The revitalized oil industry seemed to possess an insatiable demand for a variety of manufactured products including piping, oil rigs, and new valves and instruments. Increased orders for new piping meant an increased demand for other piping products. Durga Agrawal established Piping Technology in 1978, just in time to take advantage of this furious activity in the petrochemical industry. By 1981, PT&P had begun to catch the crest of this wave of prosperity and saw the number of shop orders-per-year leap from 51 in 1978, to 819 three years later. But late in 1981, PT&P’s management—Durga Agrawal, Randy Bailey, and Terry McCormick—saw the signs of an approaching slowdown. The larger engineering and construction companies had stopped announcing major new jobs. Some had begun to furlough their employees, slowly at first, but the trickle soon grew into a flood of massive layoffs.
During 1980 and 1981, the national economy began to slide into one the worst declines since the Great Depression. Because Houston’s economy was stronger in 1981 than in any of the preceding twenty years, its abrupt decline in the spring of 1982 left most business and community leaders in shock. Increased world production of oil, conservation of energy spurred by higher prices, and a worldwide recession during the early 1980s changed the dynamics of the oil business by creating a worldwide oil glut. OPEC lost its power to set prices, domestic production dropped, and the economic incentive to drill, especially for high-cost oil, began to disappear. The result was a significant decline in the number of oil rigs actively used for drilling. With this decline came decreases in new orders for all types of oil field equipment and services. Within eighteen months, the Houston economy lost 100,000 jobs. The city once considered recession-proof soon saw its unemployment level exceed that of the entire nation. As a result, the ripple effects of the big downturn created havoc for businesses, for the financial community, and for the public sector. By 1986, Houston’s unemployment rate had climbed to 10.2 percent, while national unemployment stood at 6.9 percent. In manufacturing alone, the number of jobs plummeted by 33 percent from the 1982 peak. In fabricated metals, PT&P’s sector of the economy, the number of jobs dropped by 40 percent. In electronics, it fell by 43 percent, and in non-electrical machinery by 50 percent.
The cause of the sharp downturn in the Houston economy is more complex than simply oil prices. A regional economy like Houston’s is comprised of two segments: the primary sectors, which are often referred to as the economic base, and the secondary sectors. The businesses that make up the primary sectors are the driving force behind the economy and produce goods and service for export out of the region. The secondary economy, which provides goods and services to the local communities, relies upon the continued growth of the primary sector. Although there was some diversification—the development of the Texas Medical Center and NASA’s Johnson Space Center—Houston’s economic base depended upon the prosperity of one industry. The Greater Houston Partnership, an organization that grew out of the Chamber of Commerce’s efforts to bolster the economy, explained the problem in a 1989 report: “The fact that 84 percent of the area’s economic base is related to exploration of oil and natural gas and to the production of fossil fuel products mean that 84 percent of all employment is either directly or indirectly tied to these energy industries. Roughly 84 percent of all grocery clerks, auto mechanics, real estate agents, and schoolteachers owe their jobs to the energy sector. Without the energy sector Houston would be a city of about 500,000 only the third largest in Texas.5
When the oil boom began to break in the spring of 1982, the economic base stopped expanding and by 1985 had fallen into a prolonged period of severe contraction. Many small businesses in Houston, including a host of manufacturing and fabrication companies, had relied heavily upon the continued growth of the energy-dependent industries. When that growth stopped, the big petrochemical firms delayed or cancelled plans for new construction projects and plant upgrades. This left companies like PT&P that had based their futures on supplying their products for petrochemical plants, with no new business and very bleak prospects. If oil exploration had merely leveled off during the 1980s, Houston’s boom would have slowed substantially. Instead, U.S. exploration fell by almost one-half, devastating Houston’s economic base and spreading quickly to the secondary economy.
Houston’s boom and bust shaped the history of Piping Technology & Products in a dramatic way. Although the Bayou City had been one of the best locations in the nation in which to start a business, the sudden demise of the “boom” in 1982 should have meant disaster for PT&P. But this was not the case. In fact, when the economy began to bounce back in 1988, PT&P emerged from the malaise in position to take a leading role in the piping industry. The history of PT&P, then, is the story of how dedication, innovation, and determination enabled this company to overcome many obstacles, including the economic catastrophe that hit the city in 1982, to become one of Houston’s successful entrepreneurial endeavors.
This book is a chronicle of Piping Technology during its first twenty years. The story is told in six chapters dealing with important eras in the company’s history. First, the book provides brief background information about the company’s founder, Durga Agrawal, the origins of the firm as an engineering and consulting partnership, Stress Technology & Products, and the transformation into PT&P. Chapter two explores how Agrawal took advantage of the oil boom in Houston to turn his fledgling enterprise into a profitable manufacturing concern and introduced a new design for variable spring hangers that revolutionized the pipe support industry. In the third chapter, the book examines how PT&P survived Houston’s economic slump (1982-87) through aggressive marketing in new areas and through “intelligent diversification” into complementary areas of manufacturing including the acquisition of SWECO. Chapter four describes the move to PT&P’s present headquarters on Holmes road and the acquisition of equipment that allowed the firm to continue its diversification into cryogenic pipe support and expansion joint manufacturing. As the company continued to grow from a small business into an important supplier of piping products, the need arose for PT&P to modernize its information management systems, adopt standardized procedures, and upgrade many facets of its operations. Chapter five, then, looks at the development of the company’s in-house computer programs, the application of computer technology throughout the plant, and the evolution of other, more traditional management concepts. Finally, chapter six examines recent milestones in the company’s history.
Durga Agrawal assembled a ground of talented people to help him operate his company, and together they steered a course through the myriad obstacles they encountered during the early years of PT&P. Now, after its first twenty years, Piping Technology & Products stands as one of the leading manufacturers in the piping industry.
The Cullen College of Engineering at the University of Houston grew along with the
city of Houston, attracting students from all over the world. The building on the left,
completed in 1967, was a major addition of classrooms, offices and laboratories.
The World War II vintage metal building on the right was used for laboratories and
offices for graduate students.