UBS Warburg LLC said its energy-trading unit, acquired
from Enron Corp. in February, cut about 130 jobs, or 21 percent of its staff,
after a slump in natural-gas and electricity trading.
The job reductions at the unit's Houston headquarters
and Portland, Oregon, office were effective today, spokesman David Walker said.
Most of the positions were in computer programming, trade processing and
administrative areas, he said. Some trading, marketing and research jobs were
eliminated.
``There was no hope for them to get up to the scale
that Enron had,'' said Charlie Sanchez, energy markets manager at Gelber &
Associates, a consulting firm in Houston. ``It's going to take a couple of
years before energy-trading recovers.''
Several large energy companies have been slashing jobs
because of a slump in business following the collapse of Enron. Aquila Inc.,
the No. 4 U.S. utility owner, has halted speculative energy trading and
eliminated about 1,000 trading jobs. El Paso Corp., the biggest U.S.
gas-pipeline owner, began cutting its trading staff by half in May.
Enron, once the world's biggest energy trader, filed
for Chapter 11 bankruptcy protection in December.
Stamford, Connecticut-based UBS Warburg, the
investment banking arm of UBS AG, acquired Enron's energy-trading business
through a bankruptcy auction after agreeing to cover payroll and pay Enron a
third of pretax profit. It hired 625 former Enron employees to trade
electricity and natural gas.
Some natural-gas producers have refused to do business
with the unit, called UBS Warburg Energy, because they lost millions of dollars
from Enron's bankruptcy and hold a grudge against the traders who now work for
UBS, Sanchez said.
Credit Issues
The debt grades of Dynegy Inc., Williams Cos. and some
other energy traders have been cut to junk, shrinking the industry's pool of
investment-grade trading partners. UBS AG, Switzerland's largest bank, has an
AA+ rating from Standard & Poor's, the second- highest rating.
The job cuts at UBS Warburg Energy ``reflect changes
that have occurred in the U.S. energy marketplace since the company began
operations in February,'' UBS Warburg said in a statement.
U.S. shares of UBS fell 69 cents to $47.65. They have
gained 0.7 percent in the past year.
Most of today's cuts were in the Houston office, which
has about 520 people, Walker said.
About half of 50 employees in the Portland office,
which handled Western trading and marketing, were moved to Houston in July. A
``few'' of the remaining Portland jobs will be eliminated, Walker said. He
declined to provide the specific number.
Offices in Toronto and Calgary, which have about 75
employees combined, won't be affected, he said.
More Cuts?
More cuts may be needed to make the business
profitable, said Eric Melvin, a former Enron Energy Services executive who is
now chief executive officer of Houston-based Mobius Risk Group, which advises
large businesses, including casino operator Harrah's Entertainment Inc., on
energy purchases.
``This is the first wave'' of job reductions, Melvin
said. ``The market is clearly softer, and people have shown a general
unwillingness to come back and trade with UBS. They don't want to cut it to the
bone, because that says, `We made a wholesale mistake.' ''
Enron's payroll is down to about 14,000 from about
31,000 before the filing, spokesman Eric Thode said.
About 4,500 Enron employees were fired late last year
in Houston, and 1,100 in Europe lost their jobs. Most of the subsequent
reductions came as parts of the company were sold, including the Northern
Natural Gas pipeline, which employed about 700, and National Energy Production,
which had 6,000 workers, Thode said.