LeTourneau job suspended; Cooper lays off worldwide

Published 12:00 am Wednesday, January 28, 2009

Short-term changes due to the economy loom for one Vicksburg industry, while more job cuts were announced by the parent company of another.

Rowan Companies, the Houston-based owner of LeTourneau Technologies, announced Tuesday it was suspending production of one movable jack-up oil drilling rig and canceling plans for another.

The rigs, scheduled to be fabricated on the bank of the Mississippi River at LeTourneau’s plant south of Vicksburg, were to be completed in the next two years and were part of the 240C class capable of boring in up to 400 feet of ocean water.

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Even with the announcement, work continues without a hitch at the yard west of U.S. 61 South and, based on current workloads and most recent information from higher-ups, no shutdowns were foreseen at the present time, said LeTourneau vice president Mike Gray.

The local plant laid off 50 employees this month, citing lower demand in the oil services industry. Contract workers, about one-third of last year’s peak work force of 1,100, reportedly were cut in December and weekly work hours were reduced in the wake of declining oil prices.

The addition of a member to Rowan’s 10-member board of directors also has ended temporarily a quest begun last March to spin off its local subsidiary to a private company, according to its filing Monday with the Securities and Exchange Commission.

Rowan and Steel Partners II, LP, LeTourneau’s major shareholder, inked a deal that would result in either LeTourneau’s sale or an additional board seat to be filled by a designee of Steel Partners. The company opted for the latter, stating efforts ended in November to sell its drilling manufacturing arm because of financial and credit markets and industry conditions.

The company eliminated its 10 cent-per share dividend, a move geared to save the company $45 million. The funds will be used for general corporate purposes, according to the regulatory filing. Some LeTourneau customers have asked for delays or terminations to standing purchase agreements due to the economy, the company said. The current backlog of payments totals $558 million, the company said.

Payment terms with its contract builder on yet another class of rigs, the Super 116E, are now being renegotiated. Three of the rigs are already under way in Brownsville, Texas, but a decision on whether to build the fourth is under review. The company will announce its fourth-quarter earnings in February. Shares had gained 36 cents in after-hours trading Tuesday, to $13.72.

Job cuts during 2008 have also affected the bottom line of the local division of another Houston-based company.

Cooper Industries Ltd. reported a 38 percent drop in fourth-quarter profit and said 2,200 employees were eliminated from its work force worldwide.

Company officials attributed its financial losses and job reductions to a deteriorating worldwide economy, but did not specify whether the cuts affected its electrical products manufacturing plant on U.S. 61 South in Vicksburg.

“The global recession resulted in weakness in all of our markets and geographies,” chairman and CEO Kirk S. Hachigian said in a statement. “As the quarter progressed, the credit crisis deepened with the economic deterioration in the U.S. and Europe spreading around the world.”

The company reports about 31,000 employees worldwide. About 900 were employed at the Vicksburg plant, which helps make light fixtures for a variety of industries.

Net income for the company during the quarter was $111.1 million, down from $179.3 million a year ago. Profit during the quarter also fell from a year ago, to 65 cents per share from 98 cents.

Those results included a pretax charge of $35.7 million, or 15 cents per share, related to job eliminations originally forecast to be closer to 1,000. Worsening economic conditions as 2008 wore on forced its restructuring charges and its job cuts upward, Hachigian said.

For the year, its net earnings stood at $632.2 million, down 8.7 percent in a year. Revenue for the year, however, stood at $6.52 billion — up more than 10 percent from 2007. Shares traded at $27.65 at Tuesday’s close, up 51 cents from Monday.


Contact Danny Barrett Jr. at dbarrett@vicksburgpost.com.