PRESS RELEASE: Tiny Refinery, Big Strides

contact:		Glen Gonzalez, President, 210/223-6515
subject:		Tiny Refinery, Big Strides
who:		San Antonio Express News
where:		San Antonio, TX
when:		May 12, 2005
email:		ggonzalez@agerefining.com

South Side plant has seen sales soar, works to keep success flowing

A few years ago, Glen Gonzalez was living a fast-track life as a marketing and advertising executive in Manhattan when his father came to him with an intriguing proposal.

Today, Gonzalez, 37, a Dallas native, is a world away from the cityscapes of the Big Apple. He’s running AGE Refining Inc., a small plant on the south Side that’s the city’s only refinery.

His father, Al Gonzalez, has owned the refinery since 1991, when he bought the then-moribund business from a Houston company and revitalized it.

But even after he bought the refinery, Al Gonzalez kept his home base in Dallas. As he contemplated retirement, he wanted his son to come to San Antonio and take on an active leadership role at the plant.

“When my dad approached me, there was a lot of momentum that he didn’t want to walk away from,” Glen Gonzalez said as he walked the plant’s grounds on South Presa Street. “I saw a viable business here. It’s an exciting and challenging opportunity.”

Gonzalez had no formal training in refining. But, he says, “there are some common-sense approaches that apply in this business.” And two years into his tenure heading AGE, Gonzalez is instituting new management practices and building an executive team.

“It’s a little bitty refinery, but we do all the things the big guys do except make gasoline,” said Gonzalez, who was promoted to president from executive vice president last week.

What AGE does make is JP8 jet fuel for military aircraft. Last month, the company won a $70.4 million contract to supply jet fuel to the Defense Department, one of a string of contracts the company has garnered in recent years.

“It’s a classic niche business,” Gonzalez said. “We don’t compete with the Valeros and Citgos.”

AGE produces about 11,000 barrels of fuel a day – far less than what a typical Valero or Citgo refinery makes.

AGE supplies jet fuel to San Antonio’s Randolph and Lackland Air Force bases and to Laughlin AFB in Del Rio, and Fort Hood near Killen is a new client. The company has 40 clients, and sales in 2005 are expected to reach $189 million, up from $130 million in fiscal 2004 and $40 million in 1996.

But AGE Refining hasn’t been without problems.

“There were some things that weren’t contributing to longevity,” Gonzalez said. “I didn’t know if it was pay or something else, so we decided to look more closely at it.”

As part of increasing efficiency, Gonzalez hired an experienced manager; Phil Goodman, as director of refinery operations. He’s now searching for a chief financial officer.

Gonzalez and Goodman have been concerned about Toyota’s ability to hire people away from AGE as the carmaker begins hiring for its assembly plant. “We just cannot afford to lose anybody good,” Goodman said.

So AGE did a thorough review of its pay scale and bumped up salaries. Entry-level pay is $12 an hour, but Goodman recently hired and experienced worker for #13.50 an hour who’ll make $14.50 an hour after 90 days. Lead refinery operators make about $20 an hour.

Gonzalez also has searched for ways to stabilize the business.

“We were scrappy and resourceful, but here were few tools in place to evaluate how the business was faring day to day.”

Today the plant tracks sales volume carefully. If sales are off, “we look at where and why, and then revise our figures fore the rest of the year. That’s a big step for us,” Gonzalez said.

As a result, “We don’t experience the swings of the past. “

Another focus was turnover among its truck drivers, which was as high as 75 percent last year. That’s plummeted to 24 percent – important because AGE isn’t served by a pipeline. All its crude oil arrives on its own spiffy green, black and white trucks.

AGE has been a strong contender for government contracts because it’s certified as a HUBZone company by the Small Business Administration. At least 35 percent of the refinery’s 100 workers must live in the zone.

“We are diligent about keeping track of where our employees live,” Gonzalez said. “Those are the rules, and we accept them.”

An emphasis on safety continues, especially after a day Gonzalez describes as a “meaningful experience.”

Last October, a pinhole leak caused a flash fire on one of the columns used to heat crude oil. No one was injured, but “it was a reminder of what we face in our business. But we didn’t turn a blind eye to it. We’re spending more on those programs upfront” Gonzalez said.

The company recently held its first safety awards dinner, and workers are responding. AGE’s insurance claims related to reported spills have fallen from $270,000 to $17,000.

As he looks to the future and a greater emphasis on environmentally friendly fuels, Gonzalez says AGE will be ready. Specialty fuels now make up 15 percent of sales and include solvents, low-emissions diesel and biodiesel, a clean-burning fuel that contains vegetable products.

“New diesel regulations are right around the corner,” he said. “Through our roots in government work, we could produce low emission fuel very quickly.

“Progressive fuel – that’s a big effort for us going forward,” he said. “That’s a very exciting.”