RERMAG

The Pump Channel

The late 1990s was a time of dramatic change for Thompson Pump, as it was for almost everybody in the rental industry. A manufacturer of high-end pumps that sells through distribution and rents directly to the end user, Thompson suddenly watched its distribution network shrink from 46 distributors to about a dozen, as those distributors and rental companies were acquired by consolidators. So much pump knowledge and dedication to that product segment was no longer a part of Thompson's suddenly fragile network.

What is a manufacturer, whose unique, complex products demand focused attention from distributors, to do? For Thompson Pump, the answer was a more concentrated effort to expand its factory-owned rental network. Thompson's pumps — wet and dry prime pumps, hydraulic submersible units, diaphragm pumps, rotary wellpoint units and high pressure jet pumps — are not commodities that can be easily sold or rented by just anyone as part of an inventory of dozens or hundreds of products. The typical Thompson Pump rental customer is a pumping contractor who specializes in complex applications, on projects beyond the expertise of most general rental companies that handle pumps. In fact, Thompson rental customers often are those very rental companies whose personnel know they need professional pumping expertise to make an application work.

Faced with the need to grow its own rental distribution channel, Thompson Pump took a look at its strategic focus. One of its moves was to bring in former Wacker Corp. marketing manager Brad Fine. Working closely with CEO Bill Thompson, Thompson's son Chris Thompson and vice presidents Dale Conway, John Farrell, Doug French, Shawn Mackey and Majid Tavakoli. Fine helped craft a marketing strategy that involved expanding the company's distribution channel on a national level and refocusing distribution on the Thompson product.

“We decided we had to expand and make every sales territory look like each other,” explains Fine. “We also had to be closer to the customer. We couldn't rely on distribution channels to represent us anymore. We needed to grow our own internal distribution and branches to ensure the relationship with the end user. We needed to find a way to not just live with distribution, but bring it into the fold. We wanted our distribution to do more than represent us; it had to be a partner.”

Developing a unified distribution was no small undertaking, since the company wasn't equipped to set up branches in every metropolitan area. “For every geographic area we were going to market in, we needed to find distribution that could cover all the applications we wanted to pursue, no matter what the channel,” says Fine. “So we needed to develop partners within geographic areas. If we had a branch and a distributor within, say, 100 miles of each other, but with a working agreement about how to divide the territory geographically or by application, how to re-rent or share equipment, we could find ways to make it work.”

While the expansion of the distribution level is still a project in process, the early returns are in. The result has been growing revenue from $25 million to $35 million last year and a goal of $40 million for this year and $50 million before 2008, a goal company management now expects to reach more quickly. And, Fine says, the territories are looking more like each other every day.

As the company reorganized, it also decided to focus more on the construction and public works markets instead of trying to capture every market available.

“The company reached a crossroads,” Fine says. “The core business was wellpoint and general dewatering of construction and public works projects, and obviously sewer lines are a big target both because of pumping sewage and because of the digging that takes place to lay the pipe. So that and typical construction projects were the focuses of the company, but over the years they picked up some industrial jobs, the occasional petrochemical job, mining jobs and some others. We started doing some strategic planning and we got to the point where we decided to focus first on construction and public works and then pursue the other business, because we don't have the coverage and resources to do everything yet. So we decided to stay focused on what we do best. We'll still get some of the other business, but this is where we'll make our investment.”

The rental industry itself is an important customer for Thompson Pump. Rental companies buy a lot of pumps from Thompson, especially 6-inch dewatering pumps. United Rentals and Cat Rental Stores, for example, are regular Thompson customers and like other rental companies, do a good bit of re-renting from Thompson. “Rental companies call on our guys for expertise and for shared rental and they do that on a regular basis,” says Fine.

Although Thompson Pump locations can handle jobs such as home-owners pumping out their basement after a leak or dewatering a hole after a rain, those types of quick emergency jobs can usually be handled more easily by most general rental centers.

While pumping applications are far more complex than in the past, and often are negotiated months in advance, especially on bypass jobs, Thompson rental staff still deal with emergency dewatering jobs where people call or just send trucks in need of immediate service.

“But a lot of other jobs really require pumping expertise, especially in markets such as Florida, Mid-Atlantic and the Gulf Coast,” Fine says. Thompson's pumps and personnel have been involved in some of the most challenging pump applications around, such as the pumping of millions of gallons of water after the terrorist attacks on the World Trade Center in New York, the cleaning of an oil spill in Alaska, raising a submarine in the Atlantic, moving an east coast lighthouse, fighting fires in the western United States, controlling floods in the Midwest and irrigation projects in Africa.

For Thompson, being in the rental business and selling to the rental market doesn't create a conflict because of the specialized nature of its equipment. “The typical Cat pump rental customer, for example, is probably not our customer,” says Fine. “His primary application is going to be some kind of other construction activity. It might be excavation; it might be building. Pumping is something he does on the side when work on a project requires it. Two thirds of our customer base is dewatering contractors and pipeline contractors.”

Another strong growth area that Thompson specializes in is bypass work, which involves redirecting sewage where there is an installation or repair project going on in the sewer line and the sewage needs to be bypassed from that work area.

Thompson Pump CEO Bill Thompson has, from the early days of the company, seen harmonious relationships with rental companies as a major component in his company's approach to market.

“We have proven that we can work with people as partners and manage any potential conflict,” says Thompson. “We are more focused on advanced dewatering, on technical aspects of a project, while most rental companies are into what I would call more general dewatering. We have structured support systems to work with rental companies, to provide equipment on a re-rental basis, so they don't have to make investment in areas that would provide low utilization. We work with rental companies and dealers, and we are capable of structuring situations to make them beneficial to both sides.”

To Thompson, it's all a matter of attitude and approach. “We don't see rental companies as competitors,” he says. “Some rental companies saw us as competitors when we started because they had not experienced a relationship with a manufacturer that tried to create such a cooperative relationship.”

Rental companies sometimes provide the pathway for Thompson Pump to gain a foothold in a particular market area. For example, Thompson opened a branch in Providence, R.I., last year, where a general equipment company that serviced Providence and the Boston market partnered with Thompson by referring advanced and complex pump business to Thompson, which, in turn, passed along opportunities that were more applicable for a general rental outfit.

“We've had people approach us because of how we work with our distributors,” says Fine. “I'm not talking about the classic distributor model but somebody that rents, service, does field service and sells.”

In another creative marketing development, Thompson recently signed a partnership agreement with Swedish firm ITT Flygt, one of the world's leading suppliers of electrical submersible pumps. Flygt is enhancing its position as a supplier of liquid-handling solutions by adding dewatering service outlets to its distribution. To complete Flygt needs for a rental fleet, Thompson will supply two exclusive models and provide access to the entire Thompson engine-driven line.

The agreement will provide some marketing synergies where shared distributors (such as Sander Power in the Philadelphia area, Hydraserve in Indiana and Northern Dewatering in the Upper Midwest) and Flygt direct distribution can benefit by having access to both product lines and dewatering expertise.

Origins in Orange

Thompson Pump was founded in Port Orange, Fla., in 1970. Florida was the perfect place to start a pump solutions company. “It's the largest pump market in the country,” says Fine. “You can't dig a sandbox without hitting water.”

A tinkerer who already had extensive experience in the pump and dewatering industries and had worked on numerous large projects, George Thompson founded the company in 1970 with his sons Bill and George Jr. He continued to invent and patent innovative pump products. His Vacuum Underdrain pipe, for example, was used to make shallow dewatering more efficient. During the company's early years, Thompson Pump manufactured and introduced lines of dry prime trash pumps, high pressure jet pumps, and diaphragm pumps.

In 1973, Thompson adapted the rotary pump to the dewatering industry for the first time. The rotary pump was efficient at wellpoint dewatering, propelling Thompson Pump to a strong position in that market, which the company still maintains. In 1977, the company began to produce vacuum-assisted pumps, which allowed standard pumps to prime without filling the pump with water first, and to reach higher heads for demanding applications. The company became more self-sufficient from a manufacturing and customer service standpoint by adding inhouse components and parts manufacturing.

Thompson continued to innovate over the years. It added the FilterVac pipe in 1994, and dry prime pumps with compressor-assisted priming systems. In 2001, the company added a line of piston wellpoint pumps, which quickly became an excellent rental revenue producer.

In 1998, Thompson introduced its sound-attenuated “Silent Knight” pumps with a noise-suppressing enclosure. Demand for sound attenuation for all of Thompson's pumps continue to grow, to the point where, Fine says, the company hopes to provide sound enclosures for about 60 percent of its fleet within a year, up from its current 15 percent.

After establishing the company in Port Orange, Thompson began expanding, opening its first branch outside of Florida in Goldsboro, N.C., in 1975, and Florence, Miss., in 1978, to take advantage of major projects with the city of Jackson. Thompson moved northward to Chesapeake, Va., in 1982; Pensacola, Fla., in 1983 to cover the Florida panhandle region; expansion to Ravenel, S.C., in 1984 gave the company a stronger presence in the Carolinas. The company expanded further into coastal Florida by opening branches in Sarasota in 1986 and West Palm Beach in 1989.

Unlike some manufacturers that decided to get involved in ownership of a portion of the rental channel, Thompson Pump started out as a rental company, and rental service still accounts for about 80 percent of its revenue. Although George Thompson was an inventor, Thompson Pump was essentially a rental company that went into manufacturing to produce the products it needed.

“We began in the rental business and got into manufacturing soon after when we saw that a lot of the products that were being utilized were not sufficient for the projects they were asked to perform,” says Bill Thompson. “That's why we developed the rotary pump. We were first to introduce it for wellpoint dewatering. Previously, rotary pumps were used to pump viscuous liquids, but not for pumping groundwater or water with a certain amount of solids. Pumping through wellpoint filters, it is excellent for dewatering.”

Because of its rental background, Thompson Pump approached manufacturing with a different philosophy than most manufacturers.

“Coming from our rental roots and moving into manufacturing, we had a different perspective than manufacturers that primarily produced a product and then tried to sell it to rental companies,” Thompson says. “We began by using it ourselves directly contracting jobs, and renting to contractors. We saw what some of the features needed in equipment are, we saw what features were needed on pumps to be serviced and repaired economically, we saw what features were required to have endurance on the job site. We designed with those concepts in mind. Some build a product and then try to convince the customers that they need it. We know what they need through experience.”

While Thompson Pump initially got started in manufacturing so it could make the products its staff thought would be effective on the jobsite and continued to grow its manufacturing capability so it could supply itself, now the ongoing development of new products is part of the company's way of doing business.

“We spend a lot on research and development,” explains Bill Thompson. “Fifty percent of the products that are our mainline products, we did not even have five to seven years ago. The credit for that goes to Dale Conway, our VP of engineering, and his staff.”

The R&D budget will serve the company well in the future as opportunities continue to expand in the growing market. “It's a niche market type of business, but there are so many opportunities for pumping applications,” says Thompson. “There are new technologies like directional drilling, micro-tunneling, even sliplining of pipe. Those technologies open opportunities for bypasses that you could not do before.”

Rental nerve center

With 17 Thompson Pump dedicated rental branches and about 50 total distributor locations, rentals are coordinated around the country on local and regional levels. But the true nerve center of Thompson Pump's rental operation is a small office shared by Bob Castello, operations and production manager, a 29-year veteran of Thompson pump, and 8-year Thompson veteran Bob Donovan, rental manager.

“The Bobs,” as they are sometimes called, coordinate and manage everything from manufacturing to moving pumps in and out of trade shows, supporting the needs of rental operations in various branches and actually running the rental operations.

Although a rental coordinator's job should never be limited to simple order-taking, dealing with the specialized pump applications that Thompson Pump does requires particular expertise.

“In the past we would take orders over the phone, we would work with job superintendents who knew more back then because we rented just a few models of pumps,” Castello says. “They knew exactly what went with the pump, they knew the job they had to do. But now we're getting all these specialty jobs where the contractor is relying more on us as the renter to tell him what equipment he needs for the job and how he's going to do the job. In the past it would take maybe a half hour to handle an order. Now the process might take days or even weeks and we have inhouse engineers that go out to set up the jobs. We're in the configuration end of it now as well.

“With each different pump goes different equipment and accessories such as well-point springs, fittings, couplings, jetting systems, bypass equipment, discharge pipe, hoses and a whole variety of other items. A lot of the contractors we deal with are not familiar with all these variations. So they rely on us.” A lot of the help they get on application, installation and trouble-shooting issues comes from Bill Crooms, national service manager for Thompson. Crooms has been with the company for 30 years and has seen almost everything.

In recent years, Thompson Pump has greatly increased its involvement in bypass work, for which the ability to engineer jobs is particularly important.

“A lot of the contractors we deal with don't do a lot of bypass work and they don't know much about it, but they're still bidding the jobs,” says Castello. “When they get the jobs, we go and engineer the jobs for them. Our VP of applied products Majid Tavakoli has constantly been adding resources to our application engineering capacity. And Majid himself will visit any job and propose application solutions.”

Under Crooms, Thompson has also expanded its service department. While in the past, the customer was responsible for maintaining and servicing the equipment, now the company often sends service technicians to jobs every two weeks. “We put a lot of money into that just to save wear and tear on the equipment,” says Donovan. “In the past it was up to the customer and then we'd still have to inspect and bring the pumps to rental-ready condition.”

With jobs all over North America, Thompson personnel often fly to jobsites, for engineering, set-up as well as service. And with some highly specialized pumps costing $100,000 or more, the logistical coordination can be demanding. Thompson also has to coordinate the disinfecting of pumps and equipment coming from jobsites in sewage or toxic waste applications.

Pumpology® 101

Obviously not everybody that Thompson Pump hires is an engineer, and with the company on the fast-growth track and a lot of new people coming on board, a steep learning curve is necessary to offer the level of specialized service the company offers. Thompson does look for staff with experience in the pump industry, and in recent years has particularly sought people with experience in bypass applications since the company has specialized in wellpoint and dewatering work in the past. It has developed what it calls “Pumpology®” schools, three- to four-day workshops which include classroom training, shop trouble-shooting and onhand demonstrations. Thompson trains its own staff and those of distributors as well.

Thompson has an engineering department dedicated to the specking of jobs. But the engineering group is far from a passive participant that sits back and waits for the sales staff to direct it. On the contrary, the engineering group is an aggressive proactive participant in the marketing process, closely following Dodge Reports to see what upcoming work would be likely to require wellpoint or bypass dewatering or other pump applications. It then does a preliminary job walk looking for potential hazards such as buildings, manhole locations, and street crossings to determine the best place to run the piping, and then looks at contractors proposals, and contacts bidders, offering Thompson's solutions.

The proposals go out to bid and if Thompson is chosen by the contractor who is awarded the job, Thompson representatives will do another job walk with construction company representatives. Then they re-work the plans, if necessary and send out teams to supervise pump installation. On some jobs, Thompson even sends out installation crews to install the equipment, and Thompson personnel is often employed on 24-hour pump watch or in other ongoing consulting capacities.

Thompson Pump grew significantly during the recession years, with a 12 percent revenue uptick in 2002 over 2001, leaping to 30 percent in 2003. With $25 million in rental volume, Thompson Pump is No. 43 on the RER 100. Thompson has grown its logistics capability, expanded to new branches, grown its distribution and rental capability, expanded its service capability and is poised for a period of even more rapid growth. And Bill Thompson is a strong believer that contractors will continue to increase their interest in rental as the most practical solution to their challenges.

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