Dave Baker. General Manager of H&S Tools, joins us to talk about mobile field machining.
Please excuse any typos in this hasty transcript.
Matt Register: Hey guys, welcome back to the show, Texas Business Radio. Texasbusinessradio.com is the Web site. We’re going to talking about field machining, right now. You know I’m a machine shop guy, I will understand how to make chips and you know machine a part. There are times you need to do that out in the field, where the end equipment actually is. And the guys over at Climax, that’s what they do. We have Dave Baker in the, in the studio here, to talk a little bit about that and to talk a little bit about the growth of this company as a private equity owned business. I think it’s going to be real interesting. I’m your host Matt Register. Jake Curry over in the co-host chair. Jay what do you think?
Jay Curry: I agree 100 percent. This is going to be interesting. If you haven’t been involved in private equity, this will be interesting. If you want to hear a great story of success and what Dave’s done since he’s come in, it’s a great story. It’s got a lot of aspects to it.
Matt Register: All right, Dave Baker, the General Manager of H&S Tools. Which is one of the subsidiaries of Climax. Dave welcome back to the show. Sir, how are you doing?
Dave Baker: I’m terrific. Thanks for having me guys.
Matt Register: So tell me about Climax. What do you guys do?
Dave Baker: So, we manufacture, rent and sell portable machining equipment for welders and advanced valve testing equipment. And we started in 1965. Paul Strayed, a guy out in Oregon, invented a portable key mill. And was able to use that onsite at pulp and paper plants. And really help save a lot of downtime by bringing a key mill on site and doing the work, as you kind of mentioned earlier.
Matt Register: Sure.
Dave Baker: And the business has taken off ever since.
Matt Register: Well. now, this is a, a much, much larger company now, right?
Dave Baker: Yes.
Matt Register: I mean, this private equity has, has come and taken over the, the, the company. And has added on additional companies to that. Which is what private equity companies do. Right? They are tasked with taking a pile of money and making that pile bigger using the vehicle of, you know, middle market type companies to acquire. Talk me a little bit through the story about what you guys have acquired and why.
Dave Baker: Yeah. So, in 2013 we were acquired by Industrial Growth Partners based out of San Francisco. Great group of people. Super track record of success and since they acquired us we’ve really been on the grow. Shortly after they acquired us, we acquired Calder Tester’s. Which is a company based out of Houston. In 2015 we acquired H&S Tool, which was a company based out of Wadsworth, Ohio. Pipe cutting and beveling. And they’ve also really invested a lot of time and energy in helping us grow our global footprint. Since 2013 we’ve set up regional headquarters in Singapore. We set up regional headquarters in the Middle East, out of Dubai. We set up, we’ve expanded our regional headquarters in the U.K. and all with the help and the support of the team at Industrial Growth Partners. They’ve really done a great job helping set us up for success. And we’ve also more than doubled our rep. network. So, we have about 75 authorized dealers across the globe at the moment. And in our industry, where many of our competitors seem to be in a position where they’re retracting…
Matt Register: Sure.
Dave Baker: IGP has helped support our growth in expanding our footprint and we really think that’s the right thing to do. Being closer to our customers and giving them access to our equipment.
Matt Register: Well, God bless America. You have a better product, you get to sell more of it. Right?
Dave Baker: Amen.
Matt Register: That’s exactly the way it works. Now, Texas is a big market for you. There are a lot of nationwide companies that ensure that they have a footprint in Texas and you guys are no different. What was your thought process when you guys decided that you needed something in Texas? Especially, down right there off the ship channel and in Deer Park, out of Houston.
Dave Baker: Right. So, so, Texas and the gulf marketplace was always a market that we had handled through our distribution networks. And through the acquisition of Calder, we really felt this was a good opportunity for us to put our, stamp our flag here in Houston and begin to operate directly. Bring our own people in here. We now have the largest fleet of rental equipment in the world, based out here in Houston. To support all the plants and the refineries and all the great workers here in Houston.
Matt Register: Sure.
Dave Baker: And it’s been, it’s been a good ride and we’ve done really well with it.
Matt Register: Well talk to me a little bit about the hydraulic testing. Right? The Calder Tester’s is the one here in Texas out of Houston. That is heavily oil field dependent, right? How has the downturn affected that company? And was that one of the reasons for the acquisition? Right? Or was this something that you made the acquisition and then learned the hard lesson on what, what the oilfield economy can do?
Dave Baker: No. I mean we really felt like Calder Tester’s was a, was a good complement to our portable machining lines. We have valve grinding and lapping equipment. So, it helps us provide more value to anyone that’s doing machining, refurbishment, repair on valves. If they repair them, they then have to test the valves before putting them back into circulation. So, what we’ve been able to do with Calder specifically, is Calder was a regionally based company here in Houston. And Climax, with a global footprint, has been able to invest our resources into refreshing the whole lineup of Calder valve testing equipment and then bring it out globally. And this past year we’ve relaunched a whole new lineup of Calder valve testers and we’re having tremendous success with it.
Jay Curry: So it’s a good example of a strategic acquisition.
Dave Baker: Yes.
Jay Curry: That really expand, expand the company overall.
Dave Baker: It really helped complement our overall portfolio and again really helped us leverage a position here in the Houston marketplace.
Matt Register: Well, what’s next? What is, what is the next logical thing you guys are going to want to get into?
Dave Baker: Well, I mean obviously I think that there’s opportunities for us in, to expand in oil and gas even further. With the acquisition of H&S Tool, H&S Tool was another somewhat regionally based company. And for pipe cutting and beveling type of equipment, really, you know, focused in power gen. and oil and gas industries. There’s a good opportunity to expand that, those tools globally. And we’ve recently released a new product called our O.D. mount flange facer speed facer. And we’ve incorporated some pretty slick safety features in there, which you do not see on the market today.
Matt Register: Sure.
Dave Baker: Including hands free feed. So, today in Europe, when you’re at a refinery or you’re on site, you’ll see operators using similar style equipment but they’re manually feeding the equipment.
Matt Register: Sure. What could possibly go wrong? Right?
Dave Baker: Right. And it’s crazy. But this equipment is all over the planet. And there’s guys in there for hours at a time, manually feeding the equipment. So, the speed facer is auto feed, keep, protects the user from sticking their hands in a machine like that. And we believe it’s going to be a huge success. So…
Matt Register: Now there’s a couple of time tested ways to survive and thrive during a downturn. Right? One of them certainly is, is R&D. Right? Is to new product yourself out of a downturn. Right? How much is research and development, it sounds like it’s a significant part of it, but how important is that to you all’s strategy moving forward?
Dave Baker: I think, I think it’s very important but I think R&D really starts with being closer to your customers and really understanding their problems. Portable machining, all be it, we’ve been doing this for 50 plus years, is still relatively new in terms of technology. And there’s a lot of people that are, the same people that are still using rotary phones, are using handmade, you know, made equipment, that they’ve made and they’re actually going on site and utilizing this equipment. So we believe there’s a huge opportunity. We have over 75 standard products in our own portfolio. We truly believe our biggest opportunity is getting the information out to the, you know, all the different industries that this equipment even exists.
Matt Register: Well I promise you, the vast majority of guys out there with portable machining equipment, is not up to safety standards. I mean it is, it is homemade. Hell, I’ve made some of that before. Right? I mean, I understand this is cobbled together solutions to solve a problem, not necessarily, you know, safe to operate kind of stuff. And you guys are introducing that into the market where otherwise it’s, it, isn’t there, it’s, it’s quite remarkable.
Dave Baker: Yeah. Well and another reason why a lot of, lot of customers like to partner with us is training. And the number one cause of safety incidents anywhere typically is human error, lack, lack of training.
Matt Register: Sure.
Dave Baker: And so as an OEM, we really feel it’s our responsibility to make it easier for our customers to use our tools. We set up seven global training sites, including the one here in Houston. So we want to make it as easy as possible for them to be trained by the experts to know how to use the equipment, how to be safe. And if they can’t come on site, on our, to, to our facility to do it…
Matt Register: You can pick it up and go there.
Dave Baker: We’ll send our trainers anywhere. Heck, we sent our trainers to New Caledonia and mines to train people on it.
Matt Register: Well, Hey, the equipment is portable, right? It’s a…
Dave Baker: So are our trainers, they’ll go anywhere.
Jay Curry: That’s the whole idea.
Dave Baker: Yeah.
Matt Register: No. That’s great. We’re talking to Dave Baker, the General Manager of H&S Tool, which is part of Climax, out of Deer Park. So, what’s the easiest way for someone to get in touch with you, should they want to?
Dave Baker: So, either our Web sites, they can visit us at climaxportable.com or HStool.com. Or call our 800 number, 1-800-333-8311 and you’ll get somebody, we’re available 24/7.
Matt Register: All right. Got it. I don’t remember that 800 number but we will have it on the Texasbusinessradio.com, as well as links to all of this. Dave Baker thank you very much for joining us.
Jay Curry: Great story.
Dave Baker: Yeah, thanks for the opportunity.
Matt Register: Unfortunately, we do have to go to a break. We have some bills to pay around here, as well. We’ll be back right after this.Don’t go anywhere.
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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.