Dundee company Pacson, which supplies subsea valves to the global oil and gas sector, has had to pay off 15% of its workforce in the last month.
The plunge in the price of oil led to a significant reduction in the level of orders at the company in the Claverhouse Industrial Park.
Commercial director John McLaren said the company, which had a payroll of 111, had to make some very difficult decisions.
“The whole industry is in a state of flux with the price of oil falling from around $140 to about $40 a barrel,” he explained.
“We had a healthy order book but the level of business we were able to attract fell away as it did in the rest of the industry.
“Orders were stalled or cancelled or significant price pressure was placed on remaining orders, and this affected us.
“The directors had to make some very difficult decisions to protect the company and unfortunately we had to pay off 15% of our workforce 16 people.”
As for the future, Mr McLaren said the market has still to settle after the rallying of the oil price to over $60.
“We are hopeful orders will start to come through but long-term prospects are too difficult to predict at this time.
“Forecasts for the recovery of the sector appear positive for the second half of the decade, but it is not possible to be precise about when there will be a full recovery.”
He added: “Very difficult but necessary decisions had to be made to protect Pacson, and we hope we will not be in this situation again.”
The jobs cut followed another good year for the company. Turnover in the 12 months to October 2014 was up 13.6% at £13.6 million and pre-tax profit was up 11.2% at £893,000. The previous year Pacson’s turnover was up 12.5% at £12m and pre-tax profit more than doubled to £803,000.
Managing director Keith Crawford said in his report on the 2014 accounts that activity and opportunities within Pacson Ltd had improved.
Growth was impacted by the ability of the supply chain to react to what had then been improving market conditions.
This had led to some difficult challenges for the company during the period but the company still achieved reasonable growth.
Pacson continued to make significant investment in product research and development over the period to support its long-term growth strategy.
The company designs, manufactures and tests high-specification isolation valves and pressure-containing equipment.