Oil exploration fuels fluid power growth
Houston-based distributor emphasizes long-term service and added value as demand for drilling increases
By Joe Nowlan, Associate Editor -- Industrial Distribution, 9/1/2005
For many distributors in the fluid power industry and related fields, it has been until fairly recently that business has improved. In fact, for Hydraquip, Inc., an employee-owned distributor of fluid power equipment based in Houston, it was as recently as last year that things were unsettled.
"Going into 2004, we had no idea where we'd find any growth," admits Richard Neels, Hydraquip's vice president. "We were planning and hoping for growth, but had no idea going into that year how we were going to find it. Down here in the South, we had a difficult time trying to figure out where we'd find new business."
Thus, Neels admits that he and his Hydraquip colleagues were "very pleasantly surprised" when 2004 turned out so strong for them. He candidly states that the worsening oil crisis and the rising price per barrel was a factor. Much of what Hyrdaquip deals in is equipment used in oil exploration and development, Neels explains, citing "well-stimulation equipment," as being among the most purchased items.
"When oil goes up [in price], that's when a lot of well-stimulation equipment gets built," he says. "It's used to stimulate the older and slower producing wells. So, that equipment is being built more because these days, people can afford to bring in a service company to work on their well and increase the production."
That can be an expensive path for a company to take, but, Neels points out, it's one that is viewed as an investment. In addition to well-stimulation equipment, a lot of offshore exploration is taking place, with more drilling for new reserves, such as natural gas. And the industries that cater to these related industries have had to buy more equipment just to keep up with the demands.
Other industries with which Hydraquip works include marine and mining, as well as road construction. In all fields, though, there is one approach that Hydraquip has taken that has proven beneficial.
"We sell packages or solutions to customers. We'll provide the added value of putting together kits that might include, for example, pumps, motors, controls and filtration hoses," Neels explains. "We'll help with the installation and then support them while providing after-service as well. We've been catering to the industry [in that way] and are starting to reap the rewards. It allows you to differentiate yourself from the competition."
This includes doing repair work when needed, Neels says.
"We use that as part of our whole package. We aren't just going to sell a piece of equipment and then walk away and never be heard from again. We're there to service that customer for the life of the equipment itself," he says.
Some of the equipment "covers the entire gambit," Neels explains, referring to the fact that Hydraquip carries engines that are as small as 5-to-10 horsepower, to as large as 5,000 horsepower.
He sounds confident that, whatever curve the economy throws his company's way, Hydraquip will be able to continue to do well in the fluid power-related industries.
"We've waited a long time for good business to get here, so we hope it stays around for a while," Neels says.
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