There’s a recovery, unquestionably. The recovery is
strong, but geographically centered in the United States, in
the areas of unconventional oil and gas exploitation. And
that’s where we are expecting the recovery. The crisis has
mobilized the whole industry to improve operating performance
and oil prices have returned to a level which is now
sufficient to ensure profitability in these regions. This is
not yet the case for the heavier and more complex deep
offshore and onshore projects. However, production cuts
and the rebalancing of supply and demand suggest a return
The sector cut more than 300,000 jobs in the United
States in 2015 and 2016, but the speed of the recovery is
generating a return of skills. By fall 2017, the sector will
have recovered a large portion of its workforce. In the US,
we have maintained our skill base, even during the lowest
point. In Europe, we have reduced our capacities, but preserved
our R&D budgets and key technology skills, while
continuing to innovate and to look beyond the cycle.
The new organization has two objectives. The first is
competitiveness. We need to optimize our new production
routes resulting from the plan announced and implemented
in 2016. This means being able to choose the most
competitive route for our customers and for the Group at
all times by considering all parameters, from plant loading
to costs, delivery times and exchange rates. It is the central
Technology & Industry department that now allocates production
in close and transparent cooperation with the
regions. Its mission is also to stimulate and support the
regions to improve their industrial and technological
The second objective is growth. Over the past two years,
we have focused on adapting our industrial facilities and
reducing our costs. Today, we devote more time and
resources to finding new growth paths, increasing the value
of our offer, expanding it, developing new solutions and
entering new terrains for the benefit of the entire Group.
There, too, a central Development & Innovation department
drives a transversal approach, stimulating cooperation
between the regions, which are on the front lines of
the commercial battlefield, in contact with customers.
Transparency, sharing and confidence are the levers of the
In the United States, the sharp decline in demand was amplified by a massive destocking by distributors. The rebound is equal to the amount of the drop. In six months, our capacities have returned to a level close to saturation.
Some of the recovery in demand is temporary, of course, and we are completing the American offer with an offer from Brazil, where the difficult market leaves capacity available, and even from Europe. This exercise validates two strategic choices: doubling the capacity of the Youngstown plant and establishing new production routes to meet global demand.
This is probably the boldest project in Vallourec’s transformation.
We know Tianda very well, having become a
shareholder in 2010. We know and have validated the quality
of their equipment and their attractive production costs.
In 2016, we took complete control of this company under
very attractive financial conditions. So, where is the audacity?
The challenge is to raise Tianda’s standards to the
Group’s premium entry level without losing its competitive
advantage, by gradually changing behaviors and installing
our best practices in terms of safety, quality and
Small, well-valued and short-term delivery runs remain
the prerogative of Europe for oil and gas as well as for niche
and specialty markets in industry and power. The core of
R&D in all business lines also remains in Europe, especially
in France for oil and gas, and in Germany for power and
industry. Although the crisis has affected our customers’
priorities, innovation remains a growth engine for Vallourec. We are working on new products and services
associated with our tubes in a approach sought by our customers
and considering the total cost of ownership.
The hardest part has been to fight on all fronts at once,
to adapt production very quickly and at the same time to
launch an in-depth transformation in the medium term.
You have to ask employees to make efforts and be creative
when business is halved. It was the most difficult part, but
we did it and everyone contributed. I am most proud of
convincing the teams and the shareholders to follow us in
this industrial and financial challenge with a short timeline.
We responded to it without blemish and without delay. Even
the toughest decisions were executed on time, without
penalizing our customers and in keeping with our commitments
to our employees who were most affected. Everyone
shares in this pride.
We all need a positive boost, our teams as well as our
customers, and we decided that it would come from within
Vallourec. This campaign says: more than ever, Vallourec is
capable of meeting your technical challenges, enabling you
to achieve your most impossible projects and your wildest
dreams. Today, Vallourec is ready to produce the best for
less and to surpass new frontiers. It is a message of confidence
in the future that we are sending to all of our stakeholders
around the world, faithful to the pioneering spirit