The revitalized oil
industry seemed to possess an insatiable demand for a
variety of manufactured products including piping, oil
rigs, and new valves and instruments. Increased orders
for new piping meant an increased demand for other
piping products. Durga Agrawal established Piping
Technology in 1978, just in time to take advantage of
this furious activity in the petrochemical industry.
By 1981, PT&P had begun to catch the crest of this
wave of prosperity and saw the number of shop
orders-per-year leap from 51 in 1978, to 819 three
years later. But late in 1981, PT&P's management--
Durga Agrawal, Randy Bailey, and Terry McCormick-- saw
the signs of an approaching slowdown. The larger
engineering and construction companies had stopped
announcing major new jobs. Some had begun to furlough
their employees, slowly at first, but the trickle soon
grew into a flood of massive layoffs.
During 1980 and 1981,
the national economy began to slide into one the worst
declines since the Great Depression. Because Houston's
economy was stronger in 1981 than in any of the
preceding twenty years, its abrupt decline in the
spring of 1982 left most business and community
leaders in shock. Increased world production of oil,
conservation of energy spurred by higher prices, and a
worldwide recession during the early 1980s changed the
dynamics of the oil business by creating a worldwide
oil glut. OPEC lost its power to set prices, domestic
production dropped, and the economic incentive to
drill, especially for high-cost oil, began to
disappear. The result was a significant decline in the
number of oil rigs actively used for drilling. With
this decline came decreases in new orders for all
types of oil field equipment and services. Within
eighteen months, the Houston economy lost 100,000
jobs. The city once considered recession-proof soon
saw its unemployment level exceed that of the entire
nation. As a result, the ripple effects of the big
downturn created havoc for businesses, for the
financial community, and for the public sector. By
1986, Houston's unemployment rate had climbed to 10.2
percent, while national unemployment stood at 6.9
percent. In manufacturing alone, the number of jobs
plummeted by 33 percent from the 1982 peak. In
fabricated metals, PT&P's sector of the economy,
the number of jobs dropped by 40 percent. In
electronics, it fell by 43 percent, and in
non-electrical machinery by 50 percent.
The cause of the
sharp downturn in the Houston economy is more complex
than simply oil prices. A regional economy like
Houston's is comprised of two segments : the primary
sectors, which are often referred to as the economic
base, and the secondary sectors. The businesses that
make up the primary sectors are the driving force
behind the economy and produce goods and service for
export out of the region. The secondary economy, which
provides goods and services to the local communities,
relies upon the continued growth of the primary
sector. Although there was some diversification-- the
development of the Texas Medical Center and NASA's
Johnson Space Center-- Houston's economic base
depended upon the prosperity of one industry. The
Greater Houston Partnership, an organization that grew
out of the Chamber of Commerce's efforts to bolster
the economy, explained the problem in a 1989 report :
"The fact that 84 percent of the area's economic
base is related to exploration of oil and natural gas
and to the production of fossil fuel products mean
that 84 percent of all employment is either directly
or indirectly tied to these energy industries. Roughly
84 percent of all grocery clerks, auto mechanics, real
estate agents, and schoolteachers owe their jobs to
the energy sector. Without the energy sector Houston
would be a city of about 500,000 only the third
largest in Texas.
When the oil boom
began to break in the spring of 1982, the economic
base stopped expanding and by 1985 had fallen into a prolonged
period of severe contraction. Many small businesses in
Houston, including a host of manufacturing and
fabrication companies, had relied heavily upon the
continued growth of the energy-dependent industries.
When that growth stopped, the big petrochemical firms
delayed or cancelled plans for new construction
projects and plant upgrades. This left companies like
PT&P that had based their futures on
supplying their products for petrochemical plants,
with no new business and very bleak prospects. If oil
exploration had merely leveled off during the 1980s,
Houston's boom would have slowed substantially.
Instead, U.S. exploration fell by almost one-half,
devastating Houston's economic base and spreading
quickly to the secondary economy.
Houston's boom and
bust shaped the history of Piping Technology &
Products in a dramatic way. Although the Bayou City
had been one of the best locations in the nation in
which to start a business, the sudden demise of the
"boom" in 1982 should have meant disaster
for PT&P. But this was not the case. In fact, when
the economy began to bounce back in 1988, PT&P
emerged from the malaise in position to take a leading
role in the piping industry. The history of PT&P,
then, is the story of how dedication, innovation, and
determination enabled this company to overcome many
obstacles, including the economic catastrophe that hit
the city in 1982, to become of Houston's successful entrepreneurial
endeavors.
This book is a
chronicle of Piping Technologies during its first
twenty years. The story is told in six chapters
dealing with important eras in the company's history.
First, the book provides brief background information
the company's founder, Durga Agrawal, the origins of
the firm as an engineering and consulting partnership,
Stress Technology & Products, and the
transformation into PT&P. Chapter two explores how
Agrawal took advantage of the oil boom in Houston to
turn his fledgling enterprise into a profitable
manufacturing concern and introduced a new design for
variable spring hangers that revolutionized the pipe
support industry. In the third chapter, the book
examines how PT&P survived Houston's economic
slump (1982-87) through aggressive marketing in new
areas and through "intelligent
diversification" into complementary areas of manufacturing
including the acquisition of SWECO. Chapter four
describes the move to PT&P's present headquarters
on Holmes road and the acquisition of equipment that
allowed the firm to continue its diversification into cryogenic
pipe support and expansion joint manufacturing. As the
company continued to grow from a small business into
an important supplier of piping products, the need
arose for PT&P to modernize its information management
systems, adopt standardized procedures, and upgrade
many facets of its operations. Chapter five, then,
looks at the development of the company's in-house
computer programs, the application of computer
technology throughout the plant, and the evolution of
other, more traditional management concepts. Finally,
chapter six examines recent milestones in the
company's history.
Durga Agrawal
assembled a ground of talented people to help him
operate his company, and together they steered a
course through the myriad obstacles they encountered
during the early years of PT&P. Now, after its
first twenty years, Piping Technology & Products
stands as one of the leading manufacturers in the
piping industry.
The Cullen
College of Engineering at the University of Houston
grew along with the city of Houston, attracting
students from all over the world. The building on the
left, completed in 1967, was a major addition of
classrooms, offices and laboratories. The World War II
vintage metal building on the right was used for
laboratories and offices for graduate students.
