Despite steady growth in the Greater Houston area oil and gas industry over the past few years, several large-scale manufacturing companies with branches in Tomball and Magnolia have announced companywide layoffs because of the shift in the oil and gas climate since mid-2014.

Baker Hughes announced plans in January to cut 7,000 jobs from a total workforce of 62,000, and Weatherford International announced plans in February to reduce its 60,000-employee workforce by 8,000 jobs. With 29,000 total employees, Nabors Industries—which operates subsidiary company Canrig Drilling Technology in Magnolia—announced 3,480 total layoffs in early March.

Melanie Kania, enterprise media relations specialist for Baker Hughes, said the company's decision to reduce workforce numbers and spending across the board was difficult but an important move that will help the company remain competitive in the economic environment. Kania declined to comment on any location-specific layoff numbers for Baker Hughes, including the Tomball campus.

"Oil and gas market conditions have become increasingly challenging," Kania said. "All impacted employees will be eligible for severance benefits, which include outplacement services and continuing health benefits for a period of time to aid in their transition."

Magnolia Economic Development Coordinator Tana Ross said Canrig Drilling Technology and Weatherford International have laid off an undisclosed amount of employees in Magnolia this year to help streamline companywide cost cuts. In addition, Ross said overtime hours have been eliminated for the estimated 350 employees at Canrig in Magnolia, and some schedules have been altered to 10-hour workdays for four days each week.

"There was a 0.5 percent increase in unemployment in the Houston area in January [according to the most recent reports]," Ross said. "It is clear the [oil and gas] industry has begun to contract. What is not clear is how far the rig count, oil prices, drilling activity and energy employment will fall and what impact their fall will have on the region's economy."

Tomball industry outlook

In addition to Baker Hughes, more than 60 other manufacturing companies operate in the Tomball area, including Breaux Machine Works LP, Toro Downhole Tools and NRG Manufacturing.

Kelly Violette, executive director of the Tomball Economic Development Corporation, said Tomball has become attractive to manufacturing businesses due to the availability of land, workforce opportunities and proximity to major roadways.

"The manufacturing industry in Tomball has a tremendous impact on our local economy," Violette said. "There have been ample employment opportunities, good pay and a broad range of skills, including high-tech manufacturing that attract people to the industry."

There are several new potential manufacturing company prospects on the horizon for Tomball, but no specific business names have been announced yet, Violette said. When the oil and gas industry is booming, the area benefits from commercial and residential development as well as job growth in other sectors, such as drilling equipment production and processing, she said.

"Unfortunately, the oil and gas industry is cyclical so the same driving force that's responsible for the increase in employment in the manufacturing field is also responsible for the job losses we are currently seeing," Violette said.

Bruce Hillegeist, president of the Greater Tomball Area Chamber of Commerce, said he has met with local workers in the energy sector who have been directly and indirectly affected by manufacturing sector layoffs.

"Some [of the workers] were going to retire soon, but they were offered a retirement package and so they left early," Hillegeist said. "There were a few [who] did not know or see this happening. There is encouragement that our area is growing in jobs and economic prosperity, and they will soon find work."

Magnolia industry outlook

Along with large-scale companies, such as Canrig and Weatherford International, Magnolia is home to more than 35 other manufacturing companies in a 10-mile radius of the city, including LB Pipe & Coupling Products LLC, Legacy Tubular and Lincoln Manufacturing.

"Unfortunately, the oil and gas industry is cyclical so the same driving force that's responsible for the increase in employment in the manufacturing field is also responsible for the job losses we are currently seeing." —Kelly Violette, executive director of the Tomball Economic Development Corporation

In comparison to large-scale companies, smaller manufacturing businesses in the Magnolia area, such as Legacy Tubular, have managed to weather the economic climate with existing staff sizes due to lower overhead costs, Legacy Tubular managing partner Preston Benditz said.

Since opening in 2013, Benditz said the company now employs 12 workers and sells unique steel tubing, casing and coupling products for oil wells to companies, such as Baker Hughes and Haliburton.

"My family has been [in the manufacturing industry] for three generations," Benditz said. "We've seen the '86 [oil and gas industry downturn] compared to 2008. That's the business: When it's good, it's good, [and] when it's bad, it's bad. [The industry will] pick back up and folks will find new jobs."

Despite the industry downturn, Ross said she is also hopeful manufacturing revenue will return to steady growth over time due to the diversification of the sector. Ross said she anticipates more manufacturing businesses will take root in Magnolia in the future.

"While many Magnolia manufacturers are oil and gas-related, most are small and have been able to adjust scheduling at this point without imposing layoffs," Ross said. "Some employees are still receiving regular overtime pay. Other manufacturing companies have always been diversified, and although oil and gas is a large part of their production, so is construction. Therefore these companies are standing firm."

Finding employment opportunities

Rather than a uniform trend, the amount of manufacturing industry layoffs have varied depending on whether the company derives a majority of its revenue from the oil and gas industry or in an ancillary sector with other fund streams, said Stephen Horton, northwest Houston and The Woodlands area manager for Carlton Staffing. The Houston-based company has specialized in workforce staffing and employment logistics for more than 30 years.

"We are still seeing some [companies] hiring and some smaller companies taking advantage of the layoffs to hire good [employees]," Horton said. "We are still seeing some companies in need of skilled positions."

Carlton Staffing is one of a number of area companies seeking to help workers who are affected by company layoffs to find other employment opportunities with smaller manufacturers or other supporting industries, Horton said.

"I think 2015 is going to still be a pretty tough year with oil and gas, and many people I've talked to are optimistic that 2016 will look better," Horton said.