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Change. Everyone’s talking about it. And it is change that will most impact our industry in 2008. Change is the result of the movement toward alternative fuels. Change is the result of regulations that are enacted and, even more important, enforced. Changes brought about by new technologies enable our customers to realize increased efficiencies and allow us to produce products or offer services for less. Change is visualized in the form of re-branded identities as major oil companies continue to remove themselves from the retail market. 2008 is a year in which all of us will respond to change in one fashion or another. The relationship we have with the distributor who has his ear to the ground is even more vital than ever. The closer we are to our customers and to the channels that deliver our products and services, the more likely it is that we will be in a position to act on change. New products and services and refined operations will most assuredly drive growth in 2008. Alliances with new partners will help us to round out our service and product offerings. As 2008 progresses, our ability to proactively respond to change will be tested. Those who can respond with speed and a dead-on awareness of solutions that are truly needed will gain not only increased sales, but increased profitability and increased market share. Building on Change
New energy management products, including new surge protection products, will require more communications with the distribution channel. “Increased interactions with distributors and the 4th Quarter 2007 introduction of new standardized products will support a 10% growth in sales,” says Tony Thornton, sales engineer, Carolina Products, Inc. (Charlotte, NC). The need for property upgrades and new highway construction that cause changes in traffic patterns will contribute to a 10% growth in sales, according to Harry Reynolds, president, Monitor, Inc. (Sherman, TX). The biggest challenge in 2008 may well be transportation costs. Reynolds says, “If diesel for the delivery of product and for the fabrication of product costs $4 a gallon, it needs to be absorbed. It is a serious problem. We will try to minimize cost increases by operating more efficiently, maximizing our loads in order to not waste mileage.” Craig Jones, marketing manager, Square D Integrated Power & Control Solutions (Salisbury, NC), expects retrofit projects to drive lighting control, TVSS and dispenser control sales, resulting in a 10-15% growth in sales. Jones says, “Opportunities for energy conservation will offset a softened new store construction environment.” A new lighting manager product introduced during the 4th Quarter 2007 and a standby power manager to be introduced during the 1st Quarter will help to support an expanding distributor network. “An improved distribution channel will support sales growth of 15%,” says Doug Ingram, general manager, Green Manufacturing, div. of Benco Products (Sheffield Village, OH). Stronger distribution in the Southwest and a drastically improved response time will allow the company to focus on larger projects. Ingram says, “We are networking with companies that offer products we don’t offer in an effort to take advantage of growth opportunities in a softening economy.” In order to target new opportunities for additional business, the company will focus on continual customer service improvements and increased networking with distributors, adding more distribution on the West Coast. The renovated sites of the 1990s are in need of face lifts. As more big box retailers enter the market, John Radu Jr., president, Riverside Steel (Vienna, OH), expects his annual growth of 20% in sales to continue. He says, “It’s either upgrading the underground storage tanks and pipes that drive the business for our products, or new construction.” A new island, introduced during 4th Quarter 2007, will incorporate new raw materials and a new process to create a corrosion-resistant form. Follow the Money
“The capital goods industry, regulations impacting under- and above ground tanks, pressure valves, and the work being done related to alternative fuels are all generating business for our insureds,” says Brian Donovan, president, STICO Mutual Insurance Co. (Arlington Heights, IL). Expecting a 10% growth in sales revenue, Donovan says that while rates will remain level, the growth in activity expected by his customers will drive growth. “Our challenge is to evaluate risks and price those risks accordingly. When a non-petroleum product is brought into the petroleum industry, there will be problems similar to the challenges that we had with infrastructure and ethanol. Now it’s with biofuels. The infrastructure is not always prepared for the new fuels.” A combination of OVR upgrades in California and tank compliance laws in Florida, coupled with the growth of partnering relationships with manufacturers, will help to drive a 20-25% sales increase, says Chris Santy, managing director, Patriot Capital (Atlanta, GA). A newly opened office in San Francisco and additional sales and operational personnel, to be added during the 2nd Quarter in the Atlanta office, will help to support additional equipment financing. New marketing programs with major oil companies will drive a 30% increase in sales, says Jim Borland, president, US Energy Capital (Greensboro, GA). Borland will also work with more distributors in an effort to market his Energy Star product and service. The firm will add an additional 1,200 sq. ft. of office space during the 1st Quarter to accommodate additional sales personnel and support staff. Dispensing Solutions
Quoting the responses of retailers to questions posed by his company, Greg Beason, president, Gilbarco North America (Greensboro, NC), says that one-third of the retailers surveyed plan to spend more on capital expenditures in ’08 than they did in ’07. From a different perspective, over half do not plan to increase capital expenditures. Beason is projecting a flat year with a possibility of sales increasing by 1%. He says, “Google at the pump in the March-April timeframe and other new products that will make use of streaming video and improved audio at the dispenser will serve to enhance the at-pump experience. Our growth will come not by the number of crates that we ship, but by the additional functionality that we have built into those crates.” The goal for his products is to help deliver promotions to the forecourt, to drive in more traffic and obviously more profits for the customer. He says, “We’ll enable very soon the ability to not only pay at the pump, but look at in-store promotions and order a sandwich.” Beason views the distribution channel as his company’s competitive advantage, and it is his obligation to provide them world-class training. The company is currently going through a metamorphosis, recruiting people who are more software savvy. Beason explains, “We’re not only selling to the operations people at our customers’ businesses. We’re selling to the IT and marketing folks. Technology is going to be the discriminator and the competitive edge of the future. We have to have people who can sell that competitive edge and that technology to end-users.” Increased demand on the part of the military for fueling stations and the growth of small jet fueling systems for Very Light Jets (VLJs) will propel sales upwards by 25%, believes Gordon Johnson, president, Millennium Systems International (Westminster, MD). VLJs currently being manufactured will require an infrastructure consisting of small jet fuel dispensing systems, to be installed at small airports that previously were not capable of supporting jet traffic. Johnson says, “The key for distributors wanting to grow this business is to find a supplier/partner with industry expertise, as well as product liability insurance for aviation refueling systems which also covers the reseller.” Johnson will focus on the development of a newsletter and safety bulletins, providing distributors with safe aviation refueling information. His goal is to establish a network of 25-30 distributors in key markets across the United States. Gauging Customer Needs With expectations for sales to remain level with 2007 numbers, Kathy Frank, president, Krueger Sentry Gauge Company (Green Bay, WI), says that the buzzwords for 2008 are “lean and mean.” She notes, “I see more of the need for us to stock more products for distributors. To provide faster turnaround times, we are placing more emphasis on customer service efforts.” The desire and need of station operators to have better control over their business and to lower operating costs is causing them to add more automation, says Kent Reid, vice president, vapor systems/business development, Veeder-Root (Simsbury, CT). Reid expects the 4th Quarter introduction of a new automatic tank gauge, as well as other new products to be introduced later in the year, to drive sales growth of 10%. He says, “The customer is demanding products that require less maintenance and provide a longer life span. We will lower the costs of ownership through a broadened product line.”
Looking ahead, Walt Wehof, president, B&K Tank Gauge (Somerville, NJ), expects sales to remain level or increase up to 10%, partially supported by continued growth in South America. He says, “I don’t see anything magical happening. It’s just a matter of educating our current customers, making them aware of our full product line and slowly increasing our market share.” Future plans call for new coatings that are suitable for newer alcohol blends. “New product introductions including a family of console products, a strobe light indicator and a wireless product, and a newly certified product will support growth of 22-35%,” says Brad Holton, president, Greenleaf Gauge (Greenleaf, ID). The company plans to add a production manager, customer assistance and design and development personnel beginning in the 2nd Quarter. Responding to Change with
Product Innovations Allen Porter, president and CEO, Tanknology (Austin, TX), is expecting growth of 8-11%, driven by additional regulations mandating inspections and additional testing requirements. An expanded sales force is calling on smaller and mid-size marketers. Porter says, “New product offerings during the 1st Quarter and during the last half of the year will also support a more aggressive distribution channel.” During the 1st Quarter, the company will introduce a new methodology for testing secondary containment systems. The company is introducing an aboveground storage tank testing and inspection service during the latter half of 2008. An increased need for inspections of USTs and ASTs will create new revenue streams, believes John Stanley, principal, Analytical Services (Culpeper, VA). Expecting a slight increase at most, he says that the response to the Energy Bill of 2005 is driving the bulk of his new business. The company will also introduce additional fuel polishing services and fuel treatment services. Plans call for the provision of a more complete range of services because, as Stanley says, “That’s the easiest way to drive revenue.” “Product enhancements addressing leak detection in a more efficient manner, together with a new product to be introduced during the 4th Quarter, will help to support sales growth of 10%,” says Greg Young, president, Vaporless Manufacturing Inc. (Prescott Valley, AZ). He adds, “The emphasis is on being a solutions provider that distributors can turn to for solutions in line-monitoring ware or in exposed pipe.” New business will be supported as a result of increased attention to previously unpenetrated markets. A new double-wall spill bucket that was recently approved in Florida and a new fiberglass fitting will help to drive a 20% sales increase, says Paola Recendez, vice president, S. Bravo Systems (Commerce, CA). The company plans to focus its efforts on expanding its operations geographically. Recendez says, “We need to expand our coverage in territories that are not familiar with our product, including the Midwest and the mountain states.” Compliance with new regulations and the 1st Quarter introduction of a new double-walled sump will contribute to growth of 30%, believes Steve Mozeley, president, Petro Fiberglass Sumps (Charlotte, NC). The company will add two new sales positions and will spend more time with distributors in order to drive sales. New Alliances Create New Opportunities
More Education and More
Innovation As sales to distributors increase and while OEM sales remain level with 2007 activity, Dick Basham, general manager, IRPCO (Poca, WV), expects overall growth of 3%. He says, “We will pound the pavement more. A more aggressive pricing structure and an emphasis on cost reductions which do not impact quality will be supported by new incentives to reps. The company will focus more on the discussion of hose maintenance as covered in RP500. Basham adds, “It might cost less than $50 to replace a hose, but if it is not replaced, a potential lawsuit could result in thousands of dollars. There just needs to be more awareness.” A healthy backlog is always a growth indicator, says Richard Kirtley, national sales manager, PT Coupling Co. (Enid, OK). Expecting a 7-10% growth in sales, he says, “In order to meet larger orders from our distributors, we are focusing on leaner management while adding inside salespeople as well as additional machinists.” The 4th Quarter 2007 introduction of a new fuel dispensing hose product that is compatible with conventional unleaded gasoline, as well as E85 and biodiesel fuels, together with additional new products to be introduced during the 1st Quarter, will drive a 10% sales increase, believes Tom Ingram, CEO, FLEX-ING, Inc. (Sherman, TX). Ingram will focus his efforts on training in 2008. He says, “We are emphasizing the proper installation and maintenance of our products. The more our distributor partners know, the better we all are.” Innovations in Product Open
Once-Closed Doors
“The devalued U.S. dollar will support increased sales activity in Europe, the Middle East and in Latin America, contributing to an overall sales increase of 7-10%,” says Paul Anderson, vice president of sales and marketing, Alemite LLC (Fort Mill, SC). A new lube truck product introduced in the 1st Quarter will provide distributors with a more complete offering for their customers, rounded out by still more products to be introduced during the 3rd and 4th Quarters.
Expecting a slow growth year in the economy, Glenn Will, director of sales and marketing, Graco, Lubrication Equipment Div. (Anoka, MN), says, “We still expect double-digit growth, partially as a result of the introduction of new, technology-driven products.” The company is focusing on sales to a more diverse customer base. Will adds, “There is a fair amount of pent-up demand as a result of deferred project work.” Enhanced online tools for Will’s distribution network will make his company easier to do business with. “Increased market share will help to increase sales by 10-15%, believes Richard Schmidt, vice president, Federal Process Corporation (Cleveland, OH). He says, “With increased attention from an expanding rep network, we will spend more time with the distributor to increase sales of products they do not traditionally market.” Long-term goals include organic growth as well as growth through acquisition. New Products + New Markets = New Sales
Driven by increased sales of an easier to install, more competitively priced, coaxial product, Joie Folkers, vice president of sales and marketing, Ameron International (Houston, TX), expects a sales growth of 10%. He adds, “We will also put more emphasis on our product warranties that are in place regardless of whether the product is used in conjunction with other manufacturers’ products or not.” To Jack Bales, manager, petroleum marketing, Fiber Glass Systems (Little Rock, AR), the attention placed on aboveground work, OVR and vapor monitoring systems in 2007 will leave 2008 open for attention on underground work. Expecting a 10-20% growth in sales, Bales expects that the response to the Energy Act may also create increased 4th Quarter sales activity. Bales says, “There is a need for both distributors and suppliers to maintain appropriate inventory levels. We have to communicate more in order to better manage everyone’s needs.” John Rowe, owner, Diversified Products Mfg. (Oroville, CA), is expecting a sales increase of 50%. Rowe will focus his efforts on producing more product in shorter amounts of time to respond to market needs more quickly. He says, “Our product line is maturing and is stable. However, long term, we may be broaching technologies that might lead us away from petroleum as the primary mover and motivator for fuels driving our industry. That move will create a big impact on the role of petroleum in the marketplace.” It’s Time to Clean Up Shelly Sundeng, president, Optic Fuel Clean (West Fargo, ND), is expecting a sales increase of 50%, as she installs systems in Chicago and possibly the Kansas/Missouri area during the first half of the year. She says, “Today we are only doing fuel cleaning, but we may begin doing cathodic-protection testing during the 1st Quarter.” Sundeng will explore additional new hires and a larger location during the 3rd Quarter to better support an expanding distributor network. Bob Delaney, president, Gamajet Cleaning Systems (Exton, PA), expects to more than double his petroleum-related sales. The requirement for more frequent inspections and a conversion to alternate fuels will create more need for underground storage tank cleaning equipment. The company plans to introduce a new system which will incorporate fuel polishing and cleaning as one process during the 1st Quarter. The 4th Quarter move into a new facility will accommodate a work force which by year-end will grow by 50%. Searching For Weak Links
Tom McGee, president, PMP Corporation (Avon, CT), expects sales to remain equal to 2007’s numbers, as he focuses less on sales growth and more on profitability. He says, “We will explore operational improvements as well as other products that we should be offering.” The simple act of working harder will help Dick Owens, president, Esco Manufacturing (Tampa, FL), to capture new business, yielding a growth in sales of 3-5%. He says, “Substantial growth will only come from the development of new business.” The company will spend more time meeting customers, uncovering their needs, and then introducing those solutions to the market as quickly as they can. Owens notes that the electronics typically found in the field are more reliable today. “The weak link is in the mechanical products, like printers.” The company plans to introduce services on intercoms and other, different printer options throughout the year. “We need to remain vigilant when tracking the new products that are introduced, acting as advisors, being available to distributors when they call and able to provide the products that are needed when a distributor calls the first time,” says Rod Smith, president, Freedom Electronics (Kennesaw, GA). Budgeting for a sales increase of 10%, Smith expects the demand for rebuilds to increase as the general economy softens. He adds, “The use of electronic equipment by c-stores will only continue to grow. As the equipment becomes more complex, the shade tree builder will gradually fade away.” The constant push to meet customers’ needs is driving an annual growth of 10-15%, says Rick Long, owner, RDM Industrial Electronics (Nebo, NC). He explains, “It’s not real complicated. I try to be the first to work on new products, before the product comes off warranty.” Expecting to double in sales within five years, the company continues to add personnel and will add several production people throughout the year. A mid-2007 acquisition is providing Rick Byanski, president and CEO, Petroleum Parts Inc. (Fort Wayne, IN), an assist in targeting the industry graphics, sheet metal and remanufactured dispenser market, leading to a 10-15% sales growth. Byanski says, “We will initiate a more aggressive sales effort, supported by additional telemarketers in our Minnesota office and the addition of a newly hired marketing professional.” The company will introduce new catalogs targeting the graphics side of their business. Used and reconditioned equipment sales will continue to increase in 2008 by 12%, says Craig Gezella, president, Gezella Petroleum Equipment Company (Green Bay, WI). He says, The overall better buying climate will drive sales of used equipment.” In order to maintain product availability, Gezella will add an additional technician during the 3rd Quarter. Utilizing Technology to Protect Profitability
Believing that there is increasing demand for more electronic interface between distributors and suppliers from an invoice and warranty perspective, Jim Snyder, president, Vertical Market Software (Pensacola, FL), expects sales to remain level or increase by up to 5%. A rewrite of applications to new Microsoft technology will be launched during the 2nd Quarter. The company will also introduce its newest generation of mobile data collection software for fuel techs during the 1st Quarter. Snyder says, “There are more opportunities for converting information that is captured in the field without intervention. Our challenge is to make both the distributor and the affiliate aware of how information technology can drive efficiencies and revenue.” “Expanding into new geographical markets like the Midwest and Southeast will support growth of 10%,”says Chuck Pedano, vice president, CROMPCO (Plymouth Meeting, PA). A new online portal for training and support will help the user to create a virtual station, built to specifications customized by the individual c-store. The company will add additional technical support personnel and in-house support personnel. Pedano says, “Compliance is real, and the cost to comply proactively is much less than the cost to comply reactively. Communicating that message to a larger customer base is our challenge.” Bob Murnane, president, Seraphin Test Measure (Rancocas, NJ), expects sales to increase by 15%, provided the ATC ruling passes in July. Murnane explains, “People are paying more attention to the calibration of all retail motor fuels.” Automated measuring for calibration of retail motor fuel devices are scheduled for introduction during the 2nd Quarter, as a result of a joint venture project with a manufacturer in the industry. As oil prices continue to increase, Bill Jones, executive vice president, Warren Rogers Associates (Middletown, RI), expects sales to rise by 15-17%. He explains, “As oil prices continue to increase, so does the ROI on our products.” The company plans to add two systems engineers and three analysts during the first half of the year. Joint partnerships with other PEI members will also help Jones and his team to provide additional leak detection support services. An expanded base of new customers will drive sales upward by as much as 20%, says Lee Barter, vice president, InfoNet Technology Corp. (Vancouver, BC, Canada). Barter notes, “We will complete certification for EMV pay at the pump by the end of 2nd Quarter. We know that we have to partner with the distribution channel, especially in the U.S., in order to market to the end-user.”
A combination of increased name recognition and continual new product introductions will spur the 20% growth in sales expected by Doug Dunlap, president, Syn-Tech Systems (Tallahassee, FL). Dunlap says, “Accountability for fuel has moved from a nice-to-have benefit to a necessity.” An additional five salespeople, to be hired during the first half of the year, will focus on a GPS system which provides total vehicle management and an Automated Data Capture tanker truck system to be introduced during the 1st Quarter. Dunlap adds, “We are putting together classes to not only teach distributor personnel to install and maintain the equipment, but to sell the product. The challenge will be to not only train distributor personnel but also to provide all technical support personnel with training for all new products.” Ted Warn, president, Progressive International Elec tronics (Raleigh, NC), will be tapping into new market niches, including marinas, in 2008. He says, “A card reader located at the end of a dock will save the customer time and effort and help to drive a growth of 25-30%.” A card terminal introduced during 4th Quarter 2007 and the 1st Quarter introduction of a very simple fleet control product will also support sales growth. Partnering efforts with software providers will open the door for larger projects globally. New Markets = New Dollars “The continual drive for mass customization of graphics and signage at the store level will push catalog sales revenue up by 10%,” according to Rob Trube, director, United Signgraphics (Muskegon, MI). An additional inside salesperson will support distributors. The company will expand its standard product offering to include shelf management products as well as signage in order to become more of a one-stop provider. Trube adds, “In order to be more competitive, we will reduce lead times and increase throughput to create more efficiencies.” A redesign of the shop floor and processes will be completed during the 1st Quarter. Expecting a 10% growth in sales, Mark Johnson, president, Lakeland Graphics (Minneapolis, MN), says, “We are creating more face-to-face contact with our customers.” Previously working with a marketing partner, the company is now marketing itself and, as a result, entering into more dialog with customers, generating more sales. Green is the New Frontier for Car Washes New tunnel products introduced late in 2007 will support growth, says Charlie Lieb, president, PDQ Manufacturing (DePere, WI). Double-digit growth in Europe will be supported by the company’s Tandem product. The company also plans upgrades to its wash activation line in the 2nd Quarter. A re-tooled distributor network in Europe will support an expanded channel. With an eye toward the future, Lieb says, “Long term, we will see more machines which support recycled water because of the cost and the green initiative.” The rising costs of water and municipality sewer rates are helping to create a sales increase of 15%, according to Gary Hirsh, vice president of marketing, Pur Clean/Pur Water (North Highlands, CA). In keeping with its role as a steward of the environment, the company will expand its pure water product offerings in the 1st Quarter. Stan Royal, vice president of sales, Con-Serv Manufacturing (Lakeland, FL), points to increased regulations impacting water usage as a driver of a 15% growth in sales. He says, “People want to be more environmentally conscious, and the cost of water continues to increase. An ultra-filtration system, introduced in 4th Quarter 2007, will help to dispel the old notions about vehicle washing, as we communicate the value of getting the most out of the fresh water that is purchased by the car wash owner.”
Looking ahead at 2008, our industry is capitalizing on the positive strengths of the past few years. Heightened profitability has left our industry in good stead as it moves forward, investing in offshore growth, in increased efficiencies, in more travel time to meet face-to-face with their distributor and manufacturer rep partners and in product development. Suppliers are undertaking facility improvements and will continue to invest in capital equipment and in the training of qualified personnel to carry their companies forward. The companies interviewed remain upbeat when addressing change and, more important, creating opportunities in the face of change to increase market share.
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