Yes We Can

The battle cry for 2009 is, “Yes we can.” The petroleum equipment industry's battle cry may very well be, “Yes we will.” Suppliers remain realistic and are cognizant of the many challenges the year ahead presents. They are preparing for those challenges by proactively introducing new products, by controlling their costs of goods sold, by attacking the marketplace with the goal of increasing market share and, most important, by meeting their customers' needs. Regardless of their projections, most suppliers are preparing for the worst as they batten down the hatches and return to the basics of business. They will focus on their core strengths: their relationships, their ability to deliver solutions and emphasize the quality products that have brought them this far.

Battle for Market Share
As companies battle for fewer customer dollars, the brass ring will be percentage points of market share. Those that position themselves as marketplace leaders will command a future position of leadership and that may, indeed, be the greatest prize of all. Count on the competition to be fierce as suppliers fight for each budgeted dollar.

The key to sales in 2009 for Tom D'Alessandro, vice president, OMNTEC Manufacturing (Ronkonkoma, NY), will lay in his ability to raise his customers' awareness of his company's capabilities and his ability to drive solutions with his products. He anticipates a level sales year as his company focuses on the AST market with a recently introduced, enhanced wireless product line. Plans call for a new engineering manager during the 1st Quarter. He says, “I will spend more time calling on customers. My goal is to create more opportunities for face time with those customers in order to capture market share.”

Expecting activity in Florida to increase, Tom Tietjen, vice president of sales and marketing, Xerxes Corp. (Minneapolis, MN), anticipates an overall growth in sales in 2009. He says, “I believe 2009 will still be a fairly good year for retail petroleum facilities and construction. The margins enjoyed during the second half of 2008 were very strong.” Tietjen is still realistic that 2009 will present challenges for all of us. He will respond to those challenges by addressing growth in market share. Tietjen adds, “I can't control the overall industry spending patterns on new tanks, but I can control our ability to maintain our existing customers and grow our sales and share as we add new customers.”

Chris Santy, managing director, Patriot Capital (Atlanta, GA), expects sales revenue to increase by 30%. “In an environment where banks are very, very difficult to deal with, and some banks are even gone, we can expect to capture a higher percentage of the overall business. We can provide a faster and more efficient response to the customer looking to finance an equipment purchase or lease.” Santy expects to introduce manufacturer and major oil supported financing and leasing programs that are focused on PCI and POS upgrades during the 1st Quarter. Up to four telesales professionals will join his team in 2009. With an expanded telesales presence, the goal is to grow major oil and manufacturer relationships.

Meeting the Need
When buyers talk, suppliers will be listening. Understanding the customer's need and meeting it quickly and cost-effectively will be more critical than ever. With fewer dollars to chase after, there are even fewer allowances for missed opportunities. Count on enhanced customer service departments and more training of employees as management looks to be a partner on their customer's team.

By monitoring customer needs and alerting those customers of new, recently enhanced energy management capabilities, Tommy Garver, vice president, Carolina Products Inc. (CPI) (Charlotte, NC), expects to hold his 2008 sales numbers. As budgeted dollars narrow and new construction plans are postponed, the importance of more efficient, cost-saving improvements will grow. Garver explains, “Folks who are not adding new locations are utilizing their dollars to reduce energy costs.”

From past experiences, Rod Smith, president, Freedom Electronics (Kennesaw, GA), knows that in a challenging economy end-users will be less likely to purchase new products and will rely more on the repair of existing products and components. He will spend more time making sure that he is communicating with them about their current needs. Predicting a level year at worst, he expects to add one or two new service technicians as the year progresses.

A continual focus on customer service will help to maintain sales numbers, believes Bill Taylor, corporate secretary, JDT Petroleum Equipment (Huntingdon Valley, PA). He says, “We must give the customer what they want, when they want it, how they want it.” To that end, the company will delve more into PCI compliance.

Based on early 2009 sales activity, Al Eichorn, vice president of sales, PMP Corporation (Avon, CT), is expecting a slight sales increase. He says, “We must continue to be flexible in order to react to market conditions and the needs of our customers as they occur.” Eichorn will focus his efforts on projecting exactly what product support his customers require and the proper mix of services his company must offer.

Maintaining the necessary inventor-ies to meet customer requirements will help Tom Seymour, vice president, Gorman-Rupp Company (Mansfield, OH), to create growth of up to 5% in a tough environment. He says, “We are re-evaluating our inventory load, what we have in inventory, and what we should have.” A $52-$54 million dollar expansion will result in a new 460,000 sq. ft. facility. The plan for new space illustrates the company's commitment to future growth. The company is scheduled to move into its new home late this year.

As customers look outside their typical banking relationships for funding, Richard Baccaro, president, American Equipment Finance (Warren, NJ) expects revenue to increase by 10%. He says, “It's kind of like insurance; when you don't need it, you don't think about it.” Baccaro believes that credit issues will abound in 2009, which will still necessitate a sense of prudence on the part of all lenders. Profitable growth is expected as he identifies both current and future opportunities.

An emphasis on green construction will support a 15-20% growth in sales, believes Warren Baley, president, King Manufacturing (Waupun, WI). “We will make sure that the products used are low VOC, if not LEED certified.” Baley will focus his efforts on targeting new customers, determining their objectives and meeting those objectives as the year progresses.

Relationships Are Gold
Relationships are the gold that will not only make the year shiny and bright, but will cause the cash registers to sing. Without them, 2009 could be a lonely year indeed. No one of us will survive without the alliances that have been established between us in the past. Those alliances will continue to grow in importance as the year progresses.

Dick Basham, general manager, IRPCO (Poca, WV), expects his sales to remain level with 2008 numbers. “Our sales are driven by new construction and supported by replacement business, which tends to tide us through the down economic times.” In the face of narrowing profit margins, Basham sees a more crowded field of competitors who are increasingly price competitive as the economy softens. He says, “I will rely on the relationships that have carried us through hard times in the past.”

Expecting a flat first half of the year and slight growth in the second half, John Radu, president, Riverside Steel (Vienna, OH), will focus on his core customers that have been the mainstay of his business. “We continue to build on and strengthen the relationships that we have with those customers.” He also will be looking at different material technologies. The challenge is to keep the average cost of goods sold low in order to pass those savings on to his customers.

Expecting to repeat last year's sales growth of 10%, Mark Johnson, president, Lakeland Graphics (Minneapolis, MN), says that his relationships with his customers are the main drivers of his company's growth. “Our job is to make it easier for them to order from us, and to help them determine the product that they need.” Johnson is making it easier for his customers to buy from him as he continues to expand his inventory of Product Identifications (PIDS). By year-end, he will represent more than 50 lines. He says, “We have so many varieties and types of PIDS. We have gone from marketing 1,000 items to more than 5,000 overnight. I will focus more on managing the inventory.”

After seeing sales double in 2007 and in 2008, Jay Nelson, president Excel Tire Gauge (Warwick, RI), expects sales to increase by 50% in 2009. Three new assembly workers will be added during the first half of the year. He says, “It's all about personal relationships. We are very careful about whom we work with and the credit we will extend as the year progresses.”

Strengthen the Channel
As the end-user demographic becomes more dominated by independents and less by the major oil companies, the distributor is more vital than ever. The distributor is the supplier's ticket to entry into the minds and hearts of potential customers.

Increased market share will drive a 3-5% growth, believes Joie Folkers, vice president of sales and marketing, Ameron International/Fiberglass Composite Pipe Division USA (Houston, TX). His emphasis will be on heightening his company's visibility. He says, “By strengthening the distribution channel, we can help the customer to think about long-term performance and reliability.”

As the number of smaller independents continues to increase, Jack Bales, manager of petroleum marketing for Fiber Glass Systems (Little Rock, AR), anticipates sales to grow by up to 8% by working more closely with his distribution channel.

Building on the Backlog
Guesstimating future sales (and it really is a guess for all those interviewed) becomes easier if the year is entered with a generous backlog. Those with a comfortable backlog are entering the year with a security blanket of sorts.

With a backlog that equals the total sales for all of 2008, Tim Lindblom, executive vice president, Gulfcoast Software Solutions (Clearwater, FL), is confident in predicting a sales growth of 100%. The company will introduce new smart products for loss prevention, including products that provide missing object counting and customer counting analytics. In anticipation of hiring up to 20 more employees, the company expects to move into a larger, 10,000 sq. ft. facility in May.

With backorders extending three to four months ahead, Bob Randle, president, RCI Technologies (San Dimas, CA), expects sales to grow by 20%. Most of the company's recent sales growth is being generated by offshore customers. RCI's fuel filtration system was recently green-certified, a recognition which will also serve to support sales growth.

With a strong first half of the year already booked, Gerry Carson, partner, Cohos Evamy integratedesign (Cal-gary, Alberta, Canada), expects 2009 sales revenue to remain level with 2008. “Our clients are taking advantage of softened construction costs and are still moving their projects forward. A continued emphasis on sustainable design and green construction prin-ciples are an important part of our culture in Canada and in the U.S.”

“We have a decent backlog going into the year, which will allow us to hold a softening of sales to 10%,” says Lonnie King, president, Image Resource Group (Kansas City, KS). King plans to increase market share by more aggressively controlling costs, allowing the company to be more price aggressive. He says, “We will offer more of a bundled package. By manufacturing all of our own components, we are better able to bundle canopies, modular buildings, signage and more to one customer.” The company is exploring the use of different materials for panel systems and hopes to launch a new product midyear. A 72,000 sq. ft. components plant in the Ohio Valley, which will service their family of companies, will be operational during the 1st Quarter.

With a backlog of work that will carry his company through midyear, Bobby Lee Moore Jr., CEO, B & M Construction Company Inc. (Lakeland, FL), still expects his sales to be down by 30%. Moore says, “Working with both majors and independents is the ticket to sales in 2009.”

Global Marketing
It's a small, small world. Count on all suppliers to look further from home when marketing their products. Some suppliers hope for offshore sales to offset the downward trend of the economy in their backyard.

Expecting a 15% decrease in sales, Robert Murnane, president, Seraphin Test Measures (Rancocas, NJ), plans to target offshore markets with new handheld test measures for checking gas pumps and meters to be introduced during the 3rd Quarter.

Global sales of new LED products will support a sales growth of 10-20%, according to Christopher Ruud, executive vice president, Beta Lighting (Sturtevant, WI). Ruud says, “Customers with shrinking dollars are buying what they perceive as valuable.”

Expecting a slight increase, Grenville Sutcliffe, president, Husky Corporation (Pacific, MO), is launching a new line of pressure-compensating safe-T-breaks. The recent certification on a vacuum-assist vapor recovery nozzle and anticipated European ATEX certifications will help to support sales in emerging markets. The company will complete an addition to its current facility, expanding its square footage by 30% during the second half of the year.

Launching New Product
To command buyers' attention, suppliers will introduce new products, but more important than the newness of the product or the technology are the solutions that the new products provide.

As Dave Junge, president, Junge Control Inc. (Cedar Rapids, IA), and team build equipment that is utilized for bio-blending, he expects sales to increase by 300%. A 2nd Quarter launch of a new stand-alone control system for bio-blending will further support company growth.

Cindy Fencl, CEO, Petroleum Card Services (Minden, NV), anticipates a 25% increase in transaction counts, but does not expect dollar volume to increase until the price of fuel evens out. She says, “As more stations de-brand, there are more PCI challenges, which require compliance solutions.” A new PCI compliance product for the independent will support increased sales. A recent move to a new 10,000 sq. ft. facility will support five or six more employees.

After a 2008 growth in sales of 60%, Al Henager, director of sales, Champion Laboratories Inc., PetroClear Filters (Albion, IL), expects sales growth of 20-30%. The company is introducing 18 part numbers, many of which are ethanol-specific, during the 1st Quarter.

Kathy Frank, president, Krueger Sentry Gauge Company (Green Bay, WI), expects sales to increase by 20%, driven by the new LED At-A-Glance, which will help the user read tank levels in a more cost-efficient manner.

Improved market share, together with new product introductions, will help Todd Oberg, vice president of sales and marketing, Central Illinois Manufacturing Company (Bement, IL), to grow sales by 15-20%. The 1st Quarter introduction of HydroBurn will eliminate the problem of water in fuel, and a 3rd Quarter new generation of filters will benefit from increased production capacity as the company's non-petroleum-related manufacturing operations move to a new 12,000+ sq. ft. facility.

With plans for a 50,280 sq. ft. addition, Rick Long, president, RDM Industrial Electronics (Nebo, NC), expects to expand his sales department with the hiring of one new salesperson and a new customer service representative each quarter. An expanded roster of products which are re-manufactured by his team will help support a 12-15% sales increase.

Anticipating a sales growth of 10%, Jim Snyder, president, Vertical Market Software (Pensacola, FL), will introduce a rewritten software in April and a new document imaging product designed for service technicians working from the field. Plans call for a new support and training person to be hired during each of the last three quarters of the year.

By refocusing on the fundamentals of his core products, Cameron Carmack, president, Catlow, Inc. (Tipp City, OH), expects sales to increase by 8-12%. He says, “We have several new products that will be introduced during the 2nd and 3rd Quarters, which will utilize innovation to improve performance.”

Robert Milo, president and CEO, Universal Valve Company (Elizabeth, NJ), hopes to match 2008's sales growth of 3.5% with the introduction of a new sump retrofit cover, a 3.5-gallon double-wall spill containment manhole, and a 2-inch overfill valve.

A touch-free, mini-tunnel product introduced at the end of 2008 and a stronger sales focus will enhance efforts to maintain sales numbers, believes Curtis Wade, vice president, Oasis Car Wash Systems (Galena, KS).

Expecting the first half of 2009 to be slower than the second half, Vijay Srinivasan, general manager, Balcrank Products Inc. (Weaverville, NC), expects 2009 sales to be equal to 2008. The company will introduce a new line of EVX reels during the 1st Quarter and an improved control handle during the 2nd Quarter. Srinivasan says, “The second half of the year will be all about diesel exhaust liquids and getting to the lowest costs.”

By relying on local sales and service throughout the U.S. and Asia, Jay Walsh, vice president of business development, Franklin Fueling Systems (Madison, WI), will maintain 2008 sales numbers. A new product to be introduced during the 2nd Quarter will respond to global demand for eco-friendly technologies in both the U.S. and in emerging markets, which will also support sales.

Bob Dee, executive vice president of sales and marketing, Crompco Corporation (Plymouth Meeting, PA), expects sales to be level. A 2nd Quarter introduction of a product helping customers to better control output will provide just another solution for customers seeking efficiency improvements. A plant expansion of 16,000 sq. ft. to be completed by August and additional personnel targeting the Midwest and Gulf Coast areas will further support sales.

Solutions that respond to control of fuel and security issues will help Mark Dikken, president, Kardtech (Brampton, Ontario, Canada), to maintain 2008 sales numbers. As a new dealer for Infonet Technology Corporation, Dikken will provide a new POS cardlock system, marketed online to businesses throughout North America.

With double-wall tank activity in Colorado, New Mexico and Texas, Paola Recendez, vice president, S. Bravo Systems (Commerce, CA), expects to maintain sales numbers. A new retrofit blue line fiberglass fitting and a stackable, underground dispenser box will help to support sales. The company will introduce a new price-friendly single-wall tank sump during the second half of the year.

An anticipated decline of 20% in commercial sales will be partially offset by a 10-15% growth in revenue from the Department of Defense, says Doug Dunlap, president, Syn-Tech Systems (Tallahassee, FL). The company will introduce its latest product for handheld devices during the 3rd Quarter.

New Markets
Creating diversity in their customer base will offset shrinking sales numbers. Whether suppliers plan to develop new markets for existing products or modify current offerings for new market niches, they hope that a wider base of customers will allow for sales growth.

With 50% increases in sales in 2007 and in 2008, George Boyazis, president, Innovative Petroleum Products (St. Augustine, FL), expects a sales increase of 30-40% in 2009. “We continue to target new niche markets that are historically neglected by our competitors.” The 1st Quarter introduction of the Retain-ig System, an aboveground secondary containment system, will meet the needs of new markets. The company plans to move into a new, larger facility during the 2nd Quarter and hopes to triple employment.

Expecting to maintain his current customer base, Mark Haynes, president, Environmental Compliance Services (Agawam, MA), expects customers to reduce their overall spending by 10%. He will offset that potential decline by introducing new products to new market niches.

While expecting sales to decrease by 20-25%, Peter Richardson, pres-ident of sales and marketing, Shure Manufacturing (Washington, MO), will focus on both new products and new market niches. A new dual-purpose package passer will be introduced during the 1st Quarter. His plans for 2009 call for a reduction in manufacturing lead times and an increased focus on reaching out to new markets.

Whether our emphasis is on increasing market share, spending more time with our customers, introducing new products, heeding the needs of global customers or developing new markets, the petroleum equipment industry is making it very clear that, yes, we will meet the challenges of 2009, and we will, as a result, be stronger, healthier and more efficient at meeting increased demand for our goods and services as the marketplace turns around. We will position ourselves for future success.

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The PEI Journal • First Quarter 2009 • Volume 3, No. 1 • Contents are Copyright © Data Key Communications, Inc.
All rights reserved. • Nothing may be reproduced in whole or part without written permission of the publisher.