Guttman Predicts Significant Growth For Its Tri-State Petroleum Marketing

May 1, 1998
GUTTMAN OIL Company of Belle Vernon, Pennsylvania, is projecting significant growth by 2002 for its petroleum marketing business, says Fred J Perino,

GUTTMAN OIL Company of Belle Vernon, Pennsylvania, is projecting significant growth by 2002 for its petroleum marketing business, says Fred J Perino, vice-president of supply and operations.

Guttman's Vision 2002 strategic plan projects significant increases in bulk fuel distribution and commercial and industrial lubricant distribution. Strong emphasis will be placed on acquisitions and the construction of new gasoline and diesel retail facilities. "We are looking for growth in all areas," says Perino.

To stay competitive and grow in a business controlled by volatile marketplace prices, Guttman Oil Company offsets some of the uncertainty by coupling state-of-the-art computer-generated price communications and a product storage capacity of 20 million gallons.

"One thing you can be sure of in the petroleum products market is that prices will fluctuate," says Perino. "With this storage capacity, we are not held strictly to market prices. Our experience allows us to wait for market prices that are most advantageous to our customers, and then buy in quantity, providing a smart buy and secure supply. In addition, we offer our customers several diversified risk management programs specifically designed to provide protection from the volatility of product prices, helping protect margins, and manage fuel costs."

Thomas A Rogers, transportation, warehousing, safety and terminals manager, says in-truck computerized communication systems are being analyzed to expedite invoicing and transfer data from the customer to the sales, accounting, and transportation departments. The procedure is expected to enhance the company's growth by speeding up routine procedures, billing, and cash flow.

Corporate Activities The predominantly tri-state operations are directed from the corporate headquarters at Belle Vernon southwest of Pittsburgh, Pennsylvania. Branch offices are in Ohio and West Virginia. Business activity also stretches into six other states.

The service-oriented management style originated with the company's founder, Jacob M Guttman, in 1931 when he opened a Texaco service station in McKeesport, Pennsylvania. By 1943, gasoline deliveries were made to 20 service stations. During the next five decades, the company grew through expansion and purchases of other companies. Other terminals were acquired, bulk plants were built, and branded distribution was expanded to include Texaco, Citgo, Gulf, and Exxon products.

Today, Guttman distributes to wholesale marketers, service station dealers, and commercial and industrial end-users of liquid fuels and lubricants. The company also operates a chain of convenience stores under the Crossroads Food Mart name, and a chain of commercial cardlock fueling sites under a franchise from Pacific Pride.

Liquid fuels are distributed from river terminals in Belle Vernon, and Morgantown, West Virginia; a pipeline terminal in Aurora, Ohio; and from bulk plants in Columbus, Ohio, and Elkins, West Virginia; and refiner terminals throughout its marketing area. Lubricants are distributed from a centralized package products warehouse in Zelienople, Pennsylvania, and satellite bulk and package products warehouses in Belle Vernon, Erie, Columbus, and Elkins.

Another Guttman Group company is Mon River Towing Inc, which operates towboats and barges as a contract hauler of coal, petroleum, chemicals, and other bulk commodities on the inland river system. About 650 people are employed by the company owned by Alan Guttman, chiefexecutive officer; Richard Guttman, president of Guttman Oil Company; and James Guttman, president of Mon River Towing Inc.

In addition to wholesale business, the oil company annually delivers approximately 125 million gallons of product, including gasoline, diesel, heating oil, kerosene, propane, aviation fuel, and other commercial industrial and automotive lubricant products to service station dealers, and commercial and industrial end-users.

"Although Guttman's overall volume has increased, wholesale sales of heating oil have dropped by more than 20% because of the mild winter weather in our geographical market this year," says Perino. "The home heating distributors in the tri-state area, many of whom are our customers, have really been impacted.

"They just aren't making the traditional second delivery to many homes that would usually be called for in a typical winter. However, the strong economy and increased consumption by sport utility vehicles is expected to boost gasoline volume for the summer and increase our sales."

At the same time, the company has spent millions of dollars complying with underground storage tank regulations either replacing, reconditioning, or installing tanks. "It has been a significant element of our capital budget in the last ten years," says Perino.

Customers also are looking for consultation, so Guttman provides a risk management program. "Customers are demanding tools to master the wide fluctuation in this market," says Perino. The company maintains its own company data collected over the past 15 to 20 years and combines that information with data from a computerized commodities tracking program.

To stay abreast of industry issues and other related subjects as the company expands, Guttman is active in the Pittsburgh Petroleum Association, Pennsylvania Petroleum Marketers Association, and the Petroleum Marketers Association of America.

The company's growth has necessitated strategic transportation coordination. James A Eisenreich directs the fleet's routes and oversees drivers from a central office in Coraopolis, Pennsylvania. "Drivers typically make three deliveries per day and work one of two 12-hour shifts," he says. "There are multiple terminals that we pull from. We're very service oriented."

Customer Orders Customers' orders come into the company's sales force in Belle Vernon and are relayed via fax to Coraopolis. Two dispatchers coordinate routes. One handles the company-owned transports, and the other directs 10 to 15 contract common carriers and company-owned tankwagons. Each truck has a cellular telephone. Dispatchers contact drivers by voice mail, says Eisenreich.

The company employs 65 drivers, most of whom remain with the company for years. "We aren't likely to have even one driver leave each year," says Eisenreich. "We find people who are interested in driving a truck. But more than that, they have to be willing to handle hazardous products. They also have to be flexible. They have to contend with changes that occur in their workplace. For example, we're seeing a shift from underground to above-ground tanks, which means they have to be familiar with the requirements for loading and unloading both types. Everything is different. Nothing is standardized anymore."

To work for Guttman, drivers must have a minimum of two years' driving experience, a commercial driver license, and a current Department of Transportation (DOT) physical card. The company prefers to hire drivers with petroleum delivery experience. Drivers receive two to three weeks of training. "Our training is very extensive," says Rogers. "It is very complex."

Training includes freight bill administration, incident reports, and terminal loading procedures. It also covers product characteristics; environmental concerns; emergency contacts; liability and insurance aspects; storage facility operations; and spill prevention. Drivers are certified to handle hazardous materials and have tank endorsements on commercial driver licenses. Safety is especially emphasized because of the dangerous cargo, frequentloading and unloading of short hauls, and the proximity to public places.

A safety incentive program rewards drivers every quarter with bonuses to those who qualify. Bonuses are awarded based on no DOT violations, no product contamination or spills, loading and unloading procedures, and time spent between driving to customer sites.

"Our guys really need to know all there is about hazardous materials," says Rogers. "The drivers must also be able to determine if a customer's tank is registered properly. They are responsible in many ways to insure the customers' petroleum facility meets local, state, and government regulations."

Customer Service Drivers are viewed as an integral part of customer service. "They are out there every day talking to our customers," says Eisenreich. "The drivers are an extension of our sales people."

Drivers also are viewed as experts on the products, tank sizes, company facilities, customers' tank management, and especially the tractors, tanks, and equipment they handle.

The company leases 15 tractors from Fox and James Inc of Latrobe, Pennsylvania. They are leased for five years. The Freightliner tractors are specified with Cummins N14-370E engines and Fuller nine-speed transmissions. Components include Spicer 151/2-inch, two-plate clutches; Rockwell 12,000-lb front axles; and Rockwell Rt-40-145 40,000-lb drive tandems with 4:10 ratio.

Guttman owns 15 DOT406, four-compartment petroleum transports. The 9,450-gallon aluminum tanks are manufactured by Heil Trailer International and Fruehauf Trailer Services Inc. They are fitted with Betts pressure- and vacuum-relief vents and dome lids. Manual shutoff valves are supplied by Emco Wheaton Inc and secondary valves come from Civacon. Tanks are replaced every 10 years.

Twenty-six tankwagons are used for shorter hauls. The tandem-drive truck comes with a Cummins M11 engine, Spicer transmission, and Spicer 151/2-inch, two-plate clutch. Front axle is a Rockwell 16,000-lb and the rear tandem axle is a Spicer 40,000-lb with a 3.91 ratio. The truck carries a 4,200-gallon cargo tank.

The single-drive-axle vehicle for 3,000-gallon tanks is equipped with an International engine, Fuller transmission, Spicer clutch, 12,000-lb International front axle, and 23,000-lb Spicer single reduction drive axle with a 4.78 ratio.

Cargo tanks are manufactured by Allied Tank and Amthor International Inc and are equipped with Betts dome lids, Scully overfill protection systems, and Betts and Emco Wheaton valves. Roper Pump Co pumps are also part of the equipment for the vessels. The MC306 and DOT406 tankwagons are used to haul heating oil, gasoline, and kerosene to commercial customers.

At the 60,000-gallon propane storage facility in Columbus, Ohio, are five bobtails assembled by Tri-State Tank Corporation with International 466E engines. The MC331 tanks have RegO Products safety coupling on the hose reel, flange mount belly valves, and a liquid level gauge. The 100-ft hose has a Hannay Reels Inc single electric rewind. The 11/2-inch meter is made by Neptune. Blackmer supplies the three-inch pump.

As part of the vehicles' regular maintenance program, a daily vehicle condition report is supplied by the drivers. Most maintenance on tanks and trucks is conducted at the company's three DOT-certified shops in Coraopolis, Belle Vernon, and Elkins. Some major engine repairs may be sent out to other shops. Keeping trucks well maintained and on the road smoothes the way for the company's plans for growth into the next century.

"We are growing from our core business," says Perino.