NRP Jones adding hose capacity in Utah

MARCO ISLAND, Fla.—NRP Jones L.L.C. is expanding capacity for hydraulic hose at its factory in Nephi, Utah, after increasing capability for its oilfield hose lines at the site last year.

The projects are part of an ongoing project to increase capacity and modernize equipment at the Nephi plant, with private equity owner Market Street Capital Corp. spending roughly $3 million on upgrading the facility over the past couple of years, according to Mark Prast, NRP Jones chief operating officer.

He discussed the expansion during the recent NAHAD annual convention in Marco Island.

Following the oilfield hose capacity expansion, NRP Jones took aim at the hydraulic hose department. Prast said the oilfield expansion helped, as the firm had put in place much of the support equipment during that project, adding such items as new tube extruders, wire winders and advanced wrapping and unwrapping technology.

Production equipment for the hydraulic hose lines—including new braiders and mandrel extraction machinery—currently are en route to the facility and are scheduled to be up and running the week of July 23, he said. The additions will boost NRP Jones' hydraulic hose capacity by 20 percent initially, and then another 7 percent in three months when more braiders arrive.

Prast said current market conditions position his firm well, with some customers saying they are having trouble getting product.

"This investment comes at a time in which our clients and the markets we serve have requested immediate and long-term resolution to on-going product shortages amongst many suppliers in today's market," he said.

NRP Jones makes its hose products in Nephi, while it has two facilities in La Porte, Ind., one to make fittings and the other to produce hose assemblies. It manufactures about 70 percent of the hose lines it sells, Prast said, with the rest—primarily commodity lines—supplied by foreign partners.

About 80 percent of its output is sold under the NRP Jones name, with the other 20 percent made for customers under private label. The company primarily supplies specialty hose, and makes anything from a 3/16th inch inside diameter up to a 60-inch ID hose.

NRP Jones is fortunate, Prast added, that its private equity parent had set forth this long-term expansion project and allowed it to go forward, even when some market conditions weren't so rosy. "I'm glad we're not in a position right now to just be thinking of increasing capacity," he said.

Currently, the agriculture market is up and the oilfield sector largely has rebounded from an extended downturn. Any movement on a long-term infrastructure upgrade also would aid off-road sales for hydraulic hose.

NRP Jones had particularly good months in January and March, with a February that was on par with 2017. "It's peaks and valleys right now," Prast said, "but it's peaks and valleys on a steady incline—at least for our company."

He foresees continued growth in the marketplace, with NRP Jones forecasting a sales increase of 15-20 percent for 2018, following a boost of 8-10 percent in 2017. The vast majority of the company's goods is sold through its distributor network; all of the products sold through the catalog go through distribution, though 70 percent of output from its assembly operation is sold directly to OE accounts.

"I'm very happy the equity group allowed us to put together a plan, and then stay to the plan, even though the market wasn't necessarily looking like we should keep doing it," Prast said. "As we look at it right now, we've put ourselves in a very good strategic place. We need more hose capability right now, and we're going to have it."

Going forward, NRP Jones said legislative actions likely will continue to impact lead times and cost of goods imported in its markets, making its investments even more timely.

"Right now, we have our largest demand we've had in a long time for USA-made hose," Prast said. "It must say 'Made in the USA.' (Nephi) is an older facility, but it's still very unique that we've kept all that manufacturing capabilities here in the U.S. and not moved off it."

The hydraulic hose expansion comes on the heels of a similar upgrade of its oilfield hose products, where it roughly doubled output on one of its three hose lines for that sector. That was completed toward the end of 2016 and early part of 2017. That was a project the owners said to push forward with despite a precipitous drop in oil and gas markets.

"Our goal has been to improve the company, and we had put this plan into place," Prast said. "It's kind of like a 401(k) plan. If you're going to look at it short term, that may not be the best thing to do. So we had a long-term goal for the facilities and the company, and we've just been sticking to the goal."

Dealing with Main Street Capital is different than what he expected. The PE group likes to put together a business plan and stay the course. "They know the market goes up and down, and we need to be in position to capitalize when the market is up. I think that's where we are today."

The expansion projects haven't added to the footprint or work force in Nephi, he said, as the strategy has been to modernize equipment utilizing the same square footage and staffing levels, so fixed costs don't climb. In fact, the company's employee rolls actually have decreased, with workers trimmed during the economic downturn not needing to be replaced.

Current employment is at about 200, with roughly 90 in Nephi and the rest spread between the LaPorte plants and a warehouse in Houston.

Being a small company in a business that has its share of corporate giants has its pluses and minuses, Prast said. For example, NRP Jones may not get the benefit of being able to lock in long-term contract prices for materials that its larger competitors may get.

But on the plus side, it normally can react quicker, being a smaller company. "It's very important for NRP Jones to stay lean," he said. "We have to be a lean manufacturing facility and be very cautious of our numbers. We produce at a high level and maintain a certain expectation from all of our employees that they take some responsibility in this company."

The company doesn't produce to an order, but instead runs to an order point on all cataloged items based on average monthly usage. Prast said that allows them to ship quickly, knowing that ability is one of its advantages. It also is able to do a lot of project work with customers, helping to figure out unique situations.

One factor that has adversely affected NRP Jones' fittings business is rising steel prices, with Prast saying base and surcharge prices climbed nearly 40 percent in a year. The firm earlier this year enacted its first fitting price increase since 2010, boosting prices 4-5 percent, but only on the items where it needed an increase.

Despite this, Prast remains bullish on his company's outlook, noting that the LaPorte operation has plenty of production capability in place, and the manufacturer also has ample compounding and autoclaving capacity.

"The timing of what we've been doing internally couldn't have been better for our company," he said. "We are in a great position to have the next several years be great years for us."