimise and enhance efficiency/workforce effectiveness.
S&A stated that Petrotrin wanted to know the recommended manpower utilisation “based on peer group benchmarks and assessment of its existing organisational structure, staff levels and work processes” in relation to top-performing facilities of similar size and complexity.
S&A was to assess the current work processes/practices associated with daily operations, maintenance and support activities associated with E&P, as well as Refining and Marketing businesses.
The summary noted:
“The result of Solomon’s assessment indicated that several of the key leaders within Petrotrin are very knowledgeable, engaged and committed to the success of the business.
Likewise, Petrotrin management has communicated a commitment to placing the business on a path to sustainable improvement and enhanced performance.
“The practices followed within the Petrotrin business sites were compared to Solomon’s index of best practices for workforce optimisation. Overall, Petrotrin is currently doing a number of things well and employs practices in several areas that are consistent with the best oil and gas businesses in the world.
“However, many practices are lacking or are inconsistently applied in relation to those employed by top-performing facilities and present an opportunity for Petrotrin to significantly enhance its efficiency and effectiveness.”
S&A also stated, “While many companies attempt to optimise their workforces simply by reducing staffing levels or implementing a new organisational structure, Solomon has observed over the years that the most profitable businesses are actually focused on maximising organisational effectiveness and financial performance, not just minimising the number of people.”
S&A stated that its proposed organisational structure and staffing targets would equip Petrotrin with the necessary resources to “safely, effectively and efficiently operate and maintain the business as well as capture significant value that’s currently being lost.”
Ramdeen said S&A presented a plan to improve business on a phased basis “but after S&A’s presentation on the way forward, S&A was put to an end as Petrotrin’s board wasn’t interested in carrying Petrotrin forward.”
Saying the Lashley report on Petrotrin didn’t recommend closure either, Ramdeen added, “I challenge Government to produce a report that supports the decision. This closure is the biggest deceit, deception and betrayal of the people.”
He accused Government of wanting the assets for “handpicked friends, family and financiers...already determined by Government” and “the one per cent.”
He added, “Who are the people showing interest in Trinmar, the refinery and Petrotrin?... those waiting in the wings … local and foreign?”
Ramdeen cited how Petrotrin’s deterioration - its US$750m bond, failed plants and other issues - began under the previous PNM of which Prime Minister Dr Keith Rowley was a part.
“… And it’s now it’s said he has the minus touch, not the Midas touch - his Government only takes and doesn’t give,” Ramdeen added.
S&A’s summary also noted:
•While Petrotrin has greater staffing levels than its key competitors, the business results being achieved are significantly less than top-performing Upstream and Downstream businesses in the key performance areas of Operational Availability and Operating Costs.
• As such there appears to be a significant opportunity to increase the efficiency and effectiveness of the Petrotrin workforce in order to maximize the financial performance of the business.
• While many companies attempt to optimize their workforces simply by reducing staffing levels or implementing a new organizational structure, Solomon has observed over the years that the most profitable businesses are actually focused on maximising organizational effectiveness and financial performance, not just minimizing the number of people,”
• Solomon’s experience is that the businesses that have consistently achieve top-quartile performance in terms of reliability, energy efficiency, yield optimisation and overall profitability are not necessarily the businesses with the fewest personnel.
•In fact, the best performers within the industry typically have personnel resources ranking in the second quartile. At the same time the skills and capacities of their workforces, in conjunction with the efficiency and effectiveness of their work processes, enable them to consistently achieve an increased level of performance versus their competition,”
• Key factors to be considered and be present in a business organisation for sustainable optimization of the workforce are:
Efficient work processes.
Clarity of roles/responsibilities.
Focused aligned organizational structure.
High levels of skills, competency.
Utilisation of technology and automation to help maximize productivity.
• Suggesting Petrotrin establish a continuous improvement culture, S&A stated: “Continuous change isn’t just a project, it’s a relentless, never-ending process as well as culture change.”
• The summary alluded to “transformational change which could only be achieved by Petrotrin management, union leadership and the Shareholder all working together in concert” to implement necessary changes that will provide the company with “foundational elements” for it to increase efficiency, effectiveness and financial success for many years to come.”