With the right plan, a drilling products manufacturer wades among the ebbs and flows of a volatile steel market
Above: Matrix Drilling Products uses National Tube Supply because "they have more inventory than just about everybody else combined," says Kent Peters.
With the right plan, a drilling products manufacturer wades among the ebbs and flows of a volatile steel market
August 2018 - Mining is integral to the global economy. Without it, society lacks the resources used to provide everyday needs in developed society, including electricity and the steel for everything ranging from basic infrastructure to electronics.
“The mineral side of it is really the area to watch—lithium and cobalt for example, is needed for all those iPhones, lithium batteries and Tesla cars,” says Kent Peters, president at Matrix Drilling Products, Lewisburg, Tennessee.
The drilling tools manufacturer produces drill string from 3⁄4-inch-diameter tubing to 24-inch-diameter rod. In the drilling world, a drill string is a column, or string, of drill pipe that transmits drilling fluid or air to the drill bit or pneumatic hammer. The term applies to the assembly of drill pipe, drill collars, tools and drill bit.
“Our customers buy the length of drill string they need. It might be to drill 4,000 feet into the ground,” Peters says. “So that’s 4,000 feet of drill rod we need to manufacture.”
In order to fulfill customer requirements, Matrix Drilling Products relies on University Park, Illinois-based National Tube Supply as its stocking center, vendor and broker. “They have more inventory than just about everybody else combined,” Peters claims. “NTS does an outstanding job of helping me manage my requirements.”
A driller can only penetrate as deep as the rig has power to pull rod weight out of the hole. Perhaps a customer calls to say, “I need some drill rod and it can’t be heavier than X pounds and it must be able to go 3,000 feet deep, what can you do?” Peters says he can calculate a drill string’s weight-per-foot and then go look at the material in stock.
“I know that whatever our customer needs, NTS will likely have it in stock to fill that order, if not, they can order it for us,” he says. “We don’t have field sales people and we don’t advertise, but customers come to us because they know we have reliable access to quality materials.
“When things get hot and heavy and material is needed quickly and isn’t in stock, we know NTS has the contacts to help mitigate lead times and even provide some preprocessed work so when the tubes arrive here, they’re ready to be assembled.”
Because a drill can only penetrate as deep at the rig has power to pull rod weight out of the hole, Matrix Drilling Products must accurately calculate weight-per-foot for each individual scenario.
Mitigating risk
NTS can be flexible with its products and service due in part because “we don’t have many layers of management,” says Gary Throw Jr., sales manager. “So we are able to move quickly to address our customers’ requirements whether through product or capital expenditure. We are a privately held company, which also means we view inventory as an asset and aren’t afraid of [holding] it.”
As a niche distributor that focuses on a few product lines “rather than every product under the sun,” Throw says NTS focuses on supplying high-quality carbon and alloy mechanical tube.
By communicating with customers and following the marketplace, NTS is able to plan what to carry for customers. It analyzes and uses information from the field when speculating what is going to happen in the market six to 12 months from now, Throw says.
The Trump administration’s recent tariffs on foreign steel has added volatility to supply as well as pricing because domestic prices have increased dramatically, says Throw. “Foreign steel has become nonexistent, increasing the strain on our domestic suppliers. We continue to look out and address our needs as we must have what our customers need for them to service their own customers.”
NTS works with OEMs, machine shops and other distributors across North America. “If someone has a forecast—firm or not—we can certainly work with them to mitigate their risk in the market,” Throw says. “As a distributor, our job is to provide the products our customers need when they need them rather than make our customers sit on tubing for long periods of time.”
Made to order
Matrix Drilling’s customers range from small, one-rig operations to large, global drilling contractors. “Our shop doesn’t run thousands or millions of pieces,” Peters says. “Most of our orders are less than 100 pieces [of an assembly]. Some of our standard products are used in the hard rock mineral exploration market, where we prebuild the pieces so they’re ready for when customers need 10 or 35 pieces of something, each a different size or length of rod.”
The current market volatility hasn’t deterred Peters’ outlook. “There’s no sense in wasting too much energy worrying about things I can’t change,” Peters says. “My service is to a fundamental industry [that helps to provide] of our global way of life—without mining, nothing happens. Some of our equipment ends up providing water to areas of the world that previously didn’t have access—the technology is there.”
The sector will continue to mine natural resources while remaining conscientious of the environmental footprint and pushing industry forward sustainably. “We’ve helped areas in California drill larger wells to aid the agricultural sector, for example,” Peters says.
Industry is cyclical, no matter what sector. Peters is mindful of how political and economic ebbs and flows affect business. “Matrix Drilling understands the nature of the market. We’re not in it just for the cash flow,” Peters says. “We practice real-time strategy. We know there will be busier periods and slower periods and our goal is to be available to help our customers make money when the opportunity is there. We can control internal chaos, but we can’t control what the market does.” MM
