AUGUST 19, 2013 — Louisiana officials are working to find alternative employment for workers who will lose their jobs when McDermott International, Inc. closes its Morgan City shipyard. McDermott announced the decision August 5 and said the closure was expected late this year or early next, once existing projects in the yard's current backlog are completed.
The decision to shutter the yard was driven by "the evolving market demands of the offshore engineering and construction industry in the Gulf of Mexico," said Stephen M. Johnson, Chairman of the Board, President and CEO.
Approximately 350 employees are expected to be impacted through to the time of closure. McDermott will be providing assistance to these employees over the next several months.
"We worked tirelessly with company officials, regional economic development leaders and elected officials to stave off this announcement," said Governor Bobby Jindal, visiting the yard the next day. "But most of the growth in the offshore fabrication business today is focused on very large and very heavy drilling structures that require deepwater access to fabrication facilities. And the 20-foot to 25-foot draft in the waters at the Morgan City Yard are simply not deep enough to serve the major deepwater projects today. It's for that very specific reason — and not because of the local workforce or our state business climate — that McDermott is making this very difficult decision.
"Our number one responsibility is to make sure that workers affected by McDermott's decision land on their feet at other companies in Louisiana. In order to help these folks land on their feet, the Department of Louisiana Economic Development and the Louisiana Workforce Commission stand ready to provide these workers with the resources they need to find new jobs. We will do everything in our power to see that the men and women of McDermott have outstanding career options available to them as their work here comes to a close."
Governor Jindal was accompanied by Louisiana Economic Development (LED) Secretary Stephen Moret and Louisiana Workforce Commission (LWC) Executive Director Curt Eysink. They were joined by officials from other Southern Louisiana companies—including Bollinger Shipyards, Danos, and Edison Chouest Offshore.
"That's why we came down here today. To the workers – I want you to know that we are committed to helping you find new jobs and opportunities right here at home. With the major economic activity we're seeing in this region and the coalition with us today, I'm confident that we will overcome this challenge."
An increasing amount of deepwater fabrication work for the Gulf of Mexico requires much deeper water depths than are available at McDermott's yard, which was the primary factor driving the company's decision.
LED has worked closely with local and corporate officials of McDermott for the last two years in an attempt to find ways to keep the yard open. However, the water depth at the yard has made it very difficult for the company to compete for heavy deepwater projects. LED provided incentive proposals to try to help the company secure major new work for the yard, but the timing of those potential projects hasn't worked out.
McDermott President and CEO Steve Johnson has committed that McDermott will renew its leases at the site in order to preserve the opportunity to restart operations at the yard when and if market conditions improve. Additionally, he committed to LED that McDermott would entertain offers from other companies that could make use of the location in partnership with McDermott. LED also will be connecting McDermott with some of the large industrial companies that may have a need for modular fabrication work that could be performed at that facility in the future.
Secretary Moret said, "Many employers in the Bayou Region are adding jobs right now, such as Bollinger Shipyards, Danos, Intermoor, Leevac Shipyards, Oceaneering, Gulf Island and Edison Chouest Offshore, so LED FastStart and the Louisiana Workforce Commission will work with the company to help find good job opportunities in the Bayou Region for impacted workers over the next six to nine months as the yard's work slows down. The dedicated employees at McDermott have exactly the work ethic and skill sets that other major employers in the area are seeking right now as they grow to take advantage of expanding deepwater opportunities in the Gulf of Mexico."
The LWC has a Rapid Response team that has met with company officials to establish a schedule of services for affected employees that will help make their transitions to other jobs smooth and fast. Those services include orientation meetings, skill assessments, job placement services and potentially even retraining for those who need it.
According to the LWC, the skillsets of these workers—mostly structural and pipe fitters, welders, riggers and painters—are the same or similar to the skillsets required to build approximately $60 billion of new plants and expansions of existing plants. Those projects are projected to require up to 86,000 construction workers through 2016.The LWC Rapid Response team will focus specifically on identifying those skills among the affected employees and helping them qualify for jobs with other companies.
Executive Director Eysink said, "The best way we can assist these workers is to help them find new, good jobs quickly, and that work starts today. They should understand that their skills are truly in demand. Not only are they in demand today, but employers are telling us they will continue to be in demand for years to come."
Examples of companies hiring workers include Edison Chouest for its LaShip shipyard in Houma that will result in 1,000 new direct jobs; Danos for its new $10 million corporate headquarters in Gray and new $20 million fabrication facility that will create 426 new jobs over the next five years; and Oceaneering which has announced it will create 200 new jobs averaging $60,000 per year while retaining 1,700 existing positions at its Morgan City facilities.