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AMM Awards: 2012 Steel Tube and Pipe Excellence Winners

Keywords: Tags  AMM Awards for Steel Tube & Pipe Excellence, Reliance Steel & Aluminum, NOV Grant Prideco, V&M USA, Leavitt Tube, Tenaris SA, Piotr Galitzine, TMK Ipsco Union Pacific

Drill just below the surface of the everyday issues that steelmakers face, and you’ll find people and companies that are implementing business improvements that are delivering real change to the industry. This is just as true of the steel tube and pipe sector. Earlier this year, AMM presented the first-ever Awards for Steel Tube and Pipe Excellence during its fifth annual Steel Tube and Pipe Conference in Houston, recognizing advancements rooted in technology, customer service, logistics and other practices. AMM congratulates the winners and salutes the best-in-class initiatives that a panel of independent industry experts decided set the winners apart from their peers.

Best Mergers & Acquisitions: Reliance Steel & Aluminum Co.

Reliance Steel & Aluminum Co. chairman and chief executive officer David H. Hannah believes his company is “the acquirer of choice in the metals service center industry.” He is proud of the Los Angeles-based company’s track record of not just acquiring companies but of helping those companies—including some in the tube and pipe industry—become bigger and better.

Reliance, which captured AMM’s Best Mergers & Acquisitions award, is the largest North American metals service center, having grown its sales revenue to $8.1 billion in 2011 from $447 million in 1994, the year that it became a publicly traded company. A significant part of that growth has come from its 48 acquisitions during that timeframe, including the purchase of several companies that distribute specialty tubing to complement its Tube Service Co. division, which has been in the specialty tubing business for 30-plus years.

The most recent such acquisition was that of Continental Alloys & Services Inc., an energy tubulars distributor based in Houston. But the largest was of specialty tube and bar distributor Earle M. Jorgensen Co. (EMJ) in 2006, an acquisition that was supplemented with the purchase of two Canadian tubular distributors—Encore Metals and Team Tube Ltd.

“Our strategy is just to be nimble and to look for companies as they become available that fit with our culture and our reputation in the marketplace,” Hannah said, adding that Reliance’s acquisition strategy focuses on profitable growth, not just top-line growth. “We are very disciplined. We are very focused on doing the right acquisitions for Reliance and not just any old acquisition.”

Best Innovation: NOV Grant Prideco

Synergy is a much-overused word in business and industry. But in some cases, it perfectly describes the mutual benefits to customers, suppliers and industries.

Houston-based NOV Grant Prideco—a subsidiary of National Oilwell Varco Inc., one of the largest oil and gas equipment and supply companies in the world—is a top producer of drill pipe and drill stems, the steel segments that are threaded together to turn the bit and carry fluids down to bring cuttings to the surface. NOV Grant Prideco, which captured AMM’s Best Innovation award, makes a significant amount of its own pipe at the Voestalpine Tubulars mill Austria, in which it has a majority ownership, and buys the rest from other pipe mills. For most applications, the pipe is made from a chrome-molybdenum low-alloy carbon steel.

When Brazilian oil and gas company Petrobras needed specialized drill string and risers—the pipe that connects an offshore platform to the wellhead on the sea floor—it contacted NOV Grant Prideco. The planned well would produce sour gas, which is high in corrosive hydrogen sulfide, and Petrobras needed not only the drill string and pipe but also the welds to be fully sulfide-stress-cracking (SSC)-resistant.

“We were actually already considering such a system,” Michael Jellison, senior vice president of engineering at NOV Grant Prideco, said. “We have had our pipe in sour-gas service worldwide for a decade and never seen any failure, so we never needed to make the welds resistant.” However, there was internal interest in doing so. “The advantage of such a configuration is that it is very rugged and can be deployed in more harsh environments,” Jellison said. “Still, it was a significant investment for us, so we were happy to have a client to work with.”

Best New Project:
 Vallourec & Mannesmann USA Corp.

In his 2012 State of the Union address, Barack Obama talked about “an America built to last.” The President might well have been thinking about the pending completion of Vallourec & Mannesmann USA Corp.’s Fine Quality Mill (FQM) in the rustbelt community of Youngstown, Ohio, winner of AMM’s Award for Steel Excellence for Best New Project.

The small-diameter pipe mill is already undergoing hot completion, with industrial start-up expected sometime in the second quarter. The $650-million facility will produce small-diameter pipe in sizes from 2⅜ to 7 inches, complementing an existing pipe mill on the site that has an annual capacity of about 500,000 tonnes of larger-diameter pipe from 5 to 10¾ inches. The facility will include a 200,000-tonne heat-treatment facility that will allow V&M USA to supply pipe for the most demanding horizontal drilling applications. The Youngstown complex also will include new on-site storage facilities.

Skip Herald, V&M’s North American managing director for oil country tubular goods (OCTG), said the Houston-based subsidiary of Vallourec SA was taking a calculated gamble in its significant North American investment. “Despite current macroeconomic uncertainties, we believe that the energy market shows great promise and validates our investment plans,” he said.

Youngstown, given up for all but dead in the wake of the 2008-09 recession, sits at ground zero of some of the biggest energy plays on the North American continent. The Marcellus and Utica shales, which stretch across much of eastern Ohio, Pennsylvania and upstate New York, contain volumes of natural gas considered unthinkable just 10 years ago, but geologists have learned to unlock shale gas with hydraulic fracturing drilling techniques, which will require hundreds of thousands of tons of small- and large-diameter drilling pipe.

Best Operational Improvements:
Leavitt Tube Co.

When Maruichi Steel Tube Ltd. purchased a majority interest in Chicago-based Leavitt Tube Co. in 2008, the acquisition gave it a pair of U.S. mills. Japan’s largest steel tube producer had acquired a mill in California in 1980, but the company wanted to expand its reach across the United States. Leavitt Tube fit the Japanese company’s geographic diversification goals but the Chicago producer, which first began making mechanical steel tubing in 1956, was saddled with aging equipment.

Maruichi wanted to focus on producing the highest-quality tubing in the industry for the U.S. market, so the company embarked on a strategic plan to upgrade and modernize Leavitt’s facilities.

Leavitt’s recently upgraded 1-million-square-foot production facility in Chicago produces structural tubing, mechanical tubing and Hi-Y 50 pipe tubing. Known in the industry as “The Tube People,” the company’s employees pride themselves on providing quality tubing and outstanding customer service.

For its upgrade of the Chicago plant, Leavitt Tube is the winner of AMM’s award for Best Operational Improvements.

The first major mill upgrade project at Leavitt got under way in late 2010, when engineers and construction teams began installing a quick-change cassette system on the plant’s W-80 mill, which produces Leavitt’s larger hollow structural sections (HSS) and more. First commissioned in 1981, the W-80 mill had received only minor upgrades in nearly 30 years of operation, with the exception of a state-of-the-art milling saw installation in 2006. The $12-million installation of the quick-change cassette system has allowed Leavitt to achieve tighter tolerances, reduce downtime and increase flexibility.

Best Environmental Responsibility/Stewardship: Tenaris SA

Deep in the jungle of Peru, near the Urubamba River, is the Kinteroni gas field—a veritable treasure trove of natural resources. Discovered in 1988 by Royal Dutch Shell Plc, the field holds an estimated 13.4 trillion cubic feet of natural gas and another 482 million barrels of natural gas liquids (NGLs), which can translate into billions of dollars of revenue for companies that are able to access the gas and transport it via thousands of miles of pipeline.

Unfortunately, the process of well exploration and drilling can be immensely disruptive to sensitive ecosystems. In particular, the use of thread lubricant and chemical sealant—commonly known as pipe dope—can lead to toxic seepage and has the potential to inflict lasting damage on surrounding wildlife, waterways and indigenous communities.

Enter Tenaris SA, a Luxembourg-based steel tube and pipe manufacturer. While working on a new Kinteroni well with Spanish oil and gas company Repsol YPF SA, Tenaris supplied an innovative and environmentally friendly technology called Dopeless drilling, the first time the method had been used successfully in a jungle environment. In doing so, Tenaris picked up AMM’s award for Best Environmental Responsibility/Stewardship.

According to a recent Tenaris release, Dopeless technology is a viable and environmentally friendly alternative to traditional pipe dope. When the technology is used properly, “pipe handling and cleaning operations relating to the use of dope in the field are rendered superfluous, with consequent benefits to operating efficiency, safety and the environment. Instead, a dry, multi-functional coating is applied to the connection by the pipe manufacturer in the controlled, industrial environment of the mill, ensuring consistent quality and operational reliability.”

Industry Ambassador/Advocate of the Year: Piotr Galitzine

While TMK Ipsco chairman Piotr Galitzine never set out to be an industry ambassador or advocate, throughout much of his 36-year career in the pipe and tube industry he has spoken up for things that he feels beg to be noticed, including the push for oil and natural gas drilling in the shale plays and the value of international trade and cooperation.

It is his commitment to these and other industry issues that earned him AMM’s Industry Ambassador/Advocate of the Year award.

“I am far from being the only industry advocate,” Galitzine said. “I think that all of us in the business are advocates,” bringing to others’ attention the technologies that have been developed and the ways they are improving the lives of others, both domestically and globally. “If I am an industry ambassador, then all of my colleagues at TMK and throughout the industry are the general counsels and we all should keep up the good work.”

Galitzine, the son of Russian exiles displaced by the revolution, graduated from the Massachusetts Institute of Technology with a degree in mechanical engineering, specializing in design, materials and analysis. He said he has always thought of engineers as being a force for good and that engineering was all about producing solutions for society’s problems.

Upon receiving the Woodrow Wilson Award for Corporate Citizenship from the Kennan Institute division of the Woodrow Wilson International Center for Scholars in 2010, Galitzine said he believes that trade—the more, the better—is the sanest and most sensible way of ensuring good relations and lasting world peace.

“I believe that robust trade and trade flows are the best guarantee that nations will continue to talk to each other civilly,” he said. “I think that time and again when business has flourished, so have diplomatic relations” in what he terms “a positive spiral.”

Best Logistics/Transportation Provider: Union Pacific Corp.

Shipping line pipe by rail is a tricky business. It’s often difficult for customers to properly identify suitable locations equipped to handle the unloading of pipe, and project-based cargo—high volumes of pipe shipped to specific geographic markets—can cause major delays in rail service, which in turn can create problems for project managers in need of timely deliveries.

Seeking to fix these issues, Union Pacific Corp. and subsidiary Union Pacific Distribution Services (UPDS) developed Pipeline Express, a unique tracking and management system designed to modernize the shipment of line pipe by rail. In doing so, they captured AMM’s award for Best Logistics/Transportation Provider.

Steel and pipe manufacturers, recognizing the added benefits of shipping with Omaha, Neb.-based Union Pacific, have more than doubled order sizes since 2009 to 35,000 carloads from 15,000 carloads. With that increase in shipments, Union Pacific management quickly realized that a state-of-the-art tracking and logistics system was needed to properly maintain a high level of service and efficiency.

“When we launched Pipeline Express, it allowed us to go out with customers and identify unloading sites,” said Greg Shimonek, Union Pacific’s senior business director for metal and ores. “Traditionally, what the industry would do is determine where pipeline would be, and then go out and find unloading sites. Pipeline Express was designed to integrate logistics on the front end. By having us involved, we were able to identify sites that would make sense, as opposed to customers going out and finding sites on their own.”

By identifying these sites, Shimonek said, Union Pacific was able to provide customers with the added convenience of receiving timely rail rates—a process that previously had been delayed by the inability to properly establish suitable locations for unloading.

Service Center/Distributor of the Year: Steel Supply Co.

Steel Supply Co., selected as Service Center/Distributor of the Year in AMM’s Awards for Steel Tube and Pipe Excellence, started well over a century ago and is going strong with plans to further explore potential in export markets.

Its roots were as Solid Steel Co., founded in 1888, which became Steel Supply in 1904, vice president and general manager David Sheer said. A distributor of bar products as well as a processor and tubing warehouse, Steel Supply has been owned by the same family for seven decades. Martin Hjortland acquired the company in 1939 and was succeeded as president in 1971 by his son, Donald Hjortland, a metallurgist.

Steel Supply was first built in what became Chicago’s “skid row,” a low-income neighborhood just west of the Loop often called Skid Row Steel. By 1952, Steel Supply had built a warehouse in west suburban Schiller Park, but moved to Rolling Meadows in 1971 and built an addition in 1994 encompassing 65,000 square feet of warehouse and production area, according to Sheer.

The company’s expertise lies in special finishing of tubing products and in inventorying metric as well as American sizes.

“Tubing is processed for honed inside diameter typically used in the hydraulic cylinder manufacturing process,” Sheer said. Hydraulic cylinders are widely used in mobile equipment, construction machinery such as earth movers, and in material handling equipment. The company also stocks chrome-plated tubing that is consumed in hydraulic piston rods.

“All of our tubing is carbon or mild alloy steel,” Sheer said, but the company also stocks carbon, alloy and stainless steel bar as turned, ground and polished (TG&P) and chrome plated.

Seamless Pipe Producer of the Year: Vallourec SA

Vallourec SA topped long-time and fierce competitor Tenaris SA in a battle of seamless titans in the inaugural AMM Awards for Steel Tube and Pipe Excellence. Vallourec & Mannesmann (V&M) USA Corp., the French company’s U.S. subsidiary which is building a small-diameter seamless pipe rolling mill in Youngstown, Ohio, took home the title of Seamless Pipe Producer of the Year.

So what was V&M’s secret? V&M pointed out in its nominating materials for the award that it certainly helps to have a $650-million seamless pipe mill in Youngstown—smack in the heart of the Marcellus and Utica shale plays.

V&M is nearing completion of the Youngstown mill, which is on schedule to start commercial production this summer. The mill is expected to be capable of making about 500,000 tonnes of seamless pipe annually in diameters from 23⁄8 to 7 inches, according to the company’s website. Small-diameter oil country tubular goods (OCTG) from the mill should help meet demand in such areas as the Marcellus and Utica shales (AMM, Feb. 23).

But it’s not just rolling capacity that makes a seamless pipe producer excellent. It also helps that the new small-diameter pipe mill in Youngstown will be located on a campus with heat-treatment facilities, semi-premium and premium connection capabilities and plenty of storage.

V&M also has invested in research and development in the United States. That has paid off, especially in the wake of the 2010 drilling rig explosion and subsequent oil spill in the Gulf of Mexico, which the company said resulted in a flood of demand for testing connections. The company plans to double its testing capacity in Houston, with the new portion of the research and development facility expected to start up in the third quarter.

Welded Pipe Producer of the Year:  Plymouth Tube Co.

When Plymouth Tube Co. was named the winner of AMM’s Welded Pipe Producer of the Year award, Curt McDowell, general manager of the mill in Eupora, Miss., stepped to the microphone and joked, “I’ve waited a long time to thank the Academy for this.”

The Eupora mill, one of 10 operated by Warrenville, Ill.-based Plymouth Tube, was up against some fierce competition: Boomerang Tube LLC, Chesterfield, Mo., and Welspun Pipes Inc., Little Rock, Ark.

McDowell said the award belonged to the Plymouth team who had made the achievement possible. “The team has worked very hard in preparing ourselves for this as the market comes back. And at the end of the day, people make the difference,” he said.

The Eupora facility produces welded, drawn-over-mandrel tubing as well as hydraulic and fabricated tubing. It has bragging rights even among Plymouth’s 10 mills, having finished first in the company’s manufacturing excellence survey for the past six years—no small achievement considering that expectations also increase every year.

So what is the secret to Plymouth’s success at Eupora? McDowell wasn’t kidding when he said it starts with people. Plymouth tries to recruit the top 10 percent of available talent, develop their skills and make sure it has “the right people in the right seats on the right bus,” according to the company’s award nomination.

Being the best welded tube maker also means listening to those talented people when they have good ideas, Plymouth said. To that end, the company has implemented a suggestion system that rewards employees when their good ideas are put into practice. As of October 2011, Plymouth had implemented 300 suggestions—or roughly two per employee—at the Eupora mill alone.

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