KUDU provides persuasive proof that you don’t have to be a huge multinational to be among the best. Based in Calgary, Alberta, the oil-field equipment manufacturer is widely recognized for its Progressive Cavity Pumps (PCP), and related products and services. A privately held company with a workforce of approximately 250, KUDU has emerged as the world’s second largest manufacturer and distributor of PCPs. Significantly, KUDU has found a niche as a specialized pulp manufacturer in a field where its major competitors typically are subsidiaries of much larger multinational conglomerates.
Certainly, KUDU’s success didn’t come easily. Furthermore, once success arrived, KUDU soon stood on the brink of bankruptcy as the oil industry took a dive in the the 1990s. KUDU founder and Chairman Robert Mills and his son and co-founder and current CEO Ray Mills faced financial ruin. It would have amounted to a cruel reversal and sad ending to what had been an uplifting corporate story.
Faced with insolvency in 1998, KUDU introduced lean manufacturing: a production process that improves quality and reduces costs. Lean is all about continuous improvement whether finding a better way to manage inventory levels, develop SOP’s or empower employees. Good product design can contribute toward product durability. However, product reliability comes when shop-floor employees consistently follow proper procedure.
KUDU’s competitive advantage is its people, and the biggest turnaround involved empowering employees by encouraging them to make positive change that enabled them “To do it themselves.” It all aligns with KUDU’s Golden Rule of “Investing in the people who build and create the processes that bring in the money.” With it came a corporate commitment to “Give people the tools to succeed.”
Making that transition was not easy. By his own admission, Robert ran a “patriarchal” company, and as a result, he says: “I was the hardest person to retrain. I had to learn to say to employees, “What do you think?” and “Why don’t you do it?’”
Selling employees on lean technology wasn’t easy either, Buy-in came over the course of a year and half as employees realized that rather than being a route to redundancy and fewer jobs, lean manufacturing provided a pathway to enhanced job security. Going lean sometimes proved disruptive and led to no less than three tear-downs and reorganizations of KUDU’s production processes. It sometimes proved exasperating. Ray recalls returning from a sales trip to encounter yet another make-over under way and Robert telling him “That’s what continuous improvement is all about - finding better ways to do things.”
These efforts paid off and within four years KUDU had increased sales, reduced its stock outs by 98 per cent, cleared its debt and thereby freed up capital allowing three corporate acquisitions that complement and expand the business base. A by-product of requiring less space to do more was a greener operation. A leaner operation meant generating less waste, and requiring less storage space and energy input per unit produced.
Lean manufacturing now is deeply engrained in the corporate culture at KUDU where all employees, including all levels of management, receive extensive lean training. KUDU happily shares its lessons learned. For instance, Ray Mills does so as a member of the Petroleum Services Association of Canada’s board: as a member of Productivity Alberta’s advisory board and by sitting on Calgary Economic Development’s Manufacturing Action Committee.
Doing things better brings satisfaction to KUDU staff and management. But it’s also rewarding when outsiders recognize what’s been accomplished. KUDU has received several awards, including an Innovation Insights Award for Manufacturing Practices from the National Research Council of Canada: a Canadian Manufactures and Exporters Award in the Oil and Gas Manufacturing Category; recognition as the Calgary Manufacturing Industry’s Best Employer (for Medium-Sized Manufacturers) and national ranking as one of Canada’s Top 50 Best Managed Private Companies.
KUDU continues to expand and currently serves clients through 13 Canadian service centers located from Peace River in northwest Alberta to Estevan in southeast Saskatchewan. Abroad, KUDU sells into 33 countries and has international offices in the U.S., Kazakhstan, Oman, Russia, Australia and Romania. In exporting, KUDU often has followed in the slipstream of satisfied Canadian customers as they spread their wings internationally. The result is that almost a third of KUDU sales now are exports.
Not surprisingly, KUDU got its first foothold in Western Canada where approximately 40 per cent of oilfields relied on artificial lift. With Canada accounting for 75 per cent of the world market for PCPs, it remains a proving ground for advances in this technology. Opportunities for further PCP breakthroughs will emerge as thermal solutions are applied to lap wells.
As heavier and lighter wells elsewhere in the world mature, expect them also to turn to PCP technology. With its proven PCP and supporting products, KUDU is well positioned to meet such growing international demand.
This article, which originally appeared in the June 2011 issue of Oil & Gas Network, is re-published with permission from the publisher. www.oilgas.net
