54 Business The EconomistJanuary 30th 2021
21spitetwoinfivecoffee shopsfacingre-
newed limitsonin-personcaffeination.
AlthoughtheStarbucksappwasovertaken
byApplePayin2019,itremainsone of
America’smostpopularmobile-payments
systems.Gamifiedchallengesandpromo-
tions(aswellascontactlessness,onwhich
covid-19placeda premium)temptedAmer-
icancoffee-drinkers out of theirhouses
andincreasedtheamounttheyboughton
eachvisit,whichroseby19%betweenOc-
toberandDecember,yearonyear.Drive-
throughlanesatsuburbanoutlets,which
aremushroomingasthoseincitycentres
oncedid,alsohelped.By 2023 Starbucks
wants45%ofitsAmericanoutletstoallow
drive-throughorcurb-sidepick-up.
Butcovid-19continuestocloudpros-
pectsforbusinessesthatinvolvehuman
contact—as latte-peddling does. By the
timethepandemicisoverupto 400 Star-
bucksinAmericancitycentresmaybeshut
forgood,thefirm says.Untilrecentlyin-
vestorsdidnotseemtomind,perhapscon-
cludingthatnoteverystreetcornerneeds
one.Thecompany’smarketcapitalisation
climbedsteadilysincethemarketcrashin
Marchtoanall-timehighof$126bn inlate
December. The disappointing results
shaved6.5% off Starbucks’sshareprice.
Normallystock-tradersarehighlystrung
aftertoomuchcoffee.Toolittlecanevi-
dentlyhavethesameeffect. 7I
n2020, as demand for crude went up in
smoke amid covid-19 lockdowns, so did
energy firms’ budgets. That left oilmen
with less money to spend on assessing res-
ervoirs, drilling new wells and maintain-
ing existing ones, which they typically out-
source to specialist oil-services firms.
Between January and June the number of
active rigs worldwide fell by half, to just
over 1,000. On January 19th Jeff Miller, boss
of Halliburton, a service-industry giant,
called last year “the worst in our history”.
His firms’ revenues fell by 36%, to $14.4bn,
leading to an operating loss of $2.4bn.
Still, Mr Miller insisted, the future looks
brighter. He predicted “a multi-year up-
cycle” beginning in 2022. On January 22nd
Olivier Le Peuch, chief executive of
Schlumberger, a big rival, echoed this sen-
timent, declaring “a new growth cycle”. A
day earlier executives at Baker Hughes, the
third big provider, sounded a similarly
chirpy note. Is this optimism misplaced?Recent history gives grounds for scepti-
cism. Although Halliburton’s share price
has almost recovered to its pre-pandemic
levels, it is less than a third what it was in- Schlumberger and Baker Hughes have
performed only a bit better. The trio have
torched $128bn in shareholder value in the
past four years, as low fossil-fuel prices
have squeezed oil firms’ budgets.
At the same time newcomers piled in,
particularly across America’s shale fields.
The industry’s global ranks swelled, from
about 100 companies in 2014 to nearly
1,000 last year, reckons Muqsit Ashraf of
Accenture, a consultancy. Competition
meant that most of the rewards from im-
proved efficiency went to customers, in the
form of lower prices. Returns collapsed.
The sector’s gross operating profits fell by
half from 2014 to 2019, according to Bern-
stein, a research firm. Then came covid-19.
The long-term risks beyond the pan-
demic look as daunting. Oil majors’ spend-
ing on new rigs may not keep pace with any
rise in the oil price. Investors are keener on
cashflow than on costly new gushers. Gov-
ernments are getting serious about climate
change. On January 27th President Joe Bi-
den announced an indefinite pause to new
drilling permits on America’s federal
lands. Against this backdrop, the prospects
for service firms can resemble those of
horse farriers at the dawn of the car age.
Even a shrinking market offers an op-
portunity, however. The giants have spent
the past year slashing costs. Schlumberger
laid off 21,000 workers, a fifth of its total,
cut its dividend by 75% and said that senior
managers would voluntarily forgo 20% of
their pay. It has enough cash (as have its
two rivals) to invest in better services for
traditional customers. Mr Miller boasted
that his firm sealed a wellbore in the North
Sea with cement in a process that was, for
the first time, fully automated.
The big firms are also expanding into
new, cleaner ventures. In November Baker
Hughes said it would acquire a carbon-cap-
ture company. Schlumberger has set up a
“new energy” business unit and on January
11th its joint venture in France to manufac-
ture equipment for clean-hydrogen pro-
duction received the eu’s blessing.
Most important, the three giants bene-
fit from attrition. North American service
firms entered the pandemic with $32bn to
repay by 2024, according to Moody’s, a rat-
ings agency. Speculative-grade companies
accounted for nearly two-thirds of that.
Few are attractive takeover targets; unlike
an oil firm, which obtains drillable land
when it buys another, an acquisitive ser-
vice company gets rigs and other kit it al-
ready has in abundance. Sreedhar Kona of
Moody’s sees “way too much equipment
chasing way too little cashflow”. The big
three hope that what cash is left will in-
creasingly flow to them. 7
NEW YORK
Halliburton and its rivals search for
the bright sideOil-services firmsWill baby drill?
W
hen meeting big new challenges,
chief executive officers often resort
to a convenient tool: creating fresh execu-
tive roles. This helps channel resources to
pressing problems and attract talent. It sig-
nals to staff and the wider world that
bosses understand what really matters
(and care about it).
Sometimes, it ends up looking farci-
cal—remember the proliferation of “chief
listening officers” a decade ago, as compa-
nies sought to react to social-media chat-
ter? But certain newfangled c-suite roles do
catch on; no self-respecting corporation
can do without a chief sustainability offi-
cer these days. A few corporate positions
that have gained prominence during a par-
ticularly tumultuous 2020 are almost cer-
tainly here to stay.
The most obvious example is “chief
medical officer”. Long common in indus-
tries where safety is an abiding concern
(mining, say), health supremos are now be-
ing recruited more widely, says Tony Lee of
the Society for Human Resource Manage-
ment, a trade association. The pandemic is
far from over, red tape around sick leave is
becoming more tangled as a result of it, and
mental-health problems among employ-
ees are likely to outlive the plague.
Another emerging role is that of “chief
remote officer”, responsible for designing
policies and disseminating best practices
for home-working. Succeeding couldAn epidemic of new corporate rolesJob titlesHail to the “chiefs”
Meet the new bosses
United States, hiring as a share of
allC-suitehires,selectedpositions,%Source:LinkedIn *January-October0 0.5 1.0 1.5 2.02020*,%changeona yearearlier15.337.822.417.490.6-13.320.642.024.219.83.726.82019 2020*ChiefMedicalOfficerChiefRevenueOfficerChiefSalesMarketingOfficerChiefUnderwritingOfficerChiefDesignOfficerChiefTalentOfficerChiefDiversityOfficerChiefDigitalOfficerChiefLegalOfficerChiefGrowthOfficerChiefInvestmentOfficerChiefCommercialOfficerChief Medical OfficerChief Revenue OfficerChief Sales Marketing OfficerChief Underwriting OfficerChief Design OfficerChief Talent OfficerChief Diversity OfficerChief Digital OfficerChief Legal OfficerChief Growth OfficerChief Investment OfficerChief Commercial Officer