Professional Carwashing & Detailing

Industry Watch - December 2012

November 30, 2012

COMPANY NEWS

· Zep Inc.announced on Oct. 17 that it had entered into a definite agreement to purchase the assets of Ecolab Vehicle Care, a division of Ecolab Inc., according to a press release.Zep planned to purchase the company for approximately $120 million. Pending regulatory approvals, the purchase was expected to close by the end of this calendar year.

Once approved, the combination of Ecolab’s division and Zep’s existing sales and service operation will create a new operation called Zep Vehicle Care. The company will be based in Minnesota, and it will provide car care products such as soaps, polishes, sealants, wheel and tire treatments and air fresheners to carwashes, c-stores and detailers.

The new entity will be led by Steve Nichols, the current general manager of Ecolab Vehicle Care. Nichols will assume the position of president, Zep Vehicle Care, upon closing of the transaction.

“This transaction creates a dynamic and compelling sales and marketing platform for the $1 billion U.S. vehicle care marketplace,” John K. Morgan, chairman, president and CEO of Zep Inc. said in the release. “The greater scale and diverse offerings of the new Zep Vehicle Care will enable us to capitalize on growth opportunities and further enhance shareholder value. By combining outstanding vehicle care brands, products and professionals, the formation of Zep Vehicle Care represents another example of our diversification strategy and our disciplined focus within those key markets where we bring unique value and expertise to our customers.”

According to the Star Tribune, it appeared that Wall Street welcomed the news of the sale. Andrew Wittmann, a senior equity research analyst for Robert W. Baird, said, in Wall Street’s eyes, car care was always different than Ecolab’s other business.

Car care “was just not as strategic,” Wittmann told the newspaper. “It didn’t have the same ability to differentiate itself and it didn’t have the large multinational customer base, which are the core tenets of what Ecolab is. ... Investors have been mindful of this for a matter of time. So it was not much of a surprise” that it was sold off.

The deal is expected to close about seven years after Ecolab first invested in the car care market. The company put millions into expanding its carwash division with new products and a factory. Ecolab’s car-care unit grew from $45 million in sales in 2006 to $66 million in sales in 2012, the story noted.

Over the years, the unit generated about $13 million in earnings, and it had 110 employees. Initial reports indicated that these employees would join Zep. Though Zep is headquartered in Atlanta, officials intend to run Zep Vehicle Care in Minnesota. Zep generated $654 million in fiscal 2012 sales, according to the story.

The story stated that the sale of the car care division will allow Ecolab to focus on its core business: High-tech sanitizing, cleaning and unclogging chemicals for various industries.

· Three of the carwash industry’s most well-known brands are now together under the same management after Ed O’Hanrahan of Galloway Chemical Division acquired Jim Coleman Company/Hanna, according to a press release.

The companies will join forces under the leadership of O’Hanrahan and Russell Coleman. The new company, Coleman Hanna Carwash Systems LLC, will combine the Jim Coleman Company’s knowledge of manufacturing equipment with O’Hanrahan’s knowledge of producing wash solutions.

With a combined 150 years of collective experience, the new company plans to continue development of innovative products for carwash investors. The company will also benefit from an extensive domestic and international distribution network providing operators access to a large and diverse team of professionals. This team will provide knowledge to all carwash segments to help businesses grow.

· Expanding domestic and international markets have driven Washworld Inc. to build a new plant and offices in DePere, WI. The company broke ground in October on a 50,000-square-foot building with an opening date planned for May 1, 2013. The new building will allow Washworld to expand its product line and workforce.

“The drivers behind us getting into a new facility, from the production side, are that in the last 18 months to two years we’ve really put an emphasis on growing our distribution network and helping them become better businesspeople,” Rich Andreas, vice president of sales and marketing with Washworld, said. “In the last two years we’ve gone from little to no presence internationally to 25 distributors that have been in this business already.”

The company has 96 distributors worldwide, and the international distributors are active in Europe, Australia, New Zealand and the Middle East.

Though the company started with just one touch-free system, it now offers three touch-frees and one friction unit. The current business plan calls for the addition of ancillary items so the company can offer complete packages and become a one-stop shop for distributors and end customers.

Washworld’s current location is land locked, but the new property will give the company room for the new construction as well as future expansion.

PEOPLE NEWS

· Hamilton Manufacturing Corp. announced the addition of sales veteran Kevin Pipes to their team, according to a press release. Pipes will handle sales accounts in the company’s Southern region. This area includes Tennessee, Georgia, Florida, Texas, Arkansas, Oklahoma, New Mexico, Louisiana, Mississippi and Alabama. Pipes has over 20 years of experience handling accounts for both Ecolab and Coca-Cola.

Brad Quay, vice president of sales for Hamilton, said, “Kevin’s sales experience coupled with his knowledge of the industries we serve will help bring a fresh perspective to our team, our distribution partners and our mutual customers.”

ASSOCIATION NEWS

· The 23rd Northeast Regional Carwash Convention (NRCC) was held Oct. 1-3 at the Trump Taj Mahal, and the event boasted its largest show floor ever with 255 exhibitors, according to a press release.

Julie Stanton, the NRCC show facilitator, stated, “I’m thrilled to report that we broke our record set back in 2010 with 255 booths sold this year. Our show floor was packed and our vendors and attendees were just thrilled.” The show floor attracted more than 1,300 attendees.

Robert Andre kicked off the show on Oct. 1 with a presentation called “Understand an Effective Equipment Maintenance Program’s Impact on Your Bottom Line.” Then, the Welcoming Reception was held on the 49th floor of the Taj Tower in the exclusive Signature Club.

Educational programming on Oct. 2 included a panel discussion with carwash owners, a compliance session with two labor lawyers and a keynote speech by Perry Powell. Powell is a neuromarketing and signage expert, and his speech stressed the importance of meeting the changing needs of customers. The second day’s education was capped off with the annual awards program and an International Carwash Association update.

The final day of the show, Oct. 3, included seminars that covered new ideas for carwashers and marketing.

The three-day event was put on by Stanton and the five regional East Coast carwash associations: New England Carwash Association; New York State Car Wash Association; Connecticut Carwash Association; Car Wash Operators of New Jersey; and Mid-Atlantic Carwash Association.

The 2013 show has been set for Oct. 7-9 at the Trump Taj Mahal in Atlantic City, NJ. More information can be found at nrccshow.com.

· The Midwest Carwash Association (MCA) changed the location of its 2013 Expo and revamped the show program. An email from MCA stated that the 2013 MCA Expo will be held Feb. 4-6 at the Sheraton Hotel and Conference Center in Novi, MI. The 2012 MCA Expo was held at the Suburban Collection Showplace, and it ran from Jan. 31 to Feb. 2.

· The largest tradeshow and conference for gas retailers, carwash owners and petroleum site operators in Western Canada, The Convenience U Carwacs Show, was held on Oct. 23 and 24, 2012. This is the show’s fifth year.

The event offered operators a trade show, educational sessions and networking opportunities with the industry’s top suppliers. The Carwacs Show’s website noted that the education curriculum provided critical information about the changing dynamics of the industry.

The trade show allowed owners to meet key industry stakeholders, see new products and equipment, share ideas with other delegates and develop a vision of how to grow a business. In addition, author and television personality David Chilton gave a motivational presentation for attendees on Oct. 23.