Owner Corey Mays is leveraging automation at his welding and machine shop in the Permian Basin with a focus on prefabricated pipe-racking systems for produced water.
While attending San Angelo State University, Mays started a mobile welding business that grew into CM Welding & Machine following his post-graduation move back to his hometown of Midland.
“The business concept I created inadvertently was to try to go after the work nobody wanted,” says Mays. “Because of the nature of where we were at, I did a lot of pipeline maintenance and lots of other industries — farm, agricultural, stuff like that.”
That led to projects that dealt with produced water — the water pumped out of a well along with crude oil — and the resulting expertise led to a product line of prefabricated pipe-racking systems for not just drillers but municipalities and utilities as well.
“With oil and gas, produced water is the unspoken problem that everybody has,” says Mays. “We have a lot of stainless-steel, duplex, engineered products to help that particular sector of oil and gas out.”
That line now represents about half of CM Welding’s business. Mays says he knew from his experience in mobile welding that prefabrication was going to result in savings. “When you start out building all this stuff off of a truck out in the field in all the conditions, I started really thinking that there’s got to be a lot better ways to do all this stuff,” he says.
And that applies doubly to offshore wells. “Obviously, you can’t do all of that out in the ocean other than assembly,” says Mays. “We started working on pre-engineered systems where we could prefabricate 99 percent of it in the shop, ship it out, and put it together like a big Lego set. You remove a lot of the onsite personnel off the location and put them in the shop where you have a controlled environment.”
The end result is about 30 to 40 percent lower prices compared to pipe-racking systems built in the field. “It just took off and ran in oil and gas,” says Mays. “When you put those packages together, you give your end user pretty much an exact dollar amount, but if you’re doing it out in the field, you’ve got a variable cost based on day rates and how many crews you’re going to have out there. It’s always a moving target.”
The other half of CM Welding & Machine’s work ranges from small CNC jobs to fabricating chassis for electric vehicles (EVs).
Mays put in a machine shop early in his company’s existence to shorten lead times. “We were always having to wait on our components, so I just brought that in-house,” he says. “It’s one more thing we just taught ourselves to do, and just kept growing it from there.”
The shop has enjoyed an increasingly big boost from investments in automation. “Sticking with our business model, inevitably, we get jobs in here where we have large quantities and what I call ‘widget welding,'” says Mays. ” Lots and lots of different things that are all similar. It just ends up being really monotonous.”
And the company’s welders usually try to avoid it, he adds, for that very reason. “They thrive off being challenged, so when you put a pile of brackets in front of them, it’s just a killer.”
To that end, CM Welding bought the fourth robotic welding system made by Colorado-based Vectis Automation in 2019. “We had a FANUC robotic cell already, but it’s really geared towards big, heavy, high-production type work for high-pressure components that we build,” says Mays. With Vectis, “I liked the ability to set it up on something different quickly, so if we run into a high-mix, low-volume type job, it fits right in that area. But if you do have high volume, you’re able to do that easily as well.”
Buying the Vectis cobot was not just about return on investment — which came in a mere three months — but versatility “to alleviate some bottlenecks,” Mays says. “We do a lot of high volumes, but we also do a lot of high-mix type stuff, so it’s got to be pretty flexible.”
However, automation needs a strategy and logistics to go with it or it can go the other way. “You can go overboard on the automation,” says Mays. “It’s definitely a double-edged sword. You’ve got to be very strategic about it.”
Aside from 2020, CM Welding has grown every year it’s been in business, says Mays. The company saw about 20 percent growth in 2021 and he forecasts 2022 will exceed pre-pandemic levels. “Once we weathered the storm there, we got back to rolling,” he says.
Diversification has helped stabilize the curve. “Oil and gas is a wild roller coaster,” says Mays. “The first slowdown we went through, three to four years in when I started the business, that was really an eye-opener to say, ‘Hey, we’ve got to get into some other industries and not have all our eggs in one basket.'”
Challenges: “I would say personnel is the big problem, and education of that personnel,” says Mays. “We self-educate, just because of the nature of what we do. I haven’t found anybody in 20 years that can just walk in off the street, step in there, and do what we’re doing. We have to teach everybody that comes in our process and procedures.”
He adds, “We’ve really found it’s harder for the experienced guys to pick up what we’re doing. That’s one of the reasons we try to go after people coming right out of college or high school. The turnover rate is a little bit higher, just because some work ethics aren’t what they should be, but when we do, we have more success than we do getting rid of 20 years of bad habits.”
Opportunities: “Oil and gas, primarily,” says Mays, citing work on projects with TankLogix dealing with ultrasonic detection of emissions. “There’s a lot of product lines that have potential to be really successful, where in the previous years, most operators didn’t consider spending any capital, much less any research capital, on developing product lines in these areas.”
But the bread and butter — prefab pipe-racking systems for operators from the Permian Basin to the Bakken Formation — remains the foundation of the business: “Produced water is always going to be a big deal. If you have a 900-barrel-a-day well come in, 30 to 40 percent of that’s going to be produced water — saltwater and stuff coming with it. You’ve got to do something with it, whether you recycle it or inject it, you’ve still got to do something with it. There’s a wave of produced water coming, and the interesting thing about produced water is, it doesn’t matter how busy oil and gas is on the drilling side, it’s still going to be there and you’ve got to do something with it.”
Needs: Beyond two to five more employees in 2022, CM Welding also needs more space. Mays says he’d like to expand from his current 15,000-square-foot facility to at least 50,000 square feet with a designated area for third-party non-destructive testing.
“If we continue on that growth trend, we’re going to need to expand,” he says. “There’s a lot of good properties that are really close, but there’s always the caveat when you’re out here: Because of oil and gas, a lot of the real estate is pretty expensive.”