The engineering segment of the US temporary staffing market is projected to decline by 1% in 2016, following a 3% fall in 2015, according to Staffing Industry Analysts’ recently published 2016 US Staffing Industry Forecast. Despite certain sub-sectors of the engineering staffing market performing well — especially automotive, chemical and mechanical — the decline is in large part driven by the difficulties in the oil and gas staffing landscape and in particular the upstream sub-sector.

As capital expenditure has slowed, so has job creation and job growth. For CAPEX to grow, the price of oil needs to increase (some commentators suggest $60 per barrel as a benchmark figure – at the time of writing cost was approaching $50 per barrel) and needs to stabilize at this price to guarantee business confidence and reduce market volatility. However, even with an immediate price recovery, it would take until the latter part of 2016 to create more jobs and revitalize the sector given the time it takes to restart and begin new capital projects.

In this difficult business environment, it is unsurprising that there has been a noticeable increase in acquisitions within the wider oil and gas staffing industry and we would expect that this will continue throughout 2016. Financially stable companies are looking to maximize growth opportunities through the acquisition of targets at current, more favorable, prices. The acquisitions that have been made offer the acquirer expanded geographical presence, product offerings and client base.

Mergers are likely as businesses join forces to help to manage the market volatility. There is a natural desire to get larger during such periods as bigger companies typically outperform smaller peers when times are tough. Mergers should enable the newly formed company not only to weather the current market instability but to fully capitalize when the oil prices begin to recover. Below are examples of recent mergers and acquisitions within the global oil and gas staffing market.