Cameron Sorenson, Project Manager of Tube Supply, talks about how they distribute mechanical tubing for oilfield production.
Please excuse any typos in this hasty transcript.
Matt Register: Hey guys welcome back to the show, Texas Business Radio. Texasbusinessradio.com is the website. 844-814-8144 is our 24 hour call in line. Get your calls in and we’ll get your questions answered, get the experts in here. I’m your host Matt Register. Jay Curry is the one over there in the co-host chair. What do you think Matt?
Jay Curry: This is going to be a fun one. We’ve talked about generational businesses and stuff. This is kind of an interesting twist on that, and a very interesting business. I think we’re going to learn a lot.
Matt Register: Well and we’re continuing to talk about robotics. There’s a robotics component in here as well. We’re talking to Cameron Sorensen, who is a second generation and a project manager at Tube Supply. Tube Supply is a metal distributorship here in Houston, Texas. Cameron, welcome to the show.
Cameron Sorensen.: Thanks for having me.
Matt Register: Talk to me about Tube Supply. What do you do? Who do you do it to?
Cameron Sorensen.: We are a distributor of oil field mechanical tubing. It can down hole in a packer, or a plug, and we use the seal also on surface. We use it in the well head. Our range can go down to about a two inch OD to about a 30 plus inch OD.
Matt Register: So this steel tubing is used in a variety of applications and you’re the distributor, so you have a yard full of it. You get it in, you cut it, you heat treat it perhaps, and then you get it out to the manufacturers who are turning that tubing into something. Correct?
Cameron Sorensen.: Yes sir.
Matt Register: Talk to me a little bit about how you guys ended up in that business because the current iteration of this company is only about three years old, but you’re a pretty sizable business, didn’t start three years ago. Correct?
Cameron Sorensen.: Correct. My father, Paul Sorensen, started the original company, Tube Supply Inc., in 1986 and sold it in 2000-
Matt Register: Not a great time to start a oil field related business though right?
Cameron Sorensen.: Is there a trend in this?
Matt Register: I get it. So he started it in the middle of probably the worst oil field downturn in a generation right, and started it in 86. What happened from there?
Cameron Sorensen.: He ended up selling it in 2011. Five years passed and he got a call from the company that bought it to buy the naming rights and the inventory back.
Matt Register: Okay so he sold it in ’11, bought it back in ’16. That was the three years ago. You’ve been running ever since as really a new iteration of the same business. Who are your customers? Who is it you are selling these things to?
Cameron Sorensen.: Are end users are people that build and manufacture completion equipment, well head. They range from mom and pop who’ve got two people in their shop to the multi-national companies around the world.
Matt Register: Yeah. So you guys have yards and yards of tubing, really really long lengths, and then you cut it depending on what your clients need.
Cameron Sorensen.: Correct. Currently in house we only, we offer cutting in house. Out third party we can heat treat machine to our customer’s specification and needs. Lead time is extremely competitive, and because of that we ended up buying a cold saw, which will cut in about a third of the time as a standard band saw.
Matt Register: Sure.
Cameron Sorensen.: With that came the robot.
Matt Register: Talk to me about the robot. First of all, why in the world would you decide to put robotics into a tubing distributorship?
Cameron Sorensen.: We believe that we’re the first in the steel distribution to incorporate this type of robot. It’s a material handling robot, so at the end of the cold saw it will pick up the material, it will blow it off with air, it will then stencil the traceability or part number that the customer needs on it, and stack it on a pallet either like a pancake or a pyramid depending on the length and size.
Matt Register: What kind of savings does this give you because robots aren’t, you can’t go down to the corner and buy one and they’re not cheap? Right?
Cameron Sorensen.: Right.
Matt Register: So this level of investment has to justify itself in cost savings. Talk to me about the scale of savings you guys are finding by implementing this robot.
Cameron Sorensen.: The robot was able to … I’ll take a step back. The saw was producing so much steel at the end of it that we had two or three employees manning it. Now there’s only one guy manning it. He loads up the saw, programs it, and then goes and attends another saw.
Matt Register: Okay so the actual material handling itself was something that you had a relatively high skilled guy doing relatively low skilled level of work. Is that accurate?
Cameron Sorensen.: Yeah.
Matt Register: So you’re able to replace that with a robot that just handles it and you’re able to take your skill, the expensive skilled labor that you’re using, and applying it somewhere else.
Cameron Sorensen.: Yes, correct.
Matt Register: All right. Interesting. Jay, what do you think?
Jay Curry: Well I think it’s all very interesting, especially the addition of robotics into the industry. This has got to be a big robot. This is not a little one right? It’s picking up-
Cameron Sorensen.: Up to 500 pounds.
Jay Curry: Okay. Still, that’s quite a deal.
Cameron Sorensen.: We are in a bigger robot for some bigger materials, so that’s-
Matt Register: Yeah, no problem. So you guys are eyeing, after this initial test with the first robot, you guys are identifying other places you need robots and are actively looking to do it. By the way, you didn’t lay anybody off for this right?
Cameron Sorensen.: No. We proudly kept everyone. When we initially told the guys in the warehouse that we’re bringing in the robot that was their first concern.
Matt Register: Well sure. Everybody panics and said you’re about to replace all of us right, but that’s not the case.
Cameron Sorensen.: Right.
Jay Curry: The reality is you kept everybody.
Cameron Sorensen.: We put more steel out our door and service our customers better.
Jay Curry: So you got more accuracy, you got more efficient, you were able to take some talent you already had and place them where they could be more valuable, and this thing’s putting it out faster.
Cameron Sorensen.: Yes sir.
Matt Register: Interesting stuff.
Jay Curry: Yeah, that’s the kind of ROI you like to have.
Matt Register: Yeah, no doubt about that. Talk to me a little bit about the different flavors of steel because different applications require different things, different hardnesses, different alloys. What kind of steel do you guys specialize in because there’s a lot of people that do steel? They don’t all do the same thing.
Cameron Sorensen.: We’re heavily into the 4130, 4140s, 4145, 4330s. Even though we’re called Tube Supply we do stock bar. It’s not the bulk of our business.
Matt Register: Okay, but normal carbon alloys is what you’re specializing in on the bar stock?
Cameron Sorensen.: Same alloys for those as well.
Matt Register: Okay.
Jay Curry: I’m just curious. This is a lot of material. How big is your facility?
Cameron Sorensen.: Twenty-six acres in Houston, roughly 8 in Edmonton, and a couple thousand square feet in Louisiana.
Jay Curry: Well there you go.
Matt Register: Interesting. All right. Well, we’re talking to Cameron Sorensen, project manager and second generation in Tube Supply. Cameron, thanks for joining us. What’s the easiest way for somebody to learn more should they want to learn more about Tube Supply?
Cameron Sorensen.: Go to tubesupply.com.
Matt Register: Tubesupply.com. We’re going to have that linked right from texasbusinessradio.com if you’re driving and can’t take notes. Tubesupply.com. Unfortunately we’ve got to go take a break, pay some of our own bills. We’re going to be back right on the other side of the break with a whole lot more robotics, a whole lot more Texas Business Radio. We’ll be back.
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In addition to hosting "Texas Business Radio," Matt is an investment banker and serial entrepreneur from Montgomery, Texas. He is the owner of RREA Media and Register Real Estate Advisors and a Managing Director and Principal at Corporate Finance Associates. He has a BS from the United States Military Academy at West Point and an MBA from Rice University in Houston. You can read more about Matt HERE.
Jay W. Curry
Along with hosting “Texas Business Radio”, Jay is a Professional Certified Coach and Master Chair facilitating four Houston-based Vistage peer groups. In addition to being a best selling non-fiction author, the 2015 release of his award winning novel, Nixon and Dovey: the Legend Returns, adds novelist to his title. Jay holds a BS in Mathematics from Oklahoma State and an MS in Computer Science from Kansas State. You can learn more about Jay HERE.