Being proactive rather than reactive was one of the really strong messages conveyed to an audience of over 60 fuel oil distribution staff who attended last month’s Fuel Oil News Distributor Debate in Northern Ireland, writes Irish correspondent, Aine Faherty Distributors from north and south of Ireland attended the event in Templepatrick, where much emphasis was placed on the promotion of oil as a viable, trustworthy and efficient fuel and heating solution. “Everyone needs to make a concerted effort to push oil and to improve the view people have of the industry,” said Mark Askew, chief executive of the Federation of Petroleum Suppliers and first speaker. Highlighting the very important role drivers have as the industry’s PR men, a view endorsed by David Meekin of Meekin Fuels, Mark said: “We must carry the right message and the right image to the consumer by way of proper and up-to-date driver training.” Although oil has undergone a long period of instability over the last eight years, BP’s Angus Fraser assured delegates that, despite exiting refining, the oil major remains committed to the Northern Ireland market. Stressing the importance of strong, long-term relationships, he said BP strove to pass on the best possible price to customers and that high quality products and a reliable source of supply – even when stock is low – remained the company’s invaluable strengths. “Most people hate to change software,” said Fuelsoft’s David Kingsman. “Thinking it’s a case of the better the devil you know. However, putting up with short term pain to change systems and learn new work practices, could reap rewards long term. A well-rounded integrated system links telephone and computer, meaning orders can be taken and monitored more easily and backed up by a 3D secure website for payments. In feedback, many attendees found the fuel quality presentation given by chemist Julia Mansfield of Fuel Science Additive Technologies provided great insight into reasons behind fuel’s variable quality. An issue of particular relevance to Ireland, which imports 80% of its fuel requirements, and where the closure of Whitegate, the country’s only refinery, is expected in the near future. Initially painting a dim picture for the home heating oil distributor, David Blevings, Northern Ireland Oil Federation said average profit for such a business was less than 2% of turnover. In March 2009, 900 litres of kerosene was £300 cheaper than it is today; add this to the fact that solid fuel and gas are considerably cheaper and ”it’s easy to see why people are choosing to go elsewhere,” he said. Remedy – show your customer you’re here to help – a condensing oil boiler could save 20% on fuel costs – form a partnership with an oil installer and offer a fixed contract and a budget plan. “A customer upgrading to a modern condensing boiler will be a customer for another 20 years.”

Tom Noonan – Maxol is concentrating on the retail side of its business, having condensed its distribution arm in recent years Following Maxol’s announcement that it plans to invest 50 million euros expanding its all-Ireland service station network and rebranding its image, Irish correspondent Aine Faherty spoke to chief executive, Tom Noonan about the company’s move from loss to profit-making In the news lately for all the right reasons, the Maxol Group has bucked the recession trend and experienced a €60 million turnaround in its net cash position, from minus €41 million at the end of 2005 to a net cash position of +€18 million at the end of 2011.A rise in retail In January, Maxol unveiled a new forecourt identity and a five-year business development plan involving a €50 million investment to expand and upgrade its retail business. According to chief executive Tom Noonan, this should have a very positive impact on the overall image. “Good looking service stations are the best form of advertising we have, they help to reinforce a brand in which the consumer can have faith.” Whilst the company has interests in three other distinct areas – fuel cards, distribution and lubricants, Mr Noonan explained that retail had proved to be the most lucrative area in recent times.A fall in distribution At present, distribution arm, Maxol Direct forms a modest portion of the business, down from over 40 businesses at its peak to less than 20 now. At one point the group, which had an annual turnover of €700 million in 2011, worked off the model of having one distributor per county across the island – a model that would be nowhere near feasible today with high costs and reduced working capital. Following a shake-up of the business in the mid 2000s, the company decided to undergo “enormous rationalisation” and divested itself of many distribution businesses around Ireland, some of which had only been acquired a few years previously. At the time, Maxol had begun to notice a slowdown in the fuel market and recognised that property prices had peaked. Home heat was considered too risky with an economic slow down imminent and encroaching competition from gas and solid fuel. With a shorter winter season, that spanned just three to four months, there was concern that its large team of drivers and vehicles would be left idle for the greatest part of the year. And so the decisive downsizing action, which has proved invaluable, was taken. For those businesses that have survived in this difficult sector until now, Tom believes they are in a strong position to move forward. In order to do this, he says that people need to make sure their business is as efficient as possible and realise that cash is not everything. However, managing cash flow and having a balanced portfolio is of utmost importance with a greater need than ever to keep the fleet moving. “In the downtime of the year, oil distributors need to look to the commercial market,” he says for businesses such as hauliers, pubs and other industries that carry on steadily enough throughout the year. “The bottom line is that the industry has changed – domestic customers are using remarkably less oil and businesses in general are watching their pockets. The key to survival therefore is making big decisions fast in a bid to stay afloat.”

With heating oil consumption already in decline in Northern Ireland, plans to extend the gas network are not a welcome development to distributors already under pressure reports Irish correspondent, Aine Faherty. Market share peaked in 2005 with 75% of households using heating oil; reduced to 68% in 2009. Speaking at the company’s base 20 miles from the urban Belfast centre, Ken Hylands, managing director, Hylands Fuels, recalled the impact of a similar gas expansion in Belfast and surrounding areas. “We just had to adapt in advance,” said Ken. “I would advise businesses in targeted areas (see box right) to do the same and be prepared. The secret is to continue providing a service at a competitive price and to ensure customers remain loyal to a product they still want. Nowadays customers just want to pay for what they can afford, so it’s important to have easy payment options with credit card, direct debit and standing order options. In Ken’s experience, customers may not opt for gas, even when available, preferring to stick to what they know best. “Some may not have the option to switch; a majority of homes on an estate/road must opt for change before the high cost of running a pipeline into the area is warranted.” Expansion is due to start in 2015, north and north west towns under consideration include Dungannon, Cookstown, Magherafelt, Coalisland, Omagh, Enniskillen/Derrylin and Strabane. Hillsborough, Ballynahinch, Downpatrick, Saintfield and Crossgar are being considered in County Down. Not overly concerned is Malcolm Hill, business development manager with Solo Petroleum and AH Fuels which has most business in rural County Tyrone. Whilst Malcolm is confident that as a long established business, customers will remain happy with oil, he is concerned about the knock-on effect on ‘an oversubscribed fuel business.’ “Any increase in gas coverage will have a detrimental effect on the oil business, pushing its customer base away from the inner city/towns and into the more rural areas,” reported Michael Strain, general manager, Topaz Direct. Gas is already in the main towns in which Kelly Fuels operates. “It will just be another competitor and we’ll have to deal with it,” said Derek McAuley. He likens the presence of gas to the new competition posed by the selling of home heating oil on forecourts. The Northern Ireland Oil Federation (NIOF) has little doubt that the extension will go ahead as planned with oil customers targeted to switch. “This represents a real threat,” said David Blevings, NIOF executive director. However, David did point out that the Northern Ireland Housing Executive (NIHE), which currently manages 90,000 social housing dwellings, may not hurry to changeover, despite gas being its preferred fuel. “With oil boilers only installed at many of these dwellings in recent years, these boilers are not at the end of their useful life so I anticipate gas conversion rates will take awhile. Whilst this is good news in the short term, we really do need to sit up and take notice of impending changes. “We need to lobby direct store delivery (DSD) to support and introduce the Kingspan/Carillion Pay As You Go system to public sector housing and others that will allow oil to compete on a level playing field. “If the oil sector is to retain a healthy market share it needs to think long term about the services it offers to the customer and become an energy provider offering energy services, not just oil.”

Cash conscious consumers, rogue traders dealing in washed diesel and a sharp rise in the use of solid fuel, ensures that oil distributors in the Leinster region are feeling the heat this winter, writes Irish correspondent Aine Faherty Martin Daly, head of sales and marketing at Top Oil says that a succession of shorter winters, coupled with a short home heating season, is putting pressure on the sector, as people use their central heating as a last resort. “People are burning turf or whatever fuel they can and supplementing this heat with oil,” says Martin. “In a bid to save them money in the long term, people are investing in solid fuel burners instead.”

David Blevings of the Northern Ireland Oil Federation Rationalisation of the Northern Ireland (NI) oil distribution sector has stepped up a gear. Several businesses have been acquired by former competitors and one has gone into liquidation ________________________________________________________________Recent sales