It seems that it is not just oil and gas contractors and companies being affected by the slumping global oil price. The fall in the price is having a domino effect, with a leading engineering company in Northumberland announcing that it will be axing 36 jobs.
IHC Engineering, based in Stocksfield, Northumberland, has revealed that it will be letting 36 employees go after its turnover in 2015 fell from £118.7 million to £76 million. Its operating profit dropped to £15.6 million from £25.8 million in 2014.
Strangely, even though IHC Engineering saw a decrease in its turnover and operating profits, the company’s employee count increased marginally to 240 for the year ending 31st December 2015. However, IHC Engineering Director George Salvesen stated that due to a slowdown of its major markets, the company has been forced to restructure certain responsibilities and functions. This has resulted in 36 redundancies.
IHC Engineering is part of the Dutch Royal IHC group. It works in conjunction with oil and gas companies, renewables companies and submarine telecommunications companies by designing, manufacturing and supplying specialist and precision equipment.
Salvesen stated that due to the prevailing market conditions, and after completing several projects, the company is faced with a reduced order backlog compared to previous years. As the company has forecast a further reduction in the number of projects in 2016, it has been compelled to reduce its workforce. This will enable IHC Engineering to harmonise its resources to the anticipated demand. By restructuring certain functions within the organisation, IHC Engineering will be better equipped to offer clients a more efficient service.
IHC Engineering is one of several North East companies that have been affected by the falling global oil price, which has resulted in oil and gas companies reducing their offshore activities. Until now, oil and gas contractors and workers were feeling the heat. However, it is now spreading to companies such as IHC Engineering that work with oil and gas companies.