Northwest Pipe Company is North America’s largest manufacturer of engineered steel water pipe systems. In February 2020, Northwest Pipe announced that it was acquiring Geneva Pipe Company, Inc., a concrete pipe and precast product manufacturer based in Utah. Branching out into concrete pipe and precast products will allow Northwest Pipe to grow its business in new markets and will provide a new source of revenue.
In this interview, Scott Montross, the president and CEO of Northwest Pipe, and Mike Wray, a Northwest Pipe vice president and the general manager of Geneva Pipe and Precast, explain how Northwest Pipe identified Geneva as a potential acquisition and explain how the acquisition stands to benefit Northwest Pipe in the years to come.
Municipal Water Leader: Please tell us about your backgrounds and how you came to be in your current positions.
Scott Montross: I grew up outside of Scranton, Pennsylvania, and got into the steel business after graduating from Colgate University about 32 years ago. I worked with companies such as National Steel, Mitsubishi’s international trading group, and Oregon Steel Mills. Ultimately, I had the chance about 9 years ago to come to Northwest Pipe.
Mike Wray: I was born and raised in Utah. I came to Northwest Pipe through its acquisition of Continental Pipe and have been here for the last 12 years.
Municipal Water Leader: Please tell us about Northwest Pipe.
Scott Montross: The company started in Clackamas, Oregon, outside Portland. It has been in business for 54 years. Over time, it grew to have manufacturing facilities for steel pressure water pipe spread all over the western United States. A gentleman named Bill Tagmyer became CEO of the company and built it up, continuing to add plants until it was active nationwide in the water transmission business and also had an energy tubular business. We had that energy tubular segment until the end of the first quarter of 2014, when we sold our oil country tubular goods business. We sold the last of our energy tubular plants in late 2017, at which point we became a pure water company. During that same time, the company’s water transmission business went through a multiyear period of much lower demand levels. As a result, the company went from approximately $525 million in revenue in 2012 to a low of $132.5 million in 2017. Since then, we have acquired the Ameron Water Transmission Group and Geneva Pipe and Precast, leading to revenue levels now approaching $300 million. The company has been reconfigured and is focused on maximizing our steel pressure pipe business and growing our concrete pipe and precast business.
Municipal Water Leader: What made acquiring Geneva Pipe an attractive option for you to pursue?
Scott Montross: The concrete pipe and precast business is relatively close to our legacy steel pressure pipe business, which made it a manageable integration. We had already acquired some concrete pipe manufacturing capabilities with the Ameron facilities, and they meshed well with the other water infrastructure products we manufacture. Mike Wray was a big part of figuring out what made sense for the company, and we ultimately decided that the concrete pipe and precast business would be a viable way to grow. This doesn’t mean we’re moving away from our steel water transmission pressure pipe products. Steel pressure pipe is still the core of our business. However, we have approximately half the U.S. manufacturing capacity in the steel pressure pipe segment of the water infrastructure business, making continued growth in that sector difficult. That’s why we looked to adjacent market segments as pathway for growth.
Mike Wray: We looked at quite a few businesses and industries, trying to find the right fit for Northwest Pipe. As we went through the process, we liked the concrete pipe and precast business. We thought that the markets were significantly bigger than those on the steel pressure pipe side. Geneva’s business seemed to match closely with the existing business, and we thought we could integrate its assets into our existing business fairly easily, enabling us to tap into those target markets.
Municipal Water Leader: In addition to precast pipe, are there other major products that Geneva manufactures?
Mike Wray: In addition to concrete pipe, Geneva Pipe manufactures manholes, box culverts, and other precast structures. We’re also working on some innovative sewer products using concrete as a base. That’s the bulk of the company’s business today.
Municipal Water Leader: What kinds of new clients can Northwest Pipe expect to gain from this acquisition?
Scott Montross: We’re still dealing with the same kind of customer base that we’ve had in the steel pressure pipe business, primarily construction contracting firms of varying sizes. The average order size in the precast business is significantly smaller than what we see on the steel pressure pipe side of Northwest Pipe, where we have projects that might include several thousand tons of pipe. There are many more small orders on the precast side, and the business is significantly more transactional. That was something that made it attractive to combine with our steel pressure pipe business.
Mike Wray: There are more subcontractors as customers on the precast side, whereas in steel pipe we are usually dealing directly with general contractors. Many of the customers on the precast side are excavating subcontractors who focus on residential communities and smaller storm water projects, as opposed to larger public projects.
Municipal Water Leader: How does this acquisition support Northwest Pipe’s overall growth strategy?
Scott Montross: Northwest’s growth strategy is two pronged. The first thing we wanted to do was stabilize our position in the steel water transmission pressure pipe business and make sure that we were doing the things we could control: reducing costs, improving margins, and doing everything we could to provide better shareholder value. The second prong, since we had significant market share in the steel pressure pipe business already, was to look at adjacent water spaces that might have better growth opportunities. The market size for steel pressure pipe is $450–600 million, whereas the market size for water-related precast concrete products is $3.5–4 billion. That was attractive. Geneva had good, solid margin profiles and good cash flow. We have had a strong focus on continuing to improve our cash flow.
Municipal Water Leader: Is Geneva going to remain its own unit within Northwest, or will it be merged into the overall company?
Scott Montross: It is now called Geneva Pipe and Precast, a Northwest Pipe Company. Especially in regional markets, the Geneva name is strong and has tradition behind it, and we don’t want to lose that, but we also want to make clear that it is part of Northwest Pipe.
Municipal Water Leader: What kind of changes do you anticipate occurring at Geneva, both in manufacturing and in its product offerings?
Mike Wray: On the manufacturing side, we like what Geneva has done with the business. It is a strong player. We don’t anticipate making transformative production changes other than providing additional capital for new equipment and helping build a strong safety culture, building on what Geneva has already done. We also have additional resources at our legacy Northwest Pipe plants that we can use to help boost Geneva in local markets. In some cases, we can use the Geneva management team and its expertise to enhance product offerings at our other locations. Additionally, we’re looking at a couple of innovative sanitary sewer products that we believe will address current needs in the market.
Municipal Water Leader: What kinds of projects do you anticipate pursuing with your new capacity?
Mike Wray: We’ll continue to pursue the same types of projects Northwest Pipe has in the past, using our combined resources and new geographic locations to explore available opportunities. We’ll also continue to look at all the typical projects you would expect to see out of a precast business like Geneva, including roadwork projects, residential development projects, commercial development projects, and everything in between.
Municipal Water Leader: What is your vision for the future?
Mike Wray: We’re really excited about our possibilities, both in broader reinforced concrete pipe and precast and with Geneva Pipe. Geneva has a strong legacy that we can build on, and we’re looking forward to a prosperous future.
Scott Montross: In less than 2 years, we’ve had two major acquisitions and have driven significant turnaround in the business. We expect to continue to do the things that it takes to grow the business and drive not only additional shareholder value but stakeholder value as well. We are excited about the growth opportunities that we see in front of us.
Scott Montross is the president and CEO of Northwest Pipe Company. Mike Wray is a vice president of Northwest Pipe Company and the general manager of Geneva Pipe. For more information about Northwest Pipe, visit www.nwpipe.com.