OPW, a Dover Company, is a global leader in commercial and retail fueling equipment, offering everything from dispensing nozzles for vapor recovery, gasoline, diesel, LPG, Hydrogen and CNG to swivels, breakaways, valves and fittings, underground and above ground storage tank equipment, spill containers, overfill prevention devices, secondary containment sumps and flexible piping, tank gauging equipment and automated fuel management systems. Going into the PEI/NACS Show <i>NPN</i> interviewed David Crouse, president at OPW Fueling Components, for his insight on the industry and some notable equipment issues relative to marketers and retailers.
NPN: What have the recent disruptions to the economy meant to business?
Crouse: Having a large global footprint is really an advantage today. While we have seen a relatively slow rebound in North America and Europe, we have seen a much quicker rebound in Asia/Pacific, Middle East, Africa and, interestingly enough, Latin American never really did slow down. To put it in perspective, 2008 was a record year for OPW and 2009 was a challenge for us, as it was for everybody in our industry. But, during the downturn we really did not scale back in aspects of our business such as product development and in our customer support efforts. As a result of that I don't believe we lost momentum during the downturn. And, in 2010 we bounced almost all the way back to our 2008 levels and we anticipate surpassing that in 2011.
NPN: How would you compare the U.S. market to what you see internationally?
Crouse: In a relative sense all markets are important. But in the sheer magnitude of the fueling infrastructure in the United States the North American market will always be very important. Environmental regulations will continue to drive business in the United States and, in many ways, the U.S. market has set the standard on a variety of environmental regulations that are being adopted all over the world. So, the importance of the U.S. market is paramount. Now I'm contrasting it to other parts of the world, the emerging markets, the BRIC countries (Brazil,
Russia, India and China) for example, have really enjoyed explosive growth over the last five years, which makes those markets very attractive. And really that growth is being driven by expansion and infrastructure as they build new highway systems, but also very much by the fact that you have a growing middle-class purchasing automobiles, many for the first time. If you look at the growth of automotive sales it is really indicative of what is in store for the fueling infrastructure and a lot of those countries.
NPN: The nuts and bolts fuel infrastructure is not necessarily as sexy as some areas of petroleum marketing and retailing. What drives your company to put so much effort into new development in this area?
Crouse: We really tackle new product development from three different angles. First, is the changing regulatory environment in both the U.S. and internationally, which can be quite a challenge at times. A lot of that originates in California through the California Air Resources Board and the U.S. EPA. That really drives a lot of OPW’s new product development. The second part involves listening to customers, taking their feedback and putting in the new product development. What we've heard loud and clear in recent years is can we provide products that will lower operating or installation costs, or the original price of the product. Customers are looking for a lower total cost of ownership. Finally, we work hard to understand where the market is going and try to anticipate some of the major trends such as diesel exhaust fluid. We watched DEF spread across the European continent and we've seen countries outside the United States, such as Pakistan, Brazil and Argentina embrace compressed natural gas at a much faster pace than the United States. So, we really try to anticipate where the market is going and focus a lot of product development around that.
NPN: Speaking of DEF, what do you see happening in the U.S. market now?
Crouse: I think DEF growth in North America has been very strong and I predict that will continue for the conceivable future. Eventually, all truck stops and many retail and commercial fueling sites will have DEF on-site. That's inevitable. If you look at the adoption across Europe, it started there quite slowly as well and then it very quickly ramped up and, of course, the transition took several years. But the entire European market now has DEF at the majority of fueling sites. I also think it’s a proven concept that reduces nitrous oxide emissions so the U.S. and the rest of North America will embrace it. I believe that'll be the case in other areas of the world as well.
NPN: When do you think we'll see a shift from a focus in many cases and jugs to a dispensed solution?
Crouse: I think you'll see the dispensed solution at truck stops where they have a higher volume and probably the same at commercial card lock sites when they work out how to make that available. At service stations that sell diesel and automotive dealerships it'll probably be a jug or maybe a tote solution for some period of time.
NPN: What you believe is the impact of the announced phase-out of Stage II vapor recovery requirements in the United States?
Crouse: Although the EPA has announced a potential definition for widespread use of ORVR vehicles, there are still several hurdles that will lead to a gradual change-out of equipment. First this definition needs to become official, until then much of this is very speculative.
Each state will implement this differently, and it will take time for each state to adjust and react. Once a state makes an official ruling with a selected allowable conversion date, we expect to see a rapid conversion from vapor recovery to conventional fueling equipment, as this makes the most economic sense for the station owner, and its consumers.
NPN: With the ethanol mandate forcing E15 in the marketplace, what's your perspective on that issue?
Crouse: We've been manufacturing our own nozzles and other products in Brazil for 27 years. Brazil uses E100, and has for much of that time. So, OPW has vast experience in dealing with various alcohol blends. We anticipate this growing in other markets over the foreseeable future. In anticipation of this, we set out early on to make sure most of our standard products were compatible with alcohol blends. However, I do think getting E15 into the marketplace has some challenges. I think that the EPA placing the responsibility for this fueling in the hands of the operators is going to make it a challenge for E15 to gain traction at an accelerated pace. Nevertheless, I think the market can overcome some of these challenges.
NPN: Can you tell me a little bit about 40 CFR 63 compliance? <i>Edit Note: The U.S. EPA created 40 CFR 63 to establish national emission limitations and management practices for hazardous air pollutants (HAP) emitted during the loading of gasoline storage tanks at gasoline-dispensing facilities (GDFs). These standards went into effect in 2008.</i>
Crouse: Well, 40 CFR is an older mandate from the EPA and the deadline was January of this year. In the years leading up to this deadline, OPW developed a comprehensive product portfolio to enable customers to very easily comply with the requirement. We also developed a lot of collateral materials and training programs just to make sure people could very easily understand what the requirements were, what products to order, what they look like, how they are installed and how to comply with the requirements in the simplest fashion. Even though the deadline has passed there are a lot of sites in the United States still not in compliance. I think that probably has to do with the fact that in some states it's not being enforced and, in some cases, people are unsure about what is required to be in compliance. We have a lot of materials on our website that explains what's required to be in compliance and the functionality of that suite of equipment.
NPN: What is your take on the various alternative fuel options being promoted and what do you think marketers and retailers need to be prepared for in the future?
Crouse: At OPW, we've embraced alternative fuels since the 1980s. We made an acquisition that put us into the CNG segment. Today we have a full portfolio of products for hydrogen, natural gas, LPG, ethanol, biodiesel—so I think we are ready as a company. Where I think we’re headed, more broadly, is that in the short term we will embrace hybrid technology and compressed natural gas. The hybrid technology, of course, takes advantage of the existing fuel infrastructure, and CNG is going to really start to take off for several reasons. First, there is access to natural gas in every major region of the world, so it is not a scarce resource, and it is environmentally friendly. And lastly the engine technology already exists. I think this year we will start to see exceptional growth worldwide and particularly in the United States.
NPN: I see that OPW Fuel Management Services is celebrating its 50th year.
Crouse: OPW Fuel Management Services was founded as Petro Vend and as the name denotes its core focus has always been around fuel control for commercial, private fueling sites. We expanded that focus with our acquisition of Emco Electronics in 2002, which is when we changed the name because we broadened the focus beyond fuel control to retail tank gauging. We’re very excited about the anniversary and the solutions that unit provides.