By Al Edwards, Business Co-ordinatorROY D'CAMBRE, who owns and operates National Fuels and Lubricants, has decided not to sell the chain of local gas stations to the integrated multinationals, but to franchise out 13 of them this year, with the remainder to follow.
Only last year, Mr. D'Cambre was ardently courted by both Shell and Elf-Total, with Shell slapping a $500 million offer on the table. Elf, looking to get a footing in Jamaica by placing stations along the Highway 2000 project being constructed by French company Bouygues, bettered that offer at US$13 million (about J$728 million).
Speaking to Wednesday Business earlier this week, Mr. D'Cambre said: "With our current rate of expansion it is getting unwieldy to manage 23 stations, with four more coming on stream by the end of this year. The optimum number of stations for National is 32 and we will achieve that by the end of next year. With this in mind, franchising the stations is viable in that additional revenue can be derived and it puts less stress on my management and administrative team."
Mr. D'Cambre outlined his corporate strategy of franchising to individuals, rather than corporate entities, who he expects will bring additional personal goodwill to the brand and further enhance volumes. He now sees the stations as being easier to manage, leaving him free to concentrate on expansion.
National will operate the stations for a three-month period to get the volume levels up before franchisees take over the operations. Mr. D'Cambre stressed that his company will still control margins but the franchisees will be allowed a maximum mark up.
The franchises will be determined by volume, with the stations going for between $3 million and $7.5 million for a tenure of 10 years. For that, the franchisee gets the goodwill of the business and volume of sales at the pump. A station that sells up to 140,000 gallons of gasolene per month will be in the price range of $7.5 million. Mr. D'Cambre provided documentation showing his Featherbed station producing net profits of $550,000 per month on gasolene sales alone.
National has also been pushing its own brand of products made by the state-owned Venezuelan company, Venoco. The products include lubricants, motor oil, coolant, and brake fluid - all under the brand name "Guard". These products are sold exclusively at National stations.
Turning his attention to the controversy surrounding gasolene retailers demanding that the Government curtail oil marketing companies from operating as retailers in direct competition with them, Mr. D'Cambre had this to say:
"We in Jamaica take our foreign exchange that we earn from remittances, bauxite, tourism and exports and we buy fuel using US. dollars. We then turn around and sell it to the marketing companies for Jamaican dollars. They then send their profits back home in US dollars. Now, what does that do to our dollar? Their profits are for their shareholders abroad. They don't reinvest their profits in Jamaica and that's why I called my stations National."
Mr. D'Cambre has added the Meineke car centre franchise to his portfolio of businesses, which include the fast food chain, Churches Chicken, Haphazard gambling centre in New Kingston, the National gas stations, the Italian restaurant Portofino and a number of Guard automotive products. The United States-based Meineke car centre specialises in alignment, CV joints, shocks, brakes, exhaust and car inspections.
A centre was opened at 1 Stanton Terrace, St. Andrew with the Kingston and St. Andrew Corporation (KSAC) threatening to shut down that operation, maintaining that certain stipulations were not complied with, but that has now been resolved. The president of Meineke, also based in the United States, will visit Jamaica to attend the official opening of the car centre on April 8. This enterprise came in at a cost of $26 million.
With almost 400,000 cars on Jamaica's roads - and that figure likely to go up - Mr. D'Cambre sees only good news for gas pump operators. "We no longer talk about miles per gallon; instead we talk gallons per hour," he said.
The war in Iraq has seen gas prices on the rise but he sees that levelling off soon, pointing to Saudi Arabia's decision to pump more oil and Venezuela returning to normal levels of production. Looking to the future, he sees National Fuels as a marketing company rather than a gas retailer. National sells 1.5 million gallons (6.8 million litres) of gasoline per month.
