Lee Specialties a triumph of innovation
Red Deer Advocate
By HARLEY RICHARDS - Advocate business editor – Jan 23 2007
For much of the past 30 years, Jim Lee has been a seller.
Through Lee Tools, he sold production logging data to oil companies; through Lee Specialties he is now selling the equipment to collect that information.
His philosophy on selling is pretty clear: provide the best you can.
“Knowing that there is a better, more efficient, accurate way of doing something, how can you remain stagnant and not work towards the best that you can do?
“You can’t give somebody something, knowing that it’s second class.”
In some cases, this moral obligation even means referring customers to a competitor better able to fill their needs.
“They’re not angry with you for not doing the work for them,” said Lee. “They’re happy and you’re damn well going to get the next job that you can do.”
This attitude helps explain how Lee Tools became an industry leader, and why Lee Specialties is now following suit.
The former, which Lee operated from 1977 to 1994, dedicated a staggering 25 per cent of its gross revenue to research and development “every year for years and years and years.”
Lee Tools — and ultimately its customers — were rewarded with superior technology and equipment.
A farm boy from Donalda, Lee worked for a couple of small service companies before a corporate acquisition placed him on the payroll of multinational Halliburton Energy Services.
Accustomed to exploring solutions in the field, he had difficulty adjusting to the rules, regulations and management hierarchy he was suddenly subject to.
“They ran a business, I guess, in the real sense of how a business should be run.”
But it wasn’t an environment Lee was comfortable in. So he struck out on his own, with a three-quarter ton truck and a small winch.
“I couldn’t afford a desk,” he remembered. “I had a phone that sat on the floor.”
But Lee had his reputation and that earned him jobs.
After about a year, he was able to borrow the money for a bigger wireline unit and Lee Tools grew from there.
When business dried up with the oilpatch economy in the 1980s, Lee opted to divert his resources to research and development rather than scale back or suspend operations.
He explained that much of the equipment being used in the western Canadian oilpatch wasn’t designed for the environmental and geographical demands here.
“We’d go to do jobs and the tools would fail. You don’t bring any money home when the tools fail.”
One of the things Lee Tools developed was a telemetry system that could monitor a number of well sensors at the same time. This helped speed up work and improved accuracy.
To then reduce the size of the unit by combining electronic components into a single computer chip, Lee spent some $88,000 — a “huge amount of money” in the depressed 1980s — to develop the equipment at the University of Alberta’s microelectronics centre.
Not only was the resulting tool compact, it had a higher temperature rating and was more reliable.
“That device allowed us to be in the production logging business in a real sense,” said Lee. “We could compete head-to-head with the big guys.”
Later, Lee Tools developed a memory system that allowed data to be stored downhole instead of having to be transmitted continuously.
In the right application, this technology eliminated a lot of the equipment needed to conduct a logging job, said Lee.
Such innovations helped the company capture more than half the production logging market in Alberta — and prompted Schlumberger Oilfield Services to come knocking in 1994.
Lee agreed to sell his business, which by then had about 50 employees, and for the second time in his life he found himself working for a corporate giant.
The adjustment went about as well for Lee as it had when he was with Halliburton.
Although he agreed to stay for three years and actually remained for four, he again was uncomfortable with the rules and policies and his diminished control over operations.
“You lost the sense of contribution,” explained Lee. “And when you lose that, or when I lose that, you might as well die.”
The end came when Lee was asked to downsize his engineering staff. He asked — and received permission — to leave with a number of engineers.
They formed Lee Specialties in 1999. Unlike Lee Tools, which manufactured production logging tools for its own use, the new company designed, fabricated and sold equipment to others.
Starting with a staff of about 10, Lee Specialties has grown to more than 100. Its products now include pressure control equipment and last year it began manufacturing its own wireline units.
A seal division was added after Lee discovered that elastomer products designed for his company’s equipment — and supplied by a third party distributor — were being sold without his authorization.
Lee credits a 25-year working relationship and friendship with Peter Jenele, a mechanical engineer with Chevron, for helping him succeed despite a lack of formal technical training.
“Any of my ability to add and subtract, so to speak, is because of him.”
He also believes his farm upbringing gave him the tools needed to solve problems and build a business. It was there, he explained, that he learned the “principles of common sense.”
Previous News
January 10, 2007: Machining department moves into their own shop.
December 22, 2006: Lee Specialties Ltd receives CSA seal on wireline truck
December 15, 2006: In-house flu immunization clinic
November 15, 2006: First Lee Specialties wireline truck unveiling
Various dates: Machine shop building construction archive
June 2006: Lee Specialties Ltd Open House
May 4, 2006: Lunchtime Staff BBQ
Various dates: Media updates and/or implementation