Market Segment
Tenaris Lays Off 200 at Bay City Due to Low Oil Demand
Written by Sandy Williams
May 12, 2020
Tenaris announced it will reduce the workforce at its Bay City tubular mill by 200 employees.
“We have an unexpected combination of events straining U.S. and global markets—a drastic drop in demand caused by the pandemic and an oversupply triggered by the price war between Russia and Saudi Arabia. In these stark conditions, we must right size our team to remain competitive and preserve our long-term commitment,” said Luca Zanotti, Tenaris U.S. president.
Oil demand has fallen more than 20 percent due to COVID-19 restrictions on economic activity and, combined with a surplus of oil and limited storage space, the price of oil has collapsed, said Tenaris.
“Adding more pressure to a challenged tubular sector are the influx of unfairly traded OCTG imports into the U.S., where there is already a high level of pipe inventories as a result of the reduced drilling activity,” said the company.
Because of the ongoing pandemic, Tenaris will extend healthcare coverage via COBRA for three months to employees that are laid off.
In an effort to stabilize the global oil market, Saudi Arabia said on Monday it will cut oil production by another one million barrels per day beginning in June. Kuwait and the United Arab Emirates followed the announcement with additional June cuts of 80,000 barrels per day, and 100,000 barrels per day, respectively. In the U.S., oil production cuts are expected to reach 1.7 million barrels per day by the end of the first half of 2020, according to data by Reuters.
Sandy Williams
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