McDermott yard in Amelia may be shuttered
Rumors are swirling that McDermott’s fabrication yard in Amelia may be shuttered.
Between a lease renewal in 2014, a project for BP that fell through, and a lack of skilled workers, the company is believed to be thinking about moving its operations to Mexico.
Paul Naquin, St. Mary Parish president, said, “Yes, they’re thinking about moving the plant to Mexico. That’s not a final yet. We talked to the landowner who said the same thing. It’s not final, for sure.”
The move is not a certainty, he said.
“McDermott is not saying anything official, but personnel are saying they are being offered transfers,” he said.
Naquin also said the landowner was told the company may not renew a lease on property that straddles the Assumption and St. Mary parish line.
“It will be devastating to St. Mary Parish if they move out,” Naquin said, noting that 50 to 60 percent of the workforce comes from this parish. Naquin said that “four or five months ago there were 1,500 employees there, but some of those projects have been completed.”
The number includes sub-contractors who do not work full-time for McDermott, Naquin said.
The company did not release current statistics.
Upstream, an industry trade magazine, reported that some 80 percent of staff in Morgan City will be laid off in a renewed effort to shutter the yard permanently.
State Rep. Joe Harrison, R-Gray, concurred with Naquin’s information.
Harrison said it is very possible McDermott will close here.
“We were working on a plan for six, almost seven months, with BP bringing in a major project,” Harrison said. “I don’t want to confirm that (they’re closing) because I’m hoping we can turn that around. … We have a lot of things working right now. We’re just hoping for the best. I’m not giving up on it at all.”
BP changed the project dates because they found out the field on which they wanted to locate an oil rig that McDermott was to produce is much larger than anticipated, Harrison said. The rig must be re-engineered to be a land-based, or fixed, structure, and the project must be rebid, he said.
The project would have created an estimated 2,000 more jobs at the Morgan City facility, Harrison and Naquin said.
Harrison said that number of employees would have brought the yard near its highest employment numbers in the company’s history.
“I have too many friends and neighbors who work at McDermott and depend on it,” Harrison said. “St. Mary and Assumption both depend on it for taxes. It will be a major blow to the economy of our area. It affects about four parishes for workers and families.”
“Three big companies are looking at projects right now, and we’re hoping to connect them or bring in another company that could co-op with them,” Harrison said of McDermott’s Morgan City yard.
Upstream reported May 23 that it is believed one of three South Korean fabrication giants took more than a passing look at the facility last autumn. It also noted that, given McDermott’s steep stock price decline over the past year, it is also possible the entire company could be a candidate for acquisition.
McDermott’s corporate communications department in Houston offered this:
“Our Morgan City facility is currently operating with a backlog of work. We did recently reduce our work force at the yard in response to current work demand. Like any construction company in the offshore oil and gas industry, from time to time, we must adjust our workforce to be in line with our work in-hand,” spokeswoman Louise Denly said.
“Our Morgan City yard is staffed to meet the demands of our current backlog and delivering project certainty for our clients continues to be a top priority. As projects come to a close, we are required to adjust the workforce accordingly,” Denly said.
McDermott paid $339,764 in taxes to St. Mary Parish between 2010 and 2012, according to St. Mary Tax Assessor Jarrod Longman. The tax impact in Assumption Parish is significantly higher where the company paid $2.81 million over the same three years, according to Assumption Tax Assessor Wayne “Cat” Blanchard.
Upstream reported in March that McDermott chief executive Stephen Johnson told investors despite the yard’s history, it is likely to face challenges “for at least the short term … due to the lack of availability of greater numbers of qualified tradespersons.”
The magazine noted that the company, like much of the Gulf Coast’s industry, continues to struggle with skilled workforce issues which began in the wake of Hurricane Katrina in 2005.
A related issue is that McDermott is having to subcontract work “and can’t control the labor as well as when we had a higher percentage” of directly-employed staff, the magazine quotes Johnson saying.