Dedicated to the Valley
YOUNGSTOWN – Mill mechanical technician Stephen Rolfe was out of work and in desperate need of health coverage for his family after last year’s shutdown of Warren’s RG Steel when Vallourec brought him on board for a new job and new hope.
Rolfe, 57, of Mecca, stood inside the bright new pipe mill Wednesday morning, listening to area dignitaries and top company officials speak about the promise this new mill on the Youngstown-Girard border holds, not only for 350 workers like Rolfe, but for the company’s global plan.
French-based Vallourec on Wednesday cut the ribbon for the million-square-foot pipe mill, proudly opening the doors to give media and local officials a rare glimpse inside. Previously operating as V&M Star, the global company announced last month’s plans to rebrand all its properties with the Vallourec name.
Returning to the area to speak during the ribbon cutting was former Youngstown Mayor Jay Williams, who was instrumental in a Joint Economic Development District agreement between Youngstown and Girard that made the mill project possible. Williams now serves on the staff of President Obama in Washington.
Philippe Crouzet, chairman of the management board for Vallourec, who also made the trip to the Mahoning Valley for the event, said the mill makes Vallourec a world leader in premium tubing and integrates the manufacture, pipe making and finishing all at one property.
Crouzet said at least a third of the company’s global revenue will come from this mill and its production of pipe used in the oil and gas drilling industry.
“This is really the core of the oil and gas industry globally,” Crouzet said of the Youngstown mill. “When we supply our customers in other parts of the world, this is always a reference. It’s very essential.”
Predicted continued growth in the oil and gas industry bodes well for this plant’s future, said Skip Herald, managing director North America for Vallourec USA Corp.
“The shales and the unconventional reservoirs are really the future. What that means for us is more demand for the products that we make. What we see going forward is a 3 percent annual growth rate going forward, but an 8 percent growth rate between 2012 and 2017 in oil country tubular goods,” Herald said.
So why Youngstown?
Vallourec President and Chief Operating Officer Joel Mastervich said there are very specific answers to that question, with a good available work force being one of them.
In addition to the 350 new workers at the pipe mill, the adjacent Vallourec Star mill employs about another 350 workers. A planned threading plant eventually will add about 100 more workers.
Mastervich said 96 percent of the company’s Youngstown workers have come from the Mahoning and Shenango Valley area.
In addition to the close proximity to the Marcellus and Utica Shale plays, where much of their products are used, other factors in the decision to come here were infrastructure access and good cooperation from area officials.
The pipe mill building was completed in September 2011, with the first billet pierced a year ago and first commercial shipments sent in December. The finishing mill was completed just this month, and ramp up of production is going on now with plans to reach capacity of 350,000 tons by the end of this year.
“Being domestic allows us to react fast to changes in the market. We know by experience we could not do what was required when we were exporting just from Europe,” Crouzet said.
The decision apparently was the right one. Vallourec now is the No. 1 domestic supplier of tube products needed in the shale horizontal drilling process.
That all was made possible, Herald said, due to a “bold” decision in 2009.
“As you will recall, 2009 was not the best year not only for the U.S. economy and the global economy, but also for oil and gas, so I would say it was a very bold decision for our company to make the decision in 2009 for this facility … and today we will see the benefits of that,” Herald said.
Products manufactured in Youngstown are used not only in nearby shale plays, but also in other North American shale plays in areas like Texas and North Dakota.
“I think the key is the ability to innovate,” Herald said. “Each shale play is not created equal. This allows us to adapt and move quickly, which is significant advantage over foreign imports.”
While Herald declined to put a number on the market share held by Vallourec products, he said foreign imports still produce about half of the product needed in oil and gas drilling.
“The trade protection has helped significantly,” Herald said. “We will compete with anyone as long as it’s on a fair, level playing field,” he said.
And for workers like Rolfe, that’s a good thing.
“The opportunity to open up a new mill with all new equipment. It’s been very exciting,” Rolfe said.