Lufkin Industries opens USD 140 mln plant in Romania

US-based Lufkin Industries, the oilfield equipment maker, has officially opened a new manufacturing facility near Ploiesti city, southern Romania, following an investment of USD 140 million, which is the largest in the company’s history.

Lufkin received EUR 28 million in state aid to build the Ploiesti plant, which spans 33,000 square meters and can accommodate a yearly production of 1,100 beam pumps. The facility will also service and support the sale of Lufkin products across the Eastern Emisphere. The company invested USD 72 million in equipment and USD 53 million in the buildings.

Around 260 people are currently working in Ploiesti and the headcount is set to reach 350 employees by year end. The company expects revenues of USD 60 million from Romania this year, which should accelerate to USD 100 million in the next years.

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Jay Glick, CEO and president of Lufkin Industries, said that the company has developed an IT department locally and added design engineers due to the talent pool existent in the area.

“We anticipate that the Romanian operation will serve as a strategic hub for our Eastern Hemisphere markets. This facility should allow us to secure new customers and take advantage of the increasing use of artificial lift for oil and gas wells,” said Glick.

Glick said that Romania’s strategic geographic position was one of factors that contributed to the investment decision, along with the quality (skills, education) of the local work force and easy access to raw materials and components. He added that Romania’s membership in the EU provides confidence for the future. 

Around 90 percent of the output from Ploiesti will be exported in more than 20 countries in Africa, Western Europe and Asia, the Middle East and the former USSR.

“Lufkin’s operations here represent a happy marriage of U.S. cutting edge technology and Romania’s heritage and expertise in the oil industry. Together they offer the promise of transforming Romania into a regional hub in the energy field,” said Duane C. Butcher, Chargé d’affaires ad interim, at the US Embassy in Bucharest.

Romanian president Traian Basescu commented that through Lufkin’s investment, Romania regains its technology clout in the oil and gas industry, which is useful for offshore drilling, shale gas or in reopening abandoned wells.

Glick said that the remaining 10 percent of the production that is used in Romania targets onshore conventional developments and even shale gas.

In 2012, Lufkin Industries reported a 39 percent increase in revenues to USD 1.3 billion against the previous year while the net profit rose by 24 percent to USD 82 million.

General Electric (GE) announced this spring it would purchase Lufkin Industries in a deal worth USD 3.3 billion. Glick said that GE representatives who visited the Ploiesti facility were “very impressed”, adding that the plant is easily expandable in terms of modules.

Ovidiu Posirca