The SCFM Story

by Steve Miller

 

Introduction

While José and I entered the energy business in the late 1970s on separate paths, we subsequently met and began working in compression together in April of 1985.  We quickly became friends, leading to a close relationship that was either not seen or not understood by colleagues; but was genuine and lasting just the same.  

 

 

 

 

A Brief History of time...about "packaging"

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All compression was originally sold by factories, and “packaging” (designing, building and assembling everything it takes to make any compressor run right and reliably) was an afterthought and actually a later occurence.  After separable type compressors were developed and compressors became small enough to be skid-mounted, the factories eventually "handed off" the design, supply and work for the rest of the materials to make a complete unit to a group who became known as "packagers".  The compressor manufacturers could make their required profits manufacturing the bare shaft compressor frame and cylinder sets, but not only could they not consistently make money on the packaging end, in many cases they lost money; thus, the hand-off to packagers.   

 

 

 

More lemons than lemonade

Jose and I saw some big problems in the industry.  One was that while packaging had been "handed off", and though closely linked to correct application of the frames and cylinders, the packaging of compressors turned out to be the most important part in terms of reliability and lowest cost of ownership.  It didn't really matter how good or even greater was the compressor, if it wasn't applied correctly in a package that was correctly designed and assembled, run time and reliability were lower than desired and costs of owning and operating were much higher than necessary.

Additive to these real yet existential difficulties was the RFP bidding process (enter the madman! - a process invented by the government for the prevention of real or perceived corruption) which created an inefficient exchange of information environment and encouraged "low first cost" buying.  Thus was born the predictable swing of the pendulum toward commoditization of packages; which was fostered by both the clients and the packagers.

Clients and packagers many times were both lured into and got stuck in a vicious cycle of buying and selling lowest first cost, but highest total or overall cost of operating and ownership, compression.  Because both clients and packagers were correctly unhappy with the unacceptable results, there was more than a little acrimony and a lot of distrust; further complicating and fogging effective teamwork and communication for their collective best results.

The bidding process laid the framework for clients and suppliers to be in conflict from the beginning and either seriously limited the development of profitable relationships or spoiled them outright.  In an effort to win business, packagers would bid low on a project to win the business but then, in a effort to survive, cut various corners and deliver compressor packages that either didn't work well or in some cases hardly at all.

Packagers were under the illusion that they didn't have time to strategically scope and plan with a client, so in defense of their existence they developed "one size fits all" and "standard design" mentalities.  Without knowing it, clients were choosing from a predetermined menu of a few compressor "package" models with either standardized or morphed design engineering, with much less than the best results for either the client or the packager.

 

A Fleet of Sinking Ships

Compressor packaging turned into a race to the bottom.  The industry exploded with standardized and one-size-fits-alot or a few sizes fit everything fleets; and gas compression became a commodity.

Still the business model was apparently not sustainable.  Jose and I had long observed that all packagers, including our own employers, had trouble staying in business.  Many names in the packaging business came and went, and everyone who stayed was just trying to survive the next quarter; sometimes even in good times in the industry and always in tough times in the industry; largely due to the bloody and counter--productive bidding process.

When the "packaging" industry emerged, over the decades hundreds of companies entered the business, in part because of the relatively low financial barrier to entry; and while this included many, many "mom and pop" size and abilities businesses, there were also many dozens of significant ranging to large and sizable outfits who took a turn in the packaging business.  Many of them got out almost as fast as they got in - and most just didn't survive.

 

Same fleas on different dogs

Jose and I loved what we did and wanted to do it for the rest of our professional careers, but we had valid doubts about the sustainability of the business using the currently existing business model.

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The two things that drove us to consider alternatives to our employer was that it was no longer a learning environment for us and they clearly had sustainability issues, which were later confirmed; so we decided we would leave.

However, we saw another problem in the industry at the packaging level when we started looking at possibilities; that every competitor to our employer in the industry had exactly the same sustainability issues and challenges (to a very large degree also later confirmed), so what were we to do and/or where were we to go?

 

A New Beginning

If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.
— Red Adair

With no existing alternatives, we saw the only solution as doing something ourselves, but after countless conversations and considerations, we decided the big problem was the race to the bottom.  We had to do something to address the sustainability issue.  We believed that if we treated our clients well, built compressors that actually worked, and tailored the product to the client's needs, we had a shot at being successful,.  We also believed that partnership arrangements, between the clients and us would foster a collaborative and ultimately fruitful and effective exchange of information and ideas resulting in the lowest cost compression possible for clients.

We wanted to create a place where our folks were ever caring and ever learning.  We wanted to think differently, we wanted to be and act different, and most of all we wanted to make a positive difference; for clients, employees/colleagues and supply partners.

So, on March 1, 1993, Jose and I founded the experiment/journey/experience that is SCFM Compression Systems, Inc.  We have been very fortunate and blessed with a sustainable business model; so our clients, employees/colleagues, supply partners and many others share in our success.  Since then, we've worked closely with clients to meet their specific compression needs with compression units superior in application, design and assembly; resulting in lowest total cost of ownership.

As the business matured and developed, Jose and I came to understand that our most important asset, our employees, needed a dedicated leader, and we providentially met Jay Stephens.  Like a missing puzzle piece, Jay became the perfect complement to our personalities and gifts and the champion of our culture; exemplifying service to others in his actions every day.

We now have a healthy and thriving leadership team with complementary strengths which counter and/or offset our respective weaknesses; and what we share is a love of learning and common values about the infinite intrinsic value of all people.  Every employee at SCFM has a lifelong commitment to growing, learning, and improving.  That, and our respect and care for every person, is the thread woven into all aspects of our personal and professional lives; uniting our differences and giving us a common lens through which to see the world and meet and serve our clients.