As North America’s 5th largest producer, manufacturer, and distributor of Oil Country Tubular Goods (OCTG) and line pipe for the oil and gas industries, SB International’s success today is flowing as smoothly as the oil that runs through their pipes. Steve Engelhardt reports.
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Satish Gupta came to the United States in 1979 and, during the completion of his MBA at the University of Dallas in 1981, formed a company based upon supplying non-ferrous metal products, such as scrap and off-spec steel, to countries in Asia. “During this time, countries like Korea, India, Japan, and Taiwan, who are low on raw materials like copper and steel, were beginning to start up manufacturing bases and needed these materials from somewhere, and we were happy to fill that void for them,” Gupta says.
Over the next couple of decades the company enjoyed and sustained healthy levels of demand, until the beginning of the millennium, when US steel’s competitiveness fell sharply in Southeast Asia, in favor of cheaper alternatives. Losing a primary source of revenue would derail most companies, but Gupta and his team, sitting on a stockpile of steel, looked around and, witnessing the exploding oil and gas industries around them in Texas, knew they had found their future. “Given our experience in the metal industry, we wanted our next move to be focused around steel, and from an industry that had strong demand in not only quantity, but also quality of product,” he says, adding, “the oil and gas industries in Texas provided a perfect fit for us in that respect.”
Global Identity, Local Commitment
Today, SB International is one of the top producers and suppliers for North America, with heavy demand coming from oil and gas business in both the U.S. and Canada. And yet, Gupta says that a large part of their initial and sustained success over the last 15 years, and what gives them strong confidence going forward, was effectively integrating the global aspect of their previous raw material operations into their current identity.
“One of the biggest things that sets us apart from others is that we are a major player not just in the U.S. steel industry, but also in many other markets around the world as well,” he says, continuing, “When we decided to switch to steel tubular goods in 2001, we established a number of manufacturing bases overseas, given our experience in those countries from before, and today, manufacture out of them along with our numerous facilities here in the United States and Canada.”
SB International’s global presence differs from many other steel producing companies in North America, as most only hold operations in the United States. “By combining our overseas manufacturing operations with the presence we established here in North America, we are able to develop and offer a product that is of both high quality and competitively priced,” he says.
SB International further strengthened its domestic manufacturing presence this year, when its affiliate, Centric Pipe, acquired all of the OCTG assets of Northwest Pipe Company in March. The deal includes a casing mill in Bossier, City, La., and a tubing mill in Houston, Texas, with the two facilities possessing a combined capacity of 200,000 tons per year.
“With all the growth in North America in terms of oil and gas, including the boom in shale, demand for our product has surged through the roof,” Gupta says, adding, “and with this demand has come the need for supply chains to be run primarily through North American entities compared to foreign sources, and these two facilities significantly help us meet those needs.” In addition to the acquisition, Gupta says the company took on a green field site project in Houston, to serve added processing and finishing needs as their business grows.
Gupta says the company has been bullish in their presence within the energy sector, expecting demand to increase by double digit levels over the next three to five years, and their increased manufacturing presence in the United States helps them do just that.
“The addition of Northwest Pipe’s OCTG assets, along with our established presence at additional locations in Texas, allow us to handle the rapidly increasing demand for pipe and drilling products, which is crucial because while a pipe coming from overseas could take between 60 and 90 days to the U.S., we can now supply the same product at a much faster rate.”
SB International has approximately 500,000-square-feet of floor space amongst all its facilities in North America, with around 215 employees hard at work under their roof each and every day. “Our production presence today allows us to maintain complete control over the supply chain and offer a product that is at a higher premium of quality, an outcome that has us very optimistic heading into 2015 and beyond.”
Gupta says that their current success and grasp over their supply chain and distributor partnerships has them looking into new areas of innovation. “As oil prices continue to soar, drilling activities go up as well, and with strong drilling activities, there creates a large demand for our OCTG products, and additional business opportunities have been created through this as well,” he says.
He says that because of the surge in piping and drilling activities, there has been a particularly strong demand for high-quality pipe connectors, a need that SB International looks to fill by the end of the year. “The connection between two oil pipes is, as you can imagine, extremely important, and we are working to develop a premium type of pipe connector that we feel will be very effective in the field,” he says, adding, “we believe that adding this into our product line makes us an even more complete option for business looking for OCTG products and services.”
Gupta says that his company’s global presence enables them to have financial flexibility with their customers, another distinguishing element of the company. “With our international reach and competitive pricing, we are able to offer options to our customers that most others either aren’t able or willing to do so.” He’s talking about his company’s consignment-like capabilities, in which they will assess a customer’s situation and economic conditions, and supply them with the materials ahead of time, and allow them to pay for the products as they use them.
“It’s a unique program for us, and drives home the point that we care about our customers and the jobs they have to do,” he says, continuing, “most other manufacturers would prefer to simply sell their product up front and be done, but we work with our distributors to find a suitable program that benefits both sides and it’s something that has proven very popular amongst our partnerships.”
Because at the end of the day, Gupta says he and his company are committed to the North American oil and gas landscape, and will do whatever they can to help others succeed in it as well. “We have a wide range of flexibility, both in tangible assets like raw materials and finances, and in philosophy of how we do business with individuals and companies,” he says, adding, “pure and simple, our customers know they’re getting a high-quality product at a competitive price.”
It’s been 35 years since Satish Gupta came to the United States, and through his international acumen, a dedication towards producing a reliable, cost-effective product, and, perhaps, a little bit of luck along the way, SB International is charging full speed ahead.