April 10, 2013 | Vol. 64, No. 07
Dear PEI Member:
The 2013 Service & Construction Managers Conference, held April 4-6 in St. Louis, Missouri, attracted more than 80 PEI service and construction professionals. Thirteen manufacturers were also on hand to demonstrate new technologies and products of interest to these members.
Here’s a quick summary of key issues, ideas and opportunities discussed at the conference.
Safety. Safety programs are getting more attention as distributors’ and contractors’ work grows in scope and complexity. Conference attendees spent lots of time comparing notes on their safety processes, the importance of a safety committee, and how best to monitor and keep current on licenses, certifications and other credentials. Attendees also discussed ways to hold subcontractors accountable to high safety standards. While increased regulatory enforcement is partly driving the greater emphasis on safety, even more important is the simple need to protect workers operating in new and unfamiliar situations.
Margins. Service and construction managers are being called upon to play an increased role in protecting their company’s bottom line. With competition fierce and margins tighter than ever, every penny counts. The top priority is reducing service and construction crews’ “in-shop time” through creative work schedules, automated dispatching and efficient restocking of parts.
Participants also noted that they are now taking greater care to make certain that everything that should be billed is being billed, including consumables (rubber gloves, rags), technology, driving time, and overtime for rush and after-hours work. Whether they are bundled into the company’s hourly rates or specifically broken out as separate line items, educating customers on the reason for these charges is the key to reducing pushback.
Non-Fuel-Related Revenue. A surprising number of service and construction managers reported they are now actively pursuing non-fuel-related revenue. HVAC, electrical, lighting and plumbing are at the top of that list. These companies have determined that becoming a one-stop solution will strengthen their customers’ loyalty. And, in some cases, the new work can be done at a higher margin.
Compressed Natural Gas (CNG). Most attendees believe CNG has the potential for real staying power. The biggest question is whether their existing technicians can—and should—be trained to do this new work or whether new technicians with a different skill set will have to be identified and employed.
Service Tech Technology. The pace at which service managers are equipping techs with laptops and/or tablets is accelerating rapidly. Among the most-often cited advantages are easy software downloads on the jobsite, faster invoicing, better communication with the office, and streamlined parts reorders. Because many younger workers are so comfortable with technology, the learning curve for this shift is surprisingly short.
The upcoming 3rd quarter 2013 issue of the PEI Journal will include additional in-depth coverage on the key takeaways from the conference.
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NETWORKING GROUPS FOR SERVICE MANAGERS
At the just-concluded Service & Construction Managers Conference, PEI announced an important new association initiative—networking groups for service managers. Modeled after PEI’s highly successful 10-Group program for owners and managers, the new groups will provide a forum for similarly situated but non-competing service managers to brainstorm, share knowledge, problem solve and generate new ideas.
At the conference, service managers representing more than 30 member companies expressed interest in participating. If you are a service manager in the distributor or service and construction division and would like to learn more about this exciting new program, email Bob Young (email@example.com) with your name, company name, city/state, phone number and email address. We expect to finalize plans and form the first groups by next month.
EPA PROPOSES LOW SULFUR GASOLINE RULE
The Tier 3 gasoline rule―the third move by EPA to lower gasoline's sulfur content―would require sulfur to be reduced from 30 parts per million (ppm) to 10 ppm. Tier 2 gasoline rules, phased in from 2004-2007, required a reduction from 300 ppm to 30 ppm.
The 10 ppm standard would make sulfur limits more uniform across international and state boundaries. The proposed Tier 3 gasoline sulfur standards are similar to levels already being achieved in California, Europe, Japan, South Korea and several other countries.
Under the proposed rule, auto manufacturers would need to modify catalytic converters so their vehicles can better process low-sulfur gasoline. Refiners would need to lower the sulfur content of the gasoline they produce and sell. Compliance with the proposed rule could be expensive for the refiners, although cost estimates vary widely.
EPA is also proposing to update the federal emissions test fuel to better match today's in-use gasoline and also to be forward-looking with respect to future ethanol and sulfur content. The updated test fuel specifications would apply to new vehicle certification, assembly line, and in-use testing. EPA is proposing to transition to the new test fuel during the first few years that the Tier 3 tailpipe and evaporative standards are phasing in. Key changes include moving from indolene (E0) to a test fluid containing 15 percent ethanol by volume, lowering octane, and lowering the existing sulfur specification to be consistent with the proposed Tier 3 requirements. EPA is also proposing test fuel specifications for E85 for the first time.
APPOINTMENTS, PROMOTIONS AND ELECTIONS
LUNDBERG: DISCOUNT FOR CASH IS
Once cash discounting emerges in a market, it usually spreads quickly. For example, in both Newark and Long Island, more than half the outlets offer DFC. More than 20 percent of Seattle outlets offer DFC. The most common discount (43 percent of all stations offering DFC) is a dime.―Lundberg Letter, March 26, 2013.
EXPERTS WEIGH IN ON ALTERNATIVE FUELS
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The TulsaLetter (ISSN 0193-9467) is published two or three times each month by the Petroleum Equipment Institute. Robert N. Renkes, Executive Vice President, Editor. Opinions expressed are the opinions of the Editor. Basic circulation confined to PEI members.