The oil service company says it can no longer produce competing steel pipes in Western Europe.
Less than two years after an earlier social plan, Vallourec announced on Wednesday the cessation of its European production of seamless pipes. This will lead to the closure of several factories, including those in Germany and Saint-Saulve (North), he said. In total, 2,950 jobs will be cut worldwide. The challenge, as proposed by the new CEO of the group Philippe Guillemot, is to stop the outflow of money. The group emerged in February 2021 from a restructuring plan that resulted in the shedding of 1,000 jobs (including 350 in France) and a takeover by creditors. A recapitalization of 300 million euros followed in June 2021. Vallourec was slightly profitable in 2021.
†Faced with competition from Eastern European countries, Europe can no longer be a production base for pipes destined for the Middle East or other geographic areas, says Philippe Guillemot. Our competitors have come to this conclusion a long time ago.At the end of 2021, the group had put its German tube factory, which employed 2,135 employees, up for sale. The site swallowed 100 million euros a year for seven years. Lacking a serious buyer, Vallourec announced the closure on Wednesday.
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End of a story
The French factory in Saint-Saulve was directly dependent on German production. That will also close, which will lead to the layoff of about a hundred employees. The site had been over 1,000 ten years ago, during the splendor of the oil service industry. So today is the end of the story between the small town on the outskirts of Valencienne and Vallourec, which had already separated from the Ascoval steel mill in 2017.
The site of Aulnoye-Aymeries, near Maubeuge (North) has not been spared. Vallourec will keep the two factories it operates there. However, Philippe Guillemot sets two conditions for the continuation of the activity. First, look for new outlets outside the hydrocarbon market. To facilitate the achievement of this target, the Scottish facility of Bellshill will be closed (70 jobs will be eliminated) and its production will be repatriated to Aulnoye. The second condition to be met, the success of a new activity of “additive manufacturingOne or even several robots are installed to manufacture steel parts in small series or custom-made like a 3D printer.
Vallourec also wants to streamline its R&D department by bringing its teams together on a single site, and will therefore cut a hundred positions in Aulnoye. But Aulnoye will be the group’s global R&D steering center, the CEO promises. In addition, about sixty positions will disappear from Vallourec’s headquarters in the Paris region. In total, as many as 300 jobs will be cut in France as part of a runway protection plan. In the end, 1,300 Vallourec employees will remain in France.
Production for the Middle East is concentrated in Brazil and locally for North America. The purpose of the planNew Vallourecis to lower the breakeven point so as not to burn money in lean times. Enough to generate another 230 million EBITDA (gross operating surplus) in a whole year, from 2024.
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