What can a business do when its supply chain slows to a near halt?
Colin Maskey, President & General Manager of Compass Bending Ltd., a pipe bending service based in Calgary, says, “We thought about this possibility a while ago. That’s why we focused on building inventory.”
Economic Swings of Supply and Demand
In Alberta’s energy sector, radical demand and supply swings are a fact of life. Remember those bumper stickers that went around twenty years ago? They said “Please God, please give me another oil boom. I promise not to piss it all away this time.”
Only the careful survive.
“We’ve always had demand peaks in winter,” he explains. “And after a lot of analysis, we discovered that up to 85% of our oil and gas clients needed the same pipe bends. That helped us know what to stock. That’s how we learned to operate in tight supply situations.”
The Last Seven Years
Going back to 2015, when prices dropped to decade-lows, projects all over the energy industry were cancelled. “While some customers will shop on price, we were able to accommodate those needing a quick turnaround. Stocking pipe saves days or weeks on pipe bends.”
When the pandemic hit in 2020, “All hell broke loose,” he explains. “Demand went to zero, and we had to make big cutbacks. But the world did not end. We’re back and we’re still standing.”
Today’s Challenge in Europe
Perhaps the industry would expect relief by now. But unfortunately, the energy crisis brought on by the Russia-Ukraine crisis has risen energy costs yet again, forcing closures of metal manufacturing mills in Europe including steel, aluminum and other metals used to make pipe.
While at least the high price of oil is keeping the industry somewhat active, Maskey says, supplies continue to tighten. “Normally with prices like these, we’d be going gangbusters, especially if we could replace inventory quicker. But even with supply chain issues, we can still turn things around faster than if we had no inventory at all.”
Despite supply chain holdups, Compass Bending continues to stock pipe bends in standard radii (3D, 5D, 10D, 15D, 20D), in all common sizes.
While being the fastest link in a slow supply chain presents challenges, Maskey approaches the future with tenacity.
“We’ve survived before and we’ll do it again,” says Maskey. “We fully intend to spin this inventory into the gold it is!”
By Jacqueline Drew, Tenato Strategy Inc., for Compass Bending Ltd.