and even appliances in covering “that last mile to the rig.” Excluding recent acquisitions that have not formally been integrated
into NOV’s inventory and supply chain management systems, the
company boasts 234 stores throughout the U.S. and Canada.
Each of these stores utilizes an independent purchasing plan.
This means they can work with other, local distributors or buy
directly from suppliers, and are not relegated to source solely
through NOV. The key is providing exactly what the customer
needs in as timely a manner as possible, especially given the remote locations of most rigs.
While the rig environment and energy segment overall still sits
at the core of NOV, the company has made a number of acquisi-
tions over the last two years in diversifying its reach and line card.
These acquisitions encompassed distributors, manufacturers of
oil and gas-related products, as well as those with more universal
industrial offerings. The spending spree encompassed, but is not
• A merger with Ameron, a manufacturer of engineered prod-
ucts and materials for the energy and industrial markets, in Octo-
ber 2011 for $777 million.
• The acquisition of Wilson Industries (#14 on ID’s Big 50, with
annual revenues of $2.6 billion) in May 2012. Wilson and its 200
sales and operations locations across the U.S. was perhaps the
most significant acquisition in diversifying NOV’s customer base.
“Before the Wilson acquisition, our largest customer segment was
rig technology,” offers NOV’s Senior Sales Executive, Elizabeth
Stephens. “Wilson definitely helps balance out our business and
grow downstream. Despite the size of both companies, there was
no overlap in the top 50 customers of either NOV or Wilson.” The
two distributors did, however, have 18,000 common SKUs. NOV
carries a total of about 30,000 SKUs that range in price from $20
to $20,000. The next set of challenges entail consolidating stores
where geography dictates and getting both business units on the
same ERP platform, hopefully by the end of 2013.
• CE Franklin was purchased in July 2012 for $235 million. Now
part of NOV Distribution Services, it’s a supplier of pipe, valves,
flanges, fittings, and equipment for oil and gas producers in
Canada, as well as the oil sands, refining, forestry, and mining in-
dustries. It houses 39 branches in Western Canada, some of which
may also face geographical consolidation.
“We are strategic in our acquisitions,” states Stephens. “It has
to complement one of our business units and add the extra value.
Wilson, in particular, offered the production and midstream business. Having this side, now we can offer a complete product line
from pipes, valves, fittings, electrical, and spare parts.
“NOV’s growth centers on new and better ways to address customer concerns that know no boundaries,” she adds. With daily operating costs that range from $40,000/month for land sites to as much as
$65,000/month for offshore rigs, the goal, like their industrial counterparts, is to run as efficiently as possible. So to successfully leverage
this sector’s growth, distributors need to ensure their offerings, in
terms of both products and services, provide value, and offer ROI.
NOV sees growth opportunities in the oil and gas sector coming from a number of international markets. Russia is an obvious
target. Poland, while lacking necessary infrastructure, houses huge
gas deposits. Canada continues to be a primary customer base. The
greatest opportunity, however, may lie in Brazil.
While the upside is tremendous, Brazil continues to be a challenge for many U.S. companies. This stems from local regulations
that call for products sold within the country to be made there, or
face tax rates that can run as high as 40 percent. In most instances
this leads to prices that either carry little profit or are beyond the
point of remaining competitive for distributors.
An additional similarity between oil and gas customers and
the traditional manufacturing plant is a focus on safety, as the
consequences of individual or mechanical failure can obviously