PVF Roundtable quickens its growth

BY MORRIS R. BESCHLOSS

PVF and economic analyst

The PVF Roundtable originated in 1989, when Sidney Westbrook held a series of informal meetings with many of the customers of Westbrook Manufacturing. The purpose of these meetings was to explore means of improving product quality, reducing operating expenses, and improving communication internally and throughout the supply chain. Interest in these objectives grew, culminating in a meeting of 75 representatives of 43 firms who met in October1990 to explore the feasibility of organizing a quality oriented, problem-solving effort on an industry-wide basis.

In May 1992, the PVF Roundtable was formally chartered as a non-profit Texas corporation, with Sidney Westbrook as its first president. By mid-1998, the membership rolls contained the names of more than 190 firms and organizations in both the U.S. and Canada, representing virtually every level of the industry -- manufacturers, distributors, fabricators, designers, construction firms, end-users and standard-writing agencies. This varied and comprehensive membership ensures a unique forum, well suited to addressing common industry problems in an informal, but effective, manner.

In 2006, the Roundtable suffered the loss of its long-time secretary-treasurer, Tom Cameron, and the illness of its legendary chairman and Hall of Famer Sid Westbrook. Fortunately, Fluor senior executive Ron Merrick is firmly in place as president. It was decided to offer the secretary-treasurer job to PVF industry veteran, Houston-based Don Caffee, who had headed the PVF industry’s leading personnel search firm, Valpers, since 1980. The PVF Roundtable board unanimously approved this appointment.

I was particularly delighted with Caffee’s significant Roundtable contributions, which brought about a new dynamic in the PVF industry’s involvement in the Roundtable. This fast-growing centerpiece of the $30-billion pipe-valve-fittings sector is now enjoying the greatest growth in its history.

Caffee passed away suddenly on April 10 at the age of 73. He was enshrined by The Wholesaler in this year’s PVF Hall of Fame, with his wife Marilyn receiving the plaque at the May meeting of the PVF Roundtable.

The PVF Roundtable’s increasingly important role in this expanding industry sector will retain its momentum. Danny Westbrook, popular son of Roundtable founder Sidney Westbrook, has accepted the role of secretary-treasurer. Further shoring up the Roundtable’s growth is the leadership of president Ron Merrick, P.E., a senior executive of the dynamic Fluor Corporation.

Merrick has 33 years of piping and valve specification experience with Fluor in Houston, and is a Fluor Fellow.  His primary responsibilities include maintaining the Fluor corporate master piping catalog and specifications, providing technical advice to Fluor projects and clients, and working with suppliers and manufacturers on quality and supply chain issues.  He is also on the Valves and Piping Subgroup of api Refining Division, vice-chairman of the Manufacturers and Contractors Subcommittee, and recently chaired the api 603 Task Group.

Merrick has maintained a steady hand at the Roundtable’s tiller, and is prepared to preside over an even more diversified association in the future. To give us his view regarding the future plans of the Association, we are privileged to present the following interview with Merrick to give our readers the necessary insight into the Roundtable’s future:

Beschloss: The Roundtable’s General Assembly is now meeting four times a year. In addition to the May presentation of The Wholesaler’s new PVF Hall of Fame entries, are other themes planned for the February, July and October meetings?

Merrick: Yes, the PVF Roundtable has programs designed to appeal to all segments of the industry. Sometimes we focus on one area of interest and then the following meeting will be something completely different, and sometimes we have programs that appeal to everybody across the board. For example, we bring in people like Bob Tippee, the editor of Oil and Gas Journal, on a regular basis to talk about near- and long-term forecasts. We had the mayor of Houston talking about the relationship and the benefits of our industry being here. We cover technical issues, economic outlook, near-term changes, and anything else that we think our members would benefit by knowing more about.

Beschloss:  With the Roundtable hoping to interest all levels of the distribution chain (manufacturers, distribution, constructors, end-users, specifiers) are you finding greater involvement at all levels?

Merrick: We are for sure. As business is up, we see interest and attendance increasing from all levels, but the increase is especially noticeable among the contractors and end users, who were stretched pretty thin in terms of resources and personnel during the slow times of a few years ago. Another reason for the increase is the influx of new people who look for opportunities to learn and make connections. I have a sense that the Roundtable is growing faster than the industry as a whole.

Beschloss: As a member of the Roundtable’s diversified board, I note monthly participation is at an all-time high. Is this reflective of greater appreciation by board members of the Roundtable’s enhanced industry importance?

Merrick: We’ve always felt that the Roundtable had something to offer the industry as a whole. But the big upswing in business has given us a whole new purpose in life, so to speak, and the board as a whole takes the opportunity to grow our influence very seriously. Just like in business, you really want to make hay while the sun shines.

Beschloss: I know that you’re a great proponent of ‘networking’ among the record number of members attending the four annual assembly sessions. Have you found this ‘mixer’ something the attendants find of great value?

Merrick: I would say almost inestimable value. It’s so hard for the average person who works in an office to come face-to-face with the people they deal with, and these days people in outside sales are stretched so thin you never get to meet everyone you should. So there is that, and also the availability of the program presentations which give the members an in-depth picture of some current issue or opportunity. Thirty years ago we had a similar program in-house, and when you have 2,000 people in one location it’s feasible to provide educational opportunities for such a concentration, or at least it used to. A 20-person office would never have that luxury, so the Roundtable has become the contact and learning opportunity of choice.

Beschloss: With Houston the acknowledged energy capital of the world, there seems no hesitancy in participants flying in from all over the country. In the early days of the Roundtable, attempts were made to establish replicas in other cities. Is this still in the cards? What is your opinion?

Merrick: There has been a slow migration to the Houston area of companies who specialize in hydrocarbon-related business, whether it be PVF or financial analysts. I wish it were more geographically balanced, and if we can help that by having meetings in other areas of the country we would be very pleased to do that.

Beschloss:  Ron, you have established a reputation as an outstanding international purchasing executive of one of the world’s major turnkey constructors. Could you give us an insight into the business level of your red-hot business?

Merrick: “Red-hot” is an excellent way to put it. We are at historic highs of backlog, and historic highs of spend in terms of millions of dollars per day. There are a number of us around who matriculated during the boom times of the late 70s and early 80s who frankly never thought we would see that again, but the business level now surpasses even that. I remember those days as being totally frantic, and the difference is our work processes are so automated now, that we can accomplish way more per person per day than we ever dreamed of doing back then.

Beschloss: What areas of the world represent the best opportunities for expansion by PVF manufacturers?

Merrick: Restriction to one region of the world is slowly fading, for everybody. U.S. manufacturers, in particular, have a tremendous opportunity for market penetration in other parts of the world now. We’re not low-cost producers by any means, but U.S. producers (including engineering for sure) have a quality and prestige reputation while at the same time we’re by no means the highest-cost producer around. So, another example of striking while the iron is hot, figuratively speaking. “Everybody” is moving to China for low-cost production, while at the same time spending a lot of money to do that. If you have new markets in China and nearby locations in mind, that is a growth opportunity but if you’re only thinking of selling lower cost stuff to your same old market, the upside may be somewhat limited. For sure, the process industries and oilfields in other parts of the world want the same things your local customers have bought.

An example of how the Roundtable can help you was the series of programs about export regulations that we did a couple of years ago. We brought in experts and attorneys, and the U.S. Customs Service, to discuss how to manage exports and how to take advantage of this market while keeping the producers and the customers in compliance with the law.

Beschloss: With the businesses served by the PVF sector experiencing one of the greatest expansions ever, do you believe this cycle is of long-term duration?

Merrick: Three years ago, we were speculating that we would have three years’ worth of work. Now, the level of business looks like it could be an additional three to five years from today. This isn’t like the old ethylene cycles where demand would grow in spurts, several owners would build plants, and the last one to get in the game might choose to cancel it instead of finishing it. However, I believe that no trends last forever and there will be a slowdown eventually. Chances are we will have a plateau, but not a cliff.

Beschloss:  Which of the various end-use businesses (oil drilling, transportation, refining, power generation, chemical, petrochemical) present the best opportunities for near-term growth?

Merrick: Depends on the part of the country, and for that matter the area of the world. Refining and petrochemical is huge, in all parts of North America, as well as pretty much all the rest of the world. Those few entities who are doing power work are just starting on a big upswing after having lived on leftovers for the last five years. Basic chemicals have mostly moved to China but you’d be surprised how much stuff you can sell to China because they realize they can’t make it themselves. Other than pulp and paper, pretty much anything that needs piping material is doing well now.

Beschloss: Our industry has been through several up-down business cycles in the past 25 years. Do you think this boom has ‘longer legs’ this time than some of the previous ones?

Merrick: Yes, because of the phenomenon of global growth. Certain parts of what we used to call the Third World are bound and determined to become more like us in their lifestyle, and there are at least as many people in that category as now live in North America and Europe. So even if they make incremental improvements in their lifestyle, it represents a tremendous aggregate demand.

Beschloss: As president of this dynamic organization, what additional contributions can actual and potential members make to perpetuate the PVF Roundtable’s industry dominance?

Merrick: Get involved. If you liked a presentation you saw at the last meeting, bring someone you know to hear the next one. And if you think of some problem or situation or see an opportunity that would benefit the industry, let us know and we’ll see if we can at least bring some light to bear on the subject.