Growth in propane sales prompted Holston Gases of Knoxville, Tennessee, to expand local delivery services by purchasing additional equipment and constructing a new distribution facility, says Robert Anders, president and chief operating officer.
"We've ordered two new bobtail trucks, invested $10,000 in communication equipment for drivers, and added to our storage capacity in Athens, Tennessee," says Anders.
Holston Gases was founded in 1958 by Pat Baxter and Bob Walsh in Knoxville. Originally known as Holston Oxygen because of the primary product handled at that time, the company was later re-named Holston Gases to reflect its diversification to many gases.
Company headquarters are in a 50,000-square-foot building at the headwaters of the Tennessee River in the center of Knoxville.
Since the 1960s, propane distribution has been a significant part of company sales, culminating in today's six million gallons annually. "Propane was a natural fit for the company," says Anders. "We supply homes, schools, churches, and businesses."
Holston Gases offers propane customers an annual fixed price that company officials see as a way to emphasize value. "We offer our customers price stability," says Anders.
Greater Area Propane business is kept close to home in eastern Tennessee, but the company's other transport interests take in a greater area, some reaching as far northwest as Nashville, Tennessee, and into southwestern Virginia.
In addition to propane, the 40-year-old business supplies carbon dioxide, nitrogen, hydrogen, argon, helium, and rare and specialty gases, and specializes in welding and industrial supplies. Holston Gases also supplies medical gases and accessories. The industrial gases division is the largest and boosts the company's fleet to 47 vehicles, the majority used to deliver gases in cylinders.
The company offers a complete line of pure and mixed gases for industrial uses, including gases available in a variety of containers for specific needs. Containers vary in size from 20 cubic-foot cylinders to 5,500 cubic-foot portable liquid cylinders. All industrial gases are delivered in bulk by for-hire carriers and stored in bulk as liquid gas until it is converted into compressed gas and transferred to cylinders.
Specialty gases are transported to laboratories such as those at Oak Ridge, Tennessee, where they are used in analytical testing.
Closer to home, a Holston pipeline supplies medical gas to Knoxville's Baptist Hospital located across the street from the company terminal. Nitrous oxide, helium, nitrogen, and blends of other medical gases are used in surgery, sterilization, and medical testing.
Other Services Besides supplying and transporting gases to customers, the company designs and coordinates installation of bulk systems and monitors supplies for customers. Carbon dioxide, delivered primarily to food processors and metal fabricators, is transported in bulk in Cardox trailers with 36,000-pound capacity. Equipment includes Sponsler Inc meter, Superior valves, and Betts lights. A Wisconsin motor mounted under the trailer powers a Smith Precision pump.
Product is picked up from Praxair in Loudon County, Tennessee, and delivered to customers throughout the state. Since 1990, annual carbon dioxide distribution has increased from 100 tons to 3,200 tons.
"This is another example of our ability to grow by expanding our supply of product. We have also grown through acquisitions," says Anders.
This year, Holston Gases tripled its carbon dioxide business by acquiring another company's division. Two welding supply companies also were purchased in early 1998. In the last 10 years, the company doubled its size through sales growth and 17 acquisitions, says Anders.
Company Purchases The company purchases about 60% to 70% of product through a pre-buy arrangement with suppliers and passes on the savings to customers. In its market area of eastern Tennessee, propane sales represent about 25% of total company revenues. "By providing a fixed price, we can help our residential customers meet their budgets, and our commercial customers can be more productive," says Gregory Jackson, propane department service manager.
Unlike many companies whose residential sales outnumber commercial sales, Holston Gases' propane deliveries are evenly split. Total customers number about 4,500. However, within the past five to six years, residential sales have increased considerably, driven partly by home construction in rural areas. In the hills and Smoky Mountains of Tennessee, vacation cabins are being built and are an expanding source for the company.
Mountainous terrain presents delivery difficulties during the winter months when road conditions are treacherous, but the bobtail drivers are familiar with the seasonal problems and are trained to negotiate the remote roads. Route coordinators keep an eye on the weather and see that customers' tanks are filled in advance of storms to avoid as many emergency deliveries as possible, says Jackson.
For routine delivery, drivers are given customer orders each day and work 10-hour shifts. "Drivers have a set agenda and generally know where they will be every day," says Jackson. "Few of our residential customers are at home when we make deliveries, but we continue to train our drivers in customer service. We think this is important to provide reliable delivery."
To keep pace with propane demand, the company has ordered new bobtail trucks that are identical to 10 others already in service. National Butane Tank vessels with 3,000-gallon capacity are mounted on Ford F700s by Post & Company. The 185-horsepower Fords are fueled by propane and have six-speed manual transmissions. Tank equipment includes Corken pumps, Neptune register and meter printers, Hannay hose reels, RegO internal valves, and Betts lights.
Cellular Phones All trucks are equipped with new cellular phones. "We are in constant contact with our drivers," says Anders. "Externally, we can respond to our customers and internally we are saving time in coordination. It was an expensive but worthwhile investment."
Bulk propane arrives at the five-acre Knoxville terminal via rail cars-30-35 cars per month in the busy season. The product is stored in Knoxville or transported to Chattanooga, Jacksboro, Morristown, or Athens, Tennessee. Retail stores are also situated in the five cities. In Athens, the new facility will increase the company's total storage capacity to 150,000 gallons. "Our goal is to be able to offer commercial and residential propane in all of these areas," says Anders.
Two propane tank trailers carry the product for over-the-road and local distribution. The 10,500- and 10,600-gallon Trinity Tank trailers have Blackmer pumps, RegO valves, and Betts lights. Additionally, tank trailers are leased when the company has excess business. Tractors used to pull all company trailers are leased from Ryder Company Inc. "We don't want to be in the trucking business," says Melvin Gay, vice-president of operations. "By using leased power, we can focus directly on our business. Gradually, we plan to develop our program until all vehicles are leased."
Holston Gases specifies Freightliner and International tractors. Four Freightliner tractors are equipped with Caterpillar 350-horsepower engines and Fuller 10-speed transmissions. Two International tractors were specified with Cummins 350-horsepower engines and Fuller 10-speed transmissions.
Leased Equipment In keeping with the company's plans to eventually lease all equipment from companies with maintenance agreements, Holston mechanics handle only minor maintenance on tank trailers. The equipment is sent to outside contractors for major repairs. A two-bay repair shop at the Knoxville terminal eventually will be phased out. "With the complicated computerized equipment that we use today, it's very difficult to find specialists that can handle everything," says Gay. "That's why we want to leave that to the people we lease from because they have the expertise."
While Holston plans to lease equipment, driver training remains an important aspect that is interlaced with safety and customer service. "We have about 10 propane drivers," says Jackson. "Those who drive tractors can be switched to the bobtail trucks." Propane drivers and all other employees who work in the propane division receive annual training through a program sponsored by the National Propane Gas Association.
About 90 drivers are employed companywide and must have a commercial driver license with hazardous materials and tank endorsement. The company hires only experienced drivers who are at least 21 years old. Newly hired drivers spend up to six weeks in training, including two weeks with a supervising driver and another two weeks under supervision on the route they will be serving. Training follows a course prescribed by the National Propane Association and includes safety in product loading and unloading, use of equipment, hazardous materials handling, and defensive driving. Retraining is conducted annually by Ryder in a day-long seminar conducted on a Saturday. The course covers Department of Transportation and Occupational Safety and Health Administration rules and regulations, as well as handling of hazardous materials.
All company employees participate in monthly safety meetings that are conducted in three sessions. Employees are required to attend one of the sessions where discussions include safety policies and operation reviews.
"Our goal is to make a difference," says Anders. "We do that by giving our employees all the training, equipment, and support they need to get the job done right."
As for the future, Holston Gases expects to continue its growth through further acquisitions and market expansion. Recent acquisitions are expected to boost revenue in the Athens and Chattanooga markets by 25% and add 2,100 new customers. "We have room to grow," says Anders. "There are other markets out there that can be a fit for us, and we are definitely in the buying mode."