The year 2020 was marked with the principle “health first” for Petrol Ofisi. Standing out with works that prioritize human health, Petrol Ofisi finished 2020 with permanent projects and long-term goals. We had a long conversation with Sezgin Gürsu, Lubricants Director, on how the sector took 2020 discussed how Petrol Ofisi crowned this period with new achievements.
We left 2020 behind, we have a year full of surprises ahead. The effects of the Covid-19 pandemic, which we anxiously followed in the first months of 2020 and which was first seen in our country in March, were of course at the top of the agenda. Well, how was 2020 for the industry?
Everything was running normally in the first three quarter of the year, none of us could think of such a situation. We started an ordinary year. However, the sector experienced a 40 percent decrease in sales during April-May. There was a serious decline in demand. None of us were prepared. There is a saying: “Turkey is ready for crises, Turkish authorities manage crises well.” But this was not like that. This was a very different crisis. Nobody was ready for such a crisis. We all learned by living. Restrictions and decrease in demand on one hand, fluctuations in commodity prices on the other hand forced us to manage multiple issues at a time. When we experienced a 40-45 percent decrease in demand in March-April-May, we run the factory 3 days a week. We said "health first". Health was our first priority for all our employees, regardless of the factory or field. Also, with the message of Mr. Şiper, we created an atmosphere of trust in the whole organization. The message that there would be no layoffs and no downsizing due to Covid-19 was very important. This helped people let go of fear and focus on their work. Everyone started thinking, "What can I do under these conditions?"
By the end of May, we wanted to take new steps with the expectation that the restrictions would be gradually reduced and the sector would start to recover. Most companies were doing many things, such as distributing fuel, providing various aids, handing out masks and disinfectants… But we wanted to touch the hearts. We thought about the ways to help businesses recover. ‘Siftah’, which is a word for the first sale of the day, is a very important concept in Turkey. We prepared this project together in a very short time. In early June, we launched the Siftah project, which brought us very important awards. Thanks to this project, we reached 17 thousand points, including oil change points, repair shops, special services and retail points. We distributed our Maxima and Maximus products as a siftah gift.
In a sense, companies were tested both in a period when things were slowing down and when they started to speed up suddenly. This was a test that shows your preparedness, flexibility and adaptation capability.
Like many other businesses, the lubricant business requires teamwork with integrated management from production to supply chain, from sales to marketing. In this sense, I think we passed the test. We also succeeded in adapting ourselves to the recovery period. In the first phase, communication was a priority for us. We maintained our strong communication with all stakeholders, including our suppliers, customers, dealers, and employees. In this scope, we even organized psychological support sessions for the spouses of our distributors. We received very positive feedback. Then, the Siftah project revived the market indeed. Another phase started in June. After the 40 percent decline, there was an unexpected recovery in the market that we could call an explosion of demand. Friends say "there is a recession in the market that we cannot explain" when the business slows down, and this time we started to experience an increase in demand that we could not explain. The most important reason for this was that people preferred private vehicles over public transport. Road transport was preferred over air transport. Industry also revived very quickly. As a result, our friends, who took 4 days off a week, started working 7 days and 3 shifts during the summer months. We even had difficulty fulfilling the orders sometimes. It is very good for the industry, but this pace was tiring for our friends. I want to thank them once again. While we were having meetings at our homes, sipping our tea or coffee, our friends working in the factory and the field, devoted themselves to the work. We cannot thank them enough.
Actually, we learned something new at each phase. We learned how we can move from halt of production to full speed operation so quickly. We saw what people can do when there is an urge. In September, at the heart of the pandemic, Petrol Ofisi Lubricants broke 3 records. It was a period of pride for us. Monthly production record, monthly sales record and daily production record were broken. Meanwhile, we experienced an increase in Covid-19 cases. Due to the rapid spread of coronavirus n Istanbul, we had to completely shut down our grease factory. Pending orders amounted to more than our 1 month of production. In fact, for the first time, we experienced difficulties in deliveries to our customers. But in Turkey we saw that everyone went through these times with tolerance and cooperation. It was very valuable for us as a nation to cooperate and understand each other. We empathized our suppliers, our customers empathized us. Together we have overcome this period.
It was also very important to curb the cases in the factory. At this point, Petrol Ofisi made a very critical decision. Upon this decision, everyone entering the plant have had a PCR test every Monday. This is a practice showing that we stick to our “health first” principle. In this way, we brought the cases under control. We have identified our asymptomatic friends and did not let them enter the factory and thus prevented contamination.
It was a very interesting year, we learned a lot. I have been in this industry for over 25 years, I have never faced a situation like this before. None of us do not have such an experience. We saw currency crises, demand crises, but we have never experienced such a crisis. We now have a new experience.
When we put aside the challenges we faced throughout the year, you became the leader of the lubricant market in 2019 according to PETDER data. The second half of 2020 was better, you broke records in 3 areas. You have run successful campaigns and projects in the field of lubricants. Can we say that this year has been the year of lubricants for Petrol Ofisi?
It would be wrong to say that it was the year of lubricants. I see the last 3 years as a period in which Petrol Ofisi regains its former strength, transforms the power from its roots into results and shows its real performance and capacity. I have been in this company for 15 years. I have worked with many different shareholders since 2007, but for the last 3 years there has been a change that I haven't seen in 15 years. I am saying this very faithfully at every opportunity. There has been a significant change in every part of the company, both on the retail side and on the commercial fuels side. We are happy if we have made a contribution to this success.
It is announced that you are the market leader for 2020 as well. What will you say about this success?
As of 2019, we, as Petrol Ofisi, became the undisputed leader of the lubricants sector in all aspects. We have maintained our market leadership in 2020 as well. Of course, tonnage leadership is not the only thing that matters here. It is also very important to be actually leading the sector. It is very important to be the sector leader when our marketing activities, our company culture, and the value given to our employees are evaluated altogether. Besides, of course the tonnage leadership made us happy. The important thing is a leadership that leads the sector and I think we are very good point in this regard. In terms of tonnage leadership, it is very valuable for us to be maintaining leadership in two areas under such difficult conditions, as well as achieving this by raising market shares. We increased our market share to 29.1 percent in the lubricants market and 30.5 percent in the lubricants and chemicals market. This success, together with the size of Petrol Ofisi in every field, is the result of the devoted work of a large team consisting of our colleagues, stakeholders, distributors and dealers.
This year, one of the most important developments for Petrol Ofisi is the cooperation agreement signed with Chevron. Can you tell us a bit about this agreement?
Chevron Texaco is one of the largest companies in the world. We had long meetings with them for about 1.5 years. They could have chosen another alternative, they could have entered the Turkish market themselves, but they followed us for one and a half years, so to say. Ultimately, we signed a very important agreement that will benefit both sides. Especially in such a challenging year, this is a very important agreement for our country as well. It is a great source of pride to have a world giant invest in Turkey, come to Turkey and choose Petrol Ofisi for doing business here.
This is a long term deal. Rather than an agreement, we can call it a marriage with no clear duration. We cooperated with them in the field of maritime. Somewhat influenced by it, they decided to expand this cooperation to all sectors. This agreement will benefit both sides. Their expansion to this region will be through Petrol Ofisi. Our distribution network, our trained manpower and what we have done so far in this regard attracted them. We have the largest distribution network with nearly 1,850 stations, approximately 20 thousand points that we serve through more than 30 distributors, and approximately one thousand corporate customers. It is an opportunity for them to use this distribution channel and our trained manpower. For us, this agreement is actually a technology transfer. Taking advantage of their know-how, product portfolio and global experience will be very beneficial for both our employees and our technology, as well as for the company.
We signed this agreement with e-signature in August, right at the heart of the pandemic. We imported the first batch and started selling the products. We are currently in the first phase of the project. We plan to launch Texaco products within this year. We will manage two brands. We will run it with two separate organizations on both the distributor side and our side. Of course, we will do this without compromising the goals of the Petrol Ofisi brand.
Our PCL market share, which was around 9 percent about 8-9 years ago, is now 20 percent. It is a huge gain in such a settled market where we have global competitors. We will not go off track, but in some special areas we will offer our customers the products of their expertise, such as wind turbine oils and some special gas engine oils. We will launch Texaco's main product line to the market with a separate organization from a separate channel, without conflict with Petrol Ofisi.
Texaco products will be produced in Turkey in the upcoming period. In this sense, Petrol Ofisi Technology Center POTEM is of great importance. Does POTEM's expertise in product development and analysis increase the confidence in Petrol Ofisi from the side of Chevron Texaco and other companies as well as the consumers?
POTEM is a source of pride for us. It is the most advanced laboratory in Turkey as well as the near geography. It is a source of pride for Turkey with its technological equipment and trained manpower. We will produce about 85 percent of Texaco products in Turkey. We may import some special products with low tonnage, but the majority will be produced in Turkey. POTEM is a research lab that Chevron knows well from our cooperation in the field of maritime. They know very well the equipment, manpower and know-how there. This, of course, played a big part in this signature.
POTEM is used as a referee laboratory in many fields. It is the most advanced laboratory in Turkey in terms of equipment, technologies and quality standards in this sector. There are over 150 test devices in POTEM, and they are the result of investments made for many years. We have 85 accredited test methods. Each of these was obtained with the approvals given after strict inspections. It is a laboratory that has been inspected and approved by all kinds of national and international quality standards. We are proud of it. Both public institutions and many private sector organizations see POTEM as a referee laboratory and can use the test results obtained from here. We will continue to grow this place even more.
POTEM is of course a big advantage for Chevron. It offers great advantage in terms of both quality control and preparation and development of formulas. In addition to the products we have developed with the automotive industry, there are also ‘tailor-made’ products in POTEM. There are product development studies for special applications. There are also engine oils and special products that we have developed and tested with international automotive manufacturers or additive manufacturers at international standards.
Speaking of POTEM, I would like to mention about our renovation project in the factory. With the increase in tonnage in recent years, our production capacity in the factory can no longer keep up with the pace of sales. Although we work 3 shifts 7 days in a few of our lines, we have reached the limit. We have prepared a 3-year investment plan. As of this year, we are launching a project that will change the entire design of the factory, create a new storage area, and we will make some investments in new technologies related to the production facility. This is an indication of our shareholder’s confidence in Petrol Ofisi.
You have been appreciated by and have received awards with your campaigns during the pandemic. Can you tell us about these?
For consumers, trust is the first thing that comes to mind with Petrol Ofisi. All the surveys that have been conducted show this. First of all, consumers trust the Petrol Ofisi brand. In lubricants, we are able to understand our customers' current and future needs very well and offer flexible services. We receive feedback from many of our customers in this direction. This is one of our competitive advantages.
This year, the Siftah project has been the pride of the company. This project received the Felis Award. It was a very successful project in the marketing community in the sector.
In the calm April-May period, we thought about what the customer needs the most in a phase when we could not leave our houses much and non-compulsory production slowed down, and we launched online trainings. We were the first to start such trainings in the industry. We reached approximately 1,200 people through our more than 50 corporate customers with technical trainings on lubricants. We received demands from sectors we never thought of. We got very positive feedback. We still continue our trainings. Our next normal may not be like the old normal, face-to-face trainings will largely be replaced by online trainings. We will be fully prepared and continue these trainings in the best possible way.
Our project Maximus Cabin with Selim Yuhay continues. During the pandemic, he reached the individual truck drivers, whom we call Maximus men, and shared their problems and challenges. At least he provided highly valuable support psychologically.
We had projects with our business partners. On the automotive side, we collaborated with Kia and Mitsubishi. We got very nice feedback. We continue these collaborations. But of course we miss the days when we hit the field.
During the pandemic, you have also supported great projects in cooperation with ITU Çekirdek. What are these projects?
At the early phases of the pandemic, all companies in the sector tried to do something and offered various supports. Mr. Şiper had a very good idea, he wanted to do something permanent. The projects at ITU Çekirdek appeared just in time during this period, bringing a very important opportunity for Petrol Ofisi to make a lasting impact. There were nearly 250 project applications, each of them were valuable projects. The jury formed with the participation of Mr. Şiper and senior management chose 11 of these projects. These are really interesting, very impressive projects. We have supported these 11 projects developed against the pandemic. This is a great source of pride and joy for us.
Finally, can you share your predictions and goals for 2021?
Perhaps we should say "the unpredictability of 2021". Because I think it will be a volatile and unpredictable year. We learned a lot from the crisis in 2020; we learned flexibility, agility, and taking action rapidly. I think a fluctuating year awaits us in terms of demand, supply, exchange rates and production.
We really don't know what and how the pandemic will affect. There is also a supply problem in base oils, which is the main raw material for lubricants. When the consumption of jet fuel decreases in parallel with the decrease in aviation activities, base oil production in refineries also decreases. Lubricant consumption is not low, but this supply shortage in base oils all over the world has a negative impact on lubricant production. Therefore, supply security is at the forefront for us in 2021. We have established our connections. However, there may be fluctuations in prices due to supply-demand imbalance. There may be fluctuations in demand in different sectors. We think 2021 will end with a lower growth rate of 2-3 percent for the sector.
It is a priority for us to adapt to these changes, to do our best in the current conditions, to launch Texaco products, to start and complete our investment in the factory and of course to keep human health above all.