The COVID-19 pandemic combined with the oil price crash resulted in more than 100 workers losing their jobs this month at Muskogee pipe supplier Vallourec Star.
The company recently notified the Oklahoma Office of Workforce Development that 112 workers were laid off as firm announced it was part of efforts to reduce its North American workforce by at least a third.
The move was announced at Vallourec’s recent shareholder meeting where Chairman Edouard Guinotte discussed the need for a “leaner and more competitive company.”
Vallourec manufactures seamless steep pipe for the oil and gas industry but uncertainty in the industry caused by COVID-19 and the OPEC actions forced the company to begin what it called “all necessary adaptation measures” and to speed up “its costs savings plan.”
“The world and the oil and gas industry are living through extraordinary times, particularly in the U.S.,” Guinotte said in a media release following the meeting. “The decisions announced today are necessary in a quickly deteriorating environment but preserve our ability to serve our customers efficiently.”
Guinotte said after all possible alternatives were reviewed, the final decisions “were not made lightly.” He said those decisions “will be implemented in the full respect of Vallourec values.”
The reduction in force is expected to affect more than 900 positions, which represents more than a third of the company’s total workforce and contractor positions. A media release confirmed the implementation of these measures will affect all of Vallourec’s North American plants and support functions according to a report by the Muskogee Phoenix newspaper.
“Due to the unprecedented issues caused by the COVID-19 pandemic and the OPEC-Russia oil price war, the company is unable to give 60 days notice of the layoff and is giving notice at the earliest practicable time,” Francis states in the WARN notice advising of layoffs at the company’s Youngstown facility. “These unforeseeable business circumstances include the unanticipated and dramatic drop in oil prices and the major downturn in the U.S. economy.”
Francis described the fallout from those circumstances as “a substantial decline in the demand for the company’s products and services and a significant reduction in its incoming receivables and cash flow.” He said the combination of those factors put “the company in the difficult position of having to reduce its workforce.”
Vallourec’s plant at the Port of Muskogee sustained several setbacks during the past few years. A fire in 2012 consumed part of the facility and some equipment and caused more than $6 million damage.
An $11.8 million expansion project, supplemented by a $2 million community development block grant through the Oklahoma Department of Commerce, was completed in 2014, but a downturn in the oil and gas industry the following year prompted a string of layoffs. The company began to ramp up employment again in 2017, when the Muskogee City-County Port Authority approved a $455,000 incentives package which required Vallourec “to maintain any jobs being considered for payment for 36 months prior to submitting a formal request for funds.”
Marie Synar, director of the port authority’s industrial development division, said Vallourec became eligible in February for payments from the 2017 incentives package but never made a formal request for funds. Since no funds were distributed, Synar said she expected the grant commitment to the port authority made by the City of Muskogee Foundation will be written off at the foundation directors’ next meeting.
Vallourec Star is North America’s leading producer of seamless Oil Country Tubular Goods Line & Standard Pipe, and Coupling Stock dedicated to oil and gas applications. The company also had operations in Youngstown, Ohio and Houston, Texas.
Source: Muskogee Phoenix