Well I've taken more than my fair share of time off from this. In just the short time I have taken off I have gained 30 lbs. lost 20 and have baby number 3 coming in 12 days.....amazing how much can change in such a short period of time. Not only have I had the pleasure of putting my body through a consortium of confusing changes, but I have also had the incredible opportunity to make my way back to where I started my career at age 22 - I'm now back home in Urbana, Ohio working for Duncan Oil Company. I can assure you this is definitely the last stop in, what seemed to be, my short tour of the country because my wife was clear that if I leave home again I'm going to have to do so without her. She loves me - I swear....
In my new capacity I have been introduced to areas of this industry I always assumed were a myth - operations, safety, maintenance, trucking, sales, ect.....what happened to supply? Well, I get to still have some fun with that, and I'll tell you supply in Ohio is almost as frustrating as supply in Chicago except on a whole different level. In Chicago it seemed like the economics from one refinery could adjust all the technical readings and make your projected analysis useless - frustrating to say to say the least. In Ohio it is entirely different, now we have the beauty of a melting pot concept where pricing and retail margins are derived from Gulf Coast, Chicago and New York Harbor economics. A logistical nightmare would be an understatement from where this guy is sitting, however one thing I have noticed is the INCREDIBLE opportunity to warrant additional volume from these net backs we're seeing on our Platts contracts. Obviously I've worked with NYMEX, Argus & Platts contracts in many different capacities, but none as advantageous as I have ever noticed in the part of the country. There are times such as today where our contract pricing is .20/gallon lower than the lowest posted unbranded supplier and as much as .33/gallon lower than some of the regional refiners are posting (this is for ULSD). Being that we are a heating oil and commercial fuels company this is padding our projected margin by MUCH more than what we had budgeted based on the ability to purchase fuel at a lucrative discount. We are able to pass along some of our savings to our customers by keeping our operating costs lower than our competitors and our fuel is basically selling itself! Granted, our company is very focused on customer satisfaction and incredibly service oriented so we can justify a little higher margins anyway, but the additional profit is helping us help our customers which is sowing some very good will with them as well as helping us pick up some additional companies who are used to just purchasing at retail facilities. Supply seems to be pretty good at this point - we have not noticed any significant issues even with the refinery strikes from the USW we seem to be getting optimal volume as needed.
Now - as far as the operations side goes....I was lucky enough to be tagged as the Vice President of Operations for our company about 8 months ago and in that capacity have worked with our ownership team and determined we're moving away from owning our power units and leasing everything. I'm not a gearhead by any means and can barely find my way around a shop, but what I do understand is basic economics and as we continue to see the technology advance in these new power units we see the cost to maintain these assets rise with it. For instance - we have a crane truck and blew a motor and tranny in it in December and the total bill to have everything rebuilt hit the tune of over $25,000.00. I'm not game to continue to spend a down payment on a house to fix a truck that is 6 years old. Our new leasing program lowers our liability and fixes our yearly cost per unit to where we can closely budget our cost per unit to where we can really get a strangle hold on our overhead and take advantage of external sales opportunities by generating a required rate of return. The one issue we have with leasing vehicles is obviously in the case one breaks down we will not have anything immediately available to take its place, so we have decided to keep a couple units on stand by as "spares", but they are not daily drivers; just something to keep our guys running if something comes up out of no where. Tankwagons are a little different story; since you can only lease a cab and chassis we have now come to the determination on how we are going to manage this going forward in terms of a buyout at the end and how to get a scheduled unit to replace the purchased unit. We are planning on making a profit division out of the purchase and resale of the asset and using the money to either purchase a new tank to put on the back or use the profit to roll into a new lease. Either way our research has shown after 5 years the trucks are going to be at the peak selling point and at the downtrend of its life cycle which will keep us from having to maintain the big ticket items such as a motor or transmission.
This is just the tip of the iceberg from where we stand. We have been making some huge adjustments from a sales and marketing perspective as well which I'm sure will be a point of literature in the future, but at this point I just figured it best for me to finally get back to writing down everything I'm thinking because my 9 month pregnant wife has absolutely no interest in anything I have to say at this point....she just wants to be comfortable again and me talking about work is anything but. Like I said....she loves me.
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