SOL: Simpson Oil Limited
SOL’s acquisition of Shell’s distribution business in thirteen Caribbean countries in 2005 is a significant turning point in the regional marketplace, in a segment that has been traditionally the exclusive turf of the largest of multinationals. How and why did this come about?
SOL’s origins lie in the relationships developed over many years with international businesses by the founder of Interamericana Trading Corp, Mr. Kyffin Simpson. ITC’s core business is the distribution of vehicles throughout an area stretching from Bermuda in the north to Brazil in the south, and the UK. This organization consists of a dealership network of more than 60 dealers operating in 32 countries and speaking five languages. It’s representation and development of world-famous brands such as Mercedes Benz, Suzuki, Porche, and even Rolls Royce, to name a few, gave it a comprehensive business perspective and experience.
Mr. Simpson was a founding board member of the Canadian Imperial Bank of Commerce when it converted from a branch structure in the Caribbean to a local entity with significant minority investors. This relationship has continued to the present time following the merger with Barclays Bank to become FirstCaribbean International Bank, the largest bank in the region. Besides, he co-founded Digicel Wireless in Barbados. In recognition of his substantial contributions to the regional business world, he was named in 1999 as “Entrepreneur of the Year” by Ernst & Young, and in 2004 he was awarded the distinction of Commander of the British Empire (CBE) and an honorary degree of laws by the University of the West Indies.
It should be no surprise, therefore, that ITC, should identify the petroleum distribution business as a natural extension of its core activities. The links with the automobile business are apparent, but perhaps less well known is Mr. Simpson’s interest in the petroleum business, dating back to 1970 when he was the largest of Texaco’s dealers in Barbados. This early experience gave him a hands-on perspective of what made the business tick in the sense of what customers wanted. From this emerged Simpson Motors Ltd, as an operator of gas stations, a trucking business, and the automobile business, starting with the Volkswagen franchise. The circle has, therefore, come a full turn with the acquisition of Shell’s business in February 2005.
In anticipation of a successful conclusion to some preliminary discussions with Shell in London in 2003, a new company was established as SOL Limited (taking its name from Simpson Oil Limited). After a highly competitive bidding process, SOL was declared the winner, and within weeks, Shell’s entire organizational structure was replaced with that of SOL’s. This could only have been possible with an organization with the regional and international experience and financial strength of ITC, in particular, the ability to attract executives capable of filling the key managerial positions.
SOL is led by Mr. Simpson as its chairman and chief executive officer and by a team of three executives with substantial track records in the oil business, namely Luis Carrillo, Stewart Gill, and Andrew Rollins. Luis is a former executive with Shell in the Caribbean, and his role is that of regional director north. Stewart is an engineer, and his previous role was with Texaco in the Caribbean and the US as facilities and LPG manager and whose position is now that of regional director south. Andrew Rollins is a chartered accountant, also from Texaco Caribbean, and he is the chief financial officer.
The ongoing contractual arrangements with Shell include the use of the Shell brand and the product supply logistics and expertise of Shell in the region. This will ensure that SOL’s customers continue to receive a world-class quality product backed by the Shell name. Similarly, Shell’s resources in terms of quality control and the highest environmental standards will be part of the total SOL experience.
Focused on establishing an effective and responsive company, SOL’s directors have decentralized its operations by creating a regional organization with executive control at the level of local offices with authority to make rapid decisions. This fundamental change will facilitate a greater awareness of customer needs and stimulate employees to exercise a more significant initiative. This is in contrast to Shell’s highly centralized structure. It is recognized that each country has its own culture and values, and the importance of fostering close relationships with relevant stakeholders in the community is paramount.
These developments have led to a significant regional recruitment drive to fill vacancies created by the reorganization. SOL has been successful at attracting many bright new employees across the region who bring a wealth of unique experience and positive attitudes to the business. In parallel, SOL has been busy implementing a new management information system throughout its operations. This significant investment in new technology will play a significant part in an innovative approach to growth for the business and the region. The company chose Microsoft’s Great Plains as its MIS backbone. The installation, given its geographic and financial complexity, has gained the attention of Microsoft Corporation directly and has been publicized as a global case study.
Moving forward, SOL has identified improvements in infrastructure as a necessary part of the rejuvenation of the business. In some parts of the region, many of the facilities were built in the 1960s. With the cost of energy becoming increasingly critical to the development and lifeblood of the area, SOL has earmarked these facilities for strategic upgrades. In light of the anticipated growth under SOL’s management in the region, this reinvestment is considered necessary and will drive efficiency and so lower costs.
In this growth period, SOL will continue to pay strict attention to the preservation of the environment and continued safe operations. It is part of the contractual obligations with Shell since it represents the multinational and has to maintain international standards with respect to safety and the environment. Operations will, therefore, continue with the same policy, rules, and procedures implemented by Shell. Employees were trained by Shell to maintain these guideposts, and this is one of the areas where SOL can benefit continuously from Shell’s own research and development.
Given its strategic outlook, SOL can be hailed as a model for the region, a pan-Caribbean company with a vision to penetrate beyond its shores. It is Caricom-wide, and many aspects of the Caricom Single Market and Economy, including cross-border simplification of import duties, tax systems, and movement of people, will enhance the business.
Kyffin Simpson’s view is that SOL represents a new approach to the oil business – one that combines the reach and regional relationships of ITC with Shell’s world-class technical expertise and products. SOL’s focus on investment in its people and physical facilities will grow the business through close local partnerships that will respond rapidly to customer needs.
It is reproduced from Business Barbados 2006 with the permission of Caribbean Business Publications.