Jeffersonville, Indiana-based barge builder Jeffboat LLC is cutting a number of jobs as it sees a decline in demand for its barges. The Jeffboat layoffs will affect nearly half of its employees as the barge builder cites low oil prices and low coal production the reasons for the job cuts. Meanwhile, city officials are deeply concerned about the the significant Jeffersonville layoffs.
Jeffboat Layoffs to Affect 278 Employees in Jeffersonville, Indiana
Jeffboat, the largest barge builder for inland transportation of goods in the country, is cutting 278 jobs at its Jeffersonville shipyard. The layoffs will be taking place over the course of next several months.
The company has reportedly been downsizing its workforce since last year. Jeffboat had about 800 employees at its Indiana shipyard until last year, which are down to 600 now.
The latest Jeffboat layoffs will cut the present workforce by nearly half as another 278 employees will be sent home for good.
The job cuts have left Jeffersonville officials concerned as Jeffboat has been a significant employer in the city for years. Jeffersonville’s mayor is still hopeful that the company will “bounce back” from the industry’s cyclical downturn. However, what he believes to be a “temporary” hiccup may not be so temporary after all.
Jeffboat layoffs are owed to declining demand of the shipbuilder’s key product, its barges. The barges, or flat-bottomed boats which are used in moving heavy freight, are reportedly facing a slowdown in demand as their biggest buyers likewise face an industry-wide decline.
Jeffboat Layoffs Owed to Slow Coal Production and Low Oil Prices
Jeffboat, which has been in business for well over 80 years, has long since sold its barges to the oil and coal industries. Jeffboat barges have been used for inland transportation of oil and coal for years.
However, with both the oil and coal industries on a decline, it is understandable why Jeffboat is facing waning demand. The oil boom, which occurred post the Great Recession, completely went bust in the past couple years. Oil prices cratered to extreme lows due to the global oil glut, forcing many oil producers to go out of business.
The coal industry met with a similar slump as coal prices crashed to multi-year lows. America’s transition away from coal-powered energy to green energy under the Obama administration has been the major contributing factor here.
Overall, the decline in the two big industries triggered a ripple effect across the barge industry, which also began to suffer.
In addition to these economic headwinds, the barge industry, which is itself flooded with builders, is pressured to cut prices or go out of business amid slumping demand. It is estimated that a barge can last up to 20 years before it requires a replacement. The supply glut is consequently forcing major barge builders to scale back production.
Owing to these factors, Jeffboat’s barge building business has also been cyclical. The company has historically hired during up times and resorted to job cuts during down times. However, the persistent job cutting in the past couple years is certainly worth a concern as the company’s workforce shrinks to record low levels.
Jeffboat has reportedly halted its business before, back in the 1980s, when demand for barges completely died, and has also gone through a bankruptcy phase in 2003.
With experts forecasting demand challenges to continue in 2017, it is possible more Jeffboat layoffs may follow in the months to come.
“Facing drop in demand, Jeffboat to layoff 278 workers in coming months,” Courier Journal, November 01, 2017.
“Barge industry going against the current in 2017,” WorkBoat, January 19, 2017.