Service and supply businesses lay off workers as producer spending dries up, leading to calls for more focused government support
Ryan Williams says starting a business in the midst of the Great Recession in 2008 was probably a crazy idea.
But Drake Oilfield Supply somehow navigated its launch, survived another oilpatch slump a few years later and will soon enter its 13th year of operation.
“We’ve had to suffer through several downturns,” said Williams, a wholesale supplier of valves, wellhead and other equipment. “But we’ve made it through.”
Williams is less sanguine, however, when discussing the months since an international price war flooded markets with oil while COVID-19 crushed fuel demand.
Now, he worries the strain on businesses like his could be too much as producers slash their capital spending plans by billions of dollars and hunker down. He believes more focused support from government is needed to help at-risk companies in the supply and service sector.
“I would say a majority of companies have concerns,” said Williams, who employs 10 people in Alberta. “Major concerns about how we stay open.”
There are thousands of companies across Canada that sell parts, lease equipment, offer safety services or hire out technical skills to the oil and gas industry. The swift decline in oilpatch spending has sent tremors through the sector.
WATCH | Ryan Williams calls for more focused support for the oilfield service and supply sector:
Ryan Williams, the owner of Drake Oilfield Supply, says most of the government programs won’t help businesses like his. 1:34
Drew Schofield, vice president of M & Z Industrial Supply, an Edmonton-based supplier of industrial fasteners, said sales were down by around half in May.
He said the company, which opened its doors in 1979, is in a better position than some of its peers and will continue to soldier on.
But it is looking to the federal wage subsidy to help limit the impact on staff. A couple of months ago, they had 50 people. They were recently down to about 42.
“If things don’t pick up by the end of the wage subsidy thing, then things will change,” he said. “I’m fearful [for] the companies that will not survive this. I feel for them.”
Linda Side, managing director of a collection of businesses known as the Side Group, said they employed about 600 people in Alberta and British Columbia.
A big slice of its business is with the oilpatch, but it has diversified into several sectors over the years, which helps when energy markets drag. Even so, with the double blow of COVID-19 and oil industry struggles, they’ve had to lay off 150 people.
“We’d ne