February 2017, Vol. 244, No. 2

Features

Arnett & Burgess Pipelines: Growing Up in the Business

The founders of Arnett & Burgess Pipelines (A&B), Les Arnett and Ray Burgess, met while building some of the first oil infrastructure in the Western Canadian Sedimentary Basin for Flint Energy. This came after Flint came to Canada to work with Shell after it discovered oil in Leduc in 1947.

Arnett, a graduate of the University of Saskatchewan, was an accountant and excelled as a young professional to become a senior finance manager in the 1950s. At the time, Burgess was a hard-working welder. He met Arnett while working in the pipeline patch – a friendship developed and conversations of starting a company ensued.

On Feb. 17, 1957 the pair founded Arnett & Burgess Pipeliners (A&B), based on a strategy of delivering robust customer service and end-value solutions to an infant oil and gas exploration industry. Although Burgess sold his business interest to Arnett in 1969 to pursue a pipeline opportunity in Australia, his descendants continue to be aplenty in the pipeline industry.

A&B’s first job was in Bellshill Lake, south of Sedgewick, AB, for the installation of 3-inch pipeline. They began by doing work for clients evolving into major integrated energy companies. The majority of A&B’s projects during its first few years of operation were in the Sundre and Swan Hills areas of Alberta. Operations in the early years were rather nomadic as the company went wherever the work took it.

As Arnett & Burgess Pipelines celebrates its sixth decade in business, P&GJ reached out to CEO Tom Arnett and recently promoted President Carey Arnett for a closer look at the company’s history and its game plan going forward.

P&GJ: How did you get into the business?

Carey Arnett: The Arnett family grew up with, and was surrounded by, the business. We all made our own choices career-wise. My brothers have spent their entire careers in various positions at A&B. I began my career in the industry at A&B, venturing to work for a supplier and then moved to energy financial services. I returned when the time was right. When people leave A&B, they often find their way back again.

Tom began working for the company during summers off from school at 14 years of age. He found it more fun to be outside and worked as a laborer hustling skids, swamping on a big truck and fencing, mainly in the Sylvan Lake, AB area.

Tom joined A&B full-time at 18 and would pipeline for six months during winter. In summer he ran a fishing camp in the Yukon. At 26, Tom became manager of A&B’s Sedgewick office. By 34, he had taken over as president, with Les having oversight as CEO. Tom has worked with the company for almost 50 years and has seen it grow from a small owner-operator to one of the largest open shops in our territory.

One of our superintendents, who spent his 28-year career with us, once told me that on his first job at A&B there was a hard-working laborer throwing skids like no other and when he later learned it was the owner’s son, he thought this was a company he could work for. Hard work has been a constant in our world.

P&GJ: Can you define the family’s legacy in A&B over its 60-year history?

Tom and Carey Arnett: Longevity in the construction industry is rare, but it is even more of a scarcity in the pipeline construction sector due to the cyclical nature of the energy markets that it most depends on. It’s tough in so many ways. A&B has been through eight major cycles during its 60 years and numerous challenges along the way. The Arnett family’s dedication to the company has contributed to our 60 years in operation.

Without this dedication to the company, it would have been much easier to walk away from the business during times when the clients were fighting for survival or a bad job challenged the company. We have learned many key lessons along the way that we carry over into our principles of operation today. In many organizations, the tacit knowledge of lessons learned from jobs-gone-wrong over the decades turns over with the workforce. At A&B, we have such a loyal following with a team of many 30- and 40-plus year staff, including Garry Frederick, our vice president of Operations, as well as those in the Hampshire, Schwab, Brodie and Schmutz families.

In addition to the dedication to the company, the Arnetts have always had great pride and dedication to the family of employees that make up the larger family at A&B. Family reigns supreme at A&B, and the families of the A&B work family are embraced.

P&GJ: How many family members are still involved in the company and is there a possibility future family members will also work there?

Carey Arnett: There are four family members involved with the daily operations of the company: Tom Arnett, CEO; Carey Arnett, president; Jamie Arnett, vice president, Finance; and Steve Arnett, senior equipment manager.

There is always a chance that future family members will work here, both from our family and the other families that have been loyal over the years. It actually seems to be becoming a tighter community, though the industry is more established. The general workforce does not get exposed to pipeline construction in a casual sense, so to get established in pipelining it usually takes exposure such as a family connection, which precipitates success in the industry.

We are transitioning from a second-generation to a third-generation operation at A&B, and the company is excited about this new wave of aspirations while understanding the culture and long-lived principles will not change.

P&GJ: What are some of the challenges involved in maintaining a family-owned company in today’s business environment?

Carey Arnett: The size, complexity, risk-level and volume of projects that A&B has grown into create challenges not unique to family-managed businesses. With a strong business model and clients demanding increased resources, A&B recently joined with Quanta Services to provide the strength, backbone and diversification to go hard and long to expand our services.

Quanta is a platform of successful entities that have carved a strong niche in their areas of construction, primarily power, pipeline and communications infrastructure. Many of these entities are family-run companies similar to ours. We all maintain our own identity, culture and key elements of our success while rolling into a larger organization that provides the structure and assurances expected of one of North America’s largest contractors.

While it was an emotional decision to join a larger company, Quanta was a logical fit because we were able to maintain the family values that have been fundamental to our success – caring for our employees and our clients, along with our desire to do what is right. It is still our baby.

P&GJ: What was the company’s business strategy, and how has it evolved through the years?

Tom and Carey Arnett: Our strategy has not evolved much over the years. We are focused on providing end-value pipelining solutions. We want to construct our projects properly the first time, resulting in long-term value for our customers. We are rarely the low bid, but our clients can trust our price and trust that their infrastructure will be respected.

Though our strategy has been stable, what we offer has evolved to include related services, focusing on pipeline and facility construction. This includes a strong niche in pipeline integrity solutions, coating services and custom fabrication, including fab-to-field solutions and a transportation department.

P&GJ: What are some of the memorable projects A&B has worked on?

Carey Arnett: These would include emergency pipeline failures – they are always challenging from technical, high-profile and remoteness perspectives. Frankly, these situations have never been convenient. We have been allowed to shine over the years in these high-stress situations through our innovation, response time and nimbleness in addressing our client’s sometimes undefined need.

The Vantage Pipeline project (99 km of 10-inch steel in SE Saskatchewan, August-December 2012) holds a special place in many of our team members’ memories, with its heavy wall long-haul across the meandering plains of Saskatchewan. The field bends were incredible.

All of our projects are memorable in their own right, though. Each project has a team and inherits a story to tell as they leave a legacy of critical infrastructure behind.

P&GJ: During the company’s 60-year history, what have been its most defining moments?

Tom and Carey Arnett: The “shotgun clause” being executed, which resulted in a share buyout between partners in the late 1960s (an opportunity arose to go to Australia to start a pipeline construction company.) Ray “shot-gunned” Les and, along with a few other investors, Les purchased Ray’s shares.

Another would be Tom Arnett taking over as president of the company in 1988 just after the National Energy Program (1980-86), which was considered by many Albertans to be among the most unconstitutional federal policies ever implemented. Our bank abandoned us during this time despite the company being profitable, with money in the bank and a long history with the institution. We were forced to switch banks.

Also, when the company joined Quanta Services in August 2014 – this was the only major ownership transition in A&B’s history. The current downturn has segregated our industry and being a part of the Quanta family allowed us to succeed as a competent participant that can finance larger projects.

P&GJ: What led to the decision to join Quanta, and what effect will that have on A&B, such as changes in day-to-day operations?

Tom and Carey Arnett: Our company was never “for sale.” However, we found a fit with Quanta that gave us a better chance of growing into the solutions our customers sought. They wanted more crews for more projects in more regions. We can now employ co-delivery of solutions across a wide range of construction offerings with one interface. As clients look at how to be lean, a common interface greatly reduces their management. With a brand they trust, this provides a compelling reason to execute on projects that may otherwise be waiting for sanctioning.

P&GJ: What is your outlook for the pipeline construction business in Canada and North America, especially in today’s political climate?

Carey Arnett: I’m presuming you would like me to weigh in on our long-haul pipeline construction challenges being debated across the front pages newspapers. In some ways, this is a great thing. People are communicating that 99.9999% reliability is not good enough. Our industry is responding and actively driving toward a goal of zero incidents.

The layperson is being educated about pipelines – this is a great opportunity for an industry that has been relatively out of sight, safe, and out of mind. Pipelines, like all infrastructure, have always been up for a good debate. But, I do worry about the recent deviations from the regulatory framework on both sides of the border. Project hurdles such as routing, geotec, IRR, engineering, commodity pricing and contracting are complicated enough without adding uncertainty around the regulatory framework for permits.

While people may not love pipelines, they are part of our critical infrastructure. They connect each of us in our daily lives to support our offices, schools, homes, hospitals, manufacturing sector and our modes of transport. Therefore, my long-term outlook is strong for the sector, should rational thought prevail.

P&GJ: Have you been surprised by the pushback generated by those opposing infrastructure development?

Carey Arnett: Not so much surprised, but disappointment with the loss of productivity associated with false or delayed starts, and an increasing lack of certainty in a well-established regulatory framework as politics becomes an increasing influence. I’m also disappointed by the transparency of those with whom the pushback originates.

P&GJ: The three principles that A&B lists as its foundation are quality, safety and integrity. Can you explain how A&B has integrated these into its business practices?

Carey Arnett: Quality, safety and integrity drive everything that we do – every management decision relies on these principles. A&B is committed to doing the right thing. Our principles may not be backed by a mountain of paper, but they are engraved in the culture of the company’s long-term employees.