Thursday, January 08, 2015YOUNGSTOWN, Ohio -- Tube producer Vallourec says it is watching the oil market "very cautiously" as it monitors customer demand in the wake of plummeting oil prices that have manufacturers and energy exploration companies scrambling to adjust.
"We are looking at oil price trends very cautiously and closely monitoring our customers' activity," the French company said in a statement released Wednesday. "The oil and gas sector, is by nature, cyclical. We've adapted to similar cycles in the past and will adapt to the evolution of the demand."
Vallourec's plant in Youngstown -- part of subsidiary Vallourec Star -- manufactures oil country tubular goods, or OCTG. The pipe is primarily used for oil and gas exploration. The company employs about 700 at its complex off Martin Luther King Jr. Boulevard where its $1 billion pipe mill opened in 2012.
Oil prices have dipped to just under $50 a barrel, and energy companies have become reluctant to drill for additional supply when prices are so low. This reduces demand for pipe and tube manufactured by companies such as Vallourec.
Still, Vallourec said it remains optimistic about market conditions in the long-term: "We are confident in the long-term attractiveness of global oil and gas markets and are committed to our strategy of providing the most innovative and competitive tubular solutions."
The statement, which came after a request for comment by The Business Journal, follows by one day U.S. Steel Corp.'s decision to temporarily idle its tubular production plant in Lorain, affecting 614 workers, as well as another tube plant in Houston, affecting 142.
The layoffs would begin March 8 with additional layoffs through May.
U.S. Steel said it took the action in response to a decline in tubular market conditions that affected demand for the products those plants produce.
“The company has suddenly lost a great deal of business because of the recent downturn in the oil industry,” said Tom McDermott, president of United Steelworkers Local 1104 in a prepared statement. Local 1104 represents Lorain workers. “What appeared just a few short weeks ago as being a productive year, [with new hires in December and extra turns going on], has most abruptly turned sour.”
During a conference call wih reporters Wednesday, U.S. Sen. Sherrod Brown, D-Ohio, said that he spoke Tuesday with U.S. Steel CEO Mario Longhi and other company executives, who confirmed that plummeting oil prices are just part of the reason for the downturn.
"They also said it looks like the Koreans are continuing to subsidize and dump steel in the U.S. market, directly competing with U.S. Steel in Lorain," Brown said.
This situation, coupled with lower oil prices, places these manufacturing jobs at risk, Brown said.
"If we can help to keep this dumped steel, this illegally sold steel, illegally priced steel, illegally made steel in that sense, out of our market, it will mean that U.S. Steel can begin to bring workers back," he said. "I’m not promising that, but I do know that we’re going to figure out, working with U.S. Steel, how we fight back to enforce U.S. trade laws, to protect American jobs."
Brown, who has lived in Lorain 10 years, said he knows how important the plant is to the community. "I know a lot of the workers in Local 1104 and I will fight like hell for them," he promised.
Meanwhile, Denver-based Antero Resources, one of the most active drillers in the southern portion of the Utica shale in Ohio, announced Monday that the company would place on layoff 250 contract-land brokers.
Full-time Antero employees would not be affected by the decision. The company said it wants to concentrate on developing its existing inventory instead of acquiring additional acreage.
Copyright 2015 The Business Journal, Youngstown, Ohio.
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