In the natural gas industry, it is not always easy to win the respect of your peers. It requires a lifetime of hard work, integrity, curiosity, intelligence, and the willingness to stare right at a challenge and conquer it.
When they talk about longtime energy executive Richard “Dick” Hannan, those who know him best say he embraces these traits and more. He has always placed customer service ahead of profit at the top of his list. He believes strongly in the benefits of education and is a kind man. It seems so simple. Perhaps that’s the lesson for the rest of us.
Now in the twilight of a long and successful career, Hannan recalls when he founded the current version of Mercury Instruments Inc., a Cincinnati-based manufacturer of precision temperature measurement tools for the natural gas industry, back in 1964. In 2007, Mercury Instruments was acquired by German-based RMG Group, only to be sold several weeks ago to Honeywell. Hannan formally retires on Sept. 22, 45 years to the day he started at Mercury.
Hannan is a native of Boston, a Wharton graduate who later attended the Harvard and Stanford business schools. A proud Marine, he joined the service as a private and left as a captain. A world-class traveler, Hannan is quite obviously a man of many interests, as is evident in this recent interview.
P&GJ: What were your interests as a young man?
Hannan: I always liked following in the footsteps of my two older brothers and trying to keep up with them. I was always the youngest on the team and had to work harder to get to play. I loved following my mother to Fanueil Hall and watching her buy from the various vendors. She was so skilled yet non-threatening. She would make sure they never slipped in a rotten peach while they were complimenting her dress! So, at the early age of 7, I started learning about business.
P&GJ: Was there anyone in particular who played a key role in your career?
Hannan: John Healy, VP Operations at Gillette, taught me how to be a wonderful manager. He delegated. He didn’t try to do everything himself but allowed me to try and solve problems on my own. This inspired self-confidence, and with that, I felt like I could handle anything. He taught me to have confidence in my employees which is exactly how I managed my team at Mercury Instruments. People feel good about themselves and have confidence to take on bigger challenges. It also makes for an upbeat work environment.
P&GJ: What made you decide on the energy industry?
Hannan: A geology professor at Tufts University stimulated my interest in natural gas exploration and its significant potential uses. I dreamed of having my own company in the energy industry but first I went into the Marine Corps, completed my MBA at Wharton, and then worked at Gillette and Boeing. After these life experiences, I decided to take a risk and start my own business in the energy industry.
P&GJ: What was behind the founding of Mercury Instruments?
Hannan: Studying the natural gas industry, I realized that there were only four companies that supplied all the natural gas utilities with temperature and pressure recorders. That’s how the idea of Mercury Instruments was started and I have had the pleasure of being president and chairman.
The success of Mercury is directly related to our philosophy that “Customer is King”. I firmly believe that time is better spent talking about the needs and wants of customers and never focusing on profits.
P&GJ: What was your biggest challenge and your biggest accomplishment?
Hannan: The biggest challenge we faced was getting into the industry that was dominated by those four suppliers. We now sell to all one hundred of the largest natural gas distributors in North America. This is a huge accomplishment after starting out from nothing in a close-knit industry.
Another accomplishment is the fact that we have so many long-term employees. People have liked coming to work at Mercury, some for more than three decades. I always believed Mercury’s greatest assets went home at night at quitting time.
P&GJ: What are some of your personal interests?
Hannan: I enjoy all sorts of travel and sports as does my wife, Jeanne, to whom I have been married for 55 years. I also enjoy scuba, swimming, tennis and dabbling at golf. We are blessed with a daughter, Hollie, who lives in San Francisco and another daughter, Lauren, who lives within a mile of us with our three granddaughters.
P&GJ: How have you seen the industry change in recent years?
Hannan: The transition from private and municipally owned utilities to investor-owned utilities and the consolidation of LDC ownership. I would add to that the focus on standardization of design, processes, standards, equipment, etc., increasing rate of adoption for automation solutions including: SCADA, AMR/AMI, remote telemetry, etc. and increased focus on O&M efficiencies and optimization (system design and operation). The pace of technological change has dramatically increased; 45 years ago there was not the constant expectation from operators for new technical innovations as there is today.
P&GJ: How have relationships between operators and vendors changed in the distribution sector?
Hannan: In my early years in the industry the larger vendors did a lot of lavish entertainment of key operator executives and their families. It created closeness in the industry but also a significant hurdle for new vendors trying to break in. Relationships are still very important today because operators want to work with companies they can trust and that they know will support them in good and bad times, but there is not nearly as much lavish entertainment as there used to be.
Operators are increasingly more resource-constrained and are relying more on vendors to provide additional services and support. Vendor selection and procurement has been significantly formalized. Many operators now have formal vendor-evaluation and approval processes. We are also seeing more third-party buying organizations procuring on behalf of our LDC customers.
My personal and business relationships with people in the distribution sector have been extremely rewarding and are a primary reason that I have stayed in the industry for so long. Mercury was a six person company when I acquired it 45 years ago and my philosophy that “the Customer is King” was radical at the time. I have found that when you treat the customer like a king not only is it good for business, but it is good for relationships. Customers become your friends.
P&GJ: What are the key challenges for the natural gas industry, both from and operational and services side perspectives?
Hannan: Operators face losing a large portion of their highly skilled management and field workforce to retirement over the next decade. They need to find ways to capture and manage the intellectual property that resides in the minds of these key people and to attract and train new personnel to replace them. LDCs must optimize their systems to allow them to meet increasing demand for natural gas with limited capital budgets.
Managing complex automation projects successfully is a key challenge, but doing more with less seems to be the mantra for our economy, and the gas industry is no exception. Automation is not always done in the right way or for the right reasons. Companies that do it well will have a significant competitive advantage.
One possible challenge for the next generation is keeping our pipes as a premier source of energy delivery for our economy. There is a lot of R&D going into many different sources of energy now, and a technological breakthrough in how energy is created could occur at any time that would fundamentally change our industry. History shows that fundamental changes of this nature happen and the industry needs to be aware and not go into denial if it starts to occur. This could be for better or for worse, depending on what the changes are, and how distribution companies react.
P&GJ: What is necessary for an energy service company to be successful today?
Hannan: Of course, to focus on making customers very happy. To focus on solving problems and providing solutions, not just selling products.
P&GJ: Through your years in the business, do any particular memories stand out?
Hannan: There was a time that we weren’t selling anything in Canada. I went up to Don Davis, Measurement Superintendent at Consumers Gas in Toronto and the color blue changed everything. I had noticed that all of their instruments were painted black but their company color was blue. Blue was everywhere except on their instruments, so I offered to make an instrument that matched their company color. He told me later that he had no intention of buying anything from me but decided to order a single blue instrument to stimulate his present suppliers. It turns out that we were the only company that would give him this level of customer service and he has been our customer ever since. Now they buy more than one from us.
Editor’s Note: Ted Lakeberg and Mike Dillon of Mercury Instruments assisted in the preparation of this article. Mr. Hannan can be reached at email@example.com.