The oil and gas pipeline business is cyclical, prone to long bursts of high activity and spurts of downtime. Back in 2007, Vermeer saw an opportunity to solidify its position in the pipeline sector by establishing a dedicated business unit for the industry. That was right before the recession hit. While the industry suffered a significant downturn for the next two years, it has roared back — and Vermeer has come along with it.
Jon Heinen is the segment unit manager for the Vermeer pipeline business. He has been with the company since 2004 and was involved when the manufacturer put together its strategic plan seven years ago to be a bigger player in the pipeline industry.
“Out of that planning, we created a new department, the pipeline business unit that I manage,” Heinen says. “We saw it as a growth opportunity for Vermeer that would be strong for the next 10 years. We combined separate resources in engineering, manufacturing and product management and focused it on the pipeline industry. As we got a little deeper into it, we put together a team to clearly focus on the market and the needs of the industry.”
Now Vermeer is geared toward serving the industry “from start to finish,” Heinen adds. The company provides what he calls “turnkey solutions,” with pipeline right-of-way equipment that includes clearing machines, pipe installation equipment such as trenchers and horizontal directional drilling rigs, as well as providing application assistance. Vermeer strives to be a one-stop supplier for pipeline contractors.
Another major driver for Vermeer’s focus on the pipeline industry was the concern related to aging infrastructure, Heinen says. The company saw opportunities to assist customers involved with maintaining and repairing older pipeline systems, as well as new pipelines being built.
Beyond the range of products Vermeer manufactures, the company also is well positioned to support the pipeline industry with its global network of equipment dealers, according to Dave Wisniewski, vice president of the Vermeer underground product segment.
“Many of these dealers sell Vermeer products exclusively and have been factory trained to service and support our equipment,” says Wisniewski, who has been with the company 16 years (10 of those in the underground segment). “We believe that it is important to be a global supplier that has a strong local presence. Our contractors are judged and paid on productivity, and providing service closer to the point of product installation should result in quicker service turn-around.”
Among its products most popular in the pipeline sector, Vermeer makes a full range of equipment for clearing rights of way and installing pipe, including directional drills, bucket wheels and trenching machines, high-pressure mud pumps and reclaimers, forestry tractors and horizontal grinders and rockwheels. These machines are at the heart of the Vermeer pipeline business segment, but oil and gas pipelines touch other aspects of the company’s overall business.
“Oil and gas pipelines are a primary driver of business for the underground group,” Wisniewski says. “However, Vermeer has an even bigger stake in the pipeline segment, which goes beyond our investments in maxi rigs and mud recycling products. We are also engaged in pipeline products through our environmental and specialty excavation segments. We approach the pipeline segment from a product bundling perspective.
Not only can we provide the HDD and accessory equipment for a pipeline project, but we can also provide right-of-way forestry clearing equipment and large open-trench cutting machines. We are really diversified in the pipeline market.”
While it’s difficult to pinpoint what percentage of the company’s overall business is related to pipelines, Heinen says the industry has been a main driver in overall growth for Vermeer since 2007. Because it serves the industry from so many different angles, the company has been able to meet the unique needs of its pipeline customers.
“The way we’ve gone about meeting demand is by heavily investing both corporately with a dedicated engineering and production team and service and support,” he says. “We’ve grown our parts availability to 24 hours a day. We have a dedicated team and have invested in people who have application expertise and service expertise. We’ve invested in dealer training to provide local expertise that I believe rivals anyone else in the industry.”
Helping the Industry
Because the pipeline industry is nomadic by nature, Heinen says the sector requires constant monitoring and engagement to understand where it is and what it needs. Vermeer must be ready to provide what a customer needs when they need it. Heinen mentions one contractor he spoke to who said he manages his business on a month-to-month basis because of how the work is being released.
“In the past, he might have had work scheduled a few months ahead,” Heinen says. “You could plan your year with a backlog, but now there’s such short notice from award of the contract to execution. The industry is challenged by when it’s ready to go. Contractors don’t get nine months ahead. It’s a good challenge and one we’re happy to respond to.”
But aside from providing products and services to pipeliners, Vermeer is engaged with the industry in other ways as well, Wisniewski says. The company exhibits at major tradeshows such as OTC and is involved with associations such as IPLOCA, DCA, PLCA and PLCAC.
“We feel these are extremely valuable opportunities for our team members to become engaged with the industry and to participate in committee activities that impact the direction the pipeline industry will take,” he says.
At these events, the company has the opportunity to hear directly from pipeline contractors and owners to better understand the needs and trends of the industry, Heinen adds.
“If we find a need, we try to fill that need with world-class equipment,” he says. “We walk in lockstep with the industry. Not only is it constantly moving and shifting, but there are demands that constantly need to be filled.”
As pipeline contractors and owners face new challenges, Heinen says the Vermeer response is to “analyze those challenges and come up with solutions.”
Whether it’s introducing an existing piece of machinery to the industry or developing a new solution where one didn’t exist in the past, the company has sought to create an alliance with the oil and gas pipeline sector.
The goal of that alliance, Heinen says, is to make contractors more efficient and more profitable.
“If we do that, they will continue to do business with Vermeer,” he says.
Adapting to Pipeliners
Since establishing its pipeline business segment, Vermeer has evolved its service to meet the unique needs of the industry, Heinen says. The company has initiated targeted field service training for its dealers to be better able to respond to pipeline contractor calls on the local level, as well as expanding its product offering.
In 2013 for instance, Vermeer introduced the D220x300 Navigator HDD rig, which packs 242,100 lbs of thrust/pullback and 30,200 ft-lbs of rotational torque on a 37-ft long, 8.5-ft wide platform for a high power-to-size ratio. The smaller footprint is designed to provide better access to confined jobsites, such as on an urban utility project, as well as the capability to perform larger pipeline installations.
“The D220 is filling a need that we heard of a couple of years ago,” Heinen says. “It’s very powerful with a compact footprint and is self-contained. For people working in Pennsylvania, and hopefully soon in New York, Ohio and West Virginia, where they’re dealing with steep terrain, they need a machine to work in tight confined spaces.”
Vermeer shrunk the length of the typical drill pipe from 30 ft down to 20 ft to reduce the size of the D220, but kept common connectors so contractors could use existing tooling. The company also gave the rig the same controls as its smaller machines to reduce training concerns.
“If a contractor with a smaller fleet and well-trained operators wants to step up in size to the 220,000-lb machine to grow their business, they can do so without the need to retrain their operators because it has the same controls they’re used to running.”
The features incorporated in the D220 and other Vermeer products are a direct result of the feedback the company has received from the pipeline market, Wisniewski says. As those needs change, Vermeer will adapt.
“We believe in listening to the market and delivering products and solutions that fit the various niches we
operate in,” Wisniewski says. “The pipeline market is no different.”
Into the Future
Heinen sees a bright future ahead for the pipeline industry, as well as Vermeer involvement in the market.
“There’s a trend of companies moving toward technology,” he says. “One common thread we’re seeing is contractors looking for ways to separate from the competition. When it comes to pricing, they have to adhere to the market. The way they can set themselves apart is by improving efficiency.”
Technology such as monitoring software is one way for a contractor to make efficiency gains, Heinen says. Vermeer is looking to invest in such technology to put in its machines to meet those needs. Whether it’s technology to help plan a project or to document machine usage, installing common controls or enhancing rig computing capabilities, the company continues to develop enhancements to its products.
But Heinen believes Vermeer can also help improve efficiency from a customer service side as well.
“I see them [pipeline contractors] relying more on partners like Vermeer on parts stocking, so contractors don’t have to invest in having those components on hand,” he says. “Instead of repairing or replacing components on their machines, they can rely on Vermeer to relieve them of that duty. I see a trend of Vermeer getting closer and closer on the local level to provide that level of service and support to the industry.”
Because pipeline contractors continue to work on shorter lead times, Heinen says Vermeer has responded with a strategic plan to have equipment available when it’s needed. That also carries over to parts and tooling. However, this strategy is less about expanding inventory — a dirty concept in this era of Lean Six Sigma thinking — but rather being ready to produce what the customer wants when the customer wants.
“Inventory is not evil,” Heinen says. “Having the wrong inventory is a problem. It’s a different mindset, building to anticipated demand. The Vermeer management team is convinced this is a good idea. Listening to the industry allows us to make strategic decisions surrounding our business including inventory.”
Wisniewski agrees, adding that the needs of the pipeline industry are driven by outside forces.
“All industries are a moving target to some degree,” he says. “This market is highly driven by economic factors and geopolitical influences. The fluctuations in the market can create big capacity shifts, which are not always easy to time. I do know this, when a contractor is awarded a contract and they need a piece of equipment to perform the job, the need is generally immediate and having the product is critical to securing the business.”
Bradley Kramer is managing editor of North American Oil & Gas Pipelines. Contact him at firstname.lastname@example.org.