Page 12 - Ohio Propane News, Winter

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we must shape and define it. We need to diversify from what we have historically supplied. We need to sell burner tips AND spark plugs.
TREMENDOUS AUTOGAS OPPORTUNITY
Over 450 make/model year conversions are available to all through Alliance Autogas, and Roush has a focused and strong offering as well. 2027 diesel emission regulations are a tremen- dous opportunity. The medium duty market is going to blow wide open for our fuel...and both Roush and Cummins know this. Diesel cannot hit the 2027 emissions that CARB has created and EPA has adopted...propane can. We must engage and evan- gelize our own fuel...right now.
Autogas opportunities are in every one of your markets — your fleet, school buses, and transit buses are in every rural commu- nity. I know this. Twenty percent of Blue Star Gas business is in this space...it takes time and investment to create the program, but Autogas has drastically changed our business. Our seasonal ratio went from over 3:1 to 1.7:1, that translates into many bene- fits including supply and labor.
POWER GENERATION
While my company has done well with Autogas, the fastest grow- ing segment of our business is that of power generation. The key to this segment is to shift our mindset. To be clear, there are two segments to power generation, backup power and prime power.
Backup power is a service-based model...not a demand model (or gallon driven) that we are used to. I have said that if Blue Star were in the service business, we would have gone away a long time ago, yet now this is the fastest area of growth in our business. Backup generators are a service. You achieve your ROI through higher tank rent, service contracts and approaches that have nothing to do with gallons. You will get some gallons, and if there is a solid outage, you often get three years of return in one outage if priced appropriately. If you play the long game it works, although it may not provide the return we have become accus- tomed to...and that is part of our future. But to be clear, there are lots of very successful service labor-based businesses in this world and the propane industry can join those ranks.
PRIME POWER IS A DEMAND-BASED MODEL
There are 3 products that I am involved with that PERC has in- vested heavily in:
• Stateline Generators • Lochinvar
• Axiom
A break-even point is roughly $.18 per KW. If you look at a com- mercial customer’s power bill, and demand charges are consid- ered, I expect you will be surprised just how competitive our product can be.
There will be a rebalancing of the energy landscape to include propane, and we must be ready. Today’s EOE myopic mindset is on a path where society will recognize that it is unachievable to electrify the whole world. We are beginning to see this in com- ments of some regulators and legislators, but especially amongst utility executives...they are mortified at what is coming their way.
My goal is to get marketers to consider changes to their business to capitalize on this future, regardless how it occurs (it will likely include a large grid failure). If we are able to achieve that, there will be a more balanced energy choice reality. We have a very bright future, but we must prepare for it.
Simply, we must sell products that use propane, and while that sounds very basic and obvious, many of our members do not ac- tually do that. More directly, my goal this year as NPGA Chair is to facilitate a careful consideration of the tank and bank busi- ness model many of us have adopted. If we are truly going to position ourselves and be the masters of our destiny within the bright future available to us, it is imperative that we discuss our industry business model.
PREPARING FOR THE FUTURE
I ask that you ponder everything I’ve shared as it applies to your organization and facilitate a discussion where and when appro- priate. I ask the discussion to occur amongst the leadership in the boardrooms of our large members, and around the kitchen table of our small members.
We must all, big or small, have a plan to move forward to meet the future energy needs of this country. We must invest the time to learn and assign dedicated resources in our companies to new initiatives and not just be satisfied taking business from stum- bling competitors. We must grow the market in absolute terms with new products (burner tips AND spark plugs) not just steal business from each other. We must be more aggressive and get more comfortable with venturing out of the historical comfort zone this wonderful industry has provided us. And lastly, we must get uncomfortable, stretch in ways appropriate for each company, and invest in our bright future.
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