Lubricants Engineered for Industry

Tote Notes - Spring 2016 - Vol 28, Number 2

STATE OF THE NATION

By E. W. Phares II

We have now completed the first quarter of fiscal year 2016. Our first quarter sales reflect the continued worldwide slow-down economically with our results behind last year well below profit plan.   Pretax profits are ahead of both plan and last year.

Penetone sales YTD were ahead of last year but continue behind plan at. The US economy continues to run well below anticipation and we do not expect a rapid improvement over the next 2-3 months. All market areas were behind plan for the month with the exception of industrial and military.

Sales in West Canada were well below both plan and last year. Pretax income was well below plan, but close to last year. Industrial sales, supermarket sales, and food barn sales were all below plan for the month. The DeLaval sales have continued to improve and were well ahead of last year’s sales. Unfortunately business continues to be extremely weak in most areas due to our soft economy once again tied to a sharp decrease in demand for both copper and the iron ore markets. Additional bad news was that we were informed by Sobey’s Quebec that they have decided to go with Eco Lab. We anticipate continuing to supply Sobey’s requirements for about 6 more months, at which time the business will be transferred to Eco Lab.

Considerable cost reduction is being analyzed in order to counterbalance the loss of this business. In spite of the continued weak economy, we anticipate that business should be no more than 10-15% behind in sales and operating profit.

Petron sales YTD, although behind plan, are ahead of last year by a considerable amount. Our pretax income for the month is well ahead of plan and also last year. Mine layoffs and closures continue to increase with no anticipated positive change. We are feeling this across the board but our increased sales offshore have helped counterbalance this softness.

Our plant warehouse expansion is basically on schedule and we fully expect to be up and running by June 1, 2016.

In spite of our sales development activities in South America and Europe, and continued strong sales with Mobil, we do anticipate that our sales and bottom line going forward in the next quarter will be 8-10% behind plan.

Penetone Changes

By Bruce Muretta

Penetone is moving ahead with well- planned changes that will grow the company and provide security for the years ahead. Company structural changes and targeted business market emphasis will lead the way.

With my retirement, the management structure has changed. Craig Phares will be the General Manager mostly dedicated to growing the targeted areas of Pulp & Paper and Petrochemical shutdown/turnaround. Craig has spent the last nine months delving deep in these areas developing strategies and execution plans with Mike Nelson and Mike Bradford who will be focusing their maximum efforts to rapidly achieve results.

Reporting to Craig will be Kim Lyons who will become the Director of Site Operations and Human Resources. In addition to Human Resources, legal and general insurance, Kim will direct the coordination of customer service, manufacturing, warehousing and Research & Development.

I would like to thank Woody Phares for the opportunity and confidence he has shown in me over the last 30 years; I could never have asked for a better person to work with. It was never a “job” but a wonderful challenge that ranged from some dark moments to great successes.

When you work with great people for 20-30 years, it is difficult to walk away. In a crazy way, we have transcended friendship to family. I would have never thought that a career could be that rewarding. I will miss everyone.

But hold on! I will continue around in a consulting capacity handling the coordination of the financial activities and aiding Craig on various projects.

Plant Expansion Update aka the Gorilla Story

By Jim Bittner

As the calendar flips from March to April, the thoughts of many cyclists who have spent the winter months riding in their basements turn towards the outdoors. Spring means that cycling is in the air.

One of the oldest and most storied cycling races in Europe is the Paris–Roubaix, a particularly difficult race across the north of France, this year on April 10 th . What makes it difficult is that it has sections of cobblestones that become slippery and mud covered in the wet spring weather. In fact, many professional cyclists avoid the Paris-Roubaix because it is so difficult and the likelihood of crashing is so great. Cycling fans flock to it because it makes for some excellent entertainment.

As I scanned the previous winners of the Paris-Roubaix I recognized several names and one name stuck out: Bernard Hinault. Bernard Hinault, A.K.A. The Badger. I became familiar with The Badger when watching an ESPN film entitled Slaying the Badger which details the rivalry between Bernard Hinault and Greg Lemond, arguably the United States’ greatest cyclist (sorry Lance, he did it before the era of performance enhancing drugs). Greg Lemond won three Tour de France victories (1986, 1989, & 1990). He missed the Tour de France in 1987 and 1988 because he was shot by his uncle while turkey hunting, but that’s a story for a different time.

Greg Lemond has had a quote wrongly ascribed to him. The quote is “Training is like fighting an 800-pound gorilla. You don’t stop when you’re tired; you stop when the gorilla’s tired.” In actuality, this quote was uttered by Greg Henderson, another professional cyclist but again, I digress.

So, what is the point of this long meandering article? Well, it is to talk about Petron’s plant expansion. In September 2015 we broke ground on our warehouse and plant expansion. Nary was a tear shed when the excavators tore down the bulk truck unloading dock for propensity to fill with water during the wet season had been a thorn in our sides. From September through November, the construction occurred outside our existing plant, only tangentially Petron’s operating activities. Favorable weather allowed us to pour concrete into the first week of January.

Then, in December, things changed. Work began on two new offices in the warehouse necessitating we move the equipment stored there, shrinking our available space. As soon as the offices were done, we then tore down warehouse racking in order to begin construction on a warm room for heating raw materials before use. The location we used to stage materials coming from production area was also a casualty of the warm room. Finished product was stored in the production area until enough products shipped.

As soon as the warm room was finished, construction activities turned to the production area. The existing warm room was removed to make way for an entrance between the plant expansion and the existing plant. Having construction guys in the plant meant scissor lifts taking up precious floor space to do their work. It felt like the gorilla was sitting on our chests. Finally, on February 26th, we got a little room to breathe as the two storage tanks were moved out of the existing plant into the new plant. Then, on April 1st, we were granted temporary occupancy of the new warehouse so that we could start to move many of the finished goods stored in the production area into their final warehouse destination. On April 4th, the building inspector gave us approval to start using the drum trailer unloading docks in the production area expansion. We’ve thrown the gorilla off our chests and have started to breathe again.

During this time, both warehouse and production employees worked well to make the best of the situation. Production levels and shipment schedules were maintained. This would not have been possible without the efforts of our dedicated employees.

Petron's warehouse additionFigure 1 - Petron's warehouse addition

Petron's production area under constructionFigure 2 - Petron's production area under construction

We still have more work to be done in the plant. The projected completion date for the project has been set for mid-May. From where I sit, the gorilla is starting to tire and warehousing and operations are starting to be returned to normalcy. The extra warehouse space will again allow for efficient warehouse operations and the extra manufacturing area allows for more mixers, raw material storage tanks, and room to work.

I’d like to thank all of the Petron staff who tolerated trudging through the snow because their parking spaces were in the construction area and everyone who put in extra hours because the construction inhibited manufacturing’s ability to function efficiently.

New Opportunities, New Horizons

By Paul Hayden

It’s been said that necessity is the mother of all invention. Many years ago we were approached by a client to develop a new product that could degas and clean hydrocarbon sludge from oilfield assets and refinery vessels; this endeavor would lead to the invention of ROC 40 and eventually an entire new product line that today is one of West Penetone’s primary growth areas in the marketplace. This new product line eventually became known as our shutdown/turnaround product line and encompasses many products for different uses and applications. As of late 2015 the shutdown/turnaround product line has evolved to a well-rounded set of products that have been performing well in the marketplace. So much so that West Penetone products nowadays have brand recognition and a bit of a reputation as world class products in the area of performance for onshore applications in oilfield cleaning.

In December 2015 we were contacted by another company who was searching for a product that could be used offshore in the North Sea area of Europe for degassing and cleaning oilfield assets. FIS Chemicals of Aberdeen, Scotland was responding to their clients who were looking for a solution to the problems faced at sea when trying to clean and degas for turnaround maintenance or decommissioning. ROC 40 immediately came to mind, but we soon found out that the regulations for offshore chemical cleaning are much more stringent then onshore. Not wanting to lose this opportunity and realizing that the chemical product is only one part of the solution to successful turnaround applications, our West Penetone team set to work designing a new ROC product to fit the requirements of the European marketplace. The product of this work is called ROC 40-E2 and is currently in regulatory approvals with the appropriate regulatory bodies in Europe. We are confident that we will not only meet but exceed the requirements set out for European offshore cleaning and that this new market will bring many new opportunities with the help of our new distributor for the North Sea, FIS Chemicals of Aberdeen, Scotland. A new horizon and a new market place to grow.

We are hoping that this will be the first of many new opportunities as we roll out our shutdown/turnaround product line across the globe and as needs arise, new products invented to meet ever changing needs on new horizons.

Employees of the Year

Operations

Each and every year we recognize those employees who have made significant contributions to the company for the year. For 2015, we recognize Jose Gonzalez, Operations, a Petron compounder since 2000; Jose is the hardest worker Petron has by far. He never misses a day of work. He barely takes time out to answer questions – he is so busy trying to get batches done. Jose produces more products at Petron than any other employee and rarely makes a mistake. He is a model employee.

John Mchale congratulating Jose GonzalezFigure 3 - John Mchale congratulating Jose Gonzalez

Administration

Also joining in 2000, is Penetone’s Marlon Martinez, Administration’s employee of the year. Marlon is also a dependable, reliable worker; never missing a day. He is willing to take on any responsibility asked of him including chauffeur when necessary. He is always willing to learn and has a winning attitude doing so.

Technical

The employee of the year for Technical is West Penetone’s, Greg Cebuliak. Greg has been a major contributor of formulary work leading to new products--ROC 45W, Sonic Wave Plus, Scavex line to name a few. He has also revised many products to keep competitive without sacrificing performance. He has updated sales and product literature and developed sales training. Greg is always taking courses and making himself invaluable.

Sales

Chad Tennant, a long-time employee of Penetone, is the Sales department recipient. Chad has achieved sales growth in his territory with our new Type II cleaner as well as expanded these sales into the West and Texas. Chad has also increased sales of Wescodyne Plus to Tyco for gas mask disinfecting by developing innovative packaging.

Congratulations to all on their achievements.

President’s Award

Our President’s Award is an award that anyone treasures in this company as it recognizes the significant contributions made to the organization. To receive the award once is a great honor. To receive it multiple times indicates a level of performance nearly impossible to achieve. Having won the award in 1995 and 2001, Bruce Muretta, this year’s recipient, has been the mainstay of the “West” organization for close to 30 years making himself indispensable to Woody Phares and the Board of Directors in his role as Chief Financial Officer.

In addition, for the past 15 years, he has overseen the operations at Penetone in his capacity as General Manager which has been extremely challenging at times. He has needed to find a new home for Penetone and outfit it for its manufacturing needs. Once this was accomplished, he was able to steer Penetone back into profitability, concentrating on new markets and reinventing the company. Penetone is now poised for a bright future thanks largely to his efforts.

Service Milestones

Celebrating service anniversaries this past quarter were:

  • 3 Years – W/P:
    • Melanie Cote
  • 15 Years-W/P:
    • Jo Anne Hegberg
    • Marcelo Bravo

New Hires

Petron welcomed many new personnel this past quarter including:

  • Amanda Schmitz, Production Assistant
  • Daniel Pabelick, Compounder
  • Arthur Rucker, Compounder
  • Chris Wells, Compounder
  • Richard “Bill” Hankes, VP Sales/Marketing

We wish them all great success 

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