CHICAGO — Howard Laga serves as vice president and general manager of The Penray Companies Inc., a manufacturer of automotive and heavy-duty chemicals based in Chicago. In this position, he is responsible for managing daily operations for the company.
This is a multi-faceted job in which Laga oversees the daily business of Penray and direct the formulation and implementation of short and long-term operational goals to meet business profitability and growth objectives. In addition, Laga manages the supply chain, from the purchasing function through manufacturing, as well as all aspects of the information systems department and the sales and marketing functions.
Laga has held various sales and marketing management positions in Penray’s automotive and heavy-duty divisions since joining the company in 1983. Most recently, he was the national sales manager, Power Fleet, where he was a major contributor in the growth of Penray’s cooling system and fuel system treatments.
We’ve been hearing a lot about the challenges that raw materials are causing for automotive product manufacturers but you are in a very unique and even more challenging position as petroleum is the primary ingredient in your products. Tell us what impact the increasing raw materials costs have had on making your products and how you are handling it.
Undoubtedly, chemicals companies like Penray have experienced unprecedented price increases in terms of magnitude (increases range from 5 to 40 percent) and frequency (monthly). Our entire process is affected, such as increases in freight-in rates, freight-out rates and fuel surcharges, in addition to cost increases in every component of our products, including caps, plastic bottles, steel cans and chemicals.
In order to stay on top of these price increases, we have had to shift daily schedules of how we go about doing business. Our purchasing department is tracking component pricing on a daily basis and seeking the best prices available. Our sales and marketing department has been assigned to watch pricing to ensure Penray remains competitive in the marketplace and doesn’t lose any sales.
The greatest impact on us is that because we have not been able to pass along price increases fast enough, we are stressing our minimum margins.
Have you had to raise prices for your products as a result?
Penray has taken three price increases in the past six months. This is in stride with our competition.
Has this crisis inspired any new efficiencies or ‘green’ processes at Penray?
Penray has been on the “green” trail for several years. In the power fleet division, for example, a single Need Release Extended Service Filter stays on the truck for 150,000 miles and replaces eight to 10 normal coolant filters that, when exhausted, require land filling space. Our Fill-For-Life coolant maintenance program (Need Release Filter and Fleet Charge Heavy Duty Antifreeze) protects the truck cooling system to overhaul. This eliminates draining and wasting 12 to14 gallons of antifreeze every two years. Also in our power fleet division, we have developed a complete line of fuel treatment products for biodiesel. These patented products allow biodiesel manufacturers, suppliers and users to enjoy the benefits of biodiesel fuel, while keeping their systems functioning properly year-round.
In our automotive division, our sales strategy is to move away from the do-it-yourself (DIY) market to the do-it-for-me (DIFM) market, or more commonly referred to as the quick lube service outlet. Penray features more than 20 automotive maintenance kits to help maintain proper vehicle function, reduce emissions and increase gas mileage.
With consumers and businesses alike looking to cut costs today, have you seen any downturn in business – are you finding motorists are scaling back on vehicle maintenance or just the opposite?
Despite the challenges presented by the domestic and global economies, Penray company sales are up over 2007. Sales in the heavy duty truck market are sluggish, but still above 2007. This is due to delayed or deferred truck maintenance, and the fact that there is less overall available freight, so owners have parked a portion of their fleets. This reduced truck population has temporarily affected sales.
However, things are different in the automotive market, where our sales are up significantly. Whereas you might expect the high cost of gasoline to defer or delay normal maintenance, the opposite is occurring. With reduced disposable income due to the rising costs of energy and food, consumers are not buying new cars like they used to. Instead, car owners are holding on to their vehicles for up to eight years, and they want to keep them operating efficiently for that extended period. The impact of these consumer trends has greatly benefited Penray through the sale of our DIFM vehicle maintenance car care kits that I previously discussed.
On a lighter note, you were promoted vice president and general manager of Penray just about two years ago. Now that you’ve had plenty of time to settle in to that role, what are your short- and long-term goals for the business?
My short-term goal is the single multi-faceted focus to remain ever-vigilant and navigate Penray through this economic downturn. Because our company is rapidly growing, my long-term goal is to consolidate our manufacturing plants and offices from three sites to a single location. The overall efficiencies that Penray will gain from this single direction are endless.
Will Penray be participating in Automotive Aftermarket Industry Week this fall in Las Vegas, and if so, what are your plans?
Absolutely!! This event is huge in the benefits for our domestic and international sales and marketing strategy.
