As it moves forward to resume its consumer education program, the Propane Education & Research Council (PERC) in July announced the formation of a consumer awareness task force to promote gallon growth by building on the council’s commercialization efforts over the past five years.
Since the U.S. Department of Commerce (DOC) placed a restriction on PERC’s consumer education program in 2009, the council has refocused its efforts on research and development and safety and training. Following years of work by the National Propane Gas Association and the propane industry to convince legislators of the importance of the council’s public education programs, DOC lifted the restriction this past April.
After receiving the gavel from outgoing chair Paula Wilson at the council’s annual summer meeting in July in Park City, Utah, new PERC chair Tom Van Buren said PERC’s commercialization efforts have resulted in new product lines that are making a positive impact in the marketplace. He noted, “We can now enhance and develop further and put ourselves in a position of the ultimate end goal, which is [to] increase gallons and improve the value for our industry.”
Scott Brockelmeyer of Ferrellgas (Overland Park, Kan.), chair of PERC’s market outreach and training (MOT) committee, will lead the new consumer awareness task force, which will develop a detailed consumer awareness program for the industry. Van Buren also announced the formation of a new council subcommittee that will focus on managing the portfolio of new products that PERC will seek to commercialize or bring to market.
The consumer awareness task force will first develop the plan, and then for about a year continue to work with PERC’s MOT committee to implement the program. Van Buren said the continued work of the task force will ensure “we’ve got the brightest minds that we can put together,” to provide feedback on areas that need adapting. The group will also continue to review successes and best practices from the past PERC consumer education programs that took place before the restriction was put in place.
The task force will be marketer-driven with support from PERC staff. It will include the addition of a new chief marketing officer for the council. PERC president and CEO Roy Willis explained during his president’s report that he has been developing the job description for the chief marketing officer, has hired a headhunter, and has begun interviewing candidates. “We haven’t found that ‘wow’ person yet, but I’m going to keep looking until I do,” Willis said.
Rob Chalmers of Meritum Energy Holdings (South Lake, Texas) will chair the new portfolio management subcommittee to the council. The subcommittee will review PERC’s existing project portfolio and monitor the progress of each project. Van Buren believes the subcommittee’s duties are more important now that the restriction on the council’s public education activities has been lifted. The group will also review the council’s existing rebate programs and the partnership with states program.
“We’re in a whole new world from where we were five years ago,” Van Buren noted. “It’s an opportunity to make sure we’re looking at everything within the council to include those two very important programs.”
Drew Combs of CHS (Inver Grove Heights, Minn.), in his first PERC meeting as the new vice chair of marketers, commented on that new world, where PERC can now communicate with the public about propane products and services. But he reminded the attendees of the progress the council has made over the past six years in commercializing and bringing new products to market. He does not want the council to lose that momentum just because it now has the ability again to educate the public.
“Even though there’s a new movement to go to the marketing side, we still have a responsibility to continue down that path to bring equipment and items to the market that can utilize propane,” Combs noted. “I see that being melded into our marketing campaign going forward, maybe a little different than what we’ve done in the past from a marketing standpoint. We can’t let up the accelerator with our customers.”
He also called for an effort to “right-size our industry,” by getting the correct-sized tanks to customers. That is necessary because “We don’t need another black eye in this industry,” he said, referring to the supply and infrastructure problems during the 2013-2014 winter.
“I come from the agricultural side with CHS, and I will tell you first and foremost that our agricultural community is not right-sized still. We have sold a lot of new tanks to that industry, but we have a lot of work yet to do. We are another 2013-2014 winter away from having another issue. We have a lot of product out there, but I think people need to understand, and I go on the record with this, that we are still dislocated with where that inventory is at and where the demand is needed. So to think that we have a plethora of inventory sitting out here that will meet any challenge we have, don’t kid yourself.” The industry must continue to work on better methods to move propane to the end user, he added.
Combs also noted his concern about attacks on the propane industry from outside entities. He mentioned the reversal of pipelines for use by other products as an important issue to be addressed. Increased exports of propane are affecting the industry’s portfolio.
“I see an intrusion by legislative actions in certain states that are impairing our ability to be a true industry that is run by consumers,” he commented. “We need to continue to work together as a community [to show] that this is an industry that cannot be subsidized, and I’m talking about natural gas. We have a responsibility to make sure we educate. We have a tremendous responsibility…as we look to the future…We need every one of us engaged.”
Willis, in his president’s report, stated that the council’s commercialization efforts over the past several years have resulted in many new target markets. The commercialization strategy has resulted in 40 different propane products and applications into the marketplace, with 122,343 units of those products sold. Those units have consumed 283 million gallons of propane and delivered $70 million of value to the industry on a PERC investment of $24 million.
“To me, that’s an indicator that we’re making progress in that area,” Willis noted, adding that the lengthy amount of time required to send an idea to production and then launch it into the marketplace has been a surprise. The lifting of the public education restriction will help in that area.
PERC vice president Tucker Perkins discussed various programs that will receive expanded attention from PERC in the coming months. He began by looking at the housing industry. In this area, PERC staff will increase its work to influence stakeholders in housing, including builders, plumbers, HVAC professionals, and homeowners. PERC’s Let’s Retire Heating Oil campaign will help those stakeholders see propane’s benefits over fueloil. The same goes for an upcoming campaign on geothermal energy.
The geothermal campaign, Perkins noted, “will begin to evolve, but it at least gives our marketers really concrete facts and tools to use to combat a rising technology in most markets, which is geothermal heat.”
PERC’s “Pull the Plug on Water Heating” program has done well, and it will do even better with the lifting of the public education restriction, coupled with April’s change in water heater efficiency standards that made propane a very cost-effective device compared to an electric water heater, Perkins noted.
He went on to cite a statistic showing that 4 million homes that use propane do not have a propane water heater. To take advantage of that, PERC plans a campaign with a celebrity spokesperson to talk about the efficiency standards and other facts to get homeowners to switch to propane water heaters.
Moving to the commercial sector, Perkins said getting the four Kohler propane generators launched to the commercial market is another top priority. The Tier IV final emission standard that diesel products must meet should further help sales of propane products.
He provided an update on the commercial mower market, noting that PERC, working with R&R Products (Tucson, Ariz.), is conducting a pilot program to launch propane mowers into the golf course market. The pilot program recently placed mowers at an eighth demonstration site golf course in Columbus, Ohio. Perkins reported strong initial feedback from the golf courses about the products. The demonstration, which involves about 35 mowers at the eight golf courses, will be about a year in duration.
Willis also included in his president’s report statistics showing that about 7000 propane-fueled school buses are operating in 400 school districts across the country in 45 different states. But that market has great room for growth because about 13,000 school districts exist in the country.
“One of the metrics we might adopt for this new commercialization strategy…is how many of those 13,000 school districts are going to hear from PERC about what a propane school bus fleet can do for their school district,” Willis stressed. “We do have an opportunity to grow those markets…The same could be said for other product categories. The effort to integrate consumer education into our commercialization strategy is going to be one of the more important things this council does going forward.” —Daryl Lubinsky