By: Matt Krantz
It’s hard to find much pity for oil companies, which could lose out on $44 billion in profits. But there are several non-oil companies and their workers that could feel the pain from plunging oil prices.
Cheap oil prices are a big problem for the companies that build facilities or equipment that extract oil, gas or other commodities from the earth, such as Foster Wheeler and Joy Global (JOY), says S&P Capital IQ. These so-called construction and engineering companies are the biggest companies at risk of losing out from the falling price of oil.
Pain is already starting to hurt the business of making oil production equipment. U.S. Steel (X) said Tuesday it plans to cut 750 workers in two plants that make steel tubes used largely in the, you guessed it, oil industry. One of the closed plants is in Lorain, Ohio, the other in Houston.
The company employs roughly 26,000 workers in North America. U.S. Steel blames unfair competition from foreign oil producers for the dislocation of the business.
U.S. Steel fell 57 cents, or 2.3%, to $24.78. Shares of Joy Global are down 2% to $44.54 Tuesday and are off 20% over the past year. Foster Wheeler was delisted from the Nasdaq exchange last year.
S&P Capital IQ warned weeks ago that construction and engineering firms could be hardest hit by the cheap oil. The report highlighted several other industries that could be “disrupted” due to events during the year. But cheap oil was a big theme.
“Because lower oil prices could make some drilling projects economically unfeasible, projects could be delayed, canceled or reduced in scope,” according to S&P Capital IQ’s report.
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