MinExpo 2016 sprawled across the massive Las Vegas Convention Center in late September. Schramm’s distinctive red stuck out on the edge of the Silver Lot. Schramm in Las Vegas rolled out its new Fury 130 hydraulic rig and also unveiled a new strategic supply chain partnership with DNOW L.P. The Fury 130 aims at customers in the large-diameter water management and exploration drilling arenas. The new partnership introduces the RigPAC, a warehouse in a box concept. RigPACs, which are about the size of a shipping container, can smooth out tooling and part needs for clusters of rigs working in the same region, and operate like an RFID-enabled vending machines.
National Driller stopped by the company's MinExpo 2016 booth see the new rig in person and to talk with Michael Dynan, vice president for portfolio and strategic development at the West Chester, Pa.-based rig maker. The conversation ranged from getting Schramm’s core competencies right to the current state of the industry to the future of the company.
This interview was edited for space and clarity.
Q. When you talk about core competencies, what do you mean? What for Schramm is the core competency?
A. It’s the consultive approach with the customer. Our team, we look to build a solution for a customer, so it’s very personal. We have a bit of a customized solution to what we’re doing. We have in-house engineering, so we will take that consultive approach, listen to what our customers have to say, take it back to our in-house team. We’ll develop and design that solution, then we’ll take it to manufacturing. So, from a competency standpoint, I would tell you it’s how we work with our customer to understand their needs, as opposed to trying to ram a product down their throat. Then we take it to our in-house engineering. We have the capability in-house. We go to work in our own shop. And then we bring in our partners where we don’t have that capability in-house. I call it that “integrator” capability, where there’s certain things core-competency-wise, I’m not good at. Right? And that’s why we’ve brought in DNOW to help us with the supply chain side as well. Listen, I need to innovate, I need to design, I need to put my resources into making more of these, not in the actual operational functions of procuring the materials. We choose the partners, and then they take over the relationship from there.
So, to answer your question, consultive approach, design and then manufacturing.
Q. When a Fury 130 comes out of your facility, is it going to be the same one or is it fit to the customer’s needs?
A. They’re customized. They will look very similar, but we use Legos to explain. .... This compressor pack, this box, has a space. It’s got a Lego brick. But, inside, the components, right now this is on-board with a 1050 [cfm] air compressor. If they want a higher pressure or a lower pressure air compressor, that could be inside the box depending on their needs. If you go over to the mast, this has got a 30-inch table opening. ... Some customers don’t need that 30-inch table. That’s fine. We’ll take this table out. We’ll put another brick in. It will be whatever diameter that they need it to be. Same with the top drive. ... So, on the surface they look the same, but everything is configurable so we can change all the major subsystems to meet the needs of the customer.
Q. What is the range for hole size and penetration rates?
A. We start with the pullback first, because that’s how much we got to be able to pull out of the ground. That’s really what drives a lot of what’s going on, and then everything else becomes functions of that number. ... We designed this with 130,000 pounds of pullback. If you want to go larger diameter, your depth goes less because a larger diameter pipe weighs more. We can do anything you want. Our limited factor for this version right now is 130,000 pounds, which is where the Fury 130 comes from. Our next one, we’ll probably target a little bit smaller for the exploration side. That one’s probably going to be about 95,000. What we’re actually envisioning with that one is, that will be much smaller in terms of the table size. We’re going to take that down probably more like 3.5 or 4.5 inch depending on, again, we’re going to work with the customers to understand what they want to be able to do. But we’re kind of locked in to the pullback capacity, and then everything else becomes a function now for that.
Q. Who is your ideal customer for the Fury 130?
A. There are two types. The first one is going to be someone working in large-diameter water management, which this is going to work for Thomas Drilling in phosphate mining up in Idaho. It’s been sold. Mr. [Tyson] Thomas is here. The other customer would be one working in exploration drilling where they’re using reverse circulation techniques and we’ll be happy to go anywhere in the world that they want to go.
Q. What is the availability on this?
A. We’re looking for the first quarter next year (2017) we’ll have them. Ideally, if someone places a deposit today, we’d be delivering in the first quarter. This is No. 1. We want to get it in the dirt. There’s still a few things we need to be absolutely sure we got right. But we promise in first quarter for next year.
Q. There’s been a lot of talk here about a downturn. As a relationship with your customers, how do you help them in the rough times?
A. It takes on a couple of different ways. No. 1, it’s relationships. It becomes answering questions, quickly solving and listening to what their problems are, and seeing if we can develop solutions for them along the way. Most of the times they’re going to tell us, “Listen, help us get these machines back to work.” So, it’s having available technicians and qualified personnel to assess machines and figure out what they need.
They next thing is having inventory available for them to replace parts that are rotted, destroyed, cannibalized, whatever it is. And that’s the bet that we’re making right now, is that we’ve got to get the inventory available almost as a grab and go. We’re not there yet. We’re investing. The lead times are playing out, but [we aim to give] our customers the fastest chance they can to compete and getting the machines back and running. So, it’s knowledge and parts.
Q. Are you seeing a lot more customers trying to make the equipment last longer?
A. All of our customers — everybody in the mining industry — has experienced various states of pain, depending on how they were able to manage their way through it. Some are in better positions than others. I think everybody truly needs to spend some operational money first, and then they’ll go to capital expenditure after that. Only the very best guys are ready to put down on new equipment, but we’re getting there.
But you’ve got to get their other iron back turning to the right. We did some work with Mr. Thomas. We actually did a full overhaul on one of his other rigs to get him back to work so he could start generating the cash flow so he could buy into this one. … We took that same approach and said, “Listen, we may not be able to them him into new iron, but can absolutely help them.” So we created a full-blown program where we go out, we’ll assess the rig and we’ll give you a list of options and allow you to work off a budget and off a menu. Here’s a full report from the OEM. However far you guys want to go is however you want to go, but you can go back to work with that machine. Mr. Thomas did exactly that. ... We did an overhaul on one of his machines so that he could bid another set of jobs, which got him back to work, which ultimately helps us get this one off the ground. ...
We had to do this to meet our customers where they are. I’ve got to stress that to you. ... Do you remember in the presentation I talked about going from machine builders to solutions providers? We had to build that bridge and say, “Listen, we can’t always sell new equipment. We’ve got to help our customers find solutions to get them revenue flowing.” If we’re partnered in with them and listening the way we’re supposed to be, we’ll work them and get them what they need at a price that they can afford to pay.
Q. Can you talk about the R&D that goes into a rig like this?
A. It starts with customer feedback. ... Instead of just having our engineers kind of create from just sales feedback, we took our engineers on the road with us. Our engineers were paired with different sales representatives. Tim Thomas and I — he’s my director of engineering and he was with me — we put on over 15,000 miles together visiting customers, talking through problems.
Then we built a team of 20 mining professionals who agreed to offer their feedback and make contributions to us about what they saw the industry needed. ... They contributed various levels, from maintenance points to capability to push/pull. Every time that our guys were able to come up with concepts for a subsystem idea, they had these 20 guys they — all experts in their own right — they could call and bounce ideas off of and get back to the drawing board to see if they got it or not. By the time we cut steel, we had already kind of some baked-in support for what we were doing. It wasn’t a throw-it-over-the-wall approach. ...
Once we’ve sold it from a concept standpoint, we invite the customer into the facility at different steps in the process for them to review where we are. They get biweekly updates with pictures and videos and the opportunity to comment before we get too far down the road.
Q. What was the idea to execution time for this?
A. Eleven months. ... We were doing research on this is the fourth quarter of last year (2015). We were still running around California confirming loads. We had concepts, we had gone out to the 20 guys and were working with them. Then we were talking with Tyson and he says, “How far along are you guys?” We went out to Wyoming in the first quarter (of 2016), we did a whole bunch of conceptual work with him on one day. We went back to a room, continued to work on the concepts. We went back to him with the feasibility. He said, “If you guys can do that, let me know.” We went back on March 30, he signed his order and said, “I want it.” ... From concept to iron, 11 months.
We’ve cut our design and manufacturing cycle. You asked about the core competencies, inherent in what we do is speed. Everything is designed around speed. ... Decision making is not now, send an email off to committee. It’s grab your four peers, make a decision, bounce it off an expert and bring it back in again. So, the decision’s made in an hour, or as fast as you get the phone call returned.
Q. What does Schramm look like in 10 years?
A. In 10 years, we’re a diversified provider. ... We’ll diversify the product line. We’ll continue to diversify our industries. At our heart and soul, we’re machine builders. We’ve been solutions providers. But you’ll see us with more products, more diversity and in more industries. Maybe it’s construction. I have a soft place in my heart for water. I just think the world needs water. I know we do a lot of work in that space. But we’ll continue to absolutely work in the mining community. We’ll work in the oil and gas community. Maybe we’ll be in construction. Maybe we’ll be in some other areas.
You’ll also see greener technologies. We’re going to look to get our emissions down, our waste down, our carbon footprint down, everywhere we can.