ILMA Compoundings - August 2020 - 29

"We're just now starting to see an uptick in
business. My prediction is that we'll see a
massive surge in business as people try to
make up for all of the downtime."
Robert Perkins, president, PennStar Oil

that likely helped lessen the impact of COVID-19 on that
segment of the business. However, he notes, the effect on
construction has been harder to quantify.
"I do think we've seen a slowdown due to the virus," he
said. "Public construction hasn't really changed. But in the
private sector, about 40% of active projects had significant
reductions in activity. For residential buildings, office buildings - those projects were either stopped or slowed down
and put on life support until developers can figure out their
cash-flow situations based on new forecasts for revenue from
the projects.
"I don't think these projects are going to stay 'off' for
long, though. I think this segment will turn around fairly
quickly," he added.
For PennStar Oil, however, where regional coal mining
operations and construction are both significant markets,
COVID-19 has had a dramatic impact. "Over the course of
March and April, we had upwards of a 70%-75% reduction
in volume, due to the construction companies being shut
down in our region," Perkins said. "When businesses got
closed, everybody started pulling back. Instead of us going
out and refilling their tanks every week, they asked us to
take a week off. That turned into two weeks off.
"A lot of my distributor partners were saying, 'I don't need
three bulk loads this week; I need one.' That quickly turned
into, 'I don't need one bulk load this week; I only need one

in the next two weeks,'" he added. "That was directly linked
to the fact that a lot of the end users - the mines, heavyduty trucking companies, construction companies - were
either not open or they were running so slow they were
scared to spend any money. And then the bottom fell out of
the entire oil market.
"We're just now starting to see an uptick in business. My
prediction is that we'll see a massive surge in business as
people try to make up for all of the downtime."
Despite PennStar's temporary drop in volume, the company has been able to avoid staff losses and layoffs.
"I'm proud to say we have not laid off one person during
our COVID-19 lockdown, and I have no intention of doing
so," Perkins said. "Everybody that works for me understands
that they're part of our family. And I'm going to do everything
I can to make sure they can get their eight or nine hours in
every day. I told them, 'We might be out planting bushes and
raking leaves, but one way or another, I'm going to get you
enough hours so you can feed your families. So do not leave
me. When this thing rebounds, we're going to take off and
I'm going to need all of you.' It's been tough. But, you know,
my niche is being very nimble, very creative and bringing
solutions to the customer and to my distributor partners."

LOOKING AHEAD

While the aftereffects of COVID-19 (and the predicted
possibility of future resurgences) continue to be felt in
the marketplace, the virus is not the only factor affecting
these markets.
"There's definitely a lot of downward pressure on prices,"
acknowledged Neubauer. "The price of base oil is down.
Crude oil is down. Even so, I don't think the construction
market for lubricants is quite as price-driven as, say, passenger car engine oil."
In addition to the downward pricing of oil, typically
categorized as a segment of the mining industry, McGinnis
believes another vulnerable mining segment is coal - both
bituminous, which has fallen out of favor for energy production, and metallurgical, which is used in steelmaking and
may be affected by slowdowns in the auto industry.
Overall, though, he is positive about mining's future. "The
mining for gold, silver and precious metals is still looking
very strong currently and is on an upward trajectory," he
said. "Gypsum and phosphate represent another huge part
of the mining sector; they're used for crop fertilizers and
are going to remain in demand. And the market for copper,
nickel, lead, zinc - all used in construction - as well as
limestone are all looking good for the immediate future."
Bittner is a Michigan-based freelance journalist and a frequent
Compoundings contributor.

ILMA Compoundings - August 2020

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