At just two years old, Boomerang Tube is well on its way to becoming a world-class producer of oil country tubular goods (OCTG) and line pipe (LP). Established in May 2008, the Chesterfield, Mo.-based company is in the process of constructing a state-of-the-art, 487,000-square-foot manufacturing facility in Liberty, Texas, which will utilize the most modern equipment available to the industry and employ up to 350 people once fully operational in August 2011.
Approximately $160 million of the $200 million project will be spent on the property, plant construction and new equipment; the balance will be used to pay for work, capital and start-up costs. The facility will be capable of producing 360,000 tons of electric resistance welded OCTG and LP annually, with a heat treating capacity of 250,000 tons per year.
“Boomerang’s vision is to be the most responsive supplier of OCTG and LP products in the business,” President and CEO Gregg Eisenberg states. “We will be easy to do business with and provide a world-class array of products. All questions and inquiries will be answered promptly and courteously. In short, Boomerang will be an ally of our customers, helping them to maximize return on investment – the kind of company we all want to do business with.”
Eisenberg is the former president and CEO of Maverick Tube Corp., which was acquired by Tenaris in 2006 for $3.2 billion. He and other members of Boomerang’s executive management bring more than 90 years of experience to the OCTG and LP industry.
Eisenberg expanded on the company’s vision, capabilities and plans for the future in a recent interview with Manufacturing Today.
Manufacturing Today: What led you to start Boomerang Tube?
Gregg Eisenberg: I felt there would be a good opportunity in the market for a new greenfield facility for several reasons, but the biggest was the significant consolidation that occurred during 2006 and 2007.
I thought it was going to take away a lot of the flexibility in the industry, and with reasonably long-term forecasts for oil and gas drilling, I saw an opportunity for our company to be successful in the sale of its products.
MT: What are some of the company’s competitive advantages?
GE: This greenfield project involves the latest, state-of-the-art equipment. I think that’s our biggest advantage because the people we compete against have equipment that is 20-40 years old and not as technologically up to date.
Modern equipment makes us more efficient and broadens our product capability. [Also,] our approach to business is a little different. We’re more customer-oriented, and that manifests itself into things like cycle times, changeover times, quality levels and product warranties.
MT: How do you work to ensure quality for your customers?
GE: We have all the latest in inspection equipment that we own and operate for checking, double-checking and triple-checking the quality of our products – some of which is required under specifications, some of which is for our own peace of mind and our customers’ peace of mind. We will also have third-party inspections performed by Patterson, one of the leading inspection companies in the industry. This will be done on site with their personnel and their equipment, and they will provide certification that the materials meet the standards and expectations of our customers’ directly – all at no cost.
MT: How is Boomerang Tube adapting to market changes?
GE: The dip in our segment of the industry was very profound in late 2008/early 2009. As a result of that 60 percent decline in drilling, our greenfield project was put on hold for about a year. Halfway through construction, halfway through the equipment ordering timeframe, we called a halt to it. Our vendors were asked to be patient, we conserved costs and waited for things to improve. We saw improvement in the beginning of fourth quarter 2009, and now we’re back on track.One fortuitous thing that happened along the way during the downturn was in 2009, when trade cases were filed against Chinese manufacturers.
Those cases ultimately were successful and were finished in 2010. As a result, the unfairly traded imports that were coming in from China and depressing our market had been banished from the market for a period of five years, and we think that additionally creates a nice opportunity for our company.
MT: The primary raw material used for production of tubes is hot rolled steel coils. Has the company been affected by fluctuating material steel prices that have been wreaking havoc in the marketplace?
GE: The fluctuating raw materials are a bit of a challenge. They’ve kind of turned over a little bit. We had a sharp run-up earlier this year, but it eased off a little bit. It’s interesting – today, drilling is at a level that’s about 80 percent of the average rate that we had in 2008, and the monthly consumption rate is within 10 percent of the 2008 levels, so I would say things are going pretty well.
I think the biggest concern in the industry is that we have so much natural gas thanks to the exploration of these new drilling techniques, but we need to see further development in end markets such as infrastructure, transportation and general industry. If Americans started to rethink their internal combustion engines, they would see an opportunity to run their vehicles off of compressed natural gas at half the cost and with fewer emissions. It’s a win-win situation; we just need to get the infrastructure.
MT: Filling stations utilizing natural gas are few and far between. There hasn’t been as much attention placed on the use of natural gas as an alternative fuel source. Why is that?
GE: It’s hard to change the direction of the ship, so to speak. The industry needs to do this on its own and try to communicate and sell at the grassroots level. It’s coming. It will get here. It’s just a question of when. There are very powerful economic and environmental advantages to doing this, and I think those matter.