Lubricants Engineered for Industry

Spring 2009 - Vol 21, Number 3

State of the Nation

by E. W. Phares II

Our first six months of fiscal 2009 was completed as of the end of May. I am pleased to report to you, that in spite of the depressing economic conditions, we are only 14% behind plan in sales and we are slightly ahead of our pretax income. We are obviously behind in both plans, sales and profit, compared to 2008. However, when evaluating our position to the rest of the chemical industry, I am very pleased with our results. Continued tight cost control, excellent purchasing in our raw materials and very selective investments in capital, were the contributing factors to our results.

Our major negative impact is Petron, where the cement industry, due to the low housing starts, is running at approximately 50% of capacity and has always been a very important market to us. The continued closure in the iron ore markets, especially in the Midwest, has further had a negative impact on our sales. We are running well below plan, both in sales and operating profit, however, an excellent job is being done by Petron personnel in controlling their costs and where possible, enhancing and improving our pricing.

Penetone is doing an outstanding job and are enjoying increased sales in the pulp and paper, the military, and most recently pipeline and petroleum fields. Forecast for Penetone is optimistic versus the rest of the industry and we fully anticipate continued strong sales in the three areas mentioned above.

Canadian sales were well below plan due to continued drop off in the Western market through R&M. Close to 50% of the oil and gas rigs are down in Western Canada and have not picked up as we had anticipated. The end result is that our sales to this market are well below plan.

Sales to the supermarket industry continue strong and we are hopefully anticipating that this trend will continue through the year. We are in serious negotiations for a new contract with our major customer, Sobeys, and anticipate winning a three year contract within the next couple of weeks. Our sales development program to the swine industry continues nicely and we are anticipating improved sales through this new product line through 2009.

First half encouraging but challenges lie ahead

by Jean Richard

Canada, like the US, is going through rather turbulent economic times. Hardest hit to date is our industrial segment as companies like G.M, Abitibi Bowater, Smurfit and numbers of other organizations have filed for bankruptcy protection. Western Canada which relies on the natural gas and crude oil markets is also seeing a significant slowdown.

Fortunately, our “food” related businesses performed well in the first half of the year with supermarkets, food processing and barns all up over last year. Bottom line results are slightly lower than 2008 but continue to be strong.

With raw material costs dropping, there is significant pressure to reduce selling prices. We expect this could impact negatively in the second half of the year. In addition, we are also currently renegotiating our contract with Sobeys (large supermarket customer). Assuming we retain the business, prices will be significantly lower than in the past.

On a more positive side we have 3 major prospects with whom we are now negotiating. Should these accounts be converted into customers this will help offset the expected drops elsewhere.

No doubt the next 6 to 12 months will hold major challenges.

A positive side to a difficult economy!

by David Brealey

As we are all aware, the economic climate is not conducive to high sales figures, even relatively moderate sales.

So, what are the requirements to keep our heads above water and to sow seeds for the future? Obviously America’s and European markets are suffering more from the present situation, which is typical of countries which had relatively low growth rates to start with, however even in these times there are opportunities, especially against high priced competition and inefficient suppliers.

Considering these conditions, the obvious choice for increasing sales would be in countries and markets that;

  1. Still have significantly higher growth rates albeit slower than it was,

  2. We do not have a reasonable market share using similar application products

  3. The competition is typically high priced European products

  4. Have traditional competitors selling through inefficient distributors.

  5. New applications through performance testing and approvals.

There are several countries around the world that offer significant opportunities as well as some local industries that offer niche market sales presently not being serviced by the major oil companies or by distributors with inefficient capabilities.

In support of a successful sales effort it is important we document and utilize Proof of Performance, Cost saving exercises and Reference information to the fullest, optimizing the potential for success, not necessarily working harder, just smarter.

Wherever distant distributors are involved, the tendency, especially in our type of market, is to employ purely sales people and lose focus on the service side of the business, which in our case is part and parcel.

This fortunately is where we can succeed in turning a potential customer. The time and effort required sometimes to secure this type of deal can be long and considerable, not the way sales or distributors like to operate, however, when dealing with mechanically minded customers as opposed to purchasing agents a basic knowledge of the equipment and its operating quirks is obviously an added advantage, and to be considered experts in this industry (which we are) goes much further.

Only those that are properly trained and/or assisted by the manufacturer will succeed, the rest will slowly drop by the wayside.

In these troubled times we have to be at our best, use what we have to its maximum effect. Concentrate on teamwork within the company to utilize the mine of expertise and information we have to its fullest.

Assist wherever possible to obtain new business opportunities in each other’s divisions or areas. Communicate our successes and achievements to end users, head offices and OEM’s to build stronger relationships thus increasing the potential for new, or assisting in maintaining business.

Changing needs demand adaptation

by Bruce Muretta

As economy changes affect the demands of our customer base, we at Penetone must change and diversify our products. Chad Tennant has made an excellent stride in this transformation with his contacts at Tyco by introducing Wescodyne Plus as a disinfectant for fire department respiration masks.

The sale was easy. Chad worked closely with Phil Figdore to identify the product and make the proper technical presentation at Tyco. The next step required Phil to qualify Wescodyne Plus at all the States controlling regulatory agencies. To comply with all required regs., labeling information was lengthy and precise. Phil compiled this information and worked with a specialty printer to produce the label. In turn, Tyco reviewed label proofs by their technical staff to accomplish final resolution.

Filling and packaging required complex coordination by Ralph Santoro and Health Perine working with a specilty packager to produce the final product. After package review and acceptance by Tyco, sales began.

Substantial sales have been made and we are now working with Tyco for international introduction.

Distributor meeting well attended

by Gerry Enroth

The 2009 Petron Distributor Meeting was held May 3rd through 6th in Savannah, Georgia. The gathering was very well attended with 31 meeting attendees and 51 total including spouses and guests. Distributors and employees from across the globe were present including representatives from the United States, China, South Africa, South America, Canada, Chile, and Peru.

The event was launched with a reception and dinner at the Mansion on Forsythe Park followed by two full days of very productive meetings. OEM participation included representatives from Rexnord, FFE Minerals, AC Equipment, and Fluid bag. Petron Distributor representation included Jasper Engineering, Anderson Lubricants, Copper States Specialties, Highlands Oil, United Petroleum, ConocoPhillips, PetroCanada, COPEC, and Geared Lubricants. All gave very informative presentations that sparked numerous questions and follow up discussion.

Two new mining applications were discussed and documented through detailed presentations. They are the expanded use of Petrotac EP Compound in front end loader pin and bushing applications, and Open Gear Lubricant 585W in crusher spider bushing applications. Both products have proven to work very well in these new applications, and initial testing indicates substantially increased component life can be expected. Many new quotes have been submitted as a result of the presentations, and we look forward to increased sales growth for each product.

The event concluded with a reception and dinner where all meeting attendees and guests were able to spend time discussing business, visiting, and getting to know one another.

Service Awards

In the first half of 2009 several employees celebrated service milestones:

3 Years
Kudjonga Tupela

5 Years
Armando Munoz
Jim McKay
Julie Pantano

15 Years
Maria Petrucci

25 Years
John McHale
Ron Costello

30 Years
Malcolm Popowich

40 Years
Sylvia Paredez

Birth Announcements

Congratulations to Nicholas and Lisa Murray and on the birth of their son, Bryce Daniel, born June 8th and to first time parents, Jim and Niki Brooks, on the birth of their daughter, Maia Elizabeth, who arrived at little early on July 9, 2009.

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