Well-service firms get bogged down in slowdown
Tulsa, Okla. — The influence of the petroleum industry on Tulsa's manufacturing, supply, and service businesses is tremendous. Almost every industry group represented in the city and surrounding suburbs provides support to some segment of the oil business - exploration, drilling, transportation, refining, servicing.
This year, things aren't quite so rosy for petroleum support companies as they were last. The well-servicing industry was ''branding-iron hot'' a few months ago, says Jerry Haynes, editor of the Well Service Market Letter. But now the companies are wallowing in a slowdown that could see many go sliding down the drain.
Four international petroleum-related professional organizations are headquartered in Tulsa. The prestigious Energy Advocates, a group of industry executives who travel the country giving the oilman's view, got its start here.
Derricks, rigs, pipe, couplings, valves, wellheads, portable welders, pumps of all varieties, tanks, seismic apparatus, computerized controls and metering devices, even special oil field brushes and brooms, are made in local factories.
And most banks, insurance agencies, engineers, geologists, and computer scientists are involved in some phase of the oil industry.
The many steps involved in getting oil from the ground to the consumer have poured millions of dollars into Tulsa and are responsible for hundreds of jobs.
But nowadays the well-service firms describe their operations as ''lean and mean,'' according to Mr. Haynes. He warns that not only individuals' jobs, but training and safety programs and other advances developed by well servicers may fall victim to the setback.
Drilling activity is half of what it was a year ago, and rig utilization stands at 56 percent. Since activity in the associated petroleum industry directly responds to these figures, business for servicers, suppliers, and manufacturers has also slowed significantly. The association of well servicing contractors predicts that 1982 revenues for this group will be a third less than last year's.
Tulsans are not used to counting joblessness among their primary civic and social concerns, but they're having to face it now.
In July, employment in the manufacturing sector decreased by 1,200 from the previous month. Most losses involved jobs in the production of crude oil and gas.
The personnel roster of Cooper Manufacturing Corporation, which manufactures rigs, now shows just 250 employees, down from its peak payroll of 1,200 workers in 1981.
Cooper president John Barton says, ''The net effect of what befell our company and others in this business is that we were double-dipped by two factors affecting rig supply among our buyers.
''First, the well servicing contractors' rig inventory became glutted as they overanticipated this year's servicing activity; and second, there were fewer job call-outs for servicers as a result of shrinking cash flows among well operators.
''The low per-barrel contract price for crude oil has put their revenues about 15 percent behind planned figures. In light of this reduced income, operators are choosing not to service or overhaul their wells. And reduced demand for well servicing and overhaul means fewer orders for rigs.''
One Tulsa company refused to succumb to the layoff method of treating sluggish sales. T. D. Williamson, manufacturers of pipeline and of pipeline pigs (pigs are devices running inside pipelines to scrape paraffin and corrosion from the walls of pipe), gave all its employees an 8 percent cut in pay and shortened the hourly staff's workday by one hour.
''We were, perhaps, not as greatly impacted by the recent slump as were companies more directly serving drilling activity, but we did experience a setback. We took the pay-cut approach to controlling expenses so that we wouldn't put any of our people out of work,'' said John Eyberg, TDW's man in charge of human resources.
Despite the recent shock to the city's economy, the general feeling of those involved in the oil business is one of optimism; most owners and managers of petroleum servicing companies believe ''this too shall pass.''
Cooper Manufacturing's Mr. Barton says he is confident of an upswing in his company's business because current rig inventory will need replacing.
So what's in store for Tulsa's petroleum-associated businesses in the next few years? Can they ride out the storm that is pounding away at their industry?
In Tulsa, hopes are high. Observers note that one of Tulsa's strengths is the number of companies it has that are still managed by their founding families. Such companies are seen as more flexible and adaptable and, therefore, more likely to survive and flourish.