On this episode of Banking on KC, Mike Kilkenny, CEO of Taylor Forge Engineered Systems, joins host Kelly Scanlon to discuss how a Kansas-based company has become a global manufacturer for the oil and gas, aerospace, and defense industries.
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Kelly Scanlon: Welcome to Banking on KC. I'm your host, Kelly Scanlon. Thank you for joining us. With us on this episode is Mike Kilkenny, the CEO of Taylor Forge Engineered Systems, a global equipment supplier to the oil and gas, aerospace, and defense markets. Welcome Mike.
Mike Kilkenny: Thank you, Kelly. Nice to be here.
Kelly Scanlon: I'm interested to learn more about your company that's such a diverse group of industries, and you make some very interesting equipment.
Before we get into that, let's talk about your history. It goes all the way back to 1900 Chicago, so more than a hundred years, and it was J Hall Taylor's Forge Shop.
Mike Kilkenny: It is a long, rich history at Taylor Forge. Mr. Taylor j. Hall Taylor was an engineer and an entrepreneur of the first order he developed. Your listeners may not completely know what a flange is, but he developed what is called the ANSI Flange standards.
Which is kind of the Bible of a piece of equipment in piping that is still in use today. He was a hugely important figure in, uh, the piping world. In fact, the American Society of Mechanical Engineers has an entrepreneurial and business award that's given out annually called the J Hall Taylor Award. The main reason why we have kept the name yeah, Mr.
Taylor's been gone a long time, obviously, and, uh, and yet. We keep Taylor Forge as a name that RE is resound around the world. So my father, he joined Taylor Forge in Los Angeles in I believe, 1957. He was in the sales department. He worked his way up through the company. In the early eighties. He had been made president of the large company of Taylor Forge.
Taylor Forge at that time was owned by a New York conglomerate called Gulf and Western. In the middle eighties, Gulf, Gulf and Western found that manufacturing had fallen out of favor. Profitabilities were down a little bit, and, uh, Gulf and Western decided to sell off all their manufacturing businesses as the president of Taylor Forge and a couple other companies within the Energy Products group.
My dad was tasked with divesting, uh, these companies, including Taylor Forge through the process. Eventually, the higher ups said, uh, Gary. What do you want out of this? And he said, I'd love to buy the engineered products division of Taylor Forge, located in Payola, Kansas. So they, they worked out a, uh, a financial arrangement and he was able to buy the company.
And take it private
Kelly Scanlon: and move from Los Angeles to payola Kansas.
Mike Kilkenny: Well, he, there's a couple of stops in between. Oh. Uh, I was born in LA when, when he was in la We lived in San Francisco. Uh, you mentioned Chicago being headquarters. We moved to Chicago by pure coincidence. Uh, four years before my dad bought Taylor Forge my first job outta college with Ingersoll Rand.
In the gas compressor division of Ingersoll Rand moved me to Overland Park, Kansas. Ah, and I was here, uh, four or five years later when my dad bought the company and took it private. Okay. Uh, and there, so there was a natural affinity there. I was in the same industry, different product line, but I knew. The customers, the names, kind of how things worked.
And, uh, it was a natural progression.
Kelly Scanlon: Um, yeah. So your father recruited you?
Mike Kilkenny: He recruited me. I took a pay cut, but yeah, I, he recruited me. So
Kelly Scanlon: I know there's more to the story. You're now the CEO. So tell us about that and was it something that you always thought that you would. Step into a role you'd or, or was it just something that sort of like your father, he wasn't planning to take over that division, but it happened?
Mike Kilkenny: Yeah, more the latter. I don't know that I had that much vision and, and forethought maybe, you know, in the back of my mind I probably had that there, but I was running our sales department in the middle part of the nineties, say 10 years after I got here, and one day my dad said that he was considering.
Offers to sell the company and they actually had also, uh, looked at an esop, uh, for selling it to the employees. And I said, halt, uh, I'm your option on, on selling the company. Um, it was an interesting time. Uh, oil and gas is very cyclical and very shortly after I was hired in, things went significantly downhill.
You know, I saw opportunity and I knew there was something here. I I, you could see opportunity coming at us. So went to banks. I negotiated deals and. Uh, my dad had a partner. It wasn't just my father, so they were 60, 40 partners and I was able to, uh, work out a very nice arrangement where I could buy a majority of Taylor Forge in, um, the end of 97.
Actually, I think we closed on January 2nd, 1998.
Kelly Scanlon: Let's move on to some of the key turning points during that 125 years. There were headwinds when you took over, but you saw opportunity. Were there other times like that?
Mike Kilkenny: A couple of things. Um, you, you mentioned the diversity of, uh, markets that, that we work in. My father and I had traveled to the Middle East hotbed for oil and gas.
Uh, we'd been hearing rumblings about an opportunity in, uh, Qatar. And I did a little research and found that Exxon, actually at the time it was Mobil Mobil Oil, had an office in Doha, Qatar. So this would've been right after the Persian Gulf War in 91, I believe. And I made an appointment with a gentleman, remember him to this day, Mr.
Ronnie Parker, Mobil Oil. My dad and I showed up in his office in Doha, Qatar. Typical Texas oil man sitting in the Middle East, sat down, talked about the future of, uh, natural gas development in Qatar, which even today, the north field of Qatar is the largest natural gas field in the world. He literally outlined on a piece of paper the next 30 years of development that we are enjoying today, and, and we have literally.
Uh, supplied, pushing $200 million worth of equipment into Qatar as a result of one trip, monumental, uh, time for Taylor Forge.
Kelly Scanlon: What a visionary that guy was and that he shared that with you at that critical time.
Mike Kilkenny: Absolutely another time. Uh, and it, it goes to our defense business, which we weren't in to any extent, uh, uh, initially, but um, the US Navy called up my father.
Uh, in need of a competitive bid for some piping, uh, for the nuclear reactors on the submarines and aircraft carriers. Said, uh, one of their suppliers was, was leaving the business and would we be interested in stepping in? It was pretty much a natural fit for us. They helped us with some equipment. Uh, we said yes, we'd, we'd jump in.
This was similar timeframe. 90, 91, 92, and. Today that business is uh, uh, approximately 30 to 35% of our. Uh, gross revenues.
Kelly Scanlon: Let's talk about some of those products that you build. I was reading through them. They have a lot of interesting names. Uh, slug catchers, pig traps, pressure vessels, and vortex separation equipment.
And that's just, I think that's just in the oil and gas area, so, so talk to us about what these products actually do for the industries that you serve.
Mike Kilkenny: I tell the story, true story that uh, you know, it's not unusual for dads to be invited to their kids' classroom to describe what they do for a living. And when you tell the kids that you make slug catchers and pig traps, you get a lot of funny looks.
So in essence, slug catchers and our vortex separation technology. Are ways of separating oil and gas Very simply, we use natural gas for heating our homes and propane and a, a variety of uses. And then separately, oil, the liquid portion of the hydrocarbon spectrum is used for. Thousands of uses. Not just gasoline, but everything you sit on, everything you cook with, every piece of plastic all comes from oil.
So you separate it early on in the, uh, processing. So you ask about a slug catcher, what interesting sounds, slugs aren't very fast. How hard is it to catch 'em? Exactly right. Exactly.
Kelly Scanlon: Put a paper or plastic cup out there.
Mike Kilkenny: Exactly. So, uh, just quick lesson. Um, when natural gas comes out of the ground, it's hot.
It's wet, wet with oil. You put it in a pipeline to send it to a processing plant, and it cools off in that, in that pipeline,
Kelly Scanlon: okay?
Mike Kilkenny: And it basically rains oil. So now oil is sitting in a pipeline that is predominantly made for natural gas. They need to clean that, uh, that oil outta the line. And when they do do that, you end up with a slug of liquid arriving with natural gas.
Think of your garden hose. Mm-hmm. I use the analogy of a garden hose. You turn your garden hose on, you put your hand over the end of that hose, you'll feel air coming out of it.
Kelly Scanlon: Yes.
Mike Kilkenny: Eventually, if you look at it, you'll get hit in the face with a slug of water. You will. Yes. That has been sitting in your, in your hose, which is very much like a natural gas pipeline.
Kelly Scanlon: It's a great analogy.
Mike Kilkenny: So that the slug catcher does kind of the rough cut separation of oil and gas. Vortex is the more fine, uh, separation device. We spin, we spin the mixture of oil and gas. Hydrocarbon liquid goes to the, um, the, the outer edge, uh, circumferential force. Uh, natural gas, uh, is in the middle of this, and it creates its own little tornado, its own little vortex.
The gas goes up, the liquid goes down, and you do a very high efficient. Uh, form of separation.
Kelly Scanlon: Well, that, that is, that is fascinating. Uh, so you talked about the different industries that you serve and you've seen a lot of change throughout the century. You serve the US Navy and NASA as part of the defense and the aerospace industries.
So I. As a business, how do you balance those diverse sectors? How do you manage all of that?
Mike Kilkenny: As I mentioned, oil and gas is very cyclical. Yes. And, uh, if you just ride the waves, it creates a lot of heartache. You, you could be, uh, high employment and low employment. Entering into some different markets and diversifying your product line is our effort to smooth out those, um, amplitudes, those, uh, waves of, uh, ups and downs in the cyclical oil and gas market.
So, uh, even though we are predominantly oil and gas, we've used, as I said, our navy business. That has now become almost a 30%, uh, baseline business for us. Uh, luckily, fortunately, Taylor Forge had a history with, with nasa, uh, back to the 1950s of building all the launch support high pressure systems for nasa, and most of the companies that supplied that industry are now gone.
We are still alive, kicking and healthy as they grow the launch and testing. Uh, pads for, um, uh, rocket launches. Uh, we are the people they turn to to supply that high pressure system, large pressure vessels, some piping components.
Kelly Scanlon: So is there any overlap in the technology among those industries? So you're not reinventing the wheel every time?
Mike Kilkenny: Absolutely. There's a common thread and, and the common thread for the most part is high pressure. Not very many people play in the high pressure world and unique metallurgy, uh, not the real fancy, uh, stainlesses and nickels and, but mostly high strength steels that are more efficient when you're dealing with high pressures.
And so pressure and metallurgy. Is really what we use. That's our, that's our value proposition. That's what we use to set us apart from any, any other manufacturer that might be similar to us.
Kelly Scanlon: So what are some of the most notable innovations that you've had to adjust to, or that maybe you were responsible for as a company?
Mike Kilkenny: Innovation's. One of my favorite words, innovation and imagination. It's, it's possibly one of my favorite words because I'm not that good at it, but, uh, our pipe type, slug catcher is a very unique design in, in the world. We are not the low cost supplier. But because of a very unique proven and improving design, uh, for the use of pipe fittings, manifolds and layout, we've come up with a highly economical, uh, design for our pipe type slug catcher.
We have invested in equipment that sets us apart in our ability to produce not just the slug catcher. But the high pressure vessels for NASA or the vortex separation, we can roll plate up to six inches thick. There's one or two other people in the United States that have that capability. We have what's called an extrusion process where we pull.
Holes in rolled and welded cylinders of steel pipe. Uh, that extrusion process is highly unique. So our ability to innovate in manufacturing processes, welding skills and capabilities and metallurgical knowledge and development is what really has set us apart. It's not. Sexy. It's not high tech, but it pays a lot of dividends and helps out our customer base.
Kelly Scanlon: Sure. What have been the drivers of your expansion?
Mike Kilkenny: I say this all the time, and I get a chance to speak in various forums. Recognizing your value proposition, recognizing where you're unique. Accentuating that. So it might be our slug catcher, uh, design and taking that on the road. I believe I've been in 40 or 50 different countries around the world promoting and discussing, uh, economical approach to a huge problem.
People do not like the requirement of a slug catcher. It's football fields and size. It takes up. Massive plot space. It's very expensive.
Kelly Scanlon: So you build them there on site or do you bring the parts disassembled and assemble? Correct. It's a,
Mike Kilkenny: it's a kit.
Kelly Scanlon: Okay.
Mike Kilkenny: We design and fabricate the manifolds, uh, in Paola, Kansas, or in Greeley, Kansas, or, or somewhat down in our Tulsa facility.
And then we buy just line pipe from a pipe mill. We ship the manifolds and the pipe to the job site. And then a contractor puts it together on site. This approach has been a huge success for us. It, it's a benefit to our customer and a benefit to Taylor Forge. It's a win-win with this approach. Similarly, I mentioned to you about the, the Navy opportunity that was presented to us.
Uh, it was a bit of a leap of faith. We were not guaranteed anything. They said they would help us, but we were still had to competitively bid and then fast forward another. 10 years, the other competitor went out of business and we are now the sole source supplier of this product to the US Navy. You know, I also, uh, envisioned additional diversity or the need to diversify and, uh, built from, from scratch our Tulsa plant.
Mm-hmm. So part of that employment growth has been, uh, down in the Tulsa, uh, area. And so. Um, seeing opportunities that are adjacent, uh, products to what, uh, was our base product in Paola, Kansas, but utilizing and accentuating our uniqueness and, and our, uh, value propositions.
Kelly Scanlon: How do you hold onto your culture and that standard of excellence whenever you're in multiple locations and as you're expanding?
Mike Kilkenny: That's a great question. Uh, it's a lessons learned. You don't always get it right the first time. And I am absolutely an example of that. I thought we would build this beautiful plant, brand new, uh, plant down in Tulsa, Oklahoma. We would put our name on out in front and on a nice sign and boom, culture quality, everything would be there because of the, uh, the name on the door.
Didn't happen that way six months in. I could tell that we didn't quite have the right leadership in place. We did not, uh, our values were not being presented. It took me, it took senior leadership at, uh, Taylor Forge to spend time down there to instill that culture was a fits and starts effort. And I use that as an example on, uh, culture is hugely important.
It's what Taylor Forge is known for, that that culture is what people are paying for. You've gotta work to get it right.
Kelly Scanlon: Absolutely. You've completed. Massive projects over the years. One of the largest slug catchers in the world is among them. So what does it take to deliver on that kind of scale?
Mike Kilkenny: Uh, we're also fortunate in, in this regard, um, you think about a large pipe type slug catcher going into the Middle East or Australia or Southeast Asia, somewhere.
The material portion of a slug catcher can easily be north of 50% of the overall value of that product. We're talking tens of millions of dollars just in, in material that needs to be procured and supplied by a relatively small company like Taylor Forge. Uh, we are able to negotiate favorable payment terms with our end user customer.
They realize that, uh, uh, they're gonna have to somewhat bank us and and finance the deal, and that allows us then to go out and negotiate good material purchases. The result is really good cash flow, a financially sound company. That doesn't have to tap the credit markets very heavily to complete a large slug catcher project for somewhere around the world.
So it's been a real benefit.
Kelly Scanlon: You've talked a little bit about operating in payola and Greeley, so the rural communities, and here you are working in the aerospace industry, oil and gas, these large, huge industries. So how do you manage workforce development? Infrastructure retention. And what advantages do you see in being a space age company in rural America?
Mike Kilkenny: You know, being in rural Kansas is, is more of a blessing than a curse. And, and I use this, uh, point quite a bit. Finding skilled labor is difficult. Yes. But once you bring someone in, you train them up, you give them unique skills. You introduce 'em to our culture, they realize that they've got job security you.
They have very good benefits. The rural people become very loyal and that loyalty sticks around. We have generations and generations of families that have been employed at Taylor Forge 50, 60, 70 years worth of the same names. So yes, the, the introduction, the finding of, of that skilled labor can be difficult.
But once you find, uh, a good, hardworking rural kansan, you show 'em the value of, uh, uh, longevity that Taylor Forge offers. We have them for for decades.
Kelly Scanlon: So rural community affords you a lot of benefits that you may not realize at first glance. But then Taylor Forge also gives back to those communities in more ways than providing jobs, which is a biggie.
But there are other things that you do for the community as well. You wanna talk about those.
Mike Kilkenny: I like to say in Payola Kansas, or Greeley, Kansas, and to some lesser extent in Tulsa, Oklahoma, that we're a big fish in a small pond. We're the largest employer, a private employer in Miami County, Kansas. With that comes with some responsibilities and we recognize that.
I love, I mentioned, I love being in the rural community. I also realize that we have to give back to that rural community. So we have programs for our employees to, uh, work with charities, work with food kitchens for some of the homeless shelters. Uh, we're a huge supporter of Big Brothers of Big Sisters.
Uh, the Lake Mary Center is based in, uh, Paola, Kansas. And we provide opportunities, uh, on the clock for our employees to go out and work within the community because. What. They give, they give back. What we give, we give back.
Kelly Scanlon: Exactly. And you, you feed right into a motto of the, uh, Country Club Bank to whom much is given, much is expected,
Mike Kilkenny: fits perfectly.
That's why we've been such friends with, uh, everybody at Country Club for so many years.
Kelly Scanlon: As an entrepreneur, what's been your mindset for growing the company? You know, for taking calculated risks and some of the other hard decisions that need to be made to keep Taylor Forge successful. Competitive. What criteria do you use when you see some risk that you might.
Also think could be an opportunity. How do you decide, you know, to whether to go forward or hold back?
Mike Kilkenny: My first response to that question is not being very smart. Um, you can't be afraid to fail. Yeah. And um, you probably hear that from a lot of entrepreneurs and as I've gotten a little bit older, I recognize that, that if, if you're afraid to fail, you will never grow, you will never develop.
I think I. Um, done a pretty decent job of taking calculated risks where generally the upsides, uh, uh, will significantly outweigh the downsides. Not being too crazy, not betting the farm, but taking a good calculated risk. I have made a lot of mistakes. I gave you the example in Tulsa on assuming culture would just happen, and, and that resulted in years of, uh, poor, uh, financial performance out of that plant.
Many of those mistakes we've actually turned around into positives. Once you learn, you be patient, you make the changes that are need, needed to, um, those that didn't turn out. Very profitably or very successfully. You, you put in your back pocket as a learning opportunity and, and I've learned a lot of those lessons over time.
So I see growth as one of the mainstays of our company. It doesn't have to be at the. Public markets rate of a 10, 15, 20% a year. As long as you've got a good steady growth plan and strategy, you'll keep your company healthy.
Kelly Scanlon: What advice would you give to other business owners or even future entrepreneurs about building something that lasts across generations?
You, you, you've got a couple of generational themes running here. Your own family in the ownership seat, and then you've got your. Staff, your employees, as you say, multi-generations there too.
Mike Kilkenny: Hopefully Gen three will be taking over at some point in time with our son, uh, working for us now also. So as I mentioned, I do a lot of speaking at, uh, universities and business forums.
I always highlight recognizing your niche. Find your niche, even if it's a more common product, more common service well used. You will have your own uniqueness, your own value proposition. Find that niche and drive it. Drive the heck out of it. Brand yourself along the areas of that, of that niche value proposition.
Your uniqueness is what sets you apart. Whether it's, I don't like to call us a fabricator. I like to call us a solution provider that slug catchers are the product, but they're the solution to separating oil and gas, right? If we can do that efficiently and effectively. That is our niche. We have found that and we drive it all over the world.
Kelly Scanlon: There's one principle or, or perhaps practice that you hope future leaders of Taylor Forge will carry on. What would that be?
Mike Kilkenny: I love that question. You know, I think being humble, you know, humble, hungry and smart. It's, uh, in, in a book that I read somewhere.
Kelly Scanlon: I love that. Mm-hmm.
Mike Kilkenny: Generally, when you're in leadership, uh, you have some talent.
You have some knowledge, you are able to work hard, recognize that, and then develop the people with within your organization. And the best way to do that is to be humble. That servant leadership. Yes. You know, that says, what can I do for you? Not, not. Here's what I want you to do today. What can I do for you?
Because ultimately in management, leadership, the success of your people is what will make you a success. Not just what you do, it's what the people will do That work. Around you.
Kelly Scanlon: Exactly. Thank you so much for coming on the show, Mike, telling us about this wonderful company that you have and you were able to simplify it so that even people like I could understand it.
So thank you for doing that and, and sharing, uh, some best practices about business along the way too. Appreciate it.
Mike Kilkenny: Thank you, Kelly.
Joe Close: This is Joe Close, president of Country Club Bank. Thank you to Mike Kilkenney for being our guest on this episode of Banking on KC. For more than a century, Taylor Forge has played a central role in engineering solutions that keep critical industries running from oil and gas to aerospace and defense.
Under Mike's leadership, the company has kept an innovative spirit alive, even as it's faced shifting markets and global challenges. He's guided Taylor Forge into new opportunities, invested in technology, and expanded the company's reach. At the same time, Taylor Forge remains a major employer and a generous supporter of local causes in the rural communities where it operates.
At Country Club Bank, we too believe that true success isn't measured in dollars, but in how we lift up the communities we call home. Thanks for tuning in. This week we're banking on you, Kansas City. Country Club Bank —- Member FDIC.