The offshore oil and gas industry has taken a big hit since the price of oil went south months ago. Offshore service vessel companies are stacking vessels like cordwood. Some shipyards in the Gulf are suffering too. Some are still working on newbuild orders, but their repair business has gone to hell. Then there are yards that are closed because the revenue stream has dried up.
So, does that make money the biggest concern for companies in the Gulf that are tied to the oil and gas industry? I say no. For shipyards, most learned long ago to diversify. If a shipyard works only on oilfield vessels, then that yard is asking for trouble because the industry will cycle down eventually. That’s the nature of the beast. For OSV companies, it’s a matter of working and retaining the contracts it already has, cutting expenses to the bone and playing the waiting game. It’s tough and saying it doesn’t make it any easier.
Yet the biggest problem is the same one the industry has had for years: personnel. Decades ago, an OSV company or shipyard in the Gulf could cut its employees loose and when things got better, bring them right back. But those were the days of the single family income for the grunts who held those jobs, the lunch pail brigade with wives at home. Obviously, our culture has changed. Kids and grandkids of those men saw how the layoff and rehire shuffle created problems at home and they wanted no part of that. Consequently, more and more over the recent decades, when these workers were laid off, many didn’t come back. Not just back to the company that laid them off, but back to the industry at all.
Companies have changed with the times. They have tried everything to keep the employment rolls full, and, for the most part, they have done a good job.
Sometimes, however, it just can’t be done. When an OSV is stacked, what becomes of the crew? You can try to shift them around, but eventually it becomes a game of musical chairs. For shipyards, there are only so many people needed to keep the yard clean.
Todd Hornbeck, chairman, president and CEO of Hornbeck Offshore Services, mentioned this problem in the company’s second-quarter earnings call on July 30. “While we have held our own in comparison to the first quarter, we take little solace given that vessel stackings that made it possible resulted in the loss of human capital [people] in which we have invested significantly and who have helped us to build our company.”
Hornbeck said he expects the Gulf to be a hot bed of activity when the industry cycles back around. The question is will Hornbeck and other OSV operators have the personnel needed to take advantage of the eventual upswing?