Vallourec Star reduces its workforce again

By Kalea Hall

khall@vindy.com

YOUNGSTOWN

Oil and gas producers must prepare for the worst and hope for the best during what has become a long-lasting downturn in the industry.

In turn, companies that supply the producers also must prepare for the worst.

Vallourec Star on Martin Luther King Jr. Boulevard, where pipe is produced for fracking, for example, has again decided to make a workforce reduction.

“While we have already taken substantial measures throughout the year, market conditions have not improved,” said Judson Wallace, president of Vallourec Star, in a statement. “The prolonged downturn continues to impact business. This extremely difficult decision is necessary for us to remain competitive in a very challenging environment.”

Details on how many employees will be let go this week were not released, but the reduction will occur in all areas of the company’s production and administrative departments for both hourly and salary positions. All will receive a severance package.

“We recognize this action is difficult for our employees, their families and the community,” Wallace said in a statement. “We have a talented and skilled workforce, we appreciate their dedication and will do what we can to assist them in this transition.”

Vallourec Star now will have a variable schedule operation between its multistand pipe mill and its fine-quality pipe mill. Employees will work between both mills. The new scheduling operation will improve costs, the company said.

The company has eyed the volatile oil prices throughout the year as the prices dropped dramatically. On Monday, the price was $45.89 per barrel – down $36.86 from a year earlier, according to the U.S. Energy Information Administration.

The drop, driven primarily by global competitors who are able to lower the cost per barrel and still make a profit, hurt U.S. producers. The rig count in the U.S. as of Oct. 16 was 787, down 1,131 from last year, according to Baker Hughes, an oil-field service company.

“This looks to be an extended downturn,” said Shawn Bennett, executive vice president of the Ohio Oil and Gas Association. “Vallourec Star is not an anomaly, unfortunately.”

In February, Vallourec Star went on a three-week shutdown, and the company offered a voluntary six-month layoff for workers.

That wasn’t enough.

In July, Vallourec Star leaders announced a workforce reduction of about 60 to 80 jobs effective in August. The positions affected were in operations, production and maintenance areas.

Despite the year Vallourec Star has had, the company still is optimistic “that productivity improvements and investments in innovative technologies and equipment, such as a new state-of-the-art piercer in Youngstown’s multistand pipe mill, will reinforce Vallourec’s position as a market leader when business rebounds.”

Girard Mayor James Melfi wasn’t surprised by Vallourec’s decision to reduce its workforce, and he is optimistic there will be a turnaround for the company. Girard and Youngstown share tax revenue generated by Vallourec’s employees, so they have felt the downturn’s impact directly.

“It will just take some time,” Melfi said. “When that sector does come back, and it will, that is the most-modern mill in the world. We are confident when business does come back, it will come back to Vallourec.”

Youngstown Mayor John A. McNally also believes at some point there will be a turnaround.

“It better turn around,” McNally said. “It’s got to turn around so Vallourec can put people back to work. It’s just a matter of when.”