Vallourec SA management and shareholders will be asked to make sacrifices in terms of salaries and dividends as the French maker of steel tubes for the oil and gas industry grapples with a collapse in demand, Economy Minister Emmanuel Macron told parliament Wednesday.
“Efforts will be asked of management in terms of salary and efforts will be asked of shareholders in terms of dividends,” said Macron. He plans to meet with Chairman Philippe Crouzet next week as part of an effort to “continue to put pressure on the group,” he said.
Macron was responding to lawmakers’ criticism of Vallourec’s plan to cut jobs in the face of a collapse in crude prices and cutbacks by oil companies on new exploration and production projects. The Boulogne-Billancourt, France-based company has said it will shed 2,000 jobs worldwide by the end of 2016 including 550 in France. The company is also trying to sell a majority stake in a steel-making site in Saint-Saulve in northern France.
Vallourec is in talks with potential partners for the site, a spokeswoman said Wednesday.
“The world market is in a crisis, and this crisis is more and more lasting,” Macron said in parliament. Low oil prices will likely last for another one or two years so there is a “brutal adjustment to make.”
The European Union earlier this month renewed tariffs on steel pipes from China for another five years, seeking to curb competition for EU producers such as ArcelorMittal and Vallourec.
The EU re-imposed the duties as high as 39.2 percent on imports from China of seamless pipes and tubes, which are used in the construction, energy and engineering industries. The levies punish Chinese exporters for allegedly having sold the pipes and tubes in Europe below cost, a practice known as dumping.
Part of Vallourec’s problems stem from competitive pressure in the steel industry due to Chinese producers “flooding” the European market by lowering prices, Macron said. Europe “must have an answer to Chinese dumping. We can’t have our industry progressively destroyed by cheap Chinese imports.”
Vallourec closed 5.6 percent higher at 8.48 euros. The shares have plunged 63 percent since the start of the year giving it a market capitalization of 1.1 billion euros ($1.2 billion).