Exec Q&A: Severson reflects on oil industry, career and retirement
Oil distribution in the Midwest is a family tradition for Tom Severson, the president of Winona-based Severson Oil Co. He learned the trade from his father, growing up in Harmony, Minn., and he plans to pass his business to his children when he retires, Severson said.
He sold Conoco gasoline and petroleum products in the Midwest and southeastern parts of the country before returning to Minnesota in 1981 to buy an existing wholesaler. Severson moved his family to Winona and used his experience to build on an established customer base, with only four employees then.
Today, Severson Oil employs about 30 people and delivers to towns on both sides of the Mississippi River, from Bay City to La Crosse.
Why did you decide to follow your father’s footsteps into the oil industry?
My thing on the oil business was I knew an awful lot about it, but every day I learned something new. And still do. And thought if I got into some other industry I had to learn things I already knew about the oil business.
It was simple because we had gasoline and fuel oil. Now we have ethanol and E-85 and bio products and oxygenated and un-oxygenated. It’s really beyond me. I still think in gasoline and diesel.
What kind of work did you do for your father and how did that help you later?
I did whatever he wanted done. I actually didn’t work for him, I worked for the guys at the station. I painted a lot of tanks and buildings. My kids grew up painting tanks and buildings. I hate painting and I think they do too.
It was just good. My dad had a real customer service attitude, and when you’re in a small town like Harmony you can’t afford to upset anybody, so we had to try to be good to all our customers and keep them all. Winona’s a little bit like a big Harmony. I think dealing with customers all my life taught me to appreciate them all.
How does Severson maintain and active role in the oil industry?
I’ve always been very involved in the industry, with Petroleum Marketers of America, the National Association of Convenience stores – and I was on the board of directors for six years – and that really taught me a lot. It was probably the best learning experience I could ever have. Right now, I’m in a study group with petroleum marketers from around the country and we have a professor from the University of Virginia that facilitates for us. We meet at different business places around the country, and they’re helping to transition with my kids so that they learn.
What have you learned from these groups that’s helped Severson stay active in Southeast Minnesota and Southwest Wisconsin?
I would say it gives me perspective of what we need to do. It’s seeing what people do in other parts of the country. If we’re missing something the customers like, we need to add it.
How would you describe your leadership style?
I like to say it’s not structured. I hate meetings, I like feedback from everybody. More one-on-one. Most everything we do, all our co-workers have a lot of freedom and they decide every day pretty much what they’re going to do, and we have some exceptional people.
What are your priorities as an executive?
A number of years ago when I worked for Conoco, they had a thing called L.E.M. – legally, ethically and morally right – and I like to think we live with that. We haven’t always talked about it but it’s always been a guiding principle. I really enjoy taking care of customers. That’s probably the most fun part about what I do.
How has that guided the business into what it is today?
Hopefully we act that way, and if we treat everybody right we should do well. Sort of like, if you watch the pennies, the dollars will take care of themselves.
What’s the state of the industry now?
Very competitive. With the price going up it takes more money to operate and margins haven’t been going up. We aren’t making much more than we did before. And we just have to be a lot more efficient.
We’ve got to be tougher on credit. We can’t afford to carry all the accounts receivable we used to for the people, with the higher price and not much more margin.
What trends or laws are impacting Severson Oil today?
I think it’s compliance with all the government regulations. Takes way too much time, and if we operate legally, ethically, morally right we shouldn’t have to be involved in all those things. We don’t want to do anything wrong. And I think you’ll see, any small business will say that they have an awful time dealing with all the regulation.
What does the future hold?
I think my plan is today to get Josh and Josi comfortable with running it. With all the facets we’re in, they’re just doing an amazing job of understanding. I get awfully proud of how they can grasp what they do. I say that I’m amazed at what they know and amazed at what they don’t know. It’s really a complicated business.
When you first see it go to $3.50 or $3 and you think, I’m going to cut back. And then a month later you say, oh I guess I can afford it.
I put in this perspective all the time for people: if you take a trip – a 10,000-mile trip – and you get 20 miles to the gallon, you’d burn 500 gallons. So, if that 500 gallons is a dollar a gallon higher, it’s $500. That’s a small part of your cost of the trip and probably wouldn’t cause you to stay home.
It’s interesting how two cents makes a difference when you think of it in that realm. And gasoline is still cheaper than bottled water.