Diversified company grew by slimming down to core fuel business
BELLE VERNON, Pa. -- -- The Guttman Group used to sell fuel, operate convenience stores, run barge lines and sell lubricants. But after deciding to refocus on its core fuel business and sell off some of its assets, the company saw revenues rise to $1.19 billion in 2005, up 97% from 2004, reported the Pittsburgh Business Times.
Growth in 2006 has been a slightly more modest 25% to 30% thus far, according to Richard Guttman, president of Belle Vernon, Pa.-based Guttman Oil Co., a division of the family-owned Guttman Group. "We were generalists," Guttman [image-nocss] told the newspaper. "We tried to operate lots of different areas that we were doing fine in, but we weren't focused on the core fuels business."
So, a few years ago, the company began to slowly sell off its noncore assets, moving away from the lubricants, c-store and river towing businesses in which it was once heavily involved.
Guttman sold its Crossroads c-store chain to Giant Eagle Inc. The two companies had formed a joint venture in 2003 that eventually became Giant Eagle's GetGos. And, earlier this year, the Guttman Group sold its barge towing company.
With today's volatile energy prices, Guttman's gamble has paid off, the report said. The hurricanes of 2005, which led to a spike in gasoline and diesel fuel prices, made fuel consumers turn increasingly to companies like Guttman to manage fuel. The company now has about 3,500 customers and 22 million gallons of fuel in storage.
"The petroleum industry has changed dramatically over the last five years," Guttman told the paper. "The hurricanes taught us supply is not guaranteed. Prices shot up and caused the markets in the Middle East to react. All of these influences are challenging the old assumptions of supply in the market."
By making the fuels business its primary focus, the company now has more time, flexibility and resources to spend on each of its clients, said the report. It continues to store and supply fuel while also managing fuel costs for its clients. In addition to managing costs, the company helps its clients navigate through changes in the industry.
Its customers include school districts, trucking firms, gas stations, railroads, power companies, bus companies and construction companies. When companies purchase fuel from Guttman, it works with them, at no extra charge to put together programs to help them manage prices. With some clients, this means locking in fuel prices months in advance, while with others, it could mean following an industry standard benchmark, such as the New York Mercantile Exchange price, over time.
Guttman also works with its companies to help manage where and how they will get their fuel, the report added. For companies that have their own storage, Guttman places a wireless monitor on their tanks to help determine when they should order the next load of fuel.
For those who don't have their own tanks, Guttman offers a program that gives the company's employees a credit card to buy fueland only fuel. This helps companies better keep track of how much is being spent on fuel, Gary Smelko, vice president of marketing for Guttman Oil, told the Business Times.