HOUSTON—Major changes are in the works within Trelleborg A.B.'s Offshore & Construction business, the most significant of which is the eventual closure of the firm's Houston factory and consolidation of its subsea buoy operation at a plant in England.
Among other key changes will be the resignation of Fredrik Meuller as president of the Offshore & Construction operation at the end of the year. Once he steps down, Peter Nilsson, president and CEO of Trelleborg, will become acting president of the business for the time being.
Trelleborg will discontinue the manufacturing of subsea buoys for drilling equipment in deep water environments at the Houston facility and move it to its Skelmersdale, England, plant that focuses on production of other types of deep water buoys and engineered polymer products, according to the firm, which is headquartered outside of Stockholm in Trelleborg, Sweden.
Moving the entire operation will take some time. It will happen gradually over a period of several months, a Trelleborg spokeswoman said, because the company will continue to handle orders for customers at the Houston plant while it builds up capacity at the Skelmersdale facility.
Production at the Houston site is expected to end during the second half of 2018, she said. Between 55 and 60 employees will be affected by the eventual closure. Once the plant is vacated, the firm likely will sell the complex.
Trelleborg's plan is to absorb all of the Houston factory's activities and existing capabilities at its plant in England, the spokeswoman said.
"We are now looking into how to transfer existing equipment and set up the production in England as efficiently as possible," she said. "And we will, of course, adjust the site capacity to handle future demand if necessary."
A U.S. sales and engineering organization, currently in place in Houston, will be retained and remain in the city.
Trelleborg's decision to move the operation from the Houston site to the factory in England is necessary because "the oil and gas segment has been highly volatile in recent years, hard to forecast and our earlier measures have proven insufficient to keep the business area in positive results," the spokeswoman said.
She said that is especially true for the subsea drilling segment. "Thus, we had to initiate measures to ensure we ran a profitable business in the long term," she added.
Trelleborg's offshore business will continue to operate another U.S. facility, located in Boston, the spokeswoman said. The plant develops and manufactures a number of products, including thermal insulation tapes and buoyancies for remotely operated vehicles.
In addition to those in England and the U.S., the company has offshore operations in Norway, Singapore and Brazil. Trelleborg Sealing Solutions also has offshore related facilities in the U.S.
Structural changes currently planned within the offshore operation "will make the group's earnings potential and organic trend more stable and predictable," Nilsson said in a Nov. 28 statement.
At the same time, he said, the structure of the business will be simplified, "ensuring that Trelleborg will remain the only truly global supplier of both deep water buoys and other engineered polymer solutions in the offshore and gas segment."
In terms of Meuller's resignation as president of the Offshore & Construction business—which is based in Sweden along with another Trelleborg business, Trelleborg Industrial Solutions—Trelleborg said Meuller and the company jointly decided that he will leave his post on Dec. 31.
However, he will remain with the group during a transitional period to assist in the changeover.
Meuller has been with the firm for 15 years and has held a number of different posts during that span, serving as president of the Offshore & Construction business for the past five years.
He said he's convinced the measures being taken within the business will strengthen its position and that the operation will benefit from the current moves when the market eventually recovers.
"At the same time, I see the need to simplify the organizational structure and have therefore decided to move on to new challenges outside of the Trelleborg Group," Meuller said in a statement
He did not indicate where he's heading next.
In the same news release, Nilsson thanked Meuller for his contributions to the company during the last 15 years and said he was a driving force in the globalization of the business during the last five years.
"Recently the business area has faced challenging market conditions which Fredrik has handled in an exemplary manner," Nilsson said. He added that he has personally appreciated Meuller's "constructive input and our close collaboration over the years."
Meuller eventually will be replaced on a permanent basis and Nilsson will relinquish the acting president position. Exactly when that will occur has not been decided, the spokeswoman said.
Trelleborg is not downsizing the Offshore & Construction business, she said. "We will continue to supply the same products but from England instead of the U.S."
Consolidation of the business, she added, will secure "our leading position and competitiveness in the offshore and gas segment."