Shipham Valves ,a Hull-based manufacturing firm serving the energy industry, is laying off up to 25 staff due to the falling price of oil.
The company is one of many in the UK being hit by falling demand from the offshore oil and gas, petrochemical and marine energy industries. The North Sea oil and gas industry is expected to make heavy cutbacks this year and all have experienced a slowdown and that has had a knock-on effect to suppliers.
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In a statement, managing director Michael Smith said: “Over the past few years, sales at Wartsila Valves increased quite significantly and the number of employees grew accordingly. Due to the rapid fall in the price of oil, however, business activity has slowed down, and this difficult decision is necessary to adjust to current market conditions and ensure the future health of the business.
“We continue to invest in the development of new products and prospects for the future of the business remain good.”
The company’s most recently filed accounts suggest strong performance in 2013, with turnover up almost £6m to £26.7m. Operating profit also rose
Oil prices began their fall in June last year. Analysts put it down to weak demand in many countries where economic growth was slow, and a surge in US production thanks to fracking.
Wartsila Valves is not the only business to see an effect, offfshore training group HOTA has noticed a fall in the number of rig workers through its doors.
Earlier this year, general manager Karen Shepherd said there had been “a slight decrease in delegates”, although she expected prices – and job numbers – would eventually recover.
The slump may have hit some firms, but it is also driving down fuel costs at the pump.
Shipham Valves was established 1798 and since the 1930s have been active as a key valve supplier within the British Royal Navy and Ministry of Defence, from their 8700square metre factory. Shipham Valves has had several ultimate owners in recent times.
The company was part of Flow Group until October 2011, when its parent was acquired by British engineering business Hamworthy. Later that year, Hamworthy was bought by the current owner, Finnish firm Wartsila.