Supplying the oil and gas pipeline industry in North America requires a commitment to quality and the ability to be flexible in meeting demand. Manufacturers and distributors employ a number of strategies to ensure they have the tools and supplies customers need, when they need it. That means being able to forecast demand and coordinating production and delivery to meet expectations.
One of the leading factors of success in supplying the oil and gas pipeline industry is strong customer service, says Jared Dumm, lead sales representative for the oil and gas industry at Lee Supply Co., an HDPE pipe distributor based in Charleroi, Pennsylvania. The company specializes in water lines to shale gas well sites and also sells fittings, vaults, gate valves, tracer wire and other supplies for HDPE pipelines. Lee Supply employs about 110 people, with five locations, two in Pennsylvania and one each in Virginia, West Virginia and South Carolina.
Focusing on continuous improvement is another component of success, says Bobby Darby, vice president of sales and marketing at Darby Equipment Co., who with his brother, Ryan Darby, vice president of operations, helps lead the third-generation, family-owned manufacturer. The company supplies specialty pipeline construction equipment in North America, including pipe bending machines and mandrels, internal lineup clamps, roller cradles, pipe facing machines, field joint coating equipment and other pipeline supplies. The company has approximately 50 employees at its main location in Tulsa, Oklahoma, with additional branch offices and supply yards in Conroe, Texas, and Burgettstown, Pennsylvania.
Coping with market changes is another ingredient to meeting demand, according to John Capodice, executive vice president at Sterling Lumber, a $150 million, third-generation company, founded in 1949. Originally serving the heavy civil construction lumber needs for customers across the country, the company moved into the matting industry 15 years ago. Sterling employs more than 200 people and offers a “full arsenal” of matting products for accessing jobsites, from traditional wood access, timber and bridge mats, to a variety of composite mats, steel plates, outrigger pads and transition mats.
However, the biggest key in overcoming challenges of manufacturing and distributing supplies for the oil and gas pipeline industry in North America is forming strong relationships, Dumm says. Lee Supply is 20 miles east of Washington, Pennsylvania, on I-70, an ideal location for serving the Marcellus-Utica shale plays in West Virginia, Pennsylvania and Ohio.
“When the industry first started booming, it was just getting to the right people at first,” Dumm says, “talking to the operators, trying to get them to invest and put in water infrastructure with permanent water lines, rather than trucking it to the site.”
He adds that “once you build a good relationship with someone, they tend to stick with you.”
Dealing with any kind of change in the oil and gas industry is a major hurdle, Capodice says, especially when it comes to a new product. But again, it comes down to relationships.
“Having created a new disruptive matting product and getting the word out to the old school matting users is the biggest challenge,” he says. “It takes a person-to-person conversation to convince buyers and users that [a product like]the TerraLam is a little different, but far more effective.”
The TerraLam series is an engineered mat 50 percent of the weight of traditional mats and twice as strong, manufactured using sustainable wood resources.
It’s no secret that the oil and gas industry overall suffered a slowdown stemming from low commodity prices and delays in project permitting approvals over the last two years. Suppliers like Lee Supply, Sterling and Darby Equipment have had to adjust to remain successful.
“2015 was probably the last good year,” Dumm says. “In 2016, the market definitely went down, and not just for us, but a lot of service companies in all parts of the industry.”
While last year was “a tough year,” he says Lee Supply was able to weather the downturn by serving other markets.
“We’ve seen a great turnaround this year,” Dumm says. “We’ve had a bunch of orders, and we’ve been bidding a lot of projects.”
He says he keeps up on industry related to drilling rigs in operation and operators getting permits for new projects.
“This year is picking up,” he says. “Next year will be big for oil and gas rebounding to where it was before
Darby Equipment’s attention to quality and customer service during the downturn have helped the company come out ahead this year.
“Our focus on continuous improvement has had a significant impact on both the quality of our equipment and the responsiveness of our service,” Bobby Darby says. “As a result, the slowdown has had little effect on our business, as we have increased our market share through the slowdown.”
In a market that is geared toward on-demand service, companies must remain flexible, always prepared and aggressive in an effort to fulfill customer needs.
“We strategically have personnel and products scattered throughout the country, and being a 24/7 company, we are always prepared to handle any situation that may arise,” Capodice says. “Producing TerraLam at 1,000 mats per day never allows us to sit back and wait. We are aggressively pursuing opportunities and take advantage of down times to see more customers.”
That 24/7 mentality rings true at Lee Supply, as well.
“On-demand is the way Lee Supply has always operated since the beginning as a mine supply company,” Dumm says. “Our phones are on 24/7, and we pride ourselves on service. If we get an order for fittings at 4 o’clock on a Friday, we’re going to stay and get it done.”
Darby Equipment has been fortunate in being able to maintain its staffing levels, and has even increased its field service team numbers over the last couple years, Ryan Darby says. That has allowed the company to “always be prepared to be there for our customers.” When times are slow, the company focuses on other areas of the business.
“When field service calls are slower, we focus on improving our processes and our equipment,” he says. “We have a thorough process for examining any equipment quality issues and as a result have greatly increased both our internal and customer quality metrics.”
Logistics play a crucial role in suppling oil and gas pipeline projects. From maintaining a certain level of inventory and managing transportation needs, delivering products on time is of the essence.
Lee Supply’s business approach to managing supply and logistics is a balancing act.
“We always have pipe on hand because of the many markets we serve,” Dumm says, adding that other items, such as air relief vaults, are not as common and are produced
Sterling uses both trucking and rail systems to manage its logistics needs, Capodice says. The company’s state-of-the-art manufacturing facility allows Sterling to produce product at a high rate of speed to meet demand.
Darby Equipment leans on its philosophy of continuous improvement to lay out goals and challenges in the effort to strive for “100 percent employee and customer satisfaction,” Ryan Darby says.
“Although unattainable, it gives us a true north by which we set our compass,” he adds. “We identify obstacles standing in the way of us attaining that goal and we work every day, one step at a time to reach our objectives.”
Meeting customer demand requires a certain level of collaboration, communication and flexibility.
“It’s a pretty simple approach,” Dumm says. “We make sure to answer the phone when our customers are calling, delivering orders on time and keeping service up. We also try to be flexible. We’ll hold pipe in our yard until customers are ready for it.”
Staying ahead of the game and quick response is also necessary.
“We make every effort to get in front of our customer in the early stages of planning for every project,” Capodice says. “Although we react very quickly to demand as much upfront notification for scheduling purposes is a luxury we strive for.”
Finally, working closely with contractors to meet project demands is essential to help them operate in the most efficient, cost effective manner as possible.
“Our team of engineers and bending specialists are always ready to assist with technical challenges,” Ryan Darby says, “while our service team is available 24/7 to go to the field for any issues that arise on the jobsite. We are also able to ensure the equipment meets project specifications and is ready to ship within two hours of notification by our contractors, ensuring time sensitive demands are always met.”
Managing logistics from a product delivery standpoint is of the utmost importance in an industry so focused on being on time and on budget.
“Being a service provider as well as a manufacturer allows us to understand the needs of the contractors,” Capodice says. “We pride ourselves on that understanding of what proper jobsite coordination and execution looks like.”
A final ingredient in maintaining success and meeting customer demand is collecting feedback from the industry.
“All of our service technicians on jobs, whether there for a job kick-off or to service equipment, actively seek feedback from our customers who use this equipment every day,” Bobby Darby says. “We also maintain relationships with equipment and project managers as well as superintendents and owners to ensure we are meeting or exceeding their needs. The fact that we have loyal, repeat customers is the best feedback we get.”
Sterling seeks direct customer feedback “to check the pulse of their upcoming activity,” but also employs market research services to provide industry data for upcoming opportunities, Capodice says.
While 2017 has seen marked growth in the oil and gas pipeline industry, the market hasn’t quite rebounded to its pre-2015 levels.
“There has certainly been a significant increase in activity in the last several months,” Bobby Darby says. “It might be a little premature to call it a complete recovery, but we like what we are seeing currently.”
Capodice adds that “the future looks very optimistic.”
Dumm agrees that the industry is trending upward.
“There are more projects, and we’re quoting a lot more,” he says, later adding, “We see those trends going up. It’s definitely not where it was, but we’re getting there.”
However, Bobby Darby cautions against trying to forecast the future.
“To pretend that you know the trend in the pipeline industry, you are doing just that, pretending,” he says. “Fortunately for us, we are a family-owned business that focuses on the long term and is not subject to the demands of quarterly numbers. We make decisions that will support our customers not just our quarterly bottom-line.”
Bradley Kramer is managing editor of North American Oil & Gas Pipelines. Contact him at firstname.lastname@example.org.