French pipe and tube producer Vallourec is planning to lay off 900 workers in North America by mid-April due to a collapse in oil prices caused in part by the Covid-19 pandemic, according to a letter from a senior executive seen by Fastmarkets.
Vallourec did not return a request for comment but confirmed the move in a statement on Monday April 6.
Oil prices at $20 per barrel and a reduction in onshore drilling activity of up to 40% are straining the pipe and tube producer's business and making reductions in operating costs necessary, senior vice president for North America Bernard Frischman said in a letter dated Wednesday April 2.
Of the layoffs, 200 will be contract and 700 salaried and hourly workers, Frischman said. "We understand how difficult it is for everyone and we assure you that we did not take this decision lightly," he wrote. "The exact timing of the layoffs will be site specific and depend on business needs."
The company said on Monday that the reductions impact “over one-third” of its total workforce and contractor positions in North America. “Implementation will occur over the coming weeks following all internal and external procedures.”
Vallourec's main US asset, its energy tubular mill in Youngstown, Ohio, has annual production capacity of 350,000 tonnes and makes seamless oil country tubular goods in 2½-7in diameters. US energy tubular prices have declined recently due to the downturn in the oil markets.
Vallourec announced on March 20 that it was suspending guidance due to the impact of the coronavirus epidemic.
This story was updated on Monday April 6 to include details from Vallourec's statement.