Plater Grows Bigger in Texas With Oil, Gas Customers

Ask James Sullivan to give you a tour of Schumacher Industries’ operation in Houston and the vice president and chief operating officer of the company will walk you through several huge buildings, across a street and around massive plating tanks that stretch 30 feet in depth.

“We’ve got a lot going on here,” says Sullivan, whom owner Andrew Schumacher brough back to rejoin the company two years ago. Sullivan worked at Schumacher three decades ago, before leaving for the mold making industry.

He now oversees three main operations of the company at various locations around Houston:

Schumacher Co., which plates and coats for several multinational corporations, OEMs, oil and gas companies, petrochemical companies, government agencies and a few small businesses.

Dixie Electro Plating, which also serves a broad spectrum of petroleum, petrochemical, architectural design and construction industries in the U.S. and worldwide.

Spraymetal, which provides a complete line of hard facing powder applications in both the nickel and cobalt base alloying systems, chrome oxide and aluminum bronze application, heat treating and tungsten carbide coatings

Think that’s a lot to manage? It may not be enough, the way the company tells it.

 

From 6 to 23

“We’ve gone from six to 23 polishing stations in just the last year, and that may not be enough,” says Juli Kettler, who handles corporate sales for Schumacher Industries.

A psychology major at Texas A&M University, she joined the company with not much background in finishing, but has quickly learned that customers want fast, quality finishes on parts to meet the continuous boom in the oil and gas sector.

“The market has pretty much dictated how much we have grown and where we are headed,” she says. “Our customers bring us some pretty big projects, and we have the facilities and manpower to handle those. But we’re also making sure we can handle anything we’re asked to do in the coming years, too.”

And they better be ready, according to oil and gas analysts, who predict that the U.S. will be the king of oil production by 2020, surpassing Saudi Arabia and Russia. U.S. production is at its highest level in more than 20 years.

Production of what’s called “light, tight oil” and Canadian oil sands by U.S. corporations has sent a shockwave through the market, says Maria van der Hoeven, executive director of the International Energy Agency, which helps countries coordinate a collective response to major disruptions in oil supply through the release of emergency oil stocks to the markets.

 

Even Bigger Deal

“The North American supply is an even bigger deal than we thought,” says van der Hoeven. “A real game changer in every way, not just because of the volumetric growth involved, but for a host of compounding reasons.”

She says the boom caught a lot of people off guard, and companies are trying to get up to speed. The “Medium-Term Oil Market Report” put out in May by IEA predicts the North American oil supply to increase by 3.9 million barrels per day (mb/d) from 2012 to 2018, or about two-thirds of total forecast non-OPEC supply growth of 6 mb/d.

“A country that 150 years ago served as the cradle of the oil industry, but which for decades seemed to face an irreversible production decline, now finds itself, all of a sudden, at the center of an oil boom. That is remarkable in itself,” she says.

That boom has been a rebirth of sorts for Schumacher Companies, which was founded in 1941 by E.R. Schumacher. His son, Bob Schumacher, was at the helm for many years, and is now run by Bob’s son, Andrew Schumacher.

E.R., Bob and Andrew built their company on a reputation of plating products of various sizes, and their current tanks measure 14 feet in length, 8 feet in width, 12 feet in depth, and have a lifting capability of 20 tons.

Andrew Schumacher said that bringing back Sullivan was important for the company to grow.

“James has brought back an immense amount of knowledge and experience, and has earned everyone's trust and respect,” he says. “We certainty are in a better position to address our customers needs with Mr. Sullivan aboard.”

The Schumachers have always invested in quality employees.

“My family has always taken pride in the fact that we retain so many loyal and long term employees, and I refer to them as members of the Schumacher family, and they are treated as such,” Andrew said. “Like any large family, keeping everyone 100 percent happy 100 percent of the time is one of the most challenging aspects of my position.”

 

35 Feet, 20 Tons

Through expansion in the last two years, Sullivan says his staff custom-makes their own tanks for special projects—which he calls the largest plating tanks in the Southwest—capable of handling products measuring up to 35 feet in length, five feet in diameter and weighing up to 20 tons.

“Obviously, there are some very large, very long parts that are needed in the oil and gas industry, and we need to have equipment to meet our customer’s needs,” Sullivan says. “We felt we had the ability to design and build our own equipment so we could keep our customers happy.”

At the Schumacher Co. headquarters, they perform hard chrome plating, sulfamate nickle, electroless nickel, phosphate, grinding on inner and outer diameters, honing and polishing.

It’s the grinding, honing and polishing aspect of the business on which Sullivan has had the biggest impact since his return to the company.

 

Steel Mud Rotors

Walking through the shop shortly after he returned from a few decades working in Chicago, Sullivan noticed steel mud rotors used in drilling exploration—some measuring more than 20 feet in length—stacked around the facility waiting to be plated and polished.

“We just couldn’t get to them in a timely fashion because we didn’t have enough personnel or equipment, so the customer was waiting,” Sullivan says. “I knew that had to change immediately.”

Sullivan consulted with Andrew Schumacher about the customer’s needs and demands, and they both came to the conclusion that a major expansion was needed immediately. With Schumacher’s support, Sullivan huddled with his management team and decided the quickest way to get products out the door was to hire more people. That meant getting more equipment, which also meant finding more space.

The solution involved Sullivan re-arranging the plant, opening up an auxiliary building across the street, and having his in-house manufacturing team design and build proprietary polishing machines. The machines look like giant lathes spinning at slow and moderate speeds. Automatic polishers and employees using hand-held devices work on the tungsten carbide finish until they are nearly a mirror finish.

The result has been a near round-the-clock production schedule to fill orders and get products out the door. Sullivan has Kettler working with current customers to make sure they are aware of all the new offerings that Schumacher has, on top of existing capabilities that made the company into a powerhouse in the Texas and Southwest region.

“Part of what I do is just to make sure the customers know all that we can do for them,” she says. “Some of them have new or pending needs, and we want to make sure we can work with them to meet those needs.”

That may include introducing Schumacher plating customers to the services of Spraymetal, which includes the nickel-based, high-velocity-oxygen fuel thermal-spray Colmonoy process for hard surfacing parts to resist wear, corrosion, heat and galling. The hardness of Colmonoy ranges to 35-64 HRC, and it is resistant to abrasion.

Sullivan is tasked with keeping Schumacher’s six locations up and running at full capacity, all while improving efficiency in the process. He’s also working to keep happy Schumacher’s biggest customers: Baker Hughes, National Oilwell Varco and Cameron, just to name a few.

 

Oil Tool and Gas

“Just about everything we produce here is related to the oil tool and gas industry,” Sullivan says.

Obviously, business has been good for Schumacher’s customers.  Baker Hughes, a supplier of oilfield services and products, saw a 32 percent jump in revenue in 2012, and brings in about $21 billion a year in revenue worldwide. The company spends about $3 billion annually on capital purchases and equipment, most of which needs a protective coating from the harsh drilling environment.

National Oilwell Varco, which saw a 31 percent decline in orders for its major mechanical components for land and offshore drilling rigs during the financial crisis of 2009, is back in the swing of things now that capital purchases for its oil rig equipment are nearing all-time highs. The company reported a nearly $12 billion backlog in orders at the beginning of 2013, up from just $5 billion at the beginning of 2011.

Cameron, a provider of flow equipment products for gas and oil production, has seen orders grow from $4.9 billion in 2009 to almost $11 billion in 2013.

“If we need to expand and add more, we’ll do that,” Sullivan says. “Andrew has made it clear that we will grow the business as needed. We have to serve our market and be ready when our customers need us.”. 

For information on Schumacher Co., please visit Schumachercoinc.com, or call 713-923-5548.