The job losses will fall on 1,050 staff employed directly by the American-owned company, and 250 sub-contracted workers, out of a total workforce of 2,500. McDermott said the redundancies were 'the result of a severe downturn in the fabrication market and a significant increase in the fabrication capacity serving this industry'.
Its future would depend on how well it achieved 'a critical review of our traditional way of doing business'.
In the context of Scotland's fragile Highland economy, where 1,300 represents almost 2.5 per cent of the total workforce, the announcement is being treated as an economic disaster - with the expectation that more is to follow.
Highland and Islands Enterprise estimated that the job losses would cost the local economy around pounds 30m. A futher 4,000 related jobs throughout Scotland could also go.
McDermott, Highland Fabricators at Nigg, north of Inverness, and RGC Offshore, at Methil in Fife, are Scotland's three main yards constructing huge jacket and platform structures for the oil industry. RGC could soon follow McDermott and announce that 1,000 of its 1,800 employees may have to go. Highland is expected to announce substantial job losses before the end of the year.
The UK licensing of North Sea oil fields meant in the past that the Department of Energy had influence over the placing of fabrication orders. Almost all orders in the past 20 years have gone to UK yards.
The EC single market has brought increasing competition, especially from Spain, Italy and France. McDermott and Highland Fabricators had both bid for and failed to win a construction order from Elf Enterprise for the Claymore oilfield.
The end of informal protectionism and the increasing maturity of the North Sea oil industry have caused some oil analysts to forecast a shake-out.Reuse content