Above: Specialty Pipe & Tube has a broad variety of large-diameter, heavy-wall steel pipe and tubing, adding up to nearly 20,000 tons of inventory.
Supplying hard-to-find inventory keeps pressure off supply chain
April 2014 - In the oil and gas industry, the Marcellus Shale, the second largest gas shale in the U.S., has generated a surge of new business for many in the manufacturing sector. Long before this shale boom, Specialty Pipe & Tube Inc. helped customers as a master distributor—and the company’s 50 years in the business continues to help equip the industry to welcome new opportunities for growth.
“Our customer base is pretty well aware of who we are and what we do,” says Steve Baroff, president at Specialty Pipe & Tube, Mineral Ridge, Ohio. “We are consistent with our commitment to carrying a very broad and deep inventory. Much of the inventory is relatively slow-moving, sometimes painfully so. We make it available to them as an extension of their own inventory. They take the product to market and we stay out of their way.
“Today’s corporate environment doesn’t tolerate maintaining this kind of inventory well,” he continues. “But as long as our distributors’ customers rely upon Specialty Pipe, we’re willing to make the investment and continue supporting them with products they choose not to stock themselves. We’re a pretty important link from mill through distribution and, ultimately, to end user.”
Baroff’s father started Specialty Pipe with a vision to provide immediate availability of an unusual product to the market. Over the years the company’s reputation has established a steady presence because of the relationships Specialty Pipe has formed with manufacturers and a broad, diverse customer base. “While we watch and evaluate market trends and follow plenty of economic reports, these relationships allow for communication which ultimately is where the best information comes from,” Baroff says.
The Marcellus Shale, which extends beneath the Appalachian Basin, has companies like pipe valves and distributor Petroleum Pipe & Supply Co. Inc., Heidelberg, Pa., looking to Specialty Pipe to meet their needs. “We do end work on pipe and we buy all our pipe from various manufacturers,” says Larry Doverspike, owner at Petroleum Pipe. “We’ve always dealt with gas distribution, even prior to the Marcellus Shale, but we also have a huge base in manufacturing [and] OEMs.”
The company works with carbon steel and stocks up to 36-inch diameters plus various-sized walls of seamless pipe, among others. The company also fabricates pipe to custom specifications.
“We do a lot of fabrication work for heat exchange tanks and we work with Specialty Pipe because of their huge inventory with specialty sizes and walls and grades,” Doverspike says. “That’s where our big resources are pooled from. They have what we need readily in stock and they’re local, so we get it fast.”
Specialty Pipe & Tube’s investment spans the U.S. with an additional location in Texas, headed by Dianne Beck. The Texas division is a primary supplier of tubular products to the oil and gas, and energy markets.
Plentiful and quick-arriving inventory are important to Petroleum Pipe, but so is the interaction between the company and Specialty Pipe. “They’re not just quoting a price, they follow up if there are ever any questions about pricing or delivery expectations,” Doverspike says. “They’re interested in making the sale but it’s nice to have a company that cooperates and takes an interest. I’m comfortable discussing things with them and that’s a big factor.”
Specialty Pipe’s ability to cut larger OD pipe and thicker walls comes in handy for Petroleum Pipe. “With the material and sizes they carry, they have great machines to get the tolerances customers require,” Doverspike says. “Because of the size of the material, we have a certain limitation with how thick we can cut but those guys are able to do it with no problems and it helps us get the delivery out the door.”
Automatic band saws are the equipment of choice when cutting carbon and alloy steel pipe and tube. Specialty Pipe has been aggressively updating its technology to meet the precise needs of customers. “Everything we do here is customer-centric,” Baroff says. “It’s not like this is rocket science but the technology has come a long way and it’s made an incredible difference in the level of service we provide our customers. We have always paid attention to the fundamentals but our focus is to continually improve our systems to provide a faster, more efficient experience for customers.”
That kind of interchangeable relationship has Petroleum Pipe thinking of Specialty Pipe as a business partner. “We rely on Specialty and it’s a big part of what we do,” Doverspike says. And the company expects that workload to become only more demanding as Marcellus Shale interest continues. “From 2008 until now there was a real rush to prove this area as worthwhile and now I think it will be a long-term development with distribution lines going in,” Doverspike says.
Inventory and innovation
Inventory management can be a fickle process as the nature of tube and pipe isn’t a “dial-it-in” type product, Baroff says. “You’re often faced with long lead times and mill minimums. It’s challenging trying to determine the proper sizes, grades and quantities we need to have on hand. We have a lot of great people with tremendous experience, which helps when anticipating those needs,” he says. “We never know if the 12-month supply we think we have in stock will be there in 24 months or gone next week—if the phone rings and a customer needs 300 feet of heavy wall tubing, we need to have it available. Unlike many distributors, if we ‘miss’ on the correct amount of inventory, we’d rather miss on the high side. There is guesswork involved so we just try to be right far more often than wrong.”
Specialty Pipe uses its knowledge to help people buying and machining tubular products who may not be well-versed in tolerances—like how much stock removal they need to allow for finishing their part. “Tolerances for hot finish seamless tubing are pretty generous. Often, customers assume some risk when selecting a starting size to complete their job,” Baroff explains. “We try to ascertain the customer’s finished dimensions in order to minimize or eliminate that risk. Sometimes we will advise them on a heavier size to guarantee their success or we try to save them some money if they don’t need something so heavy-duty.”
As industry innovation continues, so does the research and development behind Specialty Pipe’s grades and specifications. “We continue to work with our suppliers in the design of new grades and specifications,” Baroff says. “The idea is to add strength and impact properties to steel while at the same time, removing weight from the tube. Simply put, with metallurgical and engineering advances, an application which used to require a larger, heavier tube may now be accomplished with a smaller, lighter tube. We’ve leveraged our strong relationships with both suppliers and customers to bring innovative products to market.”
With a prime location, Petroleum Pipe is geared up to supply long-term energy infrastructure demands. “We believe we’re on the cusp of new business for oil and gas,” Doverspike says. “We’re all positive, it’s just a matter of getting distribution lines up and running and properly flowing. It wasn’t a portion of our business until recently and it marries well with what we do and we plan on staying busy.” MM