Some lucky decisions and a keen share of the marine and lubricant markets have helped give one distributor a positive outlook in recession, writes Irish correspondent, Aine Faherty.
“All markets are contracting but we’re maintaining our own and growing market share where we can,” says Arthur McMahon, managing director of the Letterkenny-based Donegal Oil Company.
In the last two years, the company’s lubricants sector has seen growth treble as great strides were made in gaining market share.
The marine industry is also an important component with business from the fisheries and exploration industries in both winter and summer. The exploration industry is serviced from the port of Killybegs, where Donegal also has a depot. If oil exploration develops further off the west coast of Ireland – something largely determined by global oil prices – Arthur is hopeful there will be a beneficial knock-on effect on his business.
Presently, the company, which was formed by Arthur’s grandfather in 1954, operates in four areas with its core being home heating oil, delivered countywide from Falcarragh to the north and Killybegs in the south. The company also supplies diesel to agricultural, commercial and small retail customers. There are 30 full-time staff and 15 tankers, ranging from mini-tankers to full articulated trucks.
Now with his grandfather, father and brother Barry acting as non-executive directors, Arthur is the first McMahon to have a hands on role as managing director. Firmly in the driving seat, he looks to the future with positivity.
“When everyone else was getting bigger, we didn’t join them,” he said. He recalls how the company sold two filling stations in 2006 and 2007. “Good business decisions on our part which I would best describe as ‘lucky’ now. Thankfully we’ve no big legacy of debt and we’re happy enough with business, at the moment.” Many of Donegal’s customers and suppliers are, however, under pressure from the banks. “This constitutes a bit of a squeeze on everything and costs are controlled accordingly,” he added.
Maintaining a good reputation
The Donegal Oil Company has a strong association with Topaz – a brand Arthur says is synonymous with quality. Although cheaper options for oil are available, he believes that people appreciate brands they can trust.
Acknowledging the substantial amount of illicit home-heating practices around, with cross-border smuggling and laundering operations in full swing, Arthur admits such activity is “very frustrating” for legitimate players. To remain disassociated with such practices and to keep reputation intact, the company supplies a number of small rural filling stations on an on-going basis. “This needs to be all or nothing. We’re not willing to share business,” he says explaining that if its brand were to be seen at a station which was also being supplied in the middle of the night by another lorry, this would have a detrimental effect on business. “A good reputation in business is next to impossible to claw back.”