C&C Industries becomes major valve factor

BY MORRIS R. BESCHLOSS

PVF and economic analyst

C&C Industries is a global example of East meeting West to build a PVF manufacturing concern that is proving increasingly successful. In 1998, K.C. Chin and Dale Lutz came together through an introduction by a mutual friend. Soon after their first meeting, they realized that they shared a common vision and many ideas about starting a company. They rapidly decided to form a small company. Their vision soon became a reality. Shortly after their first meeting they launched their own line of butterfly valves to accommodate the American market. These two men are well-acquainted with the PVF Industry.

Chin, who serves as co-president and CFO, immigrated to the U.S. and became a citizen in 1977. Throughout his career, he has introduced and pioneered well-known products such as TY Cast Steel, KOFCO Flange, Sam Shin Forged Steel Valves and KUKA Flanged Ball valves. All of these companies grew to become well-known brands.

On the other hand, president and CEO Lutz has worked as a sales manager for JB Smith Manufacturing, Bonney Forge, Westbrook Manufacturing and Kemper Valve. He primarily covered the mid-continent region. He built strong relationships with his customers and became well-known and well-liked in the industry.

C&C now serves a diverse customer base worldwide and has expanded its product lines. The company offers a unique blend of products that accommodate to a wide range of industrial, commercial, and oil & gas applications. C&C continues to think progressively and expand its products lines in order to continually adapt to the needs of the industry and their distributors.

In order to seamlessly serve their customers across the border, C&C has opened another distribution center in Edmonton, Alberta. This operation is co-owned and managed by Greg Smith. In Canada the company will be known as cctx, and with over 20,000 square feet in warehouse space, the CCTX is fully equipped to service its local customers with the same service and support that the Houston office offers. The immediate response to C&C’s Canadian Branch has proven that this venture will be extremely successful.

Smith is well-known in the Canadian market and has worked extensively in Alberta. He began his career in 1983 with Telford Valve and moved on to work with other companies such as GWC Valve, Prism Flow and CE Franklin.

C&C’s fast-growing business has forced the company to look for a larger facility. Plans are already in motion to build a new, larger distribution center, which will more than double the size of their current location. C&C gives all the credit to their loyal distributors for their continued success. The company plans to continually evolve to accommodate the needs of their distributors by keeping their service fast and looking to future growth through acquisitions and the development of new products.

It is our pleasure and privilege to share this interview with Dale Lutz, president and CEO.

Beschloss: You’re obviously upbeat about your relatively young PVF manufacturing and distribution company. Could you elucidate the respective roles played by you and Mr. Chin, respectively, in the development of your company?

Lutz: Mr. Chin has been in the valve industry for many years; he is the primary contact with all of our overseas factories. I deal primarily with the sales and marketing here in the states. Together we work side by side every day dealing with all aspects of our business.

Beschloss: It’s obvious that Mr. Chin has brought several new products to the table. Have any of these cut a particularly wide swath with your distributors and their customers?

Lutz: Yes. In fact, our line of flanged ball valves has opened a lot of new doors for our company. We are now doing business with many of the industry’s top valve distributors, both here in the states and now in Canada.

Beschloss: With your broad experience in product sales, what is your national method of interface with your distributor and their end users?

Lutz: Our main focus has been our rep network. We now have coast-to-coast distribution. We feel that the local reps throughout the country have solid relationships already in place with the distributors and the end users. We reinforce these relationships with our sales team working directly with our reps in the field.

Beschloss: Please tell us more abut your export activities. Do you expect major growth from this arena, especially with a dollar that is reaching new lows?

Lutz: Yes, absolutely. We have just begun to tap into this huge market. We are currently doing very well in Europe, the Middle East, Mexico and South America.

Beschloss: Your Canadian operations seem right on the money in light of the expansion of Alberta’s tar sands success. Are you using your Edmonton base to become more aggressive in this arena?

Lutz: Most certainly, over the last several months we have been building inventory. Now we are in a position to service the Canadian market, and we are already seeing good results.

Beschloss: Since Greg Smith is a co-owner of your Canadian operations and has gotten off to a fast start, what is his previous experience?

Lutz: Greg is well known in the Alberta PVF market. He has been selling valves and fittings for over 24 years; he has strong relationships with distributors and end users.

Beschloss: Although your revenues and other relevant numbers are privileged, could you tell us your approximate sales levels and the growth percentage, which you are anticipating?

Lutz: We have experienced incredible growth, doubling sales every year. We project the revenue for 2007 to exceed $35 million, not including our Canadian sales. We predict 2008 to level out some. However, we are still forecasting a 1%5 to 20% growth margin.

Beschloss: As an active participant in the red-hot PVF sector, what is your outlook for the rest of the year and 2008?

Lutz: It is our belief that 2007 will stay strong and that 2008 looks very good as well.

Beschloss: Since you are headquartered in the center point of the PVF sector, is the greater Houston area a major source of your total revenues?

Lutz: No. Believe it or not, the Houston and surrounding markets represent less than 10% of our sales.

Beschloss: What are the major end users to which your diversified product line is sold. Do you expect double-digit growth from any of these in particular?

Lutz: Our products are sold to pipe line companies, drilling contractors, fabricators, trucking industry, chemical plants, HVAC and irrigation. So yes, we do expect double-digit growth with every product we offer.

Beschloss: Are there any other experienced PVF veterans on your team? If so, in what capacity do they serve?

Lutz: All of us here have been active in this industry. Our experience ranges from seven to 27 years in this field. We recently added our newest member,  Stephen Witte. He worked for R&M Energy Systems for 27 years. Obviously, Mr. Witte brings a great deal of knowledge and experience with him. We are privileged to have him aboard and look forward to working with him.

Beschloss: With the PVF sector’s dynamic growth, are you seeking additional investments or is your internal financing sufficient to generate satisfactory growth?

Lutz: The answer is yes. You can never have too many sources. Our company is financially solid. We also have a great relationship with a local Houston bank, and several lines of credit with foreign export banks. Therefore, we are in a great position to handle our expected and continued growth.

Morris R. Beschloss, a 50-year veteran of the pipe, valve and fitting industry, is PVF and economic analyst for The Wholesaler.