Oil: massive restructuring in the French Vallourec – Les Echos

The specialist for seamless tubes will reduce its workforce by 2,000 positions, including 900 in France.

Vallourec enters hard restructuring. The specialist for seamless tubes for the oil sector will reduce its workforce by 2,000 jobs worldwide (down about 10%) to reduce its cost base by 350 million euros over the period 2015-2016 . Europe is particularly targeted: France will contribute up to 900 positions – on about 5,000 employees – and Germany up to 600 jobs. These announcements are in addition to economic measures already unveiled in February, which provided for the removal of 15% of hours worked in the factories of the group, the equivalent of 1,400 jobs worldwide, including 200 in France.

These measures reflect the impact of the fall in prices per barrel of crude, but also more structural overhaul of the group. “Compared to the last drop of oil prices in 2009, the turnaround is very fast and very deep. But it also happened at a time when the sector is asking questions about its costs and the profitability of its investments “, says CEO of Vallourec, Philippe Crouzet. First quarter revenues fell 17.2% year on year, to 1.05 billion euros and gross operating income was divided by four (53 million euros). The group posted a loss of 76 million euros in the first three months of the year, but maintains its objective of a cash flow positive for the year.

European Overcapacity

The staff reductions planned in France are divided into two parts. The plan calls first the “looking for a majority partner” for her unique specialty steel products located in Saint-Saulve (Nord) and its 350 employees. “Our needs no longer allow us to load our steelworks’ , justifies Philippe Crouzet. Vallourec, which has invested heavily in recent years in the United States and Brazil, seeking to reduce its European production capacity of 1.3 million tonnes of pipes per year to 900,000 tons. “The development of Vallourec in Brazil has significantly increased its European overcapacity” , criticized the CFDT Metallurgy Wednesday in a statement. The group however will retain its 20% interest in its German steel mill HKM (ThyssenKrupp) of Duisburg-Huckingen. “It works very well and this is the model that we would like to replicate Saint-Saulve» says Philippe Crouzet.

If the positions of St. Saulve intended to be held by a future buyer, 550 jobs will be deleted however in the seven other group sites in France, including at headquarters. “Between the age measures, temporary work and the creation of a shared services center in height from 50 to 80 positions, we aim to have little forced departures on arrival” says Philippe Crouzet. In early April, the group also announced a reorganization into four geographic poles (Europe, North America, South America and Eastern Hemisphere) to “improve the efficiency of its manufacturing operations and accelerate the process of decision. “