May 24, 2016 / 8:50 PM / 3 years ago

UPDATE 2-Marathon lays off 46 employees at Galveston Bay Refinery

(Adds detail on laid off employees, paragraph 12)

HOUSTON, May 24 (Reuters) - Marathon Petroleum Corp on Tuesday laid off 46 salaried employees at the company’s Galveston Bay Refinery in Texas City, Texas, the company said.

“This reduction is one element of a cost savings strategy that will better position the refinery to be competitive well into the future,” Marathon spokesman Chuck Rice said in a statement.

No announcements of reductions have been made at Marathon’s other six refineries, Rice said.

Galveston Bay Refinery manager Rich Hernandez said in an internal memo reviewed by Reuters that the refinery would take other steps to cut costs.

“We will continue to seek other efficiencies in all aspects of our business that will position (the Galveston Bay Refinery) to be cost competitive in our industry,” Hernandez wrote in the memo.

Most of the employees were informed about the layoffs on Tuesday morning, said sources familiar with plant operations who were not authorized to speak publicly about the matter.

The terminated employees were escorted from the plant after being told their jobs were eliminated.

“This was a whole barrage of people across the refinery, not just one department,” one of the sources said.

The layoffs follow drastic cuts in refining margins due to climbing crude oil costs. Earlier this year several refineries on the Gulf Coast and in the Midwest reduced production to improve margins.

Independent refiners like Marathon, which have to buy crude oil to supply their plants, can be especially vulnerable to increases in oil prices.

“We have been heavy at top of the refinery,” one of the sources said.

About three-quarters of the laid-off employees had worked at the refinery under previous owner BP Plc and were hired by Marathon when it bought the refinery in 2013.

The 451,000 barrel per day (bpd) Galveston Bay Refinery employs 1,925 people, according to a company website. More than 1,000 are hourly workers represented by the United Steelworkers union. About 800 contractors also work at the refinery. (Reporting by Erwin Seba; Editing by Richard Chang and David Gregorio)

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