Shetland Oiltools will mothball its Lerwick plant in the lead up to Christmas with the possible loss of more than a dozen jobs.
The company says the harsh economic climate has forced it temporarily to close down the Gremista base next Wednesday in order to safeguard its long term future.
It is not yet known if any of the redundancies will be voluntary as the company is still going through a consultation process with its 18 members of staff.
Drilling waste UK manager Gordon Duncan told The Shetland Times a skeleton crew would be retained at the plant to carry out essential duties, although he would not be drawn on exactly how many members of staff would remain in jobs.
He added the plant was likely to stay closed at least until next spring. “We’re having to mothball the premises until things pick up next year,” he said. “We don’t anticipate any improvement until quarter one or quarter two of 2010. In order to safeguard the business we’ve had to go down the road of redundancies.”
He said the company, which works with drilling equipment commonly used in the oil industry, had seen recent signs of improvement. However these were not enough to prevent it from laying people off.
“Things are improving slightly, but there is still a downturn in the volume of business we are doing. There have been good signs but it will take a while before they filter through.”
The company was taken over by Malaysian company Scomi almost five years ago. It had previously been a partnership between the charitable trust’s property company Slap and Oiltools International, which is part of the Scomi Group. As well as Shetland and Aberdeen, the company has a processing plant in Peterhead and operates in various overseas locations.