Top-Co is going great guns as it develops new products and expands globally
Written by Martin Slofstra Produced by Blair Dolson
Regardless of any energy slowdown, the decision to go global has had a positive impact on the bottom line of Top-Co, an Edmonton, Alta. based manufacturer of oil-well casing cementing products.
“Putting a global network in place was the first strategy after acquiring our company,” says Gerald McLaughlan, President and CEO, Top-Co LP. McLaughlan acquired the company from its founders in July 2006. The company was established in 1963.
Previous to the acquisition, the company’s revenues had been 70 percent Canadian and 30 percent international. In less than three years, the percentages have reversed and 70 percent of revenues are now sourced from international customers. Of equal significance, the company has doubled its revenues during that same period of time.
McLaughlan cites three factors propelling exceptional growth. First, is what he likes to call Top-Co’s “geographic diversity.” The company has opened a number of international distribution and service centers including Houston and Fort Worth, Tex., Mexico, Azerbaijan, Russia and Dubai. An opening in North Africa is also planned in the near future.
Secondly, the company has introduced a number of new and upgraded products following major investments in R&D. This strategy included the March 2008 acquisition of Texas based LaFleur Petroleum Services Inc. providing access to a number of proprietary technologies and patented products. Thirdly, the company consummated a number of global supply agreements with multinational service companies including Schlumberger, Baker-Hughes and Smith International. These service companies operate in over 90 different countries providing Top-Co with new mature distribution channels coupled with on-site product support. “Worldwide supplier alliances represent the engine for future exponential international growth”, says McLaughlan.
Top-Quality Products
Top-Co produces two families of specialized products both aimed at cementing of casing in well bores for the oil and gas industry. One product line is called “centralizers” with many different designs for various applications. In the cementing process, which involves the pumping of liquid cement through and around the downhole casing, centralizers are responsible for centering the casing in the well bore. The company has introduced a number of new designs and configurations including a non-steel high resistant composite product that “is becoming increasingly popular today” says McLaughlan.
Top-Co also manufactures a full line of float equipment, essentially high pressure check valves. According to McLaughlan, the company is a month or two away from introducing a new differentiated valve that has been extensively tested with much higher flow and back pressure characteristics, meaning savings in high cost rig time.
The new valve has been subjected to extensive testing on a new computer controlled state-of-the-art flow test loop. This unique equipment enables Top-Co to validate the performance of new or upgraded products to API specifications by simulating rig conditions including usage of drilling mud. “To my knowledge, no other manufacturer of casing cementing tools possesses this type of sophisticated dynamic test equipment,” states McLaughlan.
It’s In The Details
It is not just its product line that has provided Top-Co with a competitive edge, they also endeavor to differentiate themselves through continuous improvements in customer service. A critical key performance indicator in the industry is turnaround time. “There is no way E&P’s and service companies will wait weeks or months for product,” says McLaughlan. “We focus on order fulfillment, and in North America over the past two years we fill 98 percent of orders in 24 hours. International orders are filled 95% of the time within two weeks of receiving the order.” “These benchmarks represent top quartile performance standards in our industry” states McLaughlan.
Top-Co is constantly working to improve processes at its 165,000 sq. ft. facility in Edmonton, Alta. and its 25,000 sq. ft. plant in Weatherford, Texas. Lean manufacturing and 5S projects have been underway since January 1, 2009 with Phase I completion scheduled for year end. Manufacturing processes are being systematically analyzed and modified to drive waste out of the system, from material handling to CNC tooling to tubular saw cutting. Production machines are being arranged in cells to improve operator efficiency and material flows. MRP (Materials Resource Planning) and Production Scheduling functions are being upgraded and automated to ensure optimum raw materials are on hand to avoid production disruptions and delivery delays. In some cases efficiency gains of up to 40% have been achieved through this initiative. McLaughlan states “Top-Co will be a lean machine by the close of 2009 and our clients will benefit from shorter cycle times, consistent reliable order fill and stable or lower pricing.”
The View From the Top
McLaughlan remains optimistic about the company’s prospects, despite the prevailing soft economy. “Top-Co enjoys an estimated 12 percent share of the primary cementing tool market with lots of opportunity for growth, even if the sector itself is not expanding. Top-Co is positioned in offshore markets like Russia, the Persian Gulf and Mexico with robust drilling programs that will propel our growth in 2009 and 2010.”
“Low commodity prices and demand shrinkage will not seriously diminish opportunities, especially over the long term”, says McLaughlan. “In my opinion the oil industry is only experiencing a pause pending re-balancing of the demand-supply equation. E&P’s must invest in the exploration and development of oil to meet future surging demand. There is an overall global shortage of hydrocarbons and I am a proponent of the Peak Theory. I am not forecasting an early return to $150 per barrel oil, but I am projecting $60 or $70 per barrel by the end of the year with stability”.
Top-Co will continue on the current path of transforming itself into a global enterprise and developing new differentiated high performance casing cementing products. “We are expanding internationally, growing at an impressive but controlled pace and we see no reason to modify these strategies.”