Winner, Manufacturing and Distribution
When Jim Nixon was looking for a management buy-in opportunity in 1997, he was presented with a prospect from a small, relatively unknown bit business — Varel Manufacturing Co.
The company, now called Varel International, had been around since 1948 and was a low-cost supplier focused primarily on the mining and industrial bit market.
At first, Nixon wasn’t interested. But he was urged to take a second look.
“I began to notice islands of excellence existing in this otherwise chaotic company,” he says. … “My opportunity was this poor reputation, quality issues and the lack of direction. Without these key issues, there would not have been a catalyst for Varel’s success.”
Nixon set out to turn Varel into a major player. It was a lofty goal considering that, at the time, the bit business consisted of only four major players, each of which were supported by oil and gas service companies and possessed established infrastructures with research and development funding.
But Nixon was undeterred. He invested heavily in three areas: company infrastructure, emerging technologies and people. Then, in 2003, he rolled out an initiative designed to take the company to the next level.
“I set forth what we deemed at the time as the ‘Varel Rally Cry,’ which called for multiple initiatives to improve Varel’s standing in the market,” Nixon says. “We knew that as the only independent drill bit provider that we had to set our small company to operate in every way like a major player in the game.”
Varel added product lines and services, including PDC drill bits (now the major drill bit mechanism in the oil and gas market), which added value to the company’s offerings. And in 2000, Nixon made an acquisition that netted him a team of software engineers and expertise that he quickly parlayed into a stronger position for Varel as a technology leader in the marketplace.
Nixon also diversified the company’s geographic footprint and built small footholds in markets throughout the world.
By 2008, 10 years after Nixon bought in and took over as president and CEO, Varel has grown 800 percent larger in revenue and enterprise value than it was.
How to reach: Varel International, www.varelintl.com
