After years of working in the Engineering Department, Richard Hodgson made a career switch to procurement, and became a subject matter expert (SME) in his field. By working with a wide range of clients and projects he has gained a unique outlook on the LNG industry.
Hose + Coupling World had the opportunity to speak with Hodgson about his experience as an engineer and a procurement manager at a major engineering, procurement & construction (EPC) company, and discuss his thoughts on the future of the industry.
By Brittani Schroeder, Sarah Bradley and Angelica Pajkovic
Richard Hodgson did not always know he wanted to be in the oil and gas industry. After attending Baylor University in Texas for a mathematics degree, he began working part time as a pipe fitter’s assistant and that is where he got his start in the engineering world. “When I finished college I knew I did not want to teach math. I contacted a few of my friends and they got me a job in material control and engineering where I learned how to take off pipe fittings, flanges, and valves. Eventually I evolved on the engineering side and moved over to working with an engineering firm,” Hodgson related.
In 1995, Hodgson made a move away from the Engineering Department. As his company believed it would make sense to have people purchasing materials who had experience with the components they were buying, it selected a few people out of engineering, including Hodgson, and placed them into procurement. “They now call me a subject matter expert because I have been working in this industry for almost four decades,” Hodgson continued.
A Day in Procurement
After nearly four decades in the business, Hodgson reflects on his career as Commodities Manager for pipes, valves, fittings and spool fabrication in the EPC space. He was the main point of contact when the company was trying to win a project bid, and was responsible for helping source products globally. “Other colleagues would come to me and ask who they should consider for pricing in order to win the project. Once the EPC won the project, the process would begin all over again to get those products for the client,” Hodgson explained. Another aspect to Hodgson’s role was to keep track of the performance of the chosen vendors. “If a vendor had fallen behind in their schedule it was my job to make sure the other vendors were aware of this schedule change. It is a performance issue and it could hold up the rest of the process, so I needed to be there and in-the-know to keep everyone else up to date,” he continued.
Hodgson also reviewed his team’s strategies for each project bid to make sure it would run smoothly. “Are they going to do their spool fabrications in Turkey? Are they going to do their module fabrication in Thailand? If the project is in the United States, is European sourcing for products still considered? These were the types of questions I had to ask.” As Hodgson later explained, a spool fabrication is the pre-assembly of pipe fittings in a very specific configuration that is only applicable to one specific location in a facility. After the pipe spool fabrication process is complete, the module fabrication is next. This is where the steel is already built, and the preassembled spools are then put into the module and shipped altogether to the job site. Ultimately, Hodgson had a lot of questions and logistics that he needed to go over as they planned for each project bid.
Expert in the Making
After 36 years in the industry, Hodgson is certainly a subject matter expert. “Being an expert in my role and in the industry was probably my favorite part of my job,” he said. “I spent 15 years in engineering, and then I moved into procurement. I was in that role for over 20 years.” Having been in the role for such a long time, Hodgson gained vital experience and made a name for himself in the industry.
The added bonus of his experience with engineering and procurement is that Hodgson knows what should be purchased for each project. “A lot of buyers receive requisitions from the engineering department, and will purchase the products without a second glance. My past experience in engineering enabled me to help the engineering team ensure they were ordering the right products.” Hodgson has also came across parts requisitions that were incorrect for both the project, and the manufacturer. “It is not something you can teach – you just learn through doing it. A project may need a lot of check valves, and so the engineers will throw them all on to one requisition thinking that every check valve manufacturer is the same. In reality, there are two different check valve markets and they work very differently,” Hodgson said.
His experience has also given Hodgson the ability to ‘see through the smoke’. As he explained, “Sometimes vendors will give certain reasons for being behind schedule that are unrealistic, and having my previous experience allows me to know when I am not being told the truth.”
It was early in his career that Richard Hodgson discovered his biggest challenge: project schedules. “EPCs commit to compressed schedules for their clients, because getting the plant ready and online producing and delivering gas is the most important thing. That importance outweighs all the competitive bidding. If the EPC is late, then they are costing their client,” said Hodgson. After he agreed to a schedule, Hodgson would do everything in his power to make sure they stuck to that schedule.
Trying to predict whether a client will choose their company’s bid for a project was always a little tricky. “If a typical EPC team is confident that the client would choose them, they could order parts ahead of time to cut down extended lead times. If there was the chance that the client would not choose their bid, however, and the parts have already been ordered then there may be a surplus – and no one wants that,” he explained. Extended lead times go hand-in-hand with Hodgson’s biggest challenge of scheduling and timing.
Greenfield vs. Brownfield
Hodgson and his team would work on several projects at a time, and they were mostly greenfield projects. A greenfield project is a project which the company starts from scratch; they create a bid, and see the project all the way through to the end of construction when the plant is up and running.
A brownfield project is, alternatively, any project where the company is expanding on an already-standing plant. For a typical greenfield project, he and his team would source a number of hose and fittings as well as nearly 30,000 valves for the client. For LNG facilities, Hodgson would source ball valves and butterfly valves. For the refineries and chemical plants, he looked more for gate valves, globe valves, and check valves.
One of the biggest qualities that Hodgson looked for when sourcing vendors for projects is their ability to stick to a schedule. If the vendor has a record of staying on schedule for most – if not all – projects, then they are more likely to be chosen for the project over a vendor who has been late on several occasions. “EPCs need vendors to stick to their promises, not only on meeting schedules, but also on pricing. They need to hold their pricing firm. It is understandable if things outside their circle of influence happens to them and it affects their price, but the EPC also tries to write it into their contracts that if their price goes up or down, so does the EPC’s pricing. It needs to remain as fair as possible for both parties,” Hodgson explained.
A Range of Materials
Hodgson has a lot of experience sourcing a wide range of materials for the various projects he has worked on. When he worked on refineries, where parts are held at higher temperatures, more chrome materials are required. When working on LNG projects and with acids and corrosive applications, he always worked with 316 and 304 stainless steels. “I was working on a fertilizer plant project and they required some stainless steels that had special treatments applied to them, and there was only one company that had the patent for them,” said Hodgson. “Sometimes that can be a real issue – if there is only one person in the world that holds that patent and suddenly they do not start honoring their deal, there is nowhere to go and there is nothing the EPC team can do to get that product.” Hodgson went on to further describe the special requirements needed for LNG projects. Carbon steel can go down to -20˚F, and if impact tested it could be brought down to -50˚F, but below that it would need to be stainless steel. “When we get into valves for LNG plants, they need to be cryogenically tested, and that adds about four weeks to the timeline when looking at it from the procurement perspective,” said Hodgson.
The Science of Hoses
When asked about his experience with hoses, Richard Hodgson said that “hoses are a science into itself.” In explanation, he spoke of the varieties of materials, connections, and couplings there are in the hose industry. “The catalog for hose products is very thick and does not even scratch the surface.” In Hodgson’s experience, he finds that most clients he has worked with prefer quick disconnect hoses. “If the project is brownfield, a lot of clients will have a strong preference for the type of hose used at their facility. They will want it to match what they were using before, or what is used in the rest of the facility. That takes a bit of the guesswork out of the project. But if it is a greenfield project, then the EPC get to make suggestions for a wide range of hoses.” Hodgson also explained why flexible hoses are used at most docks for pumping gas into cargo ships. “We will use a flexible hose in that situation because of the possible vibration. If there is going to be a lot of vibration from the equipment, it is possible that hard piping is just going to move too much,” Hodgson said. “In that case, we will use a flexible hose to address that movement.” By using a hose instead of a pipe, they are not jeopardizing the welds in place and the flanges, and will not put anything out of alignment.”
Each utility station may also require a different type of hose. “Say there are 500 utility stations in the facility, and some will have air running through them, whereas others may have water, steam, or nitrogen moving through. Each of those utility stations will need to have hoses specifically made to handle the one substance that is moving through it,” explained Hodgson. What does this mean? A lot of different hoses need to be sourced for a greenfield project.
Words of Wisdom
The loss of knowledge and lack of knowledge transfer has become a bigger issue in the industry as of late and Hodgson certainly thinks of it as concern. “Companies are making sure to consistently add new recruits from schools to make sure that there will not be a huge knowledge loss when the older employees start retiring,” Hodgson related. “The important thing is that we start passing on the knowledge now, so that when people do retire, we are not losing that valuable information.”
If given the chance, Hodgson would tell a new graduate to be patient. “Just because you may be doing the same thing for a whole year does not mean you are failing in the company. It just means that the opportunities are slow in this industry,” he said. “The people higher up in your company will still see everything you do and will appreciate the job you do.” Hodgson regrets to say that new engineers get tired and frustrated if they have not moved up through the ranks to VP within their first four years on the job. “Unfortunately, it does not work like that in our industry. Things happen slowly, but when they do happen, they are worth it.”
Hodgson ultimately wants to urge younger employees to be patient in their first few years. “New engineers need to be able to admit when they do not know something. If they cannot admit that, then they will never learn what they need to,” said Hodgson. He went on to explain that younger engineers should be aggressively pursuing people who know how to do many things, and they should be asking those people a lot of questions. “Those people are going to be really busy and they will try to put you off, but you need to find a way to learn as much as possible from them.”