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ABSTRACT
Federal and state EPA
regulations detailing technical requirements and financial
responsibility of service station owners have created significant
changes in the market for petroleum equipment. Some market and product
segments have been depressed while others have been stimulated. In 1990,
Havill Consultants researched the impact of these regulations. The study
forecasted a downturn in petroleum equipment demand for 1991 and 1992.
This was contrary to conventional wisdom at the time. Havill research
showed that many major oil companies had completed a large amount of
their equipment upgrades, but that commercial, industrial, c-store, and
independent oil marketers still represented a significant market
potential. A critical issue for petroleum equipment marketers is the
size and timing of this opportunity.
The main objective of the
research described in the attached prospectus is to clarify this area of
uncertainty. The prospectus describes a new Havill study of the
convenience store, independent oil, major oil, commercial, and
industrial markets. This new study will build on information acquired
over the past 12 years, including the well respected 1990 Havill
industry forecast. In-depth interviews with 1,000 decision makers will
result in quantification of current and future buying demand on a
regional and national basis.
Charter subscribers to the
study will receive detailed research on demand for their particular
products and services. Havill believes this insight will prove
indispensable to subscribers as they attempt to effectively exploit
market opportunities through 1998. Subscribers will also have some
latitude in customizing the questionnaire to probe areas in which they
have special interest.
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INTRODUCTION
AND OVERVIEW
What
is the future growth pattern for products and services
sold into the United States Gasoline Service Station Marker?
A variety of geopolitical,
environmental, and economic factors have made petroleum equipment demand
exceptionally volatile. This market continues to adapt. Ownership patterns
and the introduction of fuel formulations are changing, as are the
appearance and functionality of fueling facilities.
The 1989 UST regs have had the
effect of increasing the cost to own and operate service station facilities.
Now, Stage II vapor recovery regulations are impacting 57 non-attainment
areas. In many cases, the projected returns on a new or upgrade facility do
not justify the required investment. Fewer new stations are being built and
many old facilities are being shut down. Studies over the past two years by
Havill Consultants confirm that this consolidation is continuing. The
toughest questions faced by petroleum equipment suppliers as they put
together their plans are, "How many fueling facilities remain out of
compliance with the regs, how many will upgrade, and how many will
close?"
Service station upgrading in
the '7O’s and early ‘8O’s created optimism among equipment suppliers,
but 1988 and 1989 demand levels were distorted because of extraordinary
major oil company expenditures. Now, many major oil companies are winding
down their upgrade programs and are shifting investments to refineries. As a
result, the service station equipment market has nose-dived. Some equipment
manufacturers are shifting their marketing focus to non-major oil customers.
Will upgrading these facilities boost sagging demand, or will so many
fueling facilities close that the equipment market will remain at low
levels?
New technologies with increased
sophistication are available for those who opt to upgrade. A variety of
competitive systems are being offered in all major product categories. As
examples, new Stage II assist nozzles, computerized site controllers, and
mass based tank gauges have recently been introduced to station owners.
Other products, such as tanks, piping, overfill devices, monitoring, gauges,
point-of-sale terminals, dispensing equipment, and pumps, continue to
evolve.
As a supplier of equipment or
services to this market, your company needs to know more about how potential
customers are likely to respond. Will market demand require your company to
add manufacturing capacity? If so, when? In what geographic area? Pricing
deterioration has resulted in unsatisfactory margins for many manufacturers.
Will a better market environment allow prices to recover? Havill Consultants
will help your company answer these important strategic questions. Havill
Consultants will interview the headquarter management of these potential
buyers and ask questions like:
- How many service stations do you currently
own? How many will
be closed for each year through 1998? How many will be upgraded?
How many new additional stations will be added?
- What type of equipment will you purchase
for these stations? What
equipment purchases are being planned for the next 5 years?
- What specific types of equipment will you
purchase in order to meet
EPA regulations? Which technologies are preferred and which face
obsolescence?
- What are your plans to comply with EPA
regulations for leak
detection, tank testing, Stage II, and groundwater monitoring?
These are only a few of the
questions. At the request of many clients, Havill Consultants will repeat
some of the questions used in the successful 1990 study. Havill Consultants
will also probe some additional areas. Subscribers to this study will begin
the 1993 construction season with a valuable insight into the 1993 – 1998
market opportunity. The data will be broken out by geographical area for
each market segment - major oil, independent oil, convenience store,
industrial, and commercial buyers. Annual demand forecasts for each year
through 1998 will be provided.
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WHO
WILL BENEFIT FROM THE STUDY
This study will be a valuable
tool for those who have profit and loss, planning, and product development
responsibilities, either directly or indirectly. For example:
- CEOs, company presidents, general
managers, and marketing managers of a
company or division.
- Heads of key functional areas such as
marketing, sales, marketing research,
research and development, manufacturing, finance, planning, and new
business development.
- Those providing insurance, and financial
services to the retail, commercial,
and industrial gasoline service station markets.
- Those involved in manufacturing,
distributing, or purchasing service station
equipment for either new or replacement applications.
- Those providing engineering, testing, and
clean-up services to the gasoline
service station market.
This study will help
subscribers to:
- Review current strategies and determine
appropriate new business
directions in light of technology and market trend data.
- Improve the accuracy and scope of short
and long range business plans,
especially as it relates to market changes that are now taking place and
the
one time nature of the replacement market.
- Improve the accuracy and scope of manpower
and capital spending plans.
The study will provide detailed regional demand data for insurance,
petroleum equipment and services along with regulatory information.
- Improve the accuracy and scope of
marketing strategies and sales tactics by
geographic region of the United States.
- Improve product development plans by
identifying trends in insurance
programs, petroleum equipment and services within each segment of the
service station market.
- Set short-term and long-term regional
business objectives.
- Screen new product and new business
opportunities.
- Cross-check previously prepared in-house
market analysis.
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OUTLINE
OF THE STUDY REPORT
The scope has been increased
from the original 1990 study. The sample size will be expanded from 600 to
1,000 owner interviews. This will increase the survey accuracy, facilitating
product line forecasting and regional demand analysis. Each subscriber will
receive a complete analysis of their product line. The analysis answers
three major issues:
1. The yearly product demand
over the 1992 to 1998 planning period.
2. The demand broken out by
product type.
3. The demand broken out by
technology or material system.
INTRODUCTION
EXECUTIVE SUMMARY
- MAJOR ISSUES
- METHODOLOGY
- NUMBER OF EXISTING STATIONS
- SAMPLE SIZE AND MARKET PROJECTIONS
- STATION CONFIGURATIONS
- POLLUTION LIABILITY INSURANCE AND TRUST
FUNDS
- COMPLIANCE AND STATION CLOSINGS
- FATE OF THE SINGLE STATION OWNER
- NEW AND UPGRADE STATIONS BY MARKET SEGMENT
THROUGH 1998
- STATE OF COMPLIANCE IN 1998
PRODUCTS 1992 - 1998 -
Subscribers select their product category from the list below. This
section will be repeated for each market
segment: major oil, independent oil, c-store, and
private.
- UNDERGROUND TANKS
- PETROLEUM PIPING
- FLEXIBLE CONNECTORS
- OVERFILL PROTECTION
- SPILL CONTAINMENT
- LEAK DETECTION
- PUMPS
- DISPENSING SYSTEMS
- HOSE
- NOZZLES
- POS TERMINALS
- TANK TIGHTNESS TESTING
- OTHER, SPECIFY...
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METHODOLOGY
AND DATA SOURCES
General
Havill and Company has
conducted research in the service station market for a decade, studying
the buying behavior of major oil, independent oil, convenience store,
industrial, and commercial firms. Since 1989, we have conducted four
multiple client industry studies and several proprietary studies for
individual sponsors. The research for this project will be carried out
in two stages.
Stage 1- Research Design
During the first phase of
the project, questionnaires will be developed for respondents based on
the previously mentioned study objectives. Input from charter
subscribers will be solicited. Questionnaire emphasis will be placed on
exploring how owners plan to comply with federal and state EPA codes.
The questionnaire will also probe regarding the products and services
they plan to purchase. Each questionnaire will be carefully pre-tested.
Stage 2 - National Telephone Survey
Following the design phase,
a national telephone survey will begin. All interviews will be conducted
with the person authorized to make fueling facility purchasing
decisions.
Service stations will be
broken out into volume categories - less than 10K gallons per month,
between 10K and 50K, 50K and 100K, and over 100K. The monthly revenue of
these stations attributed to gasoline sales will also be determined in
order to establish the economic likelihood of a station being closed.
Station closing plans may not be known by the interviewee, but the
economic constraints for viability may be well known. The interviews
will be completed with a random sample in each region. This will ensure
that all segments of the market are adequately covered and that the
results will be projectable. The survey will be conducted by Havill
executive interviewers with business experience in petroleum equipment
studies. These executive interviewers will be directly involved in
analysis and report writing for the project. The Havill approach
provides valuable insight into the market because prior industry
experience permits the executive interviewer to do unstructured probing
on important issues.
Sample Size
There are approximately
176,000 retail service station locations across the United States. The
EPA reports that there is a similar number of industrial and commercial
fueling facilities. Executive interviews will be conducted with 200
firms in each of the five regions of the country for a total of 1,000
interviews. Havill Consultants have tank owner lists, by state,
throughout the US. which have been converted to computer database files.
A balanced mix of independent oil, c-store, and private owners will be
randomly selected along with all the major oil companies. This will
result in a sampling error of about 3 percent at the 95 percent
confidence level. All respondents will be carefully screened to ensure
that they qualify for the survey.
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STUDY
FINDINGS
Who lead the industry?
As expected, the major oil companies lead the industry with 64
percent or 21,521 of their stations in full compliance. Convenience store
chains and independent oil companies follow with 54 percent and 53 percent
of their respective facilities in compliance.
What happen to private commercial?
Private commercial facilities bring up the rear with only a 43
percent compliance figure. Which leaves over 107,000 private facilities yet
to be upgraded or closed before December 1998.
Half of refueling facilities are
expected to be out of compliance
The 1993 United States EPA Regulated Retail, Commercial, and
Industrial Gasoline Service Station Market 1992 – 1998 study projected
that 200,935 of the 405,277 refueling facilities in the
United States 1993 are expected to be out of compliance with the 1998
EPA regulations. |
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SAMPLE
QUESTIONNAIRES
The following sample questions
for the core questionnaire and product sections are provided for direction
only. Charter subscribers will be able to alter the questionnaires to more
fully answer their particular questions, provided the changes do not add
materially to the cost of the research and the changes are received prior to
January 22.
Core Questions
- Are you a Major oil, Independent oil, C-store,
or Commercial/Industria1 firm? How many
gasoline stations/facilities do you currently own?
- How many stations did/will you close in 1992?
In 1993? In 1994? Through 1998?
- How many stations did/will you upgrade in
1992? In 1993? In 1994? Through 1998?
- How many additional new stations did/will you
add in 1992? In 1993? In l994? Through 1998?
- How many of your stations are currently in
full compliance with the regulations as they
read for 1998? What year do you expect to be in full compliance with the UST
regs as
they will read in 1998?
- What is your average annual gasoline station
volume in gallons per month? How many of
your stations are selling below 10K gallons/month, between 10K and 50K,
between 50K and 100K,
over 100K?
- For stations below 50K gallons/month, what
percent of their average monthly revenue is from
gasoline sales?
- What percent of your stations are in rural
locations? What percent are in urban locations?
- What trust fund or insurance is currently
available and in place for your stations?
- What percent of your stations are high volume
pumpers, c-store, full service, other?
- How familiar are you with the UST regulations
that will be implemented by 1998? Will
you have to comply to these regulations?
- What was your annual budget for upgrading
stations in 1992? For 1993?
UST Questions
- What percent of your upgrades through 1998
will include new tanks? How many tanks per
site is that?
- For new tanks purchased, what percent of
stations will be single wall? What percent
double wall?
- For new tanks purchased, what percent of
stations will be STI-P3? FRP? Composite?
Jacketed? AST?
Piping Questions
- What percent of your upgrades through 1998
will include new piping? How many tanks
per site will need new piping?
- For new pipe purchased, what percent of
stations will be single wall? What percent will
be double wall?
- For new pipe purchased, what percent of
stations will be FRP? Flexible piping systems?
Other pipe material?
Dispenser
Questions
- What percent of your upgrades through 1998
will include new dispenser upgrades? How
many dispensers per station will upgrades have?
- For new dispensers purchased, what percent
will be MPD's? Blending pumps? Stage II
dispensers? Other dispensers?
- For the new dispensers you purchase, what
percent will be suction rather than pressure
systems?
Spill Containment
Questions
- What percent of your upgrades through 1998
will include spill containment upgrades like
the OPW 84-D, the Emco A-1003, or the EBW 705? How many spill containers per
station
will upgrades have?
- For new spill containers purchased, what
percent will be under 5 gallons? 5-7 gallons? 8-14
gallons? 15-24 gallons? 25 and over gallons?
Overfill
Protection Questions
- What percent of your upgrades through 1998
will include overfill protection upgrades?
How many overfill protection devices per station will upgrades have?
- For new overfill protection purchased, what
percent will be automatic shutoff devices like
the Emco A1000 or OPW 61-SO? What percent will be overfill alarms? What
percent
will be ball float valves?
Leak Detection
Questions
- What percent of your upgrades through 1998
will include electronic leak detection
upgrades for your tanks? How many probes per tank will upgrades have?
- For new leak detection for tanks, what percent
will be tank monitors like the Veeder Root
250 series, the Emco Tank Monitor II, the Pollulert FD105 the EBW Autostik,
or the
Alert 2000? What percent will be using ground water probes? Vapor probes?
Interstitial
probes?
- What percent of your upgrades through 1998
will include electronic leak detection
upgrades for your lines? How many probes per line do upgrades have?
- For new leak detection for lines, what percent
will be automatic shutoff devices like the
Red Jacket P33? What percent will be using ground water probes? Vapor
probes?
Interstitial probes?
Point-Of-Sale
Questions
- What percent of your upgrades through 1998
will include new POS systems? How many
new POS units per site will be purchased for upgrade stations?
- For new POS systems, what percent will be
electronic cash registers? What percent will be
card terminals?
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PROJECT
ANALYSIS AND REPORT
Havill Consultants will
personally manage all aspects of the project. The telephone interviews will
be conducted by a dedicated team of professionals with business experience
who will share responsibility for the total project from questionnaire
design through the final report.
The market survey data from
each questionnaire will be computer tabulated using Havill's full-feature
research software. Segmentation analysis will be conducted to show
differences by geographic region, and between city and rural locations.
Segmentation by market segment, by size of service station, and by new vs.
replacement applications will also be provided. Statistical procedures will
be applied to establish the significance of the research findings. Following
a thorough analysis, conclusions and recommendations will be made.
Charter subscribers to the
study may request special analysis of specific questions that were included
in the research for their area of interest. Subscribers will be invited to
suggest special segmentation as long as their suggestions are submitted
prior to January 22, 1993, and do not materially increase the total cost of
the research.
All study findings will be
fully documented. Where appropriate, graphs will provide a picture of the
information. Havill Consultants will provide an evaluation narrative which
will include a discussion of significant findings and their business
implications.
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STUDY
DELIVERABLES
- Subscribers to this study will receive three
copies of the final report of
approximately 300 pages. The report will follow the outline detailed
herein,
including an executive summary. Subscribers purchasing product sections
will receive the total report, including all product categories
researched.
- About a month after the delivery of the
final report, Havill & Company
staff will be available to meet with individual subscribers to discuss
issues
arising from the study.
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PRICING
AND PAYMENT
The price of the core study
plus one product is $10,500. Additional product sections (see suggested
product questions) will be accommodated for an up-charge of $6,000 per
product section. Additional product questions beyond the initial three
product questions, will be accommodated for an up-charge of $2,000 per
question. A 50% payment is due with the signed purchase agreement. The
remaining 50% will be billed at the time the study is delivered.
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STUDY
AUTHORS
The individuals responsible for
carrying out this project are as follows:
Nicholas R. Havill
- Nicholas R. Havill is founder and President of Havill & Company, a
Mid-West Management Consulting Firm. He has primary responsibility for
project control and client relations.
Prior to founding Havill
& Company, he directed the Strategic Planning, Marketing Research, and
MIS functions for the Mechanical Operating Division of Owens-Corning
Fiberglas. In addition to developing and implementing the Division's
strategic planning system, he coordinated the activities of The Strategic
Planning Institute, marketing consultants, and business school professors
to plan and implement business strategy.
Before joining Owens-Corning
Fiberglas, he held senior positions in Research & Development and
Industrial Engineering for Dresser Industries. There, he was responsible
for both bringing new products to market and managing the expansion of
Dresser's manufacturing capacity.
Mr. Havill has spoken at
numerous management functions on Strategic Management and the
establishment of effective competitive intelligence systems He has an MBA
degree in Finance and Administration and a BWE degree in Engineering, both
from The Ohio State University.
Michael A. Rauh
- Michael A. Rauh is Project Manager for Havill & Company responsible
for industrial and business-to-business studies
Relevant to this study, Mr.
Rauh has project management experience in the petroleum equipment
industry, the printing industry, the paint industry and the graphic arts
industry. He has directed numerous research and consulting projects,
including the 1989 petroleum demand forecast, the 1990 contractor survey,
and the 1992 Stage II study.
Prior to joining Havill &
Company, he earned an MBA degree in Management, an ME degree in Education,
and a BA degree in Psychology, from the University of Toledo. While with
the university, Mr. Rauh was President of the MBA Association and assisted
in the development of several small businesses in the Toledo area for the
Small Business Institute.
Linda M. Erbland
- Linda M. Erbland is Senior Analyst for Havill & Company assigned to
the Gasoline Service Station Study.
Ms. Erbland has project
management and analyst experience in the automotive and petroleum
equipment industries Relevant to this study, Ms. Erbland was a senior
analyst working on the 1992 StageII study as well as several proprietary
projects.
Prior to joining Havill &
Company, she worked extensively in consumer and industrial markets for
Great Lakes Marketing, a market research firm in Toledo, Ohio. Ms. Erbland
has earned a BA degree in Communications and Marketing.
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