Brenner Oil: All in the Family
Corporate Spotlight
Written by Eric Slack   
Saturday, 01 March 2008
Brenner Oil: All in the Family - American Executive - RedCoat Publishing
Doug Brenner tells us how this family-run oil company has become the largest in Western Michigan.
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Oil gets a bad rap these days. Don’t forget, bubblin’ crude helped build this nation, and companies like Brenner Oil intend to forge a new path for the industry. According to Doug Brenner, president, his company is making itself a part of the next generation of the oil industry without losing its familial roots.

Brenner Oil: All in the Family - American Executive - RedCoat Publishing
Doug Brenner, President
“Integrity has driven our success. I haven’t driven in a year or two, but my brother and I will jump in the truck if needed to haul gasoline,” said Brenner. “It shows the other drivers we know what they are up and against, and that absolutely filters down to the customers.”

Brenner Oil is still family-owned and operated. Brenner and his brother Jerry are the third generation of Brenners in the oil business. Having grown up in the industry, the two are familiar with every aspect of the business. That understanding allowed the company’s growth to make it the largest independent oil company in Western Michigan.
The company now has four offices and hauls 1.6 million gallons per day. The Brenner Oil trucks are the biggest piece of marketing material the company has. The company is primarily a product hauler, and the trucks serve as a friendly reminder who the local leader is. According to Brenner, the fleet is something the company takes particular pride in.

“We maintain one the nicest fleets in the state by far. When we get inspected, we are told our trucks are better than everybody else’s,” said Brenner. “We pride ourselves on our fleet, and we do not want safety issues.”

Brenner’s trucks deliver home heating oil, but the company also delivers to excavators, farmers, and small municipalities. The bulk of the business serves larger customers like the Meijer grocery store chain, Marathon Oil, and Costco. The company also serves smaller gas station chain and trucking companies and has a small racing fuel business. With so much going on, equipment needs to be kept up to date. Brenner Oil has an equipment purchasing program to ensure the right buys at the right times.

“Sometimes we won’t buy in certain years because of new upgrades in technology, motors, or emissions,” Brenner said. “We may buy used equipment, upgrade barrels, and replace suspensions because barrels can last 30 years, but suspensions can wear out in 10. It is a combination of buying brand new equipment and maintenance to older units.”

The company also invested in a GPS system for its trucks. In addition to knowing where the trucks are, Brenner said the company is in the process of integrating communications solutions into the system. The company will be able to give the driver his next assignment by printing it on a screen. The driver will click to confirm rather than talking by phone or radio. Billing and inventory data will also be transmitted through the system, speeding up cash flow.

Diversification
With access to capital and the rising cost of crude oil as major concerns for Brenner Oil, the company has developed several strategies designed to allow for growth. The company has been creative by hedging fuel costs to limit exposure to the increased cost of fuel. While those hedges are running out, Brenner Oil is doing something it calls pseudo-hedging.

This pseudo-hedging is possible because of Brenner Oil’s entrance into the ethanol industry. The company develops an ethanol site and can take margins from that to plot against its fuel costs.

“Once we develop an ethanol site, we have a tremendous amount of margin there, and we can allocate some of that toward our diesel fuel costs, which gives us the ability to expand,” said Brenner.

The ethanol arm of Brenner Oil came into play in the last few years through a company called Strategic Bio Energy. Brenner Oil is a 50% owner of the company, along with a partner based in Georgia. The idea behind Strategic Bio Energy is to create the infrastructure to facilitate ethanol delivery, take it from bulk, and get it into gasoline.

Three years ago, Brenner Oil started blending ethanol, while giant oil companies are just now getting heavily involved with the product. Because of its smaller size, Brenner Oil was able to see the opportunity and start putting in tanks where retail demand is high. As a carrier, Brenner understands the labor intensity involved in stopping trucks twice to first blend the ethanol and then unload the gas.

“We’re designing these systems to load quickly, and we’re putting them in locations that are labor efficient,” Brenner said. “They are close to terminals so it doesn’t cost a lot of money in labor to facilitate getting ethanol into gas.”

The ethanol projects also give the company better leverage to expand beyond Western Michigan, as the industry is expected to double in size in 2008. Although there is a possibility Brenner Oil could move into Illinois with its traditional services, expansion into states like Indiana and Ohio will almost surely come as a result of the company’s expanding investment in ethanol and biodiesel.

Brenner is hopeful large oil companies will begin to extend credit relative to the cost of crude oil. He said there is an effort to convince the giants to take gallons of oil into consideration in their credit terms. But given the major companies’ desire to get a bigger piece of the marketshare by controlling credit, Brenner Oil is proactively looking at alternatives.

“If we’re doing the same amount of gallons per year, that used to cost $60 per barrel, but now its $100 per barrel,” said Brenner. “How do you facilitate that credit? There is a conspiracy theory that they are doing it to expand their business by squeezing companies like us out. So one of our challenges is to secure enough private placement capital to counter that.”
 
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