Vallourec to Cut Workforce by 7% Worldwide
YOUNGSTOWN, Ohio — The Vallourec Group, the French corporation that operates Vallourec Star’s pipe mill here says it’s taking “immediate and structural measures” to reduce total man-hours by 15% in its mills worldwide and its workforce by “approximately 7%.”
No further details were provided.
Vallourec Star announced Feb. 4 that it would idle its pipe and tube mill here for a three-week period beginning this week. The plant opened in 2012. The company employs 700 at its pipe and steel-making complex here, and more than 25,000 at its operations in 20 countries.
The Vallourec Group’s announcement “includes Vallourec Star’s adaptation plans previously communicated in a Feb. 4 statement,” Vallourec Star said this morning in an email to The Business Journal.
The worldwide cutbacks were announced in Vallourec’s 2014 earnings release, which reported a 2.2% increase in full-year sales. Earnings before interest, taxes, depreciation and other adjustments were 855 million Euros, “in line with guidance,” the company said.
Nevertheless, Vallourec said, market conditions necessitate the launch of what its “Valens, a two-hear competitiveness plan.” Among its components are costs reductions amounting to 350 million Euros.
“The current environment is marked by a severe oil price drop and major [exploration and production capital expenditure] cuts by our customers in the USA and the EAMEA [Europe, Africa, Middle East, Asia] region,” said Phillipe Crouzet, chairman of the management board. “To cope with the drop in sales volumes, all flexibility levers have been activated.”
According to its 2014 earnings report, sales of oil and gas products in the United States “reached a record high in 2014, benefiting from higher volumes. This performance was supported by increased local demand and the successful ramp up of the group’s new rolling mill.” Demand for oil country tubular goods (OCTG) grew by 5.7% in 2014 as a result of an “increase in the average active rig count and gains in drilling efficiency.”
Said Crouzet in his statement, “We will drive value creation by improving our cost competitiveness and cash generation capability, and increasing discipline related to our capital allocation policy. We are committed to improving Vallourec’s return on capital employed, which we target to exceed its cost of capital in 2018, under normalized oil market conditions. This is a core component of how our business will be managed going forward.”
SOURCE: Vallourec
Pictured: Vallourec Star pipe mill in Youngstown.
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