Welspun cuts back at Little Rock site, says 100-plus laid off

Stacks of pipe at Welspun Tubular Inc. await shipping to a job site. This year, Welspun has laid off as many as 160 workers because of “market conditions,” a company official said.
Stacks of pipe at Welspun Tubular Inc. await shipping to a job site. This year, Welspun has laid off as many as 160 workers because of “market conditions,” a company official said.

Welspun Tubular Inc. in Little Rock has laid off more than 100 employees this year as a result of a persistent slump in oil prices, a company official said Wednesday.

Welspun has let go 120 to 140 temporary employees since January, along with 20 full-time employees, said Rajesh Chokhani, senior vice president of Americas for Welspun.

"We have certainly downsized our operations because of the market conditions," he said. Chokhani said he did not know the exact number of people who were laid off.

Since 2014, when oil traded above $100 a barrel, crude prices have been cut in half because of an oversupply of oil and weak demand. In response to the glut and low prices, energy companies curbed drilling activities and canceled projects to cut costs.

One of Welspun's projects was canceled in December, Chokhani said.

"As the business was slowing down, we had to make those calls," he said.

Chokhani did not have details on how many people work at the facility, but he said the company has dropped from three shifts of workers to one. Welspun's website still says the company operates three shifts and employs more than 400 workers.

Welspun, which is based in India, manufactures oil and gas pipes at the Little Rock Port, the company's sole U.S. location. The company has built hundreds of miles of pipe for TransCanada's proposed Keystone XL pipeline, which stalled after President Barack Obama rejected a permit for the project in November.

Bryan Day, executive director of the Little Rock Port Authority, said he did not know how many people work at Welspun.

Welspun remains within the minimum employment level needed to retain incentives the company has received from the state, Scott Hardin, spokesman for the Arkansas Economic Development Commission, said earlier this month.

From the state, the company has received a $4.5 million Community Development Block Grant; $2 million from the Governor's Quick Action Closing Fund; sales-tax refunds on building materials; and reimbursement for workforce training, Hardin said in an email earlier this month.

Hardin could not be reached Wednesday.

Welspun also has received a cash rebate twice -- in 2007 and 2012-- for new payroll jobs, he said.

Welspun is the latest energy-related company to confirm layoffs since oil prices plunged almost two years ago. The prolonged decline in crude has strained U.S. oil producers. In response to the slump in the market, they have cut costs by idling drilling rigs and laying off tens of thousands of employees.

In May, Murphy Oil Corp. said it laid off 250 employees, about 20 percent of its workforce. The job cuts followed a 20 percent workforce reduction by the El Dorado company in October.

Southwestern Energy Co. laid off 600 employees, or about 50 percent of its workers, in Arkansas in January. The company laid off more than 1,100 nationwide.

Oil prices, which were rebounding, dropped again in June after Canadian crude production halted by wildfires ramped up again.

The United Kingdom's vote to exit the European Union also dampened oil prices.

On Wednesday, West Texas Intermediate rose 29 cents to close at $44.94 a barrel on the New York Mercantile Exchange. Brent increased 51 cents to $47.17 in London.

When asked if the rebound in oil prices is strong enough to result in more projects for Welspun, Chokhani said "maybe."

"It's very difficult to forecast," he said. "We keep our fingers crossed."

A Section on 07/21/2016

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