We spoke to Richard Bludworth, President of Bludworth Marine, about the marine vessel construction and repair business and the state of the all important marine industry to the economy of Texas.
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. I’m your host Matt Register. Jay Curry is over there, in the co-host chair. We’re talking about marine, the marine industry and how important that Gulf of Mexico is to the economy of Texas and to the economy of the country, quite frankly. Jay what do you think?
Jay Curry: It’s really huge, Matt and it’s competitive. There’s a lot of lessons to be learned from people that are successful here because they’ve got all kinds of challenges. The economy, it’s, it’s a very dynamic business that has a huge impact on our industry.
Matt Register: Yeah, no doubt. Now we’ve talked about the Panama Canal. We’ve talked about, you know, some of the ancillary business that comes out.
Jay Curry: Right.
Matt Register: The volume coming into the port. But there is an entire industry surrounding, support for the shipping, support for the, for the oil patch out, out in the Gulf of Mexico. And we have one of those, you know, great companies today. This is a repair, come Marine repair company. Richard Bludworth is the CEO of Bludworth Marine. Richard welcome to the show, sir.
Richard Bludworth: Thank you. Glad to be here.
Matt Register: Well, tell me a little bit about Bludworth Marine and what it is you guys do.
Richard Bludworth: Well, we’re a commercial marine repair company. We started business in 1998. I had spent my previous career operating tugs and barges. And started this business, like I said, about 20 years ago now, almost. Start off very small, mostly topside repair and we’ve gradually picked up additional locations in Galveston and Orange, Texas, as well as Houston, Texas.
Matt Register: Got it. So you’re expanding? You have repair facilities. Now these are repair facilities on the water. I mean these are boats that need repair and you bring them up right there to your shop and are able to do the repair work there. Right?
Richard Bludworth: Well, about half of what we do is on the water. And maybe another half is fabrication work, going to where vessels are at. Not necessarily our locations. So we do about 30 percent topside repair, about 30 percent industrial fabrication and then maybe another 30 percent is the waterside business. Where the water facilities are really needed.
Matt Register: Yeah. Gotcha. Now, you do a lot of, like rotating equipment repair and things like that. So we’re talking pumps, we’re talking air compressors. We’re talking what, what else are you guys…
Richard Bludworth: Winches, capstans, really anything on the vessel other than the main engines and the electronics. We work on, we have specific people that are good at hydraulics. The mechanics, they understand the machinery. Piping, welding, different kinds of metals, whatever’s needed.
Jay Curry: Now Richard, you’re also pretty well known to do about any size that comes along. You can do from small to huge, humongous ships.
Richard Bludworth: We work on everything from small inland tugs to ships and we’re on nearly every one of those almost every day of the week.
Jay Curry: Every day.
Matt Register: Wow. Now, that’s, that’s interesting. So when the company started, what about 15, 7, 20 years ago now. Right?
Richard Bludworth: 98, so we’re coming up on 20 years, next year.
Matt Register: Yeah. Interesting. Now your family is a Marine family. Right? It is a family well-known along the Gulf Coast for many many years. Tell us that story.
Richard Bludworth: Well, on my dad side, on the Bludworth side. They arrived in Texas in the late 1800s, down around Rockport. And lived on an island, which is incidentally, still named Bloodworth island.
Matt Register: There you go.
Richard Bludworth: All of those kids spread along the Gulf Coast from Brownsville all the way to Orange. And were in the Marine business in various phases at various times. And I think a lot of those children have also done it.
Matt Register: Yeah, well, I find it very, you know we were talking right, you know, during the break about the cyclicality in this business. Right? I mean we’re used to, you know, Texas being a very energy heavy state. We’re used to the cyclicality and in energy. There’s cyclicality as well in shipping. And it isn’t necessarily tied directly to the energy prices. Tell us a little bit about that because you managed to survive where a lot of companies haven’t.
Richard Bludworth: Well you’ve got a lot of cyclical business because the industry has always tended to overbuild. Get in a situation where there’s too much equipment, have to ride it out for several years with low utilization.
Matt Register: Right?
Richard Bludworth: And then you come down to the point to where you’ve got old equipment and you need new. So we start the whole cycle over again. And within each segment of the business they all, we also need to do the same thing every time.
Matt Register: Right. Without ever having, expecting a different result and not doing anything different. Right?
Richard Bludworth: I think it’s big capital equipment, it looks attractive, maybe to investors at different times. They’re getting in it to get a return. And ultimately there’s too many of them, try to get in, too late in the game.
Matt Register: So, what do you do as a business owner knowing that that cyclicality is baked into your business. Right? What do you do as a business owner to insulate yourself from that as much as you can?
Richard Bludworth: We work really hard to keep our overhead low, so that we can downsize or upsize as needed, as the business changes from year to year.
Jay Curry: So you try to be very, very nimble. You have to be.
Richard Bludworth: You have to stay nimble.
Jay Curry: You grown and shrink according, and quickly. You can’t sit around and think well maybe this is a short term deal. You’ve got to react. Right?
Richard Bludworth: Yes, because most of our businesses is labor driven and that’s the most expensive component. And it’s a toughest one to get rid of. But luckily the people that are in this industry; the welders, fitters and mechanics, are pretty well used to going yard to yard, state to state and finding the work. And so, they’re fairly mobile and it’s kind of a symbiotic relationship in that way.
Matt Register: Well and it’s something that, that is a.. . Those skills apply outside of Marine as well. Right? So there’s other, other places they can go besides just…
Richard Bludworth: Absolutely. Refineries, turnarounds, new industrial projects that are coming on line.
Matt Register: What are you seeing in the market? You know, we were talking very briefly during the break about, at a macro level, what are you seeing with shipping? What is your fear? What is, what is your, if you could look out 15, 20 years, what do you see going on with the shipping or with the marine industry?
Richard Bludworth: Well, there’s always the chance that the tugs and the barges can become toasters and ovens and refrigerators, washers and dryers.
Matt Register: Right.
Richard Bludworth: When they break, you throw them away and buy you a new one.
Matt Register: Right.
Richard Bludworth: And the cost of capital or the cost of repair tends to even itself out as the vessels get older. So the larger companies that have a lot of capital, can’t get new vessels. Whereas the smaller ones have more difficult time. They operate the older equipment, which is not as desirable to the customers.
Matt Register: Yeah but that’s job security for you guys. Right? But cheap capital actually means less repair work. Is that right?
Richard Bludworth: Yes it does.
Matt Register: That’s interesting, that’s very, very interesting. Well…
Jay Curry: Over the last few years, I mean if you think the 20 years you’ve been in business. What’s gone on? We’re seeing the world is getting smaller. Right? So there’s a lot more things coming and going from one country to the other. And the U.S., of course, is a major, major, if not the number one country for exporting and importing. Do you see that getting more and more with the next 20 years? And how has it changed since you started or is it kind of the same?
Richard Bludworth: It was initially a container trade. Which is mostly items coming from far away. That’s all increased and as, as of right now, it’s not really decreasing. However, there’s a chance as we bring more manufacturing back to the United States that some of that could cease.
Matt Register: Sure.Sure.
Jay Curry: Oh. I hadn’t thought about that. That’s, that’s true. And what about…
Matt Register: Or it can turn around, you know, as increase exports. Do the same thing, just going the other direction. Right?
Richard Bludworth: It’s probably an unknown puzzle at this time.
Matt Register: Yeah. No, no, no, no. That’s interesting. Well, hey, Richard Bludworth, the CEO of Bludworth Marine. Locations in Houston, Galveston, Orange, all over the place. Great. Hey, I appreciate you coming Richard.
Jay Curry: Yeah. Great record.
Richard Bludworth: Thank you. It’s been great talking to you. I appreciate the opportunity.
Matt Register: What is the easiest way for someone to get in touch with you, should they want to?
Richard Bludworth: Vesselrepair.com. That’s our Web site. It’s got all of our contact information on it for jobs or emergency repairs. So that’s a quickest and easiest way to do it.
Matt Register: Vesselrepair.com. Guys, as always there’s no need to take notes. We’re going to have links to everybody we’re talking to right there at Texasbusinessradio.com. Richard Bludworth, CEO of Bludworth Marine, thanks very much. Guys we got to go pay a couple of bills. We’re back right after this.
Richard Bludworth: Thank you Matt, Jay.
Matt Register: 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.