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Action Propane Rides Real Estate Boom

When Murray and Wanda Hoggarth started Action Propane with one delivery truck in 1984, Leander was one of several tiny Texas towns northwest of Austin, mostly separated by miles of empty roads and pasture land. Today the 20-something miles of Highway 183 between the state capital and this small community is a solid line of newly erected retail strip centers, residential subdivisions, and major road construction gasping to catch up with an unstoppable sprouting of suburbia.

Austin is home to music legends, Hollywood film producers, corporate lawyers, pompous politicians, and computer gurus who are rolling out dotcom companies faster than tumbleweeds in a wind storm. It has achieved a national reputation as a city of momentum. Action Propane is riding that wave of high-speed growth.

"Austin is well known for its Dellionaires - folks who have made their financial fortunes because of Michael Dell's computer company," says Wanda Hoggarth. "Williamson is one of the fastest growing counties in Texas. The entire area has come uncorked, and there doesn't seem to be any slowing down. We made our first year's projected delivery volumes in just three months.

"Our company started providing service to customers who live in mobile homes. We still provide that service, but many of our customers today own million-dollar homes with no access to natural gas."

Most deliveries are to residential customers who are within a 50-mile radius of Leander. Exceptions include car washes, kennels, and resort businesses near Lake Travis where affluent Austonians have weekend homes.

In the past 12 months, Action Propane has installed more than 300 storage tanks for residential use. The company stocks mostly 500- and 1,000-gallon tanks fabricated by Trinity Industries. The smallest available tank is 320 gallons.

"Houses are at least 4,000 square feet, and everyone has a swimming pool," Hoggarth says. "We work with a lot of Austin area builders who stay busy with new construction. Plumbing the gas lines during construction is the most cost-effective method to install lines for propane. We also can check for leaks on lines installed by a builder's subcontractor."

Action Propane installed a 1,000-gallon storage tank and two 500-gallon tanks to fuel eight furnaces for one customer with an 8,000-sq-ft home and a 4,500-sq-ft guest house. Newly constructed houses with heated swimming pools usually need a minimum of two 500-gallon tanks.

Full Service Company Propane is used to fuel various appliances, including water heaters, ovens, cooktops, clothes dryers, furnaces, gas-fired ceramic logs, and gas grills - a popular item for home owners. Action Propane sells a wide range of gourmet barbecue grills, some costing as much as $6,000.

"Our main business is propane gas delivery, but we make sure customers can buy the equipment and appliances they need to use the gas," Hoggarth says. "We stand behind the equipment with service whenever it's needed. That's part of our philosophy."

The rocky terrain of the Texas Hill Country provides an additional challenge for the installation of propane fuel systems. Its southeastern border is marked by the Balcones Fault Line, a significant geological uprising in the earth's crust that roughly extends along Interstate 35 between San Antonio and Austin. Action Propane uses two rock saws that are equipped with a 42-inch circular wheel, which has 36 rotating carbide teeth to cut through limestone and other rock formations. A six-way blade on the front of the machine is used to backfill the trenches.

The surrounding topography dictates how deliveries are made and the type of equipment that is used to serve customers. Backing up or down a 100-ft one-lane driveway to make a delivery is not uncommon for Action drivers.

"We use the small 2,100-gallon bobtails to make deliveries in the hills," Hoggarth says. "The roads into those neighborhoods are steep and winding; so we have to make sure we can maneuver over them."

The long-term marketing strategy of Action Propane has been to grow the propane business at a controlled rate. "Our goal is not to be the biggest propane supplier in the market but the best," says Murray Hoggarth. "When we go into a market, we're sure that we can provide the necessary service to our customers.

"We are primarily interested in acquiring customers who are service oriented," Hoggarth says. "Good delivery service is the most important factor in retaining current customers and attracting new ones. Expansion at too fast a rate can result in the loss of your existing customer base.

"There will always be some companies in the industry that are willing to offer a lower price. But we try to educate our customers that lower price without dependable service is no bargain.

"Companies with big telemarketing departments don't deal with customers on a one-to-one basis, and that has provided opportunities for us. Small propane distributors who provide personalized service will always be in demand.

"Five or six years ago, I figured we could slow down a little after establishing a base of several thousand customers. But a business either grows or shrinks. So you have to meet market demands and eventually hire additional drivers and purchase more equipment."

Martin Gas Sales in Kilgore, Texas, supplies propane to the company's bulk plant near Leander. Action Propane is considering an additional propane bulk plant because of increasing customer demand in the Austin area. The company also is advertising for another delivery driver.

Seasoned Drivers Customers are served by four experienced propane delivery drivers. All have hazardous materials endorsements on their commercial driver licenses. Annual hazardous materials retraining is scheduled for all, regardless of experience.

The company requires that new drivers have propane certification from the Texas Railroad Commission. In addition to loading and unloading procedures, drivers must demonstrate their knowledge of the workings of pumps and compressors at storage sites, pneumatic valves, and automatic shutoff equipment before they are assigned a vehicle.

Driver selection is a careful process and applicants are thoroughly researched. Depending on experience, new hires ride with a driver trainer for about a month to practice with the propane trucks, check for leaks, and perform pressure checks. Specific training covers procedures for filling a customer's tank, what to do when a leak is suspected, basic routing techniques, bookkeeping, and customer relations. Additional time is spent reviewing hazardous material regulations. Drivers also are trained in basic appliance service work.

"Each new hire works with one of our senior drivers to learn our methods and systems before he's given his own route," Hoggarth says. "We have to be sure they are qualified for the job before we send them out."

Driver turnover is generally low at Action Propane, and they have the opportunity to build good relationships with customers. "Most of our drivers are long-term employees," Hoggarth says. "Customers like the continuity of having the same driver making deliveries to their homes."

Reliable Equipment Timely deliveries are dependent upon reliable equipment. The fleet of five trucks have Chevy and Ford chassis. Assembled by Sales Equipment Company in Oklahoma City, the newest delivery vehicle in the Action Propane fleet is a 1996 Chevy Kodiak. The truck is equipped with a 427-cubic-inch V8 engine and an Eaton FS 5205B five-speed transmission. With the flip of a switch, truck engines can change from gasoline to propane that is supplied directly from the bobtail.

Running gear includes a Dana Spicer drive axle and rear axle rated at 22,000 lb, Goodyear and Michelin radial tires, and stainless steel wheel covers by Phoenix Simulators. One of the bobtails has a cab-mounted MID:COM computerized register-printer.

Action delivery trucks have air-conditioning. "That's something you might not think is too important, unless you work in Texas," says driver Stoney Holbrook, a ten-year veteran with the company. "I consider that a big benefit. We deliver propane all year long, and it gets really hot in our area during the summer, which is most of the year. Getting a chance to cool off between deliveries is a real plus."

Drivers are assigned to the same delivery trucks. Tanks range in size from 2,100 to 2,800 gallons. Most of the MC331 pressure vessels were fabricated by Arrow Tank & Engineering. Standard equipment on the bobtails includes Hannay hose reels, Fisher valves, and RegO nozzles.

Action Propane recently began adding remote control shutdown equipment to its bobtail fleet. The remote control device allows drivers to turn off the truck engine with the touch of a button. The four-button hand-held device also controls the PTO, closes the belly valve, and automatically rewinds the hose.

The Research and Special Programs Administration (RSPA) issued a final rule mandating such equipment on propane bobtails. It requires that an attendant be able to stop the unloading process at a distance from the vehicle. New equipment built after July 1, 2001, must have the remote shutoff systems. Retrofits on vehicles already in service must be completed by July 1, 2006. The RSPA ruling was prompted by an accidental release of propane during loading at a storage facility in 1997.

As an independent business owner and past president of the Texas Propane Gas Association, Murray Hoggarth says he has never been reluctant to voice his opposition to what he considers is wasteful government regulation of the propane industry. However, he strongly endorses the mandatory use of the remote control system because of its safety value.

"Remote emergency shutdown provides an additional margin of safety," he says. "Propane distributors have a big responsibility to the public as well as making sure their drivers are safe.

"The truck and tank must be visible to the driver at all times. The remote control shutoff allows a driver to take effective action in the event of an equipment failure without the risk of entering a hazardous environment. Wading into a cloud of propane gas to stop the release of product from a pressure vessel is not a reasonable alternative."

Propane Demand Demand for propane stays fairly constant throughout the year in central Texas, which means the Action Propane fleet stays busy. The central objective of the truck maintenance program is to ensure that bobtails perform reliably throughout their service life.

Preventive maintenance is stressed, and vehicles are inspected every 2,000 to 3,000 miles. Major repairs are handled by nearby service dealers. Vehicles are repaired as necessary, not only to ensure maximum life but to prevent breakdowns that create unplanned delivery delays.

"We run safe equipment," Hoggarth says. "It doesn't leave the yard if it's not safe."

Drivers help with preventive maintenance by sending engine oil samples to laboratories for analysis. Synthetic lubrication is used for engines, transmissions, and differentials. Oil filters are changed every 10,000 miles.

"It's important to correctly interpret the metal content in the analysis reports," says driver Tony Minton. "For example, an unusually high level of silicon in the oil might indicate a serious problem, unless you know that the silicon source is from gaskets in new engines from a particular manufacturer."

The well maintained fleet guarantees that customers don't run out of product. The carrier makes sure that trucks are ready whenever a customer needs a delivery.

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