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  • Ariel CEO Featured in COMPRESSORTECH2

    Transition plan in place for new leadership in the next two to three years. By DJ Slater

    The following Executive Outlook interview was taken from the October 2019 issue of CompressorTech 2 and published with their permission.

    Karen Buchwald Wright is the President and CEO of Ariel Corp., headquartered in Mount Vernon, Ohio. The company was founded by Jim Buchwald in 1966 to produce a separable, reciprocating gas compressor in the 100 to 200 hp (74.5 to 149 kW) range. That range expanded over the past five decades, with its compressors, which are used in a variety of applications, ranging from 100 to 10,000 bhp (74.5 to 7457 kW). Wright joined the company in 1980 and entered her current role in 2001. COMPRESSORTECH2 spoke with her about the company’s impact on the gas compression landscape, its future in an evolving marketplace and how its employees meet the challenges of keeping a family business ahead of the curve.

    Ariel has been a major player in the gas compression market for decades. How has ariel maintained its position as a top compressor manufacturer?

    Quality is number one throughout the company, in every aspect of the business, starting with design, through materials, manufacturing and assembly. Ariel’s entire workforce gets it that our compressors are built to last for many decades and that everything we do is toward that goal. Additionally, if it says “Ariel” on the side, then we will provide the “wear parts” to keep it running at peak performance, or help solve any problem associated with that compressor, even if we sold it 30 or 40 years ago.

    How will you grow the company, especially when it already has a strong share of the reciprocating compressor market?

    Our market niche is relatively small in the context of the entire E&P industry, and with our significant niche share, there isn’t a lot of expansion potential in the North American market. However, it is possible that the rest of the world will finally figure out that natural gas is clean, efficient, domestic (in virtually every continent) and inexpensive, and begin to develop their own production and infrastructure akin to what we have in North America. If that happens, and I think it will--because the only other realistic alternative is nuclear (which is another discussion entirely)--then Ariel will be quite capable of meeting the demands of developing the natural gas infrastructure in Europe, Africa, South America and parts of Asia (including China and India).

    As for other types of compression, we have already determined that rotary screw compressors for the natural gas market is too small a market for us to compete effectively. Certainly, we’ve looked at centrifugals repeatedly and while we haven’t ruled it out, we haven’t talked ourselves into it either. Maybe that will be part of the next generation’s initiatives.

    How do you avoid complacency in the face of your market share?

    We are not part of a conglomerate so we don’t have another division to cover for us during the extreme downturns to which we are subjected on a regular basis. We aren’t subsidized or promoted by the government. We must sink or swim by our own efforts and we believe that it is our duty to set a very high standard of quality and safety for our industry. There really isn’t a “too big for their britches” to fail policy for us to rely on, so I guess we just keep that in mind and try to do everything we can to the best of our abilities. We take Ariel’s reputation personally because it our family’s business. That tends to keep us pretty well grounded.

    How can your compressors get better technically?

    While the basic design of reciprocating compressors is over a hundred years old, there have been many, many improvements in those years. In the last fifty, most of those improvements have come from Ariel. At this point in time, it’s about the cost of horsepower, the cost of oil (lubrication) and reducing operating costs, capturing fugitive emissions, and lifetime operating costs. We continue to innovate through newly developed materials, design and manufacturing expertise. Additionally, if a better mousetrap comes along, it is my hunch is that it will come from Ariel. Our people are our strength and our future.

    What markets might develop outside North America in the next decade?

    As I mentioned above, Europe, Africa, South America, China and India (plus other smaller countries) all have the potential to develop their domestic natural gas resources. Unfortunately, the perception and ideology of “climate change” is driving the decision making, rather than the recognition of the enormous benefits of clean-burning, plentiful, locally-produced natural gas. I think China, India and several South American countries actually do recognize the significant advantages of domestically produced natural gas and are moving ahead with development. We are seeing market growth in these regions and expect it to continue.

    What geographic areas are poised for natural gas growth in the near future? Will Ariel play a part?

    Well, I suppose there are many parts of the world that could develop their natural gas reserves and infrastructure. Since we have packagers/distributors everywhere in the world, we will be there to move that gas from the well to the customer! Probably a question for the big E&P’s, the majors and the governments in the rest of the world.

    What other market subsets, such as CNG, do you see Ariel entering?

    We haven’t had much luck breaking into the refinery market as it is remarkably resistant to change in any form. While we have plenty of experience and proof that our compressors are the best solution in the refinery environment, it will likely require a generational change before we see much happening there. Additionally, it would mean that refineries are actually expanding, or new ones are being built—not something that has been happening in decades. So, a little potential there… but really, it’s all about the expansion and modernization of NA’s infrastructure and the potential of the same thing in the rest of the world.

    How has the gas compression market evolved over the course of Ariel’s history?

    Ariel’s original small, high-speed compressors led to the portable compressor package and eventually to the rental fleet concept. That wasn’t especially feasible before Ariel, at least not as the rental fleets operate today. The shale gas revolution hastened the continuing decline of coal use because natural gas is simply much cleaner, cheaper, more readily transportable through pipelines, and is supported by a vast existing infrastructure (xx.x million miles of gas pipeline in the USA). Furthermore, the development of shale oil has driven an enormous supply of associated gas and has changed the entire pricing structure and supply and demand dynamic for energy in the USA and the rest of the world. Finally, shale gas means the US leads the rest of the world in pollution, emissions and carbon dioxide reduction (just check out the EPA report, Our Nation’s Air for a look at the last decade’s huge improvements). Throughout the last 45 years, Ariel compressors have continually improved, our product lines have expanded to cover the “reasonable” range (100BHP to 10,000BHP) for our high quality, built to last, reciprocating compressors and today, if you use natural gas for electrical generation, cooking, heat, or vehicle fuel, it has surely been through an Ariel compressor on its way to you.

    How does the gas market look now and over the next couple of years?

    In the last three cycles of boom and bust, it has been oil that has caused the catastrophic swings from peak to the depths of the trough. We are going into another downturn because of a global over-supply of oil resulting from lower growth in the rest of the world besides America, and a surfeit of enthusiastic growth in oil production in the USA. About half (not sure about this number-does anyone know? Is it half, a third, a fourth?) of the natural gas coming to market is associated gas from oil production. Every time oil production rises because of higher prices, an enormous amount of gas suddenly requires compression for reinjection or into the pipeline system, and our sales skyrocket. Let the price of oil sag a bit and the rigs stop drilling, the gas stops flowing and no one needs a compressor. Unlike an appealing new car, a compressor is strictly utilitarian and no amount of marketing will sell one to a company that isn’t producing natural gas over and above their current compression capacity. The next year and a half will be the trough after the peak. I’m going to go out on a limb and predict another boom right after that! I started at Ariel in 1980, so I’ve seen this happen regularly over the years, usually about a five year cycle, peak to peak. Given that, we always plan for both and will be here to take on the challenges of volatility and growth.

    How will you fare in light of the political ideology that lumps natural gas, oil and coal into the same fossil fuel bucket and insists wind and solar will replace everything else?

    The reality is that natural gas is the fuel of at least the next hundred years (probably several hundred) because there is no way wind and solar can replace it for actual cost, efficiency, and practicality. Most people don’t realize that all wind and solar installations require some sort of reliable power back up (nuclear, natural gas or coal) that can quickly kick on when the wind and the sun are not available—100% of the time. Most people don’t realize that electrical power is generated and used in very short order. Batteries that could store power from wind or solar installations sufficient to cover irregular power generation simply DO NOT exist. Airplanes, vehicles larger than sedans and ships do not lend themselves to battery power and probably won’t. At some point ideology will bump up against reality. Meanwhile, I hope that the vast majority of states and Americans will recognize that we should be updating and expanding the pipeline system for natural gas (and oil), in an environmentally friendly and conscientious way. I also believe we should be innovating our way to the nuclear power era of tomorrow. That is the cleanest fuel there is and is also the most likely way we will power our way to the stars. Natural gas is the natural complement to that development.

    Talk about education, why it’s important and what you’re doing about it?

    Modern manufacturing requires a highly skilled workforce. While it is popular lately to sound the alarm about everything being automated, with no need for us annoying human beings anymore, the reality is that the versatility, ingenuity and decisiveness of people is nowhere near being duplicated by artificial intelligence. That being said, the tools we use today are quite sophisticated and require significant knowledge to operate effectively. At Ariel, we have always recognized that our deepest value is in our workforce, because it’s the combined knowledge of thousands of people that results in the superior quality built into every single Ariel compressor. For some reason, over the last two decades, as manufacturing technology changed, trade schools lost their way, college appeared to be the only route to the American dream, and the workforce needed for today did not arrive at the factory doors of America.

    It was necessary for us to do something about the situation if we wanted to grow and prosper. Working with both vocational high schools and technical colleges in Ohio, we have developed both levels of degreed programs and are growing our own workforce to meet the needs of the future. We are developing excellent machinists, mechanics and multi-craft maintenance techs, mostly for Ariel, but also for the broader manufacturing might of Ohio. You can read about our various programs on Ariel’s website. We welcome the opportunity to share our programs with other American technical colleges and high schools in the hopes of developing the workforce the nation will need over the next fifty years.

    What can we expect from Ariel in regards to further developing digital technology?

    Ariel Smart Compressors (monitoring and data analytics) will be shipping out early next year. Throughout the company, we continue to adopt and utilize cutting edge technology. Unfortunately, I’m not the one to ask about the specifics. Just ask someone who’s under 40 and they’ll be able to tell you. As we say in our mission statement, we set the standard and digital is certainly a significant part of giving our customers the products they need.

    What are your short and long-term goals for Ariel?

    In the next three years we will transition Ariel to the next generation of leadership. I’ve done my part for 40 plus years and I’m certain they will do theirs. We have planned for this transition, not just in our immediate family, but across the company as well. Our short term goal is to complete the transition so I can back off to a sort of distant guidance, make it through the next downturn and into the next boom, and position the company for continued success. Long-term will be up to the next generation, but I’m certain they will hold onto the same basic principles that got us here: quality, safety, innovation and the best workforce in the world.

    What challenges exist in a family-owned business? Do you see any possible structural changes in the future?

    For the past 20 years, I’ve planned for the transition to the next generation of ownership, leadership and management of the company. Three of my four sons are active in the business and I will be taking myself out of the equation, for the most part, in the next 2-3 years, backing off to chairman and enjoying not working so much. As for structural changes, none are being contemplated by me, and our general philosophy is to stay private and in control of our own destiny. That’s not to say that some future generation won’t see it differently, but that will likely be well into the future when I’m not around to warn them.

    CompressorTech 2

     

     

    Quality is number one throughout the company in every aspect of the business.

    Karen Buchwald Wright, President & CEO, Ariel Corp.

     


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