THE Dragon Industries water-testing technician doesn't have the most enviable job on this frigid morning in the Houston suburb of La Porte. Not with the area coming off its coldest back-to-back nights in five years, with the temperature plunging as low as 20°F. Not when the splashes of water feel like razor cuts.
He is testing the 130-barrel vacuum tank trailer (non-DOT code) that was designed by director of engineering Gary Markham, who might be in the best spot on this morning — in a chair in front of his angled desktop, where he is scribbling notations on a new 130-barrel design.
“They want special manways and special baffles,” he says. “We do quite a bit of specialty work. If somebody wants a tank trailer with different features, we'll work it in — different lengths, different suspensions, different manway openings. Even on our standard 130-barrel trailers, we have customers who like different manway locations based on their applications.
“Everybody thinks that they clean out differently. They all have their own opinion of what works good for what they're doing. So we move all these features around for them, rather than give them a stock unit.”
As Chief Operating Officer Doug Fierce puts it, “It's not that the customers are the number one thing. They're the only thing.”
Dragon Industries, with locations in the east Texas triangle formed by La Porte to the west, Silsbee to the north and Beaumont to the east, has a hand in everything from fracturizing tanks to 8'×40' Safe Havens for emergency housing, hospital rooms, and classrooms.
But the latest thrust is trailers: the 130-barrel tank trailers that were developed last March; a full line of end-dump trailers that are in the design stage, with a prototype produced this month; and DOT code trailers in the near future. Flatbeds are part of the long-term game plan.
The 130-barrel trailers are used primarily to haul non-hazardous fluids in the petrochemical industry — which in the Houston area involves saltwater that is injected into oil wells.
When Dragon built its prototype 130-barrel trailer, it invited some customers to review it. Based on the results, Markham made a few user-friendly changes and added some features that customers said they did not see on competitive units. Dragon then invited customers to give it a no-holds-barred review, after which more changes were made, primarily feature-related. The result was a trailer that became the standard unit and was exhibited in May at the Offshore Technology Conference, the largest petroleum expo in the world. Since then, Dragon has been ramping up production.
“We have the ability for each customer to dictate baffles and manway locations,” Markham says. “When we build a trailer for a customer, we take the order and the trailer is assigned a serial number. We prepare a shop router. We pretty much denote the barrel to the customer at the time we start building it. That allows us to give them what they want as far as fittings and pipes and accessories.”
The primary dump trailer will be a 1/4" round-bottom barrel AR 400/500, full round, 42" radius, frameless, with telescoping cylinder, air-operating latches, and available with or without an air liftgate. Dragon also is developing a frameless 38' sand trailer with a 10-gauge floor and a flat bottom with rounded corners.
Markham says he loves designing the specialty trailers because it allows him to be integrally involved in the end use of the trailers, which he describes as a “learning experience.” He says customers usually know what they want, but they don't know how to relate that to the finished product, so he provides the balancing act between what they're asking for and what can be economically built.
“Sometimes we offer them a couple different options to get to where they want to be,” he says. “Many times, the result is that cost is an issue, so we have to offer them a few different options and let them choose, because what they asked for may have been too cost-prohibitive. We usually try to offer a middle-ground solution.”
Manufacturing Space Adjusted
To accommodate the trailer expansion, Dragon reapportioned its space at the La Porte facility, which covers 37 acres, 10 of which primarily are devoted to manufacturing and the rest to storage and support activities.
The warehouse was repositioned so that the trailer-building area could accommodate two barrels at once. Six 5-ton overhead cranes were added — tripling capacity — and rollers were installed to start the fit-up station. Dragon purchased two submerged arc automatic welders, replacing the single sub-arc that had a 20' span, and automatic ring welders.
Beyond the customer service Dragon provides on trailer design, one of the key elements it offers in La Porte is a 21,000-sq-ft, totally enclosed, environmentally controlled, state-of-the-art blasting and painting facility that the company believes is one of the best on the Gulf Coast. Completed in 1998, it gets a good workout: Fierce says that between trailers, waste containers, and dry-cargo containers, it operates 24 hours a day, six days a week.
The steel-grit abrasive blasting booth is 20' wide, 20' high and 65' long, with an auger-tube recovery system. Two 20' × 20' × 65' paint booths give Dragon the ability to handle the largest jobs. Dust, dirt and contaminates are filtered out while breathing air and ventilation is provided for worker safety.
All trailers are blasted to SP6 or SP10, a 3½ to 4 mil blast profile that Fierce says is close to white metal. He says state-of-the-art infrared heaters maintain the steel temperature without an exposed flame.
“We can raise our temperature in here about 30 degrees in an hour from 32 degrees,” he says. “So it gives us the capacity to maintain painting even though we have cold weather, and get proper curing on our paint jobs, which is hugely important. We have the ability to produce a very high quality finish.”
Dragon Industries, with 350 team members, is a wholly owned subsidiary of The Modern Group, which evolved from Modern Manufacturing, founded in Beaumont.
The company's initial thrust was in short-line agricultural implements. As that market waned, the company diversified into a broad range of steel-related products, including small trailers and goosenecks. From there, it started manufacturing waste containers and frac tanks. It ventured into the rental business, but sold that offshoot to National Equipment Services in the mid-1990s in order to concentrate on its manufacturing capabilities and make that its core business.
Unlike many older companies, it does not follow the vertical integration model of expanding its business into areas that are at different points of the same production path. It is not like a car company that expands into tire manufacturing or an oil-refining firm that acquires a company that owns oil fields.
It is horizontally integrated, expanding its business into different products that are similar to the current line.
The Beaumont plant produces agricultural components, specialty aluminum windows and doors, internationally certified code containers, and suspension assembly and other subassembly, which frees up space for the bigger products to be manufactured elsewhere: frac tanks in Silsbee (utilizing a 750-ton press brake), trailers and containers in La Porte.
“We try to maximize on all of our efficiencies in a less-than-perfect world,” Fierce says. “Obviously, you would love to have everything all in one spot.
“Our primary focus has been on niche areas. Any one of them doesn't keep you alive. We're very broad and very diverse in what we do. The trailer industry is at times difficult. You have to have some other things to do or you're really going to be stretched.
“The bigger trailers developed out of what were originally small utility trailers and frac tanks. Part of the reason why we're going to these new trailer lines is to move us out of the cyclical nature of the petrochemical industry, which can be feast or famine.”
There has been a 30% drop in land-based oil rigs since a 24-month high was reached last July, and a 40% drop in offshore drilling. The industry took a huge hit in the stock market in the first week of January.
“It's scary right now,” Fierce says. “This area has been somewhat insulated from the recession up until this point. September 11 precipitated that a little faster, but it was coming already. The natural tendency of the petrochemical industry is that it has large swings up and down. When it's down, there's no gradual decline. It's an almost immediate drop off the edge of a cliff — and that's what we've seen. It's anybody's guess how long that's going to be. But historically, when it drops, it's not for a couple of weeks. It's for an extended period.
“That's one of the reasons why we're diversifying. We need to have a broader range of product. Our concern is not to get locked into that limited trailer framework of petrochemical. Ultimately, that's where the flatbeds will come in. We want to be broad enough and have enough product lines so that we're staged to avoid getting killed by the weaknesses that are inherently going to happen through the cyclical nature of the economy.”
Caution is the word right now.
“While we have taken the time to put in the infrastructure, we have not beefed up the actual labor force,” Fierce says. “We felt it was prudent to wait until the first quarter of this year to see what direction things were going. We went ahead and did the infrastructure activities so that if things do rebound and this is just a short blip, then we're poised. Our desire was to have the structure in place to be able to meet the demand and at the same time work on diversification of our trailer products.
“If the petrochemical market slows, we would have the trailers for other activities, which is why we're looking at end dumps and code trailers. We have the equipment, but we're cautious about using it until we see what direction the economy's going.”