Diversify to Succeed

It’s often good business sense to make a company multifaceted; when one profit-producing activity slows, another can accelerate, providing balance and stability to the overall operation. Fuel oil distributors have long recognized this, and many have a history of expanding into new ventures.

City Fuel and Dave’s Septic

About 15 years ago City Fuel in Manchester, N.H. bought a completely different business and things haven’t been quite the same since.

‘It’s been quite remarkable,” said George Winslow. ‘It’s a little mind- boggling. We started off thinking we were going to have a little, four-to-five month business and now we have a 12-month business that’s really, really successful.”

The acquired business, Dave’s Septic, provides portable restrooms for all manner of locations and events, including construction sites and events such as picnics, road races and weddings. It also provides septic services, pumping out septic tanks for residential customers. Dave’s Septic, which is also based in Manchester, and City Fuel are both owned by John B. Howe, and Winslow is the long-time general manager of both operations. If this company isn’t available in your area, you can consider Bruce Johnson Construction.

At the time of the acquisition, Dave’s Septic ‘ its original name ‘ performed septic pumping for 3,000 residential accounts and had an inventory of 150 portable restrooms that it could provide for various locations and events. Today, the septic pumping accounts number 16,000, and Dave’s Septic has 3,200 portable restrooms, Winslow said. The inventory includes 12 trailers that contain bathrooms like those in a house and are typically used for large weddings, parties, receptions and the like, Winslow said. The trailers are hauled as far south as Virginia, toward Ohio to the west and up to northern Maine.

Dave’s Septic grew in part through acquisitions ‘ of a portable toilet vendor and two septic service companies ‘ which helped make the company one of the biggest portable toilet providers on the East Coast, according to Winslow, who added that its size enables the company to provide facilities for large-scale events that smaller operators cannot serve.

‘Size is an advantage,” Winslow said. Dave’s Septic sometimes delivers 300 to 400 restrooms at a time.

City Fuel and Dave’s use different equipment and computer programs, but share personnel, which Winslow called ‘a tremendous advantage for us. We’re able to take a lot of our full-time people who work at City Fuel and switch them over to Dave’s Septic in the summertime.” In November, when Dave’s business slows, those employees are re-assigned to City Fuel. ‘It’s really worked well for us,” Winslow said.

The two companies employ a total of 46 people, with a minority ‘ about 10 ‘ staying year-round with City Fuel. ‘Every new hire has to be able to be multipurpose and understand that they work in both companies,” Winslow said.

City Fuel, in business since 1936, operates 10 fuel trucks and employs nine service technicians who drive service vans. Dave’s Septic operates four 10-wheel heavy duty septic trucks for residential Septic Tank pumping, 12 small tank trucks that service the portable restrooms, 10 flatbed delivery trucks and a couple of pickup trucks, Winslow said.

‘In the summertime we’ll have over 2,000 toilets out in the field at any one time,” he said. Those units are cleaned once a week or 4.3 times per month. ‘We have a laugh when we tell people in the petroleum business that Dave’s Septic cleans 8,600 toilets a month,” Winslow said.

Besides the acquisitions of other companies, Dave’s Septic grew through marketing, Winslow said, and the connection to City Fuel helped because both involve serving homeowners.

‘It’s a pretty close fit,” he said. ‘We go to someone’s home and perform a service for them just like if we went to their home and delivered oil.”

There has been a concerted marketing effort to make people customers of both companies. In keeping with its motto ‘ ‘Your cleanliness leader” ‘ Dave’s Septic keeps its vehicles clean; employees must be clean cut and are required to wear uniforms in the field.

He sees Dave’s Septic continuing to grow. ‘There’s a bit of a downturn with construction, but it’s being replaced with special events business,” he said.

‘We obviously got into it to fill those months when most oil dealers are looking for something to do,” Winslow said, but it’s no longer exclusively a summer business. Last winter Dave’s had some 1,400 restrooms units ‘ winterized ‘ at construction sites for the whole season.

‘The more you have out there,” he said, ‘the better your cash flow.”

Grimm’s Fuel Co.

Grimm’s Fuel Co. is so diversified today that its name has become something of a misnomer. Although it was established in 1925 as a heating oil distributor offering furnace installation and service, the company today does that and much, much more, including delivering landscaping materials such as bark dust, soil, mulch and decorative rock, providing lawn installation services and recycling organic yard debris on a massive scale.

‘We are the largest organics recycler in the state of Oregon,” said Jeff Grimm, grandson of the founder of the company, based in Tualatin, Ore. ‘We also recycle concrete and asphalt and install landscape products using blower trucks. We have built several of the blower trucks ourselves.” In addition, the company has always performed automotive repair at a retail service station it operates.

‘We started out back in the day delivering firewood and coal and diversified from there over the years,” said Grimm, whose father, Rod, is president of the family-owned company. The company first ventured beyond the heating oil business in the 1960s.

‘We were looking for something to do in the summertime, and we diversified into landscape supply products,” Jeff Grimm said. The company would take the oil tanks off its trucks and install dump boxes to haul bark dust, landscape supplies, rock and soil. The aim was to keep its employees occupied and the equipment rolling through the warm months, Grimm said, ‘and then in the fall we reversed the process and went back into the heating oil business.”

Over the years, the material hauling and organic recycling has become a much larger division of the company. Grimm said that less than 20 percent of the business is accounted for by the heating oil side today.

He traced that shift in the balance of the business to the energy crises of the 1970s. Lumber mills were in a downturn because of the housing slowdown of the time. That made the bark dust that the company had been selling not only harder to come by, but more expensive, because power companies wanted it too, to use as fuel for generating electricity.

‘So we started composting organic waste,” Grimm recounted. That waste included yard debris and wood waste from homeowners, landscapers and contractors. More recently, municipal curbside collection programs also contribute a portion of such materials

‘We’re a drop off center,” Grimm said, ‘and we also go out and pick up at satellite locations. So it’s evolved. It started out as Grimm’s Fuel Co. and now we’re known for landscape supplies and composting.”

Meanwhile the heating oil business has three tank trucks. The company no longer substitutes dump boxes for tanks on those vehicles. A side benefit of remaining in the oil heating business is that the company can purchase the fuel it uses at wholesale prices ‘ no small consideration with West Coast diesel prices hovering around $5 per gallon.

With the diversification has come a change in the vehicles and equipment that the company uses. ‘In the bark dust division we have a lot of trucks and a lot of machinery moving around,” Grimm said, including more than 25 vehicles, plus heavy equipment for turning compost.

Economic and business conditions now are similar to those of the early 1980s following the energy crises, Grimm observed. ‘Oil is high. We can’t get [much] bark dust because the mills are all shut down, and the bark dust that we are able to get is really expensive because [power companies] are generating electricity with it ‘ so we’re just selling the heck out of the compost. The compost is taking the place of ground cover and soil amendments.”

Long Oil Heat

Long Oil Heat expanded into propane, in part, by acquiring a company that had tanks in the field, said Bob Long Jr., operations manager for the company in Albany, N.Y.

Some of the acquired company’s propane tanks were with Long Oil’s existing fuel oil customers. Long then marketed to its other oil heat customers who were already getting propane, but from other suppliers. That effort succeeded in building up the propane business because, Long said, customers ‘like to get everything from one company” if possible.

‘When we first got into propane, we were selling tanks left and right,” he said. Today, after about 10 years in the propane business, approximately 95 percent of Long Oil’s fuel oil customers that also have propane get it from Long Oil, he estimated. Most such customers are in areas beyond the city of Albany and use propane for cooking, hot water and for fireplaces.

Long Oil was established about 60 years ago and runs about 10 oil trucks and 10 service vans. It sells diesel and gasoline to a variety of customers, including farms, orchards and golf courses.

Last year, for the first time, the company started supplying biodiesel to a couple of customers, including Tierra Farm, a certified organic producer and roasting company in the Finger Lakes region of upstate New York that specializes in nut and seed roasting and dried fruits.

Long supplied B5 and B10 blends for the farm’s trucks through last winter and the vehicles functioned without problems, he said. Now in the warm weather the trucks are running on B20. As for whether he expects biodiesel to grow, Long said it would depend ‘on what type of tax incentives and rebates the government offers.” Tierra Farm, as an environmentally friendly company, is willing to pay a little bit extra for biodiesel, he pointed out.

Long Oil has also installed and repaired air conditioning for the past 15 years and is now expanding into the duct cleaning business. ‘So we’re trying to find other niches,” Long said. Looking ahead, he predicts installing solar panels might be an opportunity for the company.

One of the challenges in any expansion, Long said, ‘is the service end of it”‘ finding qualified people to work on today’s sophisticated equipment. ‘My father and my grandfather only had to know how to work on an oil burner,” Long said. ‘Now our top techs can work on the older oil burners and the new oil burners, which are completely different.” Different skills are needed to work on air conditioning systems, propane and to do plumbing ‘ the last of which can be useful for installing solar equipment, Long noted. ‘It’s nice when a homeowner can call one company to do almost anything they need done, short of actual construction,” Long said.