TimkenSteel Corp., which provides steel products and services for the oilfield, is closing a major location in Houston early next year because of reduced activity in an “evolving energy market,” a top executive said.
The 10,000-square-foot TimkenSteel Material Services facility in Houston primarily provides services for the energy industry including deep hole-boring, i.e. hole-making, finishing and related machining services for offshore and land-based drilling and completion applications.
The company’s energy steel products are used in drill collars, mud motors, heavyweight drillpipe, wellheads, swivel joints, couplings, casing and more.
"We are focusing on our core strengths of making and heat treating steel and more fully utilizing our supply chain to provide the value-added services required by our customers,” said Executive Vice President William Bryan, who handles manufacturing and supply chain activity. “This change to how we serve the evolving energy market will improve the company's financial performance.”
The Houston plant closure is expected to impact about 97 employees beginning in mid-January, according to a Form 8-K filing with the Securities and Exchange Commission (SEC). The company plans to complete a “facility phase-down plan” by the end of March.
As a result of the plant closure, the Canton, OH-based company expects to realize $6-8 million in annual savings.
Estimated charges related to severance and other termination expenses related to the plant closure are estimated to total $500,000 to $1 million in 4Q2019, with cash payments occurring in the first half of 2020, the SEC filing indicated. Inventory writedowns are expected to be $7-12 million in 4Q2019 based on expected results of the closure.
“In total, these actions are expected to result in estimated total charges of approximately $15 -20 million during the phase-down period,” the company said.
TimkenSteel, which manufactures alloy steel, carbon and micro-alloy steel, has an annual melt capacity of about 2 million tons. The global operator is considered a leading North American manufacturer of special bar quality, or SBQ, and provides steel large bars at least six inches in diameter. It also provides mechanical tubing.
TimkenSteel operates warehouses and sales offices in five countries and has made its steel in America for more than 100 years. At the end of 2018, it employed around 3,000 people worldwide.
In 2018, the company reported a net loss of $31.7 million, versus a 2017 net loss of $43.8 million. Last year it posted sales of $1.6 billion, up 21% year/year.