National Petroleum News (NPN) has been the independent voice of the petroleum industry since 1909 as the opposition to Rockefeller’s Standard Oil. So, motor fuels marketing and retail is not just a sideline for us, it’s our core competency.
Issue link: https://read.dmtmag.com/i/131382
is to understand how to allocate capital properly," said Mike. "You cannot fall in love with a particular business, and you have to be able to measure them across and against each other using riskadjusted measures." In order to conduct that valuation, the proper benchmarking metrics need to be established. "For the stores, we are really involved in the CSX/NACS data collection, and we aggressively benchmark our operations against industry leaders, he said. We use industry data elsewhere in our business to see if we are staying on track. But one of the challenges we have come across, since we're in the business, is how do you measure current asset utilization? A lot of (assets) have already been written off, so do you throw a market value on there and look at the utility of market so you're not missing out on opportunity costs, and how do you allocate capital around that? So we try to walk through and evaluate the risks that each business brings." Another issue Mike cited is avoiding popularity contests where you invest in things you like more than you invest in operations that are providing higher returns. Diversification holds with it the promise of integrating a range of administrative functions on the back end to support the varied front end operations. While there is considerable opportunity in areas such as accounting, Mike noted that those efficiencies diminish as you get closer to the specialized operational and system needs of the independent business units. "We can aggregate data very well and measure it. You have to be careful not to try to do too much one-size-fits-all for systems development," he said. "There are some really specialized systems that are really well done, and even though we would like to have one overall kind of enterprise software, there are limitations. You can do that somewhat on the lubricant side—we're trying to put that in place on the fuel side—but it gets more difficult when you get out into the dealer business, for example." While NOCO has taken diversification to a top level, some degree of diversification should be on the mind of any fuel oil or motor fuels marketer. "I think diversification www.npnweb.com n NPN Magazine is critical," said Mike. "Obviously in the energy business there is a lot of natural market correlation, but we try to be able to look at as a continuum of risk. We have some things that are probably on the more risky side and some that are far less risky, and we try to make sure we balance ourselves across a number of them. So we try to put ourselves in the position that if any one thing happens, it would not kill us. But with that, sometimes I get concerned that without more specialization…are we really challenging ourselves to be better?" Managing the family Having been a truly family operated business from the beginning, including multiple siblings involved in senior management, NOCO's longevity and success is all the more impressive. "The key to our success is what we call 'De-Newmanizing' the business, which is basically trying to take the element of family out of it to some degree," said Mike. "Family members are held accountable to achieving goals, and in addition we try to hire good managers to run our divisions. We try to work with them and help them grow their abilities and their teams, but to not put our thumbprints on everything that goes on. We have a number of very bright people that work here, and they do a hell of a job." That sentiment is more than echoed by the current leaders' parents. "I think Jim and Mike have taken this thing to an entirely different level," said Don. "My wife Barbara and I are just proud as heck of our boys." May/June 2013 19