The two-year rout in oil and gas markets is cascading into manufacturing, Bloomberg reports. Equipment makers for energy companies’ plumbing fields from the Gulf of Mexico to North Dakota are firing thousands of workers or ceasing operations altogether. Revenue in some shops is down 80%.
At Breaux Brothers Enterprises in Loreauville, a community of about 1,000 located roughly 25 miles southeast of Lafayette, generators and power tools are mostly idle. Employees, down to 30 from 90, no longer work Fridays.
A 205-foot-long aluminum-supply boat on order lays half-finished while the firm completes work on its only other active boat-building contracts, two for $12.5 million each. Vice president Vance “Vic” Breaux Jr. tells Bloomberg competitors underbid him on a contract for the New York ferry system.
“In the last 15 years we had a five-year waiting list,” Breaux says. “It’s dropped to zero. All 50 states produce something that goes on each boat, so this downturn affects everybody.”
With crude prices stuck at half their 2014 peak, energy-dependent regions that outperformed the nation during the Great Recession are watching bulwark industries implode. Lafayette, the nation’s fourth most mining-dependent metro area, posted the largest year-over-year decrease in employment of any U.S. metro area in June.
As states hemorrhage such high-wage jobs, drilling royalty payments and sales tax receipts that buttress some government budgets declined by as much as 60%. The drop forced Louisiana, also grappling with rebuilding costs from a historic flood, to take out a short-term loan to pay its bills until income taxes are filed in April.
In Louisiana, the evidence of a manufacturing industry in crisis is inescapable. About 131 miles southwest of New Orleans, the Port of Iberia is crammed with “dead iron.” Idled barge rigs rocked as sugarcane swayed in the breeze. Mountainous offshore oil platforms sat across an isthmus from rusted lift boats with 130-foot-tall legs.
Two-hundred-foot-long supply vessels named for members of a family-owned firm seeking to lease them to oil companies for $9,000 a day—one fifth of their $45,000 rate in 2014—floated nearby. Some multimillion-dollar equipment, delivered after the downturn started, has never been used.
Meanwhile, in Loreauville, Breaux says he’s advertising his 33-year-old family-operated company for the first time in 15 years to find contracts to fill his warehouses.
“When oil gets good again we will be the last to get back to work” because half the fleet available isn’t being used right now, he says. “It could take two years.”
