Vallourec plans to cut 7% of its worldwide workforce

The parent company of the Vallourec Star plant in Youngstown has announced a plan to reduce costs at operations worldwide that includes cutting the workforce.

In reporting financial results from 2014 on Tuesday, Vallourec executives said that delivery of products for the oil and gas industry are expected to be heavily impacted this year by the downturn in the oil markets.

The report notes that the current environment is marked by a severe oil price drop and major cuts in exploration and production capital expenditures by Vallourec's customers, especially in the US as well as Europe, the Middle East and Africa.

The drop in oil prices is severely impacting the number of drilling rigs, which Vallourec estimates may decline between 40% and 50% when compared to the end of 2014.

This will result in lower consumption of tubular products used by the oil industry, as well as destocking from distributors, and pressure on prices. Vallourec says it expects a sharp drop in its 2015 volumes.

As a result, Vallourec says it has undertaken immediate and structural measures in the mills that will result in a reduction of approximately 15% of working hours, including a reduction of approximately 7% of the workforce.

21 News contacted Vallourec seeking information on whether the employment reductions will impact the Vallourec Star facility here. A spokesperson for the company responded by saying that information in the press release includes Vallourec Star's adaptation plans previously communicated in a statement issued on February 4.

In that earlier statement, Vallourec Star announced plans to shut down Youngstown operations for three weeks in the middle of February. Vallourec also offered a voluntary six-month lay off to those who are interested.

The shut down announcement came after Vallourec Star officials said that they had already adjusted production schedules and minimized the use of contractors to adapt to operating and business demands.

There is no indication that further reductions are in the future for the Youngstown facility, but Vallourec said it is carefully monitoring market developments and will continue to adapt quickly to what they called an unstable business environment.

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