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A marine company with local branches is scouring the market for new, diverse lines of work while the oil and gas industry is down.
Gulf Island Fabrication, a Houston-based company with fabrication, services and shipyard locations in Houma, has survived the oil and gas downturn so far. However, the sluggish market could mean tough decisions for the company’s leadership in the near future.
Gulf Island issued a Worker Adjustment and Retraining Notification with the Louisiana Workforce Commission on April 14 saying that as many as 227 workers at their Louisiana-based fabrication company could lose their jobs by June 23. The LWC press release announcing the WARN said the company would have to lay off the workers if the company cannot win bids on upcoming projects.
Gulf Island President and CEO Kirk Meche said his company has picked up some smaller projects in this downmarket, but the larger projects the company usually chases are not there.
“I think as they push the [larger] projects to the right, they start questioning themselves as far as the concepts they may be choosing, whether it’s a floating facility or fixed structure or something totally different,” Meche said. “We haven’t seen that much movement on the big projects and I don’t particularly see any movement on the big projects probably for the remaining part of this year.”
Meche said his company would not know until June 23 whether the layoffs have to take place. He stressed that Gulf Island may not have to lay off the entire 227 workers – the company is required to list the maximum number of possible layoffs.
He said Gulf Island has been moving employees from its fabrication segment to the shipyard and services segments of the company to help with projects. Because the skills transfer across each area, if the company picks up work in any area it could help avoid layoffs.
“We have the luxury of having three different segments within our business now. Within those three segments, we’re fortunate that two of the three are busy,” Meche said. The three segments are fabrication, shipyard work and services.
The company has also expanded its reach over the past year to find new options as the weakened oil-and-gas market offers diminished opportunity. The company purchased LEEVAC at the turn of the year, acquiring its employees, equipment and leases at facilities in Jennings and Lake Charles, giving it more riverfront shipyard repair opportunities. Gulf Island absorbed $112 million in work on two projects through the acquisition.
Meche said there have been challenges since the acquisition, but not big surprises. He praised the addition of Gulf Island’s management team, with over 50 years in the business, as crucial to the company expanding its line of work.
“Who knows what the future is going to bring. But we think when we look outside the traditional oil-and-gas industry, whether we’re talking about barges or river towboats or whatnot, that group certainly had some expertise in that area. So, we’re combining the strengths of both companies, and, hopefully, we’ll end up with a very, very strong company for the marketplace,” he said.
The LEEVAC acquisition has helped Gulf Island in finding work supporting river facilities in the liquefied natural gas industry, one of many new arenas the company is exploring. Gulf Island has also dabbled in alternative energy. Local marine services company MONTCO has found work providing lift boats for offshore wind farms on the country’s east coast, and Gulf Island built one of the two boats that made its way up there. Meche said the two companies are still talking about further work together in support of new markets.
“MONTCO and Gulf Island are becoming two well-known names in the offshore wind sector. That’s great. That’s good for both Louisiana companies, get our name out on the east coast and, hopefully, get things moving in the next couple of years,” he said.
The Gulf Island president said his company has seen downturns in its 31 years of existence, although maybe not as bad as the current situation. He said the company’s acquisitions, mergers and diversification have it well positioned to make it through this current economic malaise.
Helping the company’s position is its balance sheet, which features no debt and cash reserves, according to Meche. Keeping its assets in the black presents a reliability that companies look for in a downmarket.
“Cash is king right now. If you’ve got cash, and no debt, which you’re fortunate to have, it allows you to really kind of expand a little bit more,” he said. “Folks don’t get as nervous when they’re dealing with you, in terms of rewarding projects and whatnot, to know whether you’re going to be here next week or not.”
As Gulf Island continues to look for contracts, the clock keeps ticking on his employees’ jobs, a fact Meche is aware of.
“We understand and appreciate the position our employees are in, and it’s never easy. It’s a very difficult market. We’re doing everything we can to make sure this company survives and is around for when the industry comes back up and we start putting people back to work.”
