A BUSINESS LESSON AND ITS APPLICATION UTAH 1986

While in Utah I spent my time overseeing the operation of a pipe fabrication facility in Clearfield, UT. This was an existing business, contracted by us to build pipe assemblies, for the work we were doing at the Kennecott Mine. Each pipe assembly was a piece of pipe, including all of the fittings, bends and connections, as detailed in a drawing for each assembly. When joined together they formed all of the piping system for the plant we were building. So basically all the assembly work was done in a controlled environment off site. Then, transported to the site, and welded or connected in its place in the piping system. Each pipe assembly was designed to be for loading and transport on flatbed trucks (40 ft. in in length).

My specific role was to ensure that these assemblies were made in accordance with drawings. And in the sequence we required for construction. Further, that they were inspected to ensure quality. Ultimately, to be delivered on time to the job site. Pretty simple eh? Not so fast! My life never goes that simply. This particular shop could weld pipe and produce quality assemblies. They just had no ability to follow schedules and move pipe out of their yards. The production rate thru the shop was good. I had experienced, very minor quality issues.The revisions, that I made to drawings, were incorporated quickly into their system. So, at first glance it appeared a smooth running operation.

However there was turmoil bubbling just below the surface. When I arrived I was under immediate pressure from the jobsite. They claimed, that they were being delayed in construction waiting for pipe assemblies. A look at the yard showed a lot of completed assemblies that looked ready for shipment. What could be wrong? So I stuck my nose in to see what I could make of it.

Quickly it became obvious what the issues were. It seemed that the flow of pipe assemblies thru the shop was good and without pinch points (places where some issue was choking off progress). The quality was good. The problem appeared when the welding work was done and the assembly was taken to the laydown area. At that point each assembly had to be marked with specific information detailing its place in the sequence of piping on the job. It then needed to be scheduled for delivery. Also some pieces had not yet been completed and were just moved out of the way for one reason or another.

The yard was the point where I found the problem of getting sufficient assemblies out to our job site in support of construction. A couple of issues became apparent. The sequence of work had not been previously monitored and many, many pieces laid out in the storage yard were not required on site for a period of time, markings were incomplete, pieces that were required were waiting some final work (usually minor) and a general disarray in the storage yard. Truck schedules were sporadic and crane availability to load assemblies onto trucks was not consistent. Hmmmmmm, what now?

The problem appeared to be that 99% of the focus of the company was directed at “production” in the shop. They had all of the focus, attention, priority of people. Once it left the shop, it seemed like no one really cared what happened to the work. Well just so happens that coincident with my arrival, also came the new owner of the company. He had recently purchased it to add to his portfolio of companies. He was from Chicago, was young (about my age), wealthy and very successful. His only problem was he had never been around or involved in pipe fabrication work before. The closest his business had been was the rolling of the lips on tin cans to seal the tops of soup cans. Geezus I thought! Here we go.

We were just into the beginning of a major struggle with the pipe assembly work and I was hitting a block wall. Things were about to get nasty and in walks this guy.He comes to see me, introduces himself, explains who he is and wants to talk. After some chit chat, he asks me to give him my spin on what he is getting into and anything he can do to help. So I took him through a bit of the process and explained where we were at and what we needed to do to make sure we left our work with him. At the point, because of change in ownership we had the option of removing our work and going elsewhere if we deemed it necessary for the completion of our contract.

Obviously, because he was new, he did not want to lose work which was booked and for him was part of the upside of his purchase. We had scouted out a few options, but to me they were all disruptive to our task. I took him for a small tour of our work and explained one thing which stuck to this guy as long as we worked together. I explained that in my mind it was simple. It went like this. I pointed out that all of the good work they were doing, although great, was basically worth nothing to him or us. I explained that all of the pipe assemblies laying in their yard were worth, $0, nada, nothing and only when they were loaded on trucks and out the gate, signed off by me, were they then “money”. He didn’t say much but you could smell him thinking.

This was the ultimate businessman. He excused himself thanked me and left. Within 48 hours we have trucks backed up at the gate, the lifting equipment was all moved to the laydown area and they started loading completed assemblies. A few days later I am called from the jobsite and asked if I can please stop the flow. My answer “yeah right”! “This is what you guys had been screaming for and making my life miserable about.” Better start unloading because more are coming. As long as I stayed there I never had another call about slow or late deliveries. The new owner had learned his first lesson about being a fabrication contractor. And did he learn it well. He understood one thing clearly. HOW TO KEEP CASH FLOWING!