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After a dismal start to the year, Valero Energy reported a second-quarter rebound in income despite the ongoing drop in consumer demand and lower petroleum prices as a result of the COVID-19 pandemic.
While the industry has been stunned by the collapse in demand, the San Antonio-based independent refiner boasts that it hasn’t laid off employees or cut pay for any of its 10,000 employees around the world.
“Our employees are our greatest asset in the heart of our company,” said CEO Joe Gorder during the second-quarter earnings call last week. “Their health, safety, and well-being remained among our top priorities, and we will continue to take the steps necessary to keep them safe, whether they work in the field or at our headquarters in response to the COVID-19 pandemic imposed shutdown.”
But bringing those employees – accountants, administrators, traders, programmers, and other office workers, including almost 70 summer interns – back to Valero’s far Northwest Side headquarters starting in May has prompted the kind of corporate culture shift that could test other companies in the coming months.
Valero manufactures and sells transportation fuels and operates plants around the world, and thus is considered part of the nation’s critical infrastructure. Its plants never shut down. Gorder told investors the company has continued to fully operate its refineries to keep critical supplies moving, and the company posted net income of $1.25 billion on revenue of $10.4 billion for the quarter ending June 30.
At headquarters, however, in March, the company complied with emergency lockdown orders and told most of its white-collar employees to work from home. With about 300 remaining on campus, Valero management teams went into high gear equipping employees with the technology, supplies, and even furnishings they needed to do their jobs from home, said Julia Reinhart, senior vice president of human resources and administration.
It also set up a COVID-19 response team and began formulating a campus reopening plan.
“Our job was to really figure out whether we can have people on campus safely,” Reinhart said, adding that financial pressures in the energy sector in recent months are what contributed to a sense of urgency. “People needed to be here and they needed to be very nimble [with] quick decision-making.”
On Valero’s hectic trading floor, where many employees once worked shoulder-to-shoulder and face-to-face in pre-pandemic days, workstations have been thinned out to provide more space between people, said John Locke, vice president of investor relations and communications.
Today, dozens of traders navigate the fast-paced business of shipping, tankage, and markets while they work 6 feet apart, but unmasked, in the “bullpen-type” office area. “All these [trading and shipping] questions have to be answered and have to be answered quickly,” Locke said. “To have them all laid out like this so they can sort of talk and point and yell and do whatever they need to do is very critical to maximize the amount of money we can make per day.”
In addition to reconfiguring desks and common spaces in Valero’s five headquarters buildings, more than 800 signs posted throughout the campus remind employees to wear face masks and to keep their distance from one another. Hand sanitizer dispensers are placed near doorways and stairways, and contactless entry systems have been installed. In the cafeteria and conference rooms, seating charts and decals on tables show workers where they should sit.
Employees returned to the office in stages so that by mid-June most of the company’s 1,800 workers were back on the sprawling campus, save for a few who were exempted due to health conditions that put them or family members at risk, Reinhart said. “We have a very extensive accommodation process,” one which she said also will extend to working parents who might choose distance learning when campuses reopen.
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Then, as a wave of positive coronavirus cases began to spike in the community, other major local and national employers such as USAA announced their workers would not be returning to the office before the end of the year or even later in some cases. Other large employers around the country are making return-to-work voluntary or establishing a system of blended hours.
Locke said that the nature of Valero’s business makes working from home difficult to manage.
“If you’re in a service business, it’s a little different to mobilize and provide your service remotely,” Locke said. “Buying crude oil from all over the world and refining and products that need to be moved is a different undertaking.”
But one employee who contacted the Rivard Report expressed concerns that the company’s precautions weren’t enough. “Frankly, if masks were being worn diligently and social distancing was possible, I still would have concerns being inside with so many individuals for extended hours,” the employee wrote in an email. “… Valero must do a better job of protecting their employees, and by extension, our families, among the community as a whole.”
Another email writer who requested anonymity suggested the company provide a “hybrid situation” in which people split their working hours between home and the office in order to decrease the number of people on site at one time.
Working from home during April and May did not diminish productivity or returns, said another employee. “If anything, we were more efficient.”
Gorder sees it differently. “The notion that we don’t care about our employees is so far from reality, it’s troubling,” he said.
During a visit to the headquarters on Thursday, a gate guard asked the Rivard Report a series of health screening questions prior to entry. Valero employees are expected to monitor themselves for signs of illness and stay home if they are not feeling well.
In late June, the company strengthened its policies to mandate, rather than recommend, that all guests and employees wear face masks while moving about the building, but did not require face coverings when employees are at their desks and cubicles.
The Centers for Disease Control (CDC) advises that because COVID-19 spreads mostly among those who are in close contact for a prolonged period, people should try to keep 6 feet of space between themselves and others and wear a mask.
Valero’s response plans and on-campus health services are being overseen by a consultant medical doctor, Reinhart said. The company’s managers monitor compliance with the face mask and social distancing rules, and warnings have been handed out.
Locke compared the precautions to how Valero’s refinery workers must wear protective gear: “That is like a prescription to stay alive and to stay employed.”
Since the beginning of June, the company has tested 225 workers in the San Antonio headquarters for the virus and has reported 37 employees and eight contractors testing positive. All were required to quarantine.
None contracted the virus while at work, Reinhart said, though the employees who wrote to the Rivard Report questioned the finding based on their knowledge of where employees work in the buildings. A section of the company’s intranet site called “Seasonal Virus Update” informs workers when and where cases are found among the employee population.
But Reinhart said her information is based on the company’s investigations and the questions it asked people who became infected. “I would say 90 percent of the people that we have talked to that have been infected can tell us where they got it,” she said.
In June, the business consulting firm PwC surveyed over 1,000 American workers nationwide and found that fewer than half of employees who were forced to work remotely or stop working said safety measures like wearing masks or reconfiguring layouts to promote physical distancing would make them more comfortable returning to the office. Even mandatory screening measures, like temperature checks before allowing people on the worksite, did not help their comfort level.
Valero is not alone in facing the challenges of reversing an extended period of remote work operations. A recent Wall Street Journal article outlined the challenges of at-home work, citing a lack of spontaneous interaction, difficulty in orienting new hires, and the potential effect on career development.
PwC already has created a series of articles and webinars on the topic of resuming operations during the pandemic. Likewise, the CDC provides guidance for employers that starts with the advice to talk with employees about planned changes and seek their input.
It’s simply important for a company like Valero to be in the office together, Gorder said.
“We cannot function as a team if we’re not seeing each other,” he said. “We’re in kind of a real-time operating business and we need to hang together here to be sure we’re not missing things. And we did miss things when we were apart. It just wasn’t as efficient.”
Disclosure: Valero is a financial supporter of the Rivard Report. For a full list of business members, click here.