Daniel Industries, Inc.
Daniel Industries, Inc.
Incorporated: 1946 as the Daniel Orifice Fitting
Sales: $168.56 million (1995)
Stock Exchanges: New York
SICs: 3824 Fluid Meters & Counting Devices; 3452 Bolts, Nuts, Rivets & Washers; 3494 Valves & Pipe Fittings
Daniel Industries, Inc. is a leading manufacturer of energy measurement technology, including systems to measure the flow of gases, liquids, and steam. In addition, the company is a major international producer of high-technology equipment to transmit, distribute, and market oil, gas, and various other energy commodities. Having initiated a comprehensive reorganization strategy in early 1995, which focused on providing products for the natural gas industry, the development of technology involving liquid flow, and the expansion into specific sectors of the gas processing industry, the company was beginning to reap the rewards of its meticulous planning in the mid-1990s. Revenues increased dramatically, and sales offices were operating in such far flung locations as Calgary, Canada, Dammam, Saudi Arabia, Datchet, England, Falkirk, Scotland, Leiden, Holland, Moscow, Russia, Potsdam-Babelsberg, Germany, and Singapore.
The Company’s Founder Gets His Start in the Early 20th Century
Paul Daniel was born in Houston, Texas, on May 17, 1894. Educated in a one-room schoolhouse on the edge of the city, as a teenager Paul Daniel worked various odd jobs on the range in the burgeoning Texas metropolis. Yet as cattle raising became more and more modernized, and Houston began to lose its western “shoot’em up” aura, the young man discovered that work was getting scarcer and scarcer. Finally, after much deliberation, and with guarded encouragement from his parents, the young man traveled to southern California in order to seek his fortune.
Arriving in California without money or prospects in 1915, Daniel found a job at the El Segundo Refinery operated by Standard Oil Company, one of the largest and most successful enterprises in the history of American business. During his time at the refinery, Daniel learned all he could about the oil industry, and the new technology that was designed to speed and control the flow of oil through pipelines running across miles of almost uninhabitable terrain. In just two years, the ambitious and knowledgeable man from Texas had been promoted to the prestigious position of Tank Gauger at the refinery, one of the most sought-after and respected jobs within the Standard Oil Company.
Daniel volunteered to serve in the U.S. Army when America entered World War I in 1917. Although most of the recorded history about American involvement in the First World War has focused on the European theatre, especially the fierce fighting around Belle Wood in the French countryside, American soldiers also fought against Germany in the Middle East and in Siberia. Daniel was assigned to the United States Army Siberian Expeditionary Force, which saw extensive action fighting alongside its Russian compatriots-in-arms. Daniel returned to the United States after two years of service, a wiser, stronger, and more determined man.
By 1920, Daniel was back in California working for the Pan-American Petroleum Company owned by an entrepreneur by the name of E.L. Dopheny. Under Dopheny’s tutelage, Daniel learned more than ever about the oil industry and worked his way up the corporate ladder. Throughout the 1920s Daniel became acquainted with the intricacies of flow systems within the oil pipelines and, by 1928, he had risen to the position of assistant to the manager of the company’s Natural Gas Division in Los Angeles, California.
The company was hard hit by the Great Depression in the early 1930s, and salaries were slashed dramatically. At first Daniel didn’t expect the economic hardships of the Depression to last very long, but when it became evident that no immediate relief was in sight, he grew worried about the security of his job. Indeed, during the height of the Great Depression in the early and mid-1930s, Daniel was slowly phased out of work at the company. Forced to scrap by for a living, he worked any job he could get. At the same time, however, he never gave up his hope of working for the oil industry once again, and he started designing an orifice fitting that would allow for the changing of plates within the oil pipeline system without interrupting the flow of the oil or allowing significant leakage. After a few years of work on his design, he was rewarded with a patent for the “senior orifice fitting,” as he called it, a creation whose fundamental design remains the standard in the pipeline industry at the present.
Daniel Starts a Business in the 1940s
With his patent in hand, and requests for the new device overwhelming him, Daniel decided to start his own business. The Daniel Orifice Fitting Company opened for business near the end of the Depression in Los Angeles, and began manufacturing orifice fittings, orifice plates, and meter tubes for the oil industry. Not long afterward, the company expanded its product line to include the manufacture of piston-controlled check-valves, orifice flanges, and Simplex plate holders. By the end of the decade, Daniel was head of a thriving business.
When America entered World War II in December 1941, the U.S. government contracted major oil companies to provide gas and oil to operate the tanks, jeeps, trucks, and various other motorized equipment used by soldiers in both the European and Pacific theatres. The major oil companies like Texaco and Standard Oil, in turn, contracted smaller firms to keep the flow of oil running smoothly. The Daniel Orifice Fitting Company bene-fitted directly from these contracts. In fact, business expanded so rapidly that the company opened a small plant in Houston, hometown of the founder and owner.
By the war’s end, the Daniel Orifice Fitting Company had grown dramatically, and was poised to expand its manufacturing facilities and sales operations even further. Over the years, Paul Daniel had developed into a cautious but shrewd businessman, and he had grown to understand the value of expanding his company’s operations in a slow but methodical manner. Gradually, throughout the 1950s, the company increased the number of its employees, built new manufacturing plants across the United States, and opened numerous sales and marketing offices, primarily in the western and southwestern regions of the country.
Expansion During the 1960s and 1970s
By the mid-1960s, after Paul Daniel had left the active management of the company, the Daniel Orifice Fitting Company counted over 500 employees, five manufacturing plants located across the nation, ten sales offices, and 48 sales agency offices. In 1966, the board of directors decided to change the name of the company to Daniel Industries, Inc., in order to reflect the growing diversity of its product line and services.
The 1970s saw further expansion and growth for the company. Major acquisitions during this time included M&J Valve Company, an old and well-known firm that manufactured valves and gauges for the oil industry, and Oilfield Fabricating & Machine Company, one of the pre-eminent businesses in the supply of custom-made machine parts for oil and gas pipeline systems. In addition, management created a subsidiary named the Daniel Bolt Company, which was involved in the manufacture of products for oilfield machinery. Management also kept abreast of all the new developments in oilfield technology, and utilized innovations and new designs within the field to improve upon and expand the types of mechanical, electronic, and highly sophisticated computer-based products and systems the company was now producing. With the energy crisis at its peak during the mid- and late 1970s, and America determined to develop its own sources of energy in order to decrease dependence on foreign oil, Daniel Industries was at its high point.
Downturn During the 1980s and a Return to Basics
The most profitable period in the company’s history lasted for about ten years. When the energy crisis faded, and the price of oil went down drastically, the entire American oil industry was hit hard. By the end of the decade, energy companies in the gas and oil industry had lost over 370,000 jobs. Conservative estimates of job losses in the supporting industries were placed at over one million. Daniel Industries faced its first real crisis, and management decided to return to the basics. This meant liquidating inventories, reducing capacity, and eliminating jobs. At the same time, management rededicated itself to manufacturing fewer but higher quality products, streamlining manufacturing operations, encouraging innovative designs and product development, and improving customer service.
The most important development to come out of this difficult period was what became known as “partnership relationships” between Daniel Industries and both its customers and suppliers. A greater emphasis was placed on manufacturing quality products at competitive prices, with the common goal of minimizing total installation costs and operating expenses to the user. These partnership relationships were successful due to a number of strategic management innovations, including a material resource planning program, the use of computer numerical controlled machines and other highly specialized equipment, extensive employment of CAD/CAM systems, improved internal communications networks, and a new order-entry system.
Integral to the Company’s renewal and future are refo-cusing and redoubling efforts on natural gas markets. Daniel developed its well-earned reputation by providing high quality, technically advanced, reliable products and systems for natural gas markets. The Company’s focus will be to augment its reputation with even higher quality products, systems and services to satisfy the needs of customers.
The 1990s and Beyond
By the early 1990s, Daniel Industries had developed three main core businesses: metering, electronics, and pipeline valves. The core metering business included manufacture of the industry’s standard Senior Orifice Fitting, as well as gas turbine meters, and ultrasonic flow meters. As the company’s focus has shifted from liquid metering to value-added gas metering, management believed that the ultrasonic flow meter was the meter of the future for all gas pipeline systems. The electronics division, which became a part of the company’s metering business, focused on manufacturing items such as Daniel flow computers for the worldwide market. The company’s flow control valve business retained its traditional manufacturing role of producing gate valves for liquid pipeline systems. By the mid-1990s, the company had added a line of ball valves, as well as specialty control valves for use in gas pipelines and gas and liquid storage facilities.
During the early and mid-1990s, Daniel Industries made a commitment to expand its marketing worldwide as well as to increase its customer service locations internationally. A sales and service office was opened in Singapore in order to take advantage of one of the world’s fastest growing gas producing markets. A sales office was opened in Moscow with the purpose of cultivating the emerging natural gas markets in Russia. An office in London was established to provide direct communication links with customers and engineering companies conducting operations in the North Sea. A subsidiary was formed in Germany—Daniel Messtechnik GmbH—to provide the company with access to developing markets in Eastern Europe. Other major offices included locations in Saudi Arabia, Scotland, and The Netherlands.
In 1995, management at the company decided to implement a comprehensive reorganization strategy to make all of the company’s operations more effective, and to increase shareholder value. As the restructuring program successfully progressed, all of the assets of the company were sold to an investor group headed by Russell Ginn, a Houston-based entrepreneur. The change in ownership, however, did nothing to affect the expansion and growth of the company. In early 1996, the company purchased the Oilfield Fabricating & Machine Company and later in the year entered into an agreement with Framo Engineering AS of Norway to market and sell the Norwegian firm’s highly innovative multiphase flow metering system. At the same time, the company acquired Spectra-Tek International, and concluded an agreement with Cooper Cameron Corporation to license worldwide that firm’s geothermal gate valves and wellhead systems.
With its restructuring program completed, and with the financing to continue to develop new products and partnership arrangements, Daniel Industries was well poised to meet the challenges of the volatile oil and gas producing industry.
Daniel Automation Company; Daniel EN-FAB Systems, Inc.; Daniel Flow Products, Inc.; Daniel Industrial, Inc.; Daniel Valve Company; RBC Realty Inc.; Daniel Canada; Daniel Industries Ltd.; Daniel Messtechnik GmbH
“Daniel Industries,” The Oil and Gas Journal, August 7, 1995, p. 68.
“Daniel Industries,” The Wall Street Journal March 7, 1995, p. B2.
Fletcher, Sam, “Daniel Industries Sells Subsidiary,” The Oil Daily, June 26, 1995, p. 6.
——, “Management Buys Daniel En-Fab Systems from Parent Company for Undisclosed Price,” The Oil Daily, July 7, 1995, p. 2.
“Moorco Discloses Bid for Daniel Industries,” The Wall Street Journal, March 9, 1995, p. C15.