Tote Notes - Spring 2017 - Vol 29, Number 2
STATE OF THE NATION
By Craig Phares
The market rally from the Trump victory has faded and the group's First Quarter performance tracked along with it. All operating companies had a very weak Q1.
Having said that, since the start of the Q2, business has rebounded demonstratively. As is often said, "A rising tide lifts all boats". Since the beginning of March U.S., corporate earnings have been strong lead by a rebound in global mining and resource companies and firms that supply and service those customers. At the same time, military budgets are expected to be increased.
The West Chemical Group has benefited from all of this.
- Petron has made significant new wins in selling to copper mines throughout the Americas with new products and superior product performance. A clear sign of global growth resumption.
- Penetone has crossed the goal line in winning its first orders for its new paint stripper to the military. Year-to-Date military 1 sales have surged and have exceeded plan by over 60%.
- West Penetone has received increasing orders in the SDTA space. In particular, a new vapor phase product has been sold to several customers for the first time. Expectations are for sizable sales for this new product this year and beyond.
Green shoots of growth are emerging. This is very encouraging. But a lot has to be done in order to make up for the disappointing first quarter in order to make or exceed 2017 plan. Human Capital is the key. There have been several key hires since the start of the fiscal year that have already impacted the franchise. Namely:
- John Grams at West Penetone - Business Development Manager for SDTA
- Dean Kuehl at Petron – Western North American Sales Manager
- Todd Allison at Petron - Eastern North American Sales Manager
We will continue to enhance our workforce as market conditions improve. And the fortunes of the group along with it.
Keep up the good work!
Global deal shows great promise
By Mike Nelson
Following on our 4.1% YOY growth in Pulp & Paper in 2016, and a 12 year growth rate of 634%, we now have just about 80% of the wire cleaning/stickies removal business in the USA. We know that there is about ten percent that we would never get for a myriad of reasons such as local contacts, as well as a low pricing structure on commodity chemicals that a few slow running machines would use. This means that organic growth in the USA is very limited.
We are fortunate to be working with the leader of the Global Chemical Team with one of the largest pulp and paper manufacturers. This is a three-man team that determines which chemicals can be used at this manufacturers’ facilities throughout the world. And, I am pleased to announce that Penetone has been chosen as the global supplier for ‘stickies removal’ on the wire and felts in the wet end - at all facilities.
This will be a tremendous boost to Pulp & Paper sales as there are numerous mills located throughout Mexico, South America, Eastern and Western Europe, and in Russia as well. Many of these facilities are similar to locations where we already supply our Pensolv in bulk. During the next three months we are running trials at facilities in Sahagun, Mexico; Glens Falls, NY; the Netherlands; Nokia, Finland; and the Stubbins Mill in the UK.
We have a lot of hard work ahead of us but with success we look forward to a very bright future and continued growth for the Pulp & Paper Group.
No failure to launch
By Jean Richard
As we all know the perennity of a company such as ours relies heavily on the development of new products. Over time, customer needs, competition and simple attrition will erode our product offering and ultimately sales.
Two new products were recently “launched” in order to respond to a need in the oil and gas sector and to date have generated some nice orders.
Originally formulated after a customer in the petrochemical segment questioned why two products (i.e. Roc 40 and Scavex VP) were needed instead of 1 for steam/high temperature procedures, ROC 60VP was developed to bring the degassing/cleaning operation to a one-step operation.
The new product was formulated to decontaminate units and vessels under steam application or high temperature. That is, to control hydrocarbon/Lel gases, hydrogen sulfide, scale fines and oil or hydrocarbon skim.
Recently one of our key accounts in the Ft. McMurray area was so impressed with our product that they placed a $100K order for an upcoming shutdown. Hopefully, the first of many to come. Of note also was that the product wasn’t formulated to compete against any particular competitive product, but to improve our own product line and cover a gap in our product offering.
In certain markets in Western Canada, an older technology is used to “decontaminate” large volume vessels. The process involves the use of a “foam-type” product. In an effort to penetrate this market a “foaming” product was developed.
The product was developed to have similar, if not higher, foam expansion ratio and foam stability in comparison to the AFFF products (fire-fighting foam) currently being supplied. In the formulation process, the product was adjusted to better control hydrogen sulfide gas.
The product was successfully tested in April of 2017 and found to have the ability to successfully mitigate hydrogen sulfide gas contamination. This characteristic is not found with competitive products. Customer placed first order and we envision a sizable opportunity (market size not established) for the future. Would be remiss not to mention the good work done by Greg Cebuliak in developing these 2 products.
The value of a name
By Jim Bittner
I recently attended some training on quality systems. At first blush, it seemed odd that we’d be talking marketing and quality in the same discussion but as I listened, it began to make more sense.
According to a Huffington Post article, a brand is often identified by a trademark or tradename - a recognizable logo that identifies the product and/or manufacturer. We all recognize the following brands:
Wait. Petron is a brand? I thought it was just a small company that I worked for in New Berlin? Well, Petron is a name that is recognizable and identifies a manufacturer. It doesn’t have the broad name recognition that Apple, Facebook, BMW and the rest of the logos shown, but in the world of mining, Petron is a recognized name.
Back before many of us were born, if a company wanted a loan, they went to a bank and they had to provide tangible assets as collateral. Buildings, equipment, and bank accounts were all used to secure a loan.
In recent years, banks have begun to consider that a brand has intrinsic value. Today, a recognizable brand may be worth more than 75% of a company’s tangible asset value when securing a loan. Many of us remember the tech boom of the early 2000’s when companies, many of which are no longer around, were valued at billions of dollars based solely on their brand recognition. Many of them were comprised of simply an idea, a couple computer servers, and a ton of venture capital. They had almost no tangible assets but many of their founders retired young and wealthy.
Proverbs 22:1 says “A good name is to be more desired than great wealth, Favor is better than silver and gold.” While this verse is speaking about an individual’s reputation, banks are recognizing that same is true of a company’s reputation.
I know you are probably asking, why is Jim wasting his time writing about branding in a company newsletter? Well, the answer is simple. Every one of us has an affect on the value of a brand. It is not just the marketing and sales people. Every one of us. When we put a label on a drum, do we take the time to make sure they are all straight or is it close enough? When we are making a batch, do we hit our target weights or is it close enough? I’m not just calling out the manufacturing people here, I’m just more familiar with the plant personnel’s temptations. We all know that there are areas in our departments where we can cut corners. Each time we do this we devalue our brand.
It is also important to remember that many of our customers have entrusted us with their brands. A short-filled drum delivered to a customer hurts the private label company whose name is on the label and it hurts our brand value when that private label company digs into the details to find that we didn’t do our job as well as we should have. I’ve just started to wrestle with the concept of how my actions (good and bad) affect the Petron brand and the brands of our customers. I hope you’ll join me on the journey.
By Jim Brooks
What a difference a new year can make. Sales for the military and aerospace markets in 2017 have been terrific so far in comparison to 2016. Current sales are 28% over budget and 37% ahead of last year to date. These results have been achieved by a mix of direct sales to existing and new customers, government buying agencies and contractors. We received an order in February from DLA Aviation (Defense Logistics Agency) for a paint remover with a request for expedited delivery. Charlie Good and Sylvia Paredez successfully coordinated the production and logistical related details and we delivered ahead of the requested delivery date. This order was our first for this product and very rewarding based upon the challenging experiences involved with the qualifying and quoting processes. Additional quotes for this product are pending and should result in orders.
The positive results experienced so far are expected to continue for the remainder of 2017. 2016 was a tough year due to a variety of reasons. Persistence and determination have created success and optimism in terms of increased sales to customers with existing and new products. Perseverance eventually pays off.
Eye on the future
By Gerry Enroth
North America Mining is well underway in planning for the future. Additional staffing for sales has already taken place with the hiring of Dean Kuehl (North American Sales Manager Western Division) and Todd Allison (North American Sales Manager Eastern Division). Separating the North American Mining Division into two territories, Eastern Division and Western Division, will allow Dean and Todd to focus their attention on new business opportunities with greater precision and regularity. Growth opportunities at current accounts will also be enhanced.
Chuck Strait has been promoted to Service and Training Supervisor and is currently recruiting for an additional service technician. Technical service to both current and prospective customers will benefit through Chuck’s management of this important Petron offering. Thermal imaging, emissivity review, and the standardization of technical reporting are some of the enhancements that Chuck has initiated.
Francisco Cerrillo has been promoted to Manager Central America. Francisco has been working to expand our sales representation in Mexico and his efforts have paid dividends. We are currently testing in (2) large mill rooms at Cananea and looking forward to significant growth in the coming months.
New markets are being targeted and new product development is under review. Dragline business in the phosphate mining sector, kiln and dryer business in the paper industry, as well as grinding and kiln business in the lime industry are examples of opportunity for growth. Our core business in iron, taconite, copper, and cement are also showing signs of resurgence. These are all examples of the commitment Petron is making in preparation for the future.
On a personal level, I too, am preparing for the future. I will be retiring from Petron at the end of fiscal 2017 after 16 years of service, and 40 years in the mining industry. I am very confident in knowing the North American Mining Division I have managed for the past 16 years is in good hands on all levels and will carry the business forward for many years to come.
Joining the ranks this past quarter were:
- Bevan Bonnett (Sales –W/P)
- John Grams (Business Development Manager-W/P)
- Todd Allison – (Mining Sales Manager Eastern – Petron)
- Michael Farrell (Compounder-Petron)
- Daniel Orlowski (Compounder-Petron)
- Samuel Alexis (Production - WP)
- 3 years - Louise Couillard – W/P
- 10 years - Darlene Vogel – Petron
- 20 years - Jim Brooks – Penetone