Tote Notes - Summer 2016 - Vol 28, Number 3
STATE OF THE NATION
By Craig Phares
As of the close of May, Fiscal Year 2016 is half over. And across all 3 operating groups, we are falling behind plan on revenues. This despite continued, though modest, U.S. GDP growth.
Key Operating Statistics: Revenues
- Penetone: 13% behind plan, down 6% YoY
- West Penetone: 2% behind plan, down 15% YoY
- Petron: 2% behind plan, up 5% YoY
Disappointing sales to date mandates a renewed focus on cutting costs. Adjustments are being made to match costs with revenue but not at the expense of growing the business. All of us need to be conscious of the need to reduce costs while at the same time moving the business forward.
Despite year-to-date speed bumps, the future looks bright. Existing organic businesses expect orders delayed in the first half to materialize in the current quarter and into year end.
In addition, new initiatives in refineries shutdown/turnaround (STAR Team), industry changing product approvals for North Sea oil rig work, growth in bulk shipments to the pulp & paper industry, and expected new business due to the recently completed expansion at Petron all combine to point to a better second half - and well beyond.
With the group's finances on solid ground, West Chemical is in the market to enhance its position by purchasing complimentary businesses. To this end, several compelling acquisitions have been identified. Common among all of these corporate candidates are robust product lines, new customers and new human capital that complement our existing franchises.
A new corporate ethos is in place. It is no longer a mentality of "build or buy". But to do both. Growth is back in vogue at West Chemical Group.
The STAR Team
By Jean Richard
Over the last number of years, West Canada has developed a line of decontamination products consisting of H2S Scavengers, Degassification/Decontamination and degreasing products for the Oil/Gas Sector within the refining /petrochemical segment; in particular, for shutdowns and turnarounds.
This market segment has really started to show significant potential in spite of the drop in crude oil prices. Realizing that the opportunity is North American in scope (global in fact), West Canada and Penetone have joined forces to approach the market together both north and south of the border by using everyone’s strength.
Building on this initiative, a strategic plan meeting was held in Edmonton, Alberta to formally launch the program with the participation of Craig Phares, Mike Bradford, Dave Von Duhn and Jim Boyle from the States and Paul Hayden, Wayne Dory, Greg Cebuliak, Louise Couillard, Jean Richard and Sean MacDonald from the Canadian operation. Sean is the newest member of the team and fills the role of Tech Advisor, an engineering role. One outcome of the meeting was the suggestion to identify the team as the ‘’STAR’’ team, (STAR being an acronym for Shutdown TurnARound). Plant visits have already been made by the ‘team’ to Marathon Oil and Toledo Refining Company in Ohio and also Chevron in Texas. The objective of the presentations being to get on the bidders lists for major shutdowns/turnarounds projects in 2017 and 2018.
The STAR team was well received by these prospects and we are bullish about the prospect of new work awarded to the STAR team in the USA.
While West is a relatively new player in this field, we feel very confident that with the team in place, a complete product line and excellent marketing support, we are well positioned to see important growth for West over the upcoming months and years.
IEEE – IAS/PCA Cement Conference
By Elisa Pieroni
Craig Phares, John McHale, Bill Hankes, Gerry Enroth, Karl Bruno, and Elisa Pieroni (pictured below) represented Petron during the May 15 – 19 Conference in Dallas, Texas. Petron showcased our Premier lubricants Gear Shield NC, Gear Shield NCW, Gear Shield Synthetic, and Kiln Lube 300 to the cement industry for ultimate protection on gears for the kilns and grinding mills.
Bill and Elisa participated in a Panel Discussion on Lubrication with two of Petron’s competitors (Kluber and Fuchs). A few of the topics discussed were delivery systems, application rates, types of lubricants (advantages & disadvantages), additives, EHL (Elastohydrodynamic Lubrication). Each company spoke to the topics, the Chairman Glen Cahala asked a few questions after each topic, and the members of the audience were able to submit questions to be addressed in the final moments of the discussion.
Over the course of the show Petron was able to meet with representatives of sixteen current Customers and qualify ten new prospects during the Cement show.
Away-From-Home Trend Increases Demand
By Mike Nelson
There has been strong consumer demand in US tissue consumption in 2015 - 2016, a large part of it in the ‘Away-from Home’ sector (AFH). Some of this can be attributed to the lower gasoline prices as consumers have traveled more and restaurant sales have soared. Following on this growth some of the major tissue manufacturers that Penetone works with have added capacity through acquisition. This is a much less expensive way to increase capacity without the high cost of building new machines. For instance, SCA has recently purchased Wausau Paper, which added on 3 additional mills in the USA. They now have 26% of the market in America, second only to Georgia-Pacific at 30%. Moreover, these facilities are running a significant percentage of recycle furnish which is where we come in with ‘stickies removal’. Penetone is the largest supplier to SCA as well as Georgia-Pacific and Kimberly-Clark in this market. We recently added on the SCA Menasha, Wisconsin facility and are in the process of converting them from totes to bulk deliveries. This has been three years in the making and along with new business at Georgia-Pacific in Green Bay; this will fuel growth for Penetone in the mid-west. This is complimented by new business at the Natchez, Mississippi location of Von Drehle that started-up in March 2016. The Production Superintendent there selected Penetone for product performance of the Pensolv L115C and our technical acumen in the forming zone. While other chemical suppliers have an extensive list of products that cover all applications in a paper-mill, we are known for our expertise in ‘stickies removal’ on wires and felts.
Georgia-Pacific recently acquired Augusta Select Tissue in Georgia and they are our customer as well. They are close to the flagship facility in Rincon/Savannah Georgia that we send tanker loads of Pensolv from our Carlstadt, NJ production facility. Orchids Paper in the USA recently spent fifty million dollars to enter into a strategic alliance with Fabrica de Papel San Francisco which has a facility in Mexico six miles from the US border. This is important for Penetone as this facility has set worldwide production and machine speed records globally, and we have an upcoming trial with the Pensolv L115C.
This trial along with others with KimberlyClark and SCA in North America will allow us to grow in a market where we currently have over 70% of the business.
Wi-Fi System Delivers More Coverage and Security
By Roger Wichner
The wireless (Wi-Fi) system at Petron has been upgraded to improve security, coverage and flexibility. Our former system utilized older encryption technologies. The new system incorporates the latest encryption technologies and security tools to prohibit any unauthorized usage into our network.
With the advent of the plant and warehouse expansion our existing wireless system needed to be able to cover more area. The new system provides the additional coverage and capacity we needed. It also allows us to incorporate new modern equipment with advance features as they become available.
With the upgrade we are now able to provide “Guest Services” which allows us to limit wireless availability to our visitors and guest to internet access only preventing them from access to our internal systems.
In summary, we have implemented a newer and more robust wireless solution which will provide Petron with a more secure, expandable and stable infrastructure with room to grow for many years.
Marketing Technicalities or Technically Marketing?
By Greg Cebuliak
A fine line that appears in any profession or business where sales is involved is the one between connecting and informing the client. One can appreciate that simple terminology and colorful adjectives help and serve in connecting a customer’s interest and needs to the respective product. But in order to inform the customer about the application of the product, one also has to appreciate that words with complex meaning are also necessary to simplify and condense discussion with them. This is done to ensure that he or she makes no assumptions about the product, its intended application, and the level of performance to expect. Unfortunately, trying to manage these levels of language can certainly cause more confusion than it solves.
An example of the issue in managing language to both connect and inform a client, in our industry, is the use of the word microemulsion. Neither an emulsion nor extremely small, the term was designated to describe a point where surfactants aggregate in solution to form a bi-continuous, semistructured low-energy thermodynamic state of a solubilised material in phase or evenly dispersed within another. That’s a mouthful! But why perpetuate the misnomer? One possible explanation is the desire to inform a client about the physical properties or state of a product without the necessity of invoking complex or further technical chemical terms. Another explanation is that it’s simple terminology for connecting a customer’s interest and needs to the respective product. For example, a client with an application requiring a surface clean of oils, grease, and hydrocarbon material may be best served by a product with a degreasing solvent emulsified in a solution of surfactant over a degreasing solvent alone.
But where can managing language to both connect and inform a client go wrong? It can go wrong when marketing terms are used to muddle information and purposely invoke pointless debates on standards already in place. An example and easy to understand reference, in Canada, is the restaurant franchise A&W using the terms hormone and antibiotic free to describe their chicken and egg products. The first problem is that the use of hormones for chicken production was long ago banned in Canada. The second problem is that a large amount of Canadian chicken and egg farmers have voluntarily stopped the use of antibiotics. So, why market a technicality? Or is this technically marketing?
Needless to say, it can certainly confuse clients and promote illogical assumption. This is of course an issue we see in our industry with the use of the words low toxicity, nonflammable, non-carcinogenic, non-ozone depleting, etc., etc., etc., etc. …
Petron welcomed new personnel this past quarter including:
- Bruce Cash, Compounder
- Breanna Frankenberg, Lab Technician
- Steven Penkert, Warehouse Assistant
We wish them all great success
Celebrating service anniversaries this past quarter were:
- 3 Years – Penetone: Dave Von Duhn
- 3 Years – Petron: Diane Liginsk
- 5 Years – Petron: Chuck Strait
- 15 Years – Petron: Gerry Enroth
- 30 Years – W/P: Pierre Stewart