Exterran to Close Plant by March 31
YOUNGSTOWN, Ohio – Exterran Energy Solutions Inc.’s 60,000 square-foot fabrication plant in the Salt Springs Road Industrial Park is the latest local casualty from the downturn in the oil and gas industry, the result being 68 workers will lose their jobs by March 31.
Exterran notified Mayor John McNally Friday that the plant will cease operations, and “the first group of 11 employees will be separated on Jan. 14.” The notification came in a letter emailed to McNally and delivered by UPS. It was signed by Exterran’s senior vice president for human resources, Chris Michel.
The job losses are described as permanent terminations. Notice of the shutdown had not been received by Ohio Department of Job and Family Services by the close of business Friday.
The Exterran plant fabricates compressor stations and other equipment for companies exploring the Utica and Marcellus shale plays. It opened in April 2013 with executives estimating as much as $60 million in annual revenues once it operated at full capacity.
When Exterran broke ground in February 2012 for the $13.2 million project, economic development officials hailed the company’s investment as sending a welcome message to the nation’s shale gas industry. The ribbon-cutting that followed May 7, 2013, produced a full lineup of company and development officials as well as Gov. John R. Kasich.
The city provided the brownfield site, remediated it with state funds, and Ohio supplied job-creation tax credits and other incentives. At the time, Exterran projected the plant would create 103 full-time jobs.
What some called the “shale gas boom” has become more of a bust as natural gas supplies rose and prices have fallen to 16-year lows.
In October, Vallourec Star furloughed more workers at its pipe mill here, the result of fewer rigs operating in the shale plays. The following month its French parent company posted a $152 million loss for the third quarter.
Next month Parker Hannifin plans to close its pump plant in the Salt Springs Road Industrial Park, idling all 132 employees.
Exterran says it might reopen its plant here, depending on whether markets improve.
In November Houston-based Exterran Holdings Inc. completed the spinoff of its compression, production and processing products and services to a new company, Exterran Corp., described as a $2.2 billion publicly traded company that employs 7,000 in 30 countries.
The new company’s first release of earnings data showed a big fall-off in profits.
Net income for the three months ended Sept. 30 fell to $12.3 million, compared to $36.9 million in the comparable period in 2014. For the nine months ended Sept. 30, net income was $58.2 million compared to $105.4 million for the first nine months of 2014.
In management’s “forward-looking statements,” Exterran Corp. warned deteriorating conditions in the oil and gas industry could “depress or further decrease demand or pricing for our natural gas compression and oil and natural gas production and processing equipment and services.”
Management also noted the spinoff into a new company took away “a significant amount of our product sales revenues and our ability to secure new product sales customers.”
The company’s common shares, traded on the New York Stock Exchange, fell to an all-time low Dec. 15, closing at $13.48.
Copyright 2024 The Business Journal, Youngstown, Ohio.
