For the Duncan Equipment Co.—and Randy Davis, vice president-air systems pump solutions—last year was a strong one, with sales and profits up overall, as well as in the general power transmission business.

Duncan Equipment has four locations: three in Oklahoma (Tulsa; Oklahoma City; and Duncan) and one in Texas (Irving), so it's no surprise that a good segment of its customer base is found in the oil industry.

"Oil field-related manufacturing has been very robust," Davis says, "and that's driven a lot of our business."

But he cautions that Duncan doesn't overly rely on oil and its unpredictability.

"Oklahoma and North Texas [now] have pretty diversified economies," he explains. "Back in the early '80s, it was pretty specific to oil, and manufacturing related to oil. But the economy is diverse enough in Oklahoma now that we don't ride those peaks and valleys as we used to."

Pumps for oil field work, as well as more powerful compressors, were among the better selling products in '05, Davis explains. The sales success of the larger horsepower products surprised Davis and some of his Duncan colleagues.

"We went into the year [2005] thinking that more mid-sized compressors would be our bigger sellers, and that we'd be selling more to the small and medium-sized accounts," Davis says. "So we were geared up for the 100 to 200 horsepower range. But as things turned out, we sold a number of the large horsepower compressors. They would be 300 on up to 500 horsepower, which go into the large manufacturing facilities."

The potential cost savings aspect of some of the more powerful compressors is something that Davis and his colleagues emphasize to customers during the plant survey that Duncan offers them. Davis and his staff can go into a company and conduct the survey, which may result in them recommending a newer piece of equipment.

"That newer piece, for example, might have a variable speed drive, as opposed to the old-style motor. This can offer considerable savings if plants replace their existing equipment with the variable speed unit," Davis explains.

Service is something Davis sees as a trend to watch in 2006, and something that Duncan will be especially keen to emphasize. More companies, and Duncan customers, outsource their maintenance, he cites as examples.

"So preventative maintenance agreements are something we're focusing on," he says. "For example, customers will buy a compressor, buy an extended warranty, and will contract with us to do the service right there when they buy that machine.... We're also staffing up to handle more service work as a result of companies deciding to outsource it more."

Davis remains optimistic overall about 2006, but admits to being concerned about what he describes as the supply of products and increased lead times. He attributes this by and large to a manufacturing capacity issue. But he's watching it, he adds, because it's common to many of Duncan's suppliers and vendors.

"The lead times for products, across the board, have slid from two to three weeks up to six or eight weeks even. We'd been used to being able to deliver a specialized product, for example, within a few weeks. Now it's more like a few months," he says.

jnowlan@reedbusiness.com