From nuts and bolts to groceries, suppliers keep rigs on track

The activity level of the oil and gas industry is booming, which is great news for supply companies across the board.

Most directly affected by the Gulf of Mexico’s oil exploration boom are those which supply the tools, tubing, cables and other hardware that are the industry’s essentials.

The boom is also having a positive effect on other businesses without strong oil and gas connections.

Oilfield supply executives say the boom has made for fierce competition between local, national and international rivals, so they must keep their heads on swivels to monitor every direction for opportunities.

“There is competition everywhere you turn,” MRC Global sales representative Doug Sealy said. “There are local manufacturer reps that we either buy from or they sell direct so we have to compete against them too. We have to analyze who our competition is at all times.”

MRC is a global distributor of pipes, valves and fitting products. The company got a competitive leg up in 2012 through an agreement with Shell Oil that makes them the first supply stop for any project Shell may have.

For other companies that may not have the luxury of an agreement with a leading oil producer, the day-to-day process begins with sales people who check their emails for bids and quotes on upcoming projects.

The sales game is considered especially competitive both in and out of house.

The more product employees sell, then the more money they will ultimately make because companies generally pay on commission.

“You have to be self-motivated by the almighty dollar,” vice president of Pipe Distributors Inc. Mitch Thompson said. “A lot of people want their money up front, but we want to hire people that are aggressive.”

Local firms may not have guaranteed agreements with offshore providers, but many have built strong loyalties with clients. Pipe Distributors considers Gulf Island Fabrications and Morgan City-based Allison Marine as important clients in that way.

Companies service their clients by looking at what distributors have in stock and the delivery status of the products then reach out to companies. The day-to-day process can be hectic due to the fast-pace of the competition.

“Customers have needs and we fill those needs depending upon their requirements,” Sealy said.

Suppliers use the Approved Manufactures’ List (AML) to help them figure out what products and prices customers are looking for.

“We have to know what to do and how to price materials based on the AML,” Sealy said.

The ability to supply with speed, business owners and managers said, requires commitment and dedication.

“Sometimes, companies want these products yesterday,” Thompson said.

Suppliers say they must stay on top of the market and competition because any shift can force companies to look elsewhere for suppliers.

“It is cyclical. It has its ups and downs depending on the customer needs and industry requirements,” Sealy said. “If there is a high demand, then activity will be great. If the demand is low, then the activity is usually pretty low.”

Sealy expects business for MRC Global to boom this year and be that way for the next three to five years.

“They would not be building refineries and chemical plants if the activity was not strong. With all the activity and proposed pipe-line construction, business will be brisk,” he said.

Thompson said business has picked up in the last month or two despite being down in recent years, which is attributed to the BP oil spill.

“They expect to have a banner year in 2015,” he said. “We are seeing some positive things come up in the fourth quarter of this year and all of next year.

Another supply industry that has seen exponential growth is one that meets a very different kind of need.

Grocery stores like Frank’s Supermarket, Cannata’s and Rouses help fuel the bellies of the offshore workers with orders for the rigs and boats.

“Every customer is important, but these orders are special,” said Vince Cannata, president of Cannata’s Family Markets. “The people work hard and they want fresh food. You are taking the place of them being in the store, so you have to be sure the products you are choosing are fresh, not bruised and that they will keep well. We take our responsibility to that very seriously.”

Likewise, offshore business has been a boon for Frank’s.

“Business has spiked in the last few years for us. Our business in general is dependent on the oil industry. I would think that a high percentage of commerce is dependent on the oil industry both directly and indirectly,” said David LeBoeuf, president of Frank’s. “When things are good offshore, it is good for our offshore business, but it is also good for our walk-in business because a lot of our customers are dependent on the oil field for their payroll check.”

Frank’s has been providing offshore supply vessels, more so than the rigs, with food for 36 years.

“We are full service. We pick up cooks and captains at the dock. We bring them into our stores and they shop or we bring them and the groceries back or they can go to our website,” LeBoeuf said. “Anyway they want to order, we accept it. We will pick it ourselves and then box it all up and bring it back to them. It is their choice. Whatever is convenient for them.”

As the oil and gas industry continues to grow, the supermarkets have capitalized on the business.

“We have been doing it for many years. Recently, we have really kicked it up and started focusing on it,” Rouses Owner Donny Rouse said.

While the business has always been there for the grocers, LeBoeuf said that Frank’s has been getting more companies calling as they are two weeks away from opening a fourth store in Larose.

“We are doing well with the offshore sector of our business. Business in general has grown in the oil industry,” LeBoeuf said. “We are getting a bigger piece of the offshore pie because we have done very well with that part of our business. I think we are get-ting referred by companies, who maybe have gone elsewhere, are coming to us.”

For a company like Frank’s, as the oil industry goes, their business goes.

Frank’s Supermarket has provided food service for the offshore industry for 36 years. Employees Donna Brock and Garrett Candies make sure the shelves are stocked and ready to go. 

MICHAEL HOTARD | THE TIMES