One of the most overlooked aspects of the pipeline construction business concerns supplies and specialty equipment. On any given project the lack of a particular piece of equipment — no matter how large or small — can cause expensive and unnecessary delays.
As the shale boom continues to expand through America, pipeline construction is close behind. These may be big-inch or little-inch projects, but they remain on a schedule that allows little leeway in making deadlines. In recent months, the supply sector made news when Houston-based Pipeline Supply & Service, LLC merged with Salt Lake City-based Wasatch Supply Inc. PSS Companies is now the holding company to Wasatch Supply and Pipeline Supply & Service. Karma Newberry is president of Wasatch Supply and vice president of Sales and Marketing for PSS Companies. In this interview, she discusses the combined company’s strategy as the largest supplier of consumable pipeline materials and specialty equipment for the oil and gas industry in the U.S. It also becomes clear that she places the highest value on the most important hallmark of the industry: the handshake.
Q: Where are you from and what enticed you to find a career in the energy industry?
Newberry: I was 19 years old and going to school in Utah when I went to work on the first Kern River pipeline in Evanston, WY. I met and married Danny Newberry, we started a family, and spent the next eight years traveling from pipeline site to pipeline site. After my first job, I was hooked. The sense of community on a pipeline is great — the BBQs, the ladies luncheons, the late nights and staying in RVs. It’s like being a part of a big family. You won’t meet a better group of people.
Q: What was the career path that led to your current position?
Newberry: We worked in 16 different states over eight years, moving from pipeline to pipeline. The first thing I learned about pipelining was how stressful every job was. During my experiences, I began thinking there’s got to be a way to take some of the pressure off those purchasing agents (PAs).
As many people know, it’s hard to have a family in this business, especially when kids have to go to school and leave their dad to work on the pipeline. It took us a year and a half to complete the business plan and raise the capital to launch Wasatch Supply in January 2000. In 2008, Danny and I divorced and he decided to go a different direction with work, so I bought him out. It was a big challenge, running the business on my own. I was determined to make it work for our employees and their families, as well as my family.
Recently Wasatch Supply merged with Pipeline Supply & Service to form PSS Companies, the largest pipeline construction supply company in the U.S. I’m excited to remain focused on building a company that is focused on customer service, and am still one of the largest private shareholders in the new entity. The most important thing for me to focus on is customers, overseeing sales and marketing for the company, and making sure customers are getting the service they want at the level they need.
Q: Why are supply companies such as PSS so important to the pipeline business?
Newberry: Anytime a pipeline construction crew stops working — for any reason – it costs money. And the farther up on the pipeline where the work stop occurs, the greater impact it has on total productivity. I learned that early in my career, and it’s a main motivator in how we operate PSS Companies.
Because supplies only account for about 2% of a total pipeline project costs, it’s easy to overlook the importance of what we do. The first time a crew doesn’t have a part or piece of equipment they need — or they get shipped the wrong product — they appreciate the things we do to ensure this doesn’t happen.
Q: Why did the merger make sense?
Newberry: The merger between Wasatch Supply and Pipeline Supply & Service made sense because of a unified vision. We were both focused on providing customers with the supplies they need, when they need them. I’ve always been focused on the customer — and many of the things I wanted to do to improve our customer service, we could accomplish more quickly through a merger. I am excited about the new capabilities we’ll be providing, while maintaining the personal touch that has made us successful in the past.
Q: Do you feel there will be more consolidation in the supplier business?
Newberry: We are seeing trends in the pipeline construction industry toward more smaller projects. In the past we would typically see more of the large transmission work in a given year and our business was focused on serving these major, long-term projects. With a trend toward smaller projects it became evident we needed to expand our geography to better serve our customers and Wasatch was a natural fit with PSS both in geography and customer base. I can’t speak for other suppliers, but we will continue to expand to meet the need of our customers. This may include geographic expansion, acquisitions, or additional product and service offerings.
Q: What are some of the most challenging aspects in working to supply a pipeline company with what it needs?
Newberry: Having the knowledge and foresight to anticipate pipeline supply needs and issues are easily the biggest challenges. Our typical order may be only $1,000 but it will consist of 30 different items. The challenge is having the right inventory at the right time. We do this by having very sophisticated inventory management and purchasing systems that are shared across the enterprise. Also, we can plan ahead by staying in touch with our customers and industry forecasts to anticipate size demands.
Another challenge is to help our customers meet the project budgets. This means buying better products at a better price and delivering on time in a cost-effective manner. As our business grows we are staying focused on meeting this challenge by negotiating national buying programs that will benefit our customers.
Q: How important is relationship building and has this been a particular part of your success?
Newberry: Relationships are everything in this business and they are built on trust. Our customers are under tremendous pressure to finish their project safely, on time, and on budget. We build strong relationships by doing what we say and making our customers’ success our top priority. Likewise, we will always be straight-forward about what we cannot do. As we add capabilities, customers won’t lose the ability to contact people they’ve worked with for years and created that trust with. I’m very focused on us keeping those great relationships in place.
Q: Speaking of merger activity, how is the supplier business affected when operators and contractors merge?
Newberry: Fortunately for us, this is a relationship business and regardless of ownership and mergers, we maintain our longstanding relationships with the purchasing agents and project superintendents that we’ve been serving for years. This is really no different when people change companies. However, the benefits we see as companies consolidate and grow are that we are now a national, not regional, supplier with capabilities of serving customers with an expanded operations footprint.
Q: Going forward, what changes do you expect we’ll see from the newly merged company, and how should this benefit customers?
Newberry: Customers will be seeing some immediate benefits from this merger, all of which are focused on enabling us to get supplies to customers anywhere within the U.S. and making it easier to work with us. Firstly, we’ll be adding two new distribution sites at key locations, Utica and Bakken Shale areas. Secondly, as part of the merger, we’ll be integrating many aspects of Wasatch Supply and Pipeline Supply & Service using the new joint ERP system. Finally, we’ll be rolling out an innovative Web-based order management system that will help customers anticipate needs and overall make it easier to work with PSS Companies.
Q: What is the range of products you provide, and how are you able to maintain a satisfactory inventory?
Newberry: Our primary focus has always been consumable supplies and ancillary rental equipment. We represent over 1,500 different manufacturer’s products. This consists mainly of tools; clamps; welding, safety, environmental, inspection, and coating supplies and pipe handling, test and inspection equipment. Our websites provide a complete “kick-off” order list as well as more specific product information on most items.
Q: In what ways has the economic downturn affected the business?
Newberry: We definitely saw a slowdown in 2009 but this was also coming off an industry peak in 2008. While our business is certainly cyclical like the rest of the energy business, we tend to be a little more insulated from big swings due to longer planning cycles for pipeline projects. Another good thing about our business is that with pipeline construction, there is always maintenance work on existing infrastructure.
Q: Have there been instances where you went above and beyond the call of duty to help a customer?
Newberry: Every day! We pride ourselves on being pipeliners, not just order takers. A major part of our service is helping customers source better. This means finding the right product for the application. We’ve had a case where we’ve put a person on a flight over the weekend to hand-deliver hard hat chin straps to a job site because a pipeline company executive was coming in for a last-minute helicopter tour of the right-of-way. We know that if we take care of our customers, they will take care of us.
Q: What’s your perspective of the state of the pipeline industry?
Newberry: In 2011 the general consensus from the customers in the field was that if would be a better year than 2010. That grassroots level forecast turned out to be a 20% surge in pipeline construction activity! We’re hearing the same thing for 2012 but a little more cautious optimism due to political intervention such as what we’re seeing happen to major projects like Keystone XL.
The shale plays are definitely driving pipeline construction growth but not just on a regional basis. At some point we will see the go-ahead of the major, “big-inch” projects like Keystone. The oil and gas eventually will have to get to the end-use markets and processing plants.
Q: In addition to large-pipeline transmission operators and contractors, who are some of your other customers and how do their needs differ?
Newberry: Together we actively service over 700 different customers. We are definitely seeing the trend of more, smaller projects and this is evident in the contracts that are being awarded today. Whether companies are operating on a local, regional, or national basis, the needs at the job site are all the same.
Q: What would you like to tell people about the oil and gas pipeline industry?
Newberry: That’s all we know. I’d tell anyone that this is the best industry in the world with the hardest working and brightest people available, but I’ve never done anything else as a basis for comparison. It may be the same everywhere, but I know in pipelining that we work hard, play hard, and do what we say we’re going to do…always.
Q: What are some of your interests away from work?
Newberry: I spend a lot of time with my kids, and have fun going to their activities, such as my son’s basketball games, for example. My favorite vacation spot is Lake Powell. It’s nice to take a break and get away from it all, including cell phone service!