Tote Notes - Fall 2017 - Vol 29, Number 4
STATE OF THE NATION
By Craig Phares
With only 2 months left in fiscal 2017, this is how things are shaping up.
Year-to-Date Performance Highlights:
- Petron: 6% above plan.
- West Penetone: 16% above plan.
- Penetone: July-September period showed a profit, but YTD still at a loss and well behind plan.
- West Ventures: 1.4% above plan
Very noteworthy is the acceleration in performance over the last 3 months. Several key customers at all three operating companies have come forward to place meaningful orders. And at a time that is usually seasonably slow. This has moved the needle unexpectedly to the positive.
When I reflect on my pronouncement in Tote Notes over a year ago, that the group will see growth through acquisition, I was wrong. It has not materialized. This was not for lack of funds, effort or suitable strategic fit. But price. Several attractive franchises we came close to buying simply were too expensive. Better to save hard earned cash than to regret having spent too much for too little.
At the end of February and our 1Q close, things were grim. At that point, it was far from clear whether the group could grow organically at a reasonable rate. Or grow in a sustainable way, in key industries and with the right customers. At the time it seemed there was an immediate need to “acquire” growth and meaningful customers.
This failure, in acquiring additive businesses, has put the organic growth of the group in stark contrast. To plot out the group’s rate of growth since December 2016 draws a beautiful steeply ascending hockey stick: a relatively short flat blade (December to February) and then an uninterrupted upward sloping stick (March to date).
This picture is a masterpiece born out of teamwork and hard work.
Even though there are 2 more months left in the fiscal year, it is not too optimistic to believe that 2017 may break some profit records.
2018 will prove another banner year for organic profit growth despite what is now a high 2017 comparable base line. Many key business initiatives planned and implemented over the past 12-18 months will be at play (see other articles in this Tote Notes). Cost cuts will come into full force, new business builds are finally ramping, and hard fought, long awaited bid wins are being realized.
The right acquisition at the right price is always being looked for. But the need is no longer urgent. Nor as important. Thanks to you all.
Petron’s foot print in broader geography
By Chandra Sekar
Petron has been very successful in its business operations in the Americas for many decades. Petron took the bold initiative of widening its global presence and started its operations in the growing markets of China in 2007 and India in 2010. Petron as a brand name was unknown in India/China and, although we have the required OEM approvals from the main players globally as well as extensive worldwide user lists, local user references were non-existent. These to the end users were considered essential before they would entertain a test. The predominant players were Fuchs/ Kluber/Castrol and they have been entrenched in India/China for many years. To dislodge them would take something special and of course time.
The first couple of years required daunting efforts in improving Petron brand visibility, reaching out to customers and improving our OEM relationship. We set out aggressively to remedy this situation and what may have seemed extremely challenging in the beginning soon became a success story with the major OEM's in India. We were able to get successful tests and conversions in the cement, power and steel industries.
We turned the situation around to the point where major OEM’s in the India cement and power industries recommend the first fill and continued use of Petron Gear Shield NC on its equipment. This recommendation was also extended to clients looking for alternatives to their present suppliers and problem gearing.
Being the new kid on the block we needed to exhibit different market approaches to sustain and grow customer base. We devised new market approach strategies to counter the strong competitive forces.
- Signed working agreement with OEM’S to position Petron as first fill.
- Moved away from a Lubricant supplier to Solution provider.
- Promoted a concept “Pump to Drain”. Highlighting Petron expertise in managing the complete product cycle from pumping to draining.
- Improved the service levels significantly above competitors. i.e. assistance in gear alignment, checking backlash, root clearance, radial and axial runouts, gear profile grinding, and thermal imaging.
Our continued improvement in the market share in these regions made us confident to broaden our geographical horizons to SE Asia, Middle East and North Africa. We have been very successful in gaining some decent business in Morocco in 2017. We have appointed likeminded distributor partners in SE Asia and Middle East and are expecting to make inroads in 2018. Let’s make a giant leap in 2018 and make Petron the undisputable leader in the OGL market in the world.
Website, spiders and shine!
By Louise Couillard
Most of you already know about the new website and the major improvements it features, but for those who don’t, here’s a quick recap of what was done.
The structure was completely modified to allow quick and intuitive access to the pertinent section. Products are presented either by ‘’application’’, ‘’business sector’’ or ‘’category’’. You’re invited to browse through to discover how products are classified under each section.
A powerful search engine has been created so you can search the website by name or keyword … Which greatly simplify things when you don’t know the name of the product!
A download page with all our brochures and other documentation is also available.
Another improvement is that each product now has its own page with product description, available sizes, SDS and technical bulletin. Also, many internal links were created and all those features will greatly improve the website’ SEO with time.
So, what is SEO?
Search Engine Optimization is a series of actions to be taken by the webmaster that will allow your website to be found by search engines. Now I can hear you say: ’’Well, why does Penetone.com not come up on search results?’’ This is due to a series of factors, but basically, changing the URL (web address) from west- penetone.com to Penetone.com caused the loss of traffic.
To understand what happened, here’s a brief overview of how things work.
In order to appear in search results, a website needs to be indexed by a search engine first. Each search engine has a robot, also called a ‘’bot’’ or a ‘’spider’’, that will crawl the web to collect data on websites in order to classify and include them into the search engine index. The spider will come back once in a while to verify that the path is still valid. Once your website is indexed, it will appear in search results based on a series of factors such as popularity, times it has been searched, inside and outside links, keywords relevancy, etc. These are natural or organic search results. A bidding system on keywords, operated by Google, can also be used with a consistent monthly budget and thorough monitoring to boost traffic or appear with a better ranking.
URLs and navigation form the road map that search engines use to crawl and index a site. When URLs change, organic search performance changes — often for the worse. When changing a websites’ address, some actions are necessary before it is sent online in order not to lose your actual traffic and search engine indexing. Keeping the most important keywords and links throughout the site is critical, but even more important is the need to map your old and new addresses. Such a ‘’map’’, placed on the websites’ root, will tell the spider what path to take from now on to access the page it is looking for. In the process, the new URLs inherit link equity instead of having to slowly earn it from scratch, and the old URLs are deindexed over time. Failure to map addresses will result in major loss of traffic as the requested link is no longer valid and the index will be removed from the search engine; this is precisely what happened to the Penetone website.
Ok, so now what?
The site has been re-submitted manually to several search engines in order to have a spider come visit again and rebuild the index. This takes time, but along with all the SEO improvements put in place, we can be confident that Penetone Corp. will shine again on search engine results!
Strong finish anticipated
By John McHale
We have now concluded September and only have 2 months to go in our fiscal year. We are on track to finish 9.5% ahead of prior year’s sales and 10% ahead of prior year operating income. With a little bit of luck, we could be in a position to set an alltime profit record at Petron.
The turnaround in sales from 2016 is attributed to strengthening in our mining segments. Iron Ore, Copper and Cement in particular. In addition, our toll blending business and private label business saw significant increases over 2016. Improved revenue combined with good cost containment and relatively stable base oil prices all contributed to what will be a very successful year at Petron.
Our safety and quality numbers continue to be very good. There were no serious injuries at Petron in fiscal 2017 and for that I am very grateful. Our first time through production numbers and on time shipments continue to be on track with the goals we have set.
As many of you are aware, we finished our $4.2 million-dollar plant expansion in 2016 and I mistakenly thought we would take a break for a while and digest all the new equipment and space we added. But a project we have been working on for almost 2 years with a major oil company took a big step forward in early January 2017 and we committed to putting in an additional $750,000 for raw material storage tanks, mixers, pumps, etc. We are now at a point that all new equipment is in and we are rounding third on formulas for the new products. We expect to start production by mid-November. Annualized new sales for this project alone will exceed $4 million. This will be a very nice boost as we begin 2018.
And finally, as we get close to saying good bye to 2017 we will also be saying good bye to Gerry Enroth. Gerry has decided to retire after 16 years as the Petron North American Sales Manager. It has been a real pleasure for all of us to work with Gerry. He has been a true professional who brought experience, common sense and compassion to the job every day. We wish Gerry and Joanne the utmost enjoyment and health in their retirement.
Ready to cut the cord
By Alberto Medina
As you may know, VoIP technology has been around since the mid-1990s, yet a lot of companies are still hesitant of it. Here at West Penetone, we are always looking for new options to help our staff communicate more efficiently and save money, and this is why we are ready to cut the cord!
Effective November 30 2017, we will switch from traditional analog phone lines to a Voice over Internet Protocol (VoIP) system. By switching to a VoIP system the company will drop its telephone costs by 50% while maintaining reliability.($20k savings).
How does this work? VoIP uses an IP phone and converts the sound of the voice into data packets and then sends them to the target destination. In other words, you are using the internet to make phone calls.
What are the benefits? VoIP offers many advantages over the old landline phones.
IP Phones are easy to install and configure, even for people with no technical skills. VoIP software makes it easy to add new users, and to move, add, or change the system's configuration. VoIP systems have more convenience features than traditional phone lines, including voice-to-email, call pushing, mobility, and instant messaging presence.
Finally, we will increase the overall productivity by allowing our staff to conduct videoconferencing calling through the VoIP phone, stay in touch with co-workers and clients to discuss important deals, affairs, meetings, files, documents, agendas, no matter where they are.
The company extends a warm welcome to Jake Doherty, Service Technician, Petron and congratulates him on his recent marriage!
- 3 years - Colin Michael Pichota – W/P
- 5 years - Denis Martin – W/P
- 30 years - Luis Suruy - Penetone