There are signs that the domestic oil-and-gas sector is regaining some of its “energy” after more than three discouraging years of weak demand. The boom-and-bust nature of that market is no shock to the machine shops and other manufacturers supplying the various tools, parts, and equipment required to drill for oil and natural gas, but managing the market demands a separate sort of skill.
Or resources. Or insight. In fact, the skill for locating customers and matching available resources to customers’ needs or requirements is one that every manufacturer needs but not every one can claim to have.
Superior Drilling Products Inc., Vernal, Utah, is one of those manufacturers. Thanks to its manufacturing capabilities and marketing skill, it may be said to be “resourceful.” SDP designs, manufactures, and repairs drilling tool technologies, specifically steel drill bits. It also produces parts supplied to manufacturers of firearms and aerospace programs.
SDP operates a state-of-the-art machining operation, with five-axis milling as well as seven- and nine-axis mill/turning centers. “We have two Okuma MU-500s, two Okuma B-400 Ws, a DMG CTX-3000, and a Okuma B-750 W,” according to Cameron Dick, who manages the machine shop. A few manual machines are available too, he noted, “for support.”
In 2014, the oil-and-gas sector started to decline, and there were fewer and fewer orders for those machines to fill. With less and less oil-and-gas extraction happening, the need for new drilling tools and equipment (and replacement parts) dropped apace.
Dick needed to find a way to keep the shop open and the machines turning. “Most of the machine shop workers aren’t from the oil fields,” he explained. “They have backgrounds in aerospace, nuclear, and other industries. We had wide-ranging experience and top-of-the-line machinery. I needed to find a way to fill the shop with work.”
He recalled a similar dilemma some years back, when he owned his own machine shop, in Idaho. “I was the sales guy, the janitor, and the machine operator; I didn’t have the time to knock on doors or make cold calls,” he said. “I started looking at MFG.com as a source of work. I didn’t follow through with MFG.com then, because another company bought me out. Still, I always remembered what a good resource it was.”
MFG.com is an online marketplace for businesses and engineers to locate manufacturers with CNC machining, injection molding, metal stamping, metal fabrication and many other process capabilities. The manufacturers list their resources and skills, and the “buyers” select the one best suited to their project.
Some time later, when SDP was launching new product lines and there was a surplus of shop work, Dick took that problem to MFG.com, using that online platform to qualify vendors, put standard parts up for bid, and asked suppliers to offer quotes.
“We know how much it costs to make a part and the run time involved,” he detailed. “We used this information for our price breakdown. Bidders could be lower or higher, but we wanted to see if they could actually do the work and the quality of that work. That way, in the event a new product line took off, we could utilize our shop for new product development and still maintain our inventory on the current product line.”
And so it was that Dick looked to MFG.com for new business when the oil-and-gas orders ran low at the SDP shop. He started bidding jobs posted at the online marketplace.
“When I first started quoting on MFG.com, I did so with the module I had at the time,” Dick said. “It relied on a basic shop rate computed by our accountants. With MFG.com’s ShopIQ tool, I soon saw my bids were high on everything. I went back into my module and sat down with the accountants and did some re-costing and refiguring. The revised rates brought us more awards.”
ShopIQ is a function that draws on MFG.com’s records for Request for Quote (RFQ) data, so the site users can compare their quotes retroactively against all competitors, as well as the successful bidder.
ShopIQ generates reports comparing RFQs with competitor’s offers, or versus winning bids, or by region, or by several other factors. The results allow users to determine whether they are overbidding (or underbidding) for orders, or how the prices compare to competitors in a designated region, or several other possible comparators.
For SDP, that extra analysis paid off well. “We won work from NASA, tooling companies and other firms,” Dick said. “We made shim packs, regulators, sensor housings, exotic weld fittings, helix fluted tool blanks, motor housings, plate bracket assemblies, and cutting machine assemblies — all from materials ranging from standard steel to exotics.
“I searched for whatever we could build,” he recalled. “I made some excellent contacts via MFG.com and benefited from work from repeat customers. They still email me today.”
Luckily for SDP, the oil industry picked up recently, and the machine shop workload is returning to its pre-2014 levels. In turn, having diversified its production options through the online marketplace, SDP is considering some additions to its manufacturing capabilities.
“We are always looking for a way to utilize what we have with new ways to make parts and support good opportunities in the future, with the possibility to add to the fleet if the market demands.”
Dick remains grateful for the additional marketing resource. “MFG.com is great, and did several things for us: It helped us qualify some excellent suppliers and keep the lights on during a very difficult time. Plus, the process of bidding on work and using ShopIQ helped us gain new perspective on what kind of shop SDP is, in comparison to others. We are far more competitive now and continue to use ShopIQ to keep improving our business model.”