Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Texas Steel Conversion (TSC) has warned that its 491 employees could be laid off due to low demand for OCTG and drill pipes. 


The pipe maker, however, does not plan to shut down all operations yet. The company filed a Worker Adjustment and Retraining notification with the Texas Workforce Commission (TWC), which is a necessary action for companies prior to proceeding with labor changes. Employees at all four plants and two offices in the Houston area are considered at risk of layoffs.


The workforce reductions could start June 15 but the staging for both segments and the total employees to be laid off will depend on new orders and workloads. However, TSC has proactively notified all its 491 employees of the layoff risk and that these reductions would be permanent. 


Mark Carnahan, vice president of sales at TSC, stated that the company must reduce its workforce due to the dampened demand in the oil and gas industry, which has been impacted on a long-term basis by COVID-19. Control policies related to the pandemic have greatly diminished the demand for transportation fuels over the past three months while record oil prices is limiting capital investments and exploration for oil & gas companies.


The pipes and tubes maker will attempt to continue operations of its manufacturing and processing facilities by obtaining additional sales and has indicated that some of its employees could be recalled if sales increase. 


According to a report by Haynes Boone, 14 oil and gas companies filed for bankruptcy in April and May compared to five in the first three months in 2020. Bankruptcies translate to unpaid orders, higher inventories, and fewer potential sales for manufacturers in an industry that was already struggling in late 2019. More manufacturers expected to announce layoffs.


Turner Industries Group, a steel pipe fabricator with a plant in Corpus Christi, informed the TWC in April of 40 temporary layoffs, which were updated to permanent layoffs on June 1. Layoffs at Turner are expected between June 25 and July 9. The company plans to close the plant until market conditions improve after its pending orders are fulfilled.

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