Wright says the natural gas industry is distinctly cyclical. Last year, business was up 40 percent, and this year it is down 50 percent. With the warm winter leading to reduced natural gas consumption, and a recession deepened by Sept. 11, there was a considerable oversupply of natural gas. Additionally, the Enron collapse has broadly affected the industry.
Being able to turn the manufacturing facility down and then back up quickly is key in a cyclical industry. Ariel’s operations group continues to devote a considerable amount of analysis to rapid response. Various initiatives such as lean manufacturing, just-in-time, supplier consignment programs and partnering and cell manufacturing mean Ariel can essentially “turn on a dime,” the company says.
Getting a Foothold
Initially, when the company was founded, buchwald and his partner James K. Doane designed and built the prototype compressor in Buchwald’s basement. The fledgling company was able to get a foothold in the compression industry by addressing a niche market for small, independent gas producers in the Southwest.
In the late 1960s and early 1970s, numerous small packagers served the independents with mobile, “truckable” compression units. Packaging entails pairing a compressor with a driver, either an engine or electrical motor and mounting them on a fabricated I-beam and concrete skid along with piping, controls and cooling units. Packagers were often engine distributors who got into the compressor packaging business and eventually grew along with both Ariel and the compressor market.
The infrastructure of gas pipelines has been well established in the United States for more than half a century, particularly in the populous East. The continued growth of population centers, industrial requirements for energy, and today, the need for clean-burning electrical generation, has continued to develop the natural gas industry.
Canada supplies a considerable amount of natural gas to the United States, and as wells are depleted – both in Canada and the United States – compression is essential. Natural gas consumption will continue on an upward trend for at least the next 20 to 25 years, Ariel says.
The company says that considerable infrastructure development is occurring in the former Soviet Union, South America and Asia. “Clean air imperatives are driving fleet [trucks, buses, taxis] conversions to compressed natural gas [CNG] as the fuel of choice because it burns much cleaner than diesel or gasoline,” the company says.
Ariel’s channels to market are through a large and well-organized distribution network. The distributors are either cross-industry, public companies which play in both the North American and international markets, or small, niche specialists providing specific, highly engineered packages. The larger packagers have developed rental fleets, which can be deployed wherever gas needs to be compressed, rented and operated until the wells are depleted – or the price of gas drops below profitability levels. They then are reconfigured and re-deployed.
“Ariel became the dominant compressor manufacturer in the industry, as it was the rental fleet compressor of choice,” the company says. “Extreme attention to quality, testing, reliability, service and aftermarket support essentially dictated Ariel compressors as the most dependable workhorse of the industry.”
The company says over the next 20 years the developing infrastructures in much of the world will require compression from the wellhead-to-transmission, storage-to-delivery and for CNG fueling stations. “We are at the beginning of another great market development like the one which drove the compression industry in North America from the 1940s to today,” Wright says. “Ariel will continue to grow its product lines to meet the demands of that market with the same attention to quality, service and support we’ve had from the beginning.” As the second generation in this family-owned business, she hopes to pass on the torch of the company to her four sons.
“We’re very proud of all the things we stand for as a company,” she says. “We’re particularly proud of the people who have grown and developed with Ariel. It’s they who continue to value our core culture and reapply it in new and innovative ways to meet the challenges of an ever-changing market.”