BUFFALO, N.Y. -- ExxonMobil is about half way though converting its direct-served retail marketing operations in upstate New York to a variety of distributors. The company is switching about 160 sites in the Albany, Buffalo, Syracuse and Rochester areas to distributor sites, just as it has done in the Detroit and Milwaukee markets, according to spokesperson Paula Chen.
ExxonMobil continuously assesses the markets in which it operates in order to determine the preferred method of site operation. In the upstate New York market, we believe converting [image-nocss] our direct operations (both dealer- and company-operated) to distributor-served provides us with the best opportunity to compete, Chen told CSP Daily News. This change will strengthen ExxonMobil's current branded position through distributors with considerable market presence.
The Fairfax, Va.-based company began the dealer conversions during the second quarter of this year and will continue through the end of 2006, according to Chen.
One of the new station owners, Janis Klein, said owning her own site gives her a sense of independence. I think it's better, she told The Buffalo News. I don't have to go with their mandated programs. I can run my business the best way I feel I can.
The oil giant presented Klein and other upstate Mobil station operators with an opportunity to buy, rather than continue to lease, the stations. Exxon Mobil no longer wants to own upstate Mobil retail properties. Instead it wants to supply its fuel products to the region only through distributors.
Ralph Bombardiere, executive director of the New York State Association of Service Stations & Repair Shops, views the move as a step forward for station owners who want to be owners, rather than just pay rent. This is good for the dealers, he told the newspaper. New York was a market [ExxonMobil] constantly claimed they couldn't make money on. They just wanted to supply (their products).
Jan Quitzau, executive director of the Syracuse-based Service Station & Repair Shop Operators of Upstate New York, said some of his members who bought their stations nonetheless had some problems with the deals they were offered. For instance, dealers were required to make costly upgrades to their equipment immediately, so that ExxonMobil wouldn't face any potential environmental complications down the road.
The new owners also face challenges such as managing the paperwork that ExxonMobil, as the owner, used to handle for them, he said. Those obstacles aside, the station operators-turned-owners have a chance to put more of a stamp on their businesses, Quitzau said.
They have the opportunity to create their own destiny, he said, noting that many of his group's members are independent, family-owned enterprises that pass from one generation to the next. Plus, he noted: Obviously they are looking at the opportunity to make some money.
Quitzau said he sees ExxonMobil's move toward exiting property ownership in markets such as upstate New York and Detroit as sort of testing the waters with that business model.
David Lutz is another former renter who opted to take the step into Mobil-station ownership, after a 25-year leasing relationship with the company. He agreed to buy three stations in the Buffalo area.
Lutz told the newspaper that ExxonMobil presented him with a nonnegotiable price to buy the locations, and also required him to make equipment upgrades, in items such as storage tanks, as part of the deal. Lutz said the oil company had fallen behind in investing in its properties in recent years, which led him to spend some $400,000 to upgrade his three sites.
Lutz said he knows of only a few cases where dealers passed on an offer to buy their stations. As for Lutz, he said it is a difficult time to be in the gasoline business. While prices are high, dealers are making only a few cents per gallon selling gas, he said, and credit-card fees eat up a significant amount of a station owner's profit.
Ultimately, though, he said he sees becoming an owner as an investment in the future of his business. Now you've got new opportunities down the road, he said.
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