Oil Change: Paul Schmuckal reflects on recent sale of his family’s 64-year-old company

When Schmuckal Oil Company was sold in August to Ohio-based True North Energy LLC, it marked the end of a well-known Traverse City business that Art Schmuckal and George Slane started 64 years ago with little more than a contract to sell home heating oil.

“They had no customers, just a contract with Shell Oil Co.,” said Paul Schmuckal, Art’s son and the long-time president of Schmuckal Oil. “They knocked on doors and started finding customers, bought a delivery truck and picked up some service stations.”

The business, which launched in the fall of 1955 as the Slane and Schmuckal Oil Co., grew quickly. Within a year it was selling gasoline, diesel fuel, tires, batteries and other accessories to service stations in the area, in addition to delivering home heating oil.

The company doubled in sales by 1957 and by 1965 was delivering three million gallons of gasoline a year to 22 service stations.

In 1960, Art Schmuckal bought out Slane, who moved to California. He then changed the name of the business to Schmuckal Oil. Schmuckal, who was prominent in local community affairs, died in 2012 at the age of 91. He was inducted posthumously into the Traverse City Business Legends Hall of Fame in 2015.

“Dad was a good salesman who understood the value of taking care of customers,” Paul Schmuckal said.

Over the years, Schmuckal Oil transitioned from primarily distributing wholesale fuel and related products to building convenience stores that also sold gasoline. At the time of its sale to True North, Schmuckal Oil owned 25 convenience stores, employed 220 people and sold 30 million gallons of gasoline annually. Revenues were not disclosed.

All but 12 Schmuckal Oil employees were offered jobs with True North. Among those who didn’t stay on was Schmuckal Oil CEO Kevin Severt, who is pursuing new opportunities, Paul Schmuckal said.

Financial terms of the sale were not announced.

The Schmuckal family at the NMC Dennos Museum in 2008. Back: Paul Schmuckal, Jean Benson, Evelyn Richardson, Chuck Benson, Barb Benson, Mike Richardson, Art Schmuckal. Front: Matthew, Griffin and Andrew Benson.

The Schmuckal family “built one of Michigan’s most successful petroleum marketing and convenience retailing companies,” Matrix Capital Markets Group executive Spence Cavalier told Convenience Store News. Matrix advised Schmuckal in the sale of the business.

Schmuckal, 72, said he began thinking about a succession plan for the company a decade ago, knowing that there were no family members likely interested in taking over the business.

“I’ve spent some time over the past 10 years looking at options,” he said. “This seemed to be the appropriate time and the appropriate buyer.”

Large operators like True North are acquiring smaller ones like Schmuckal Oil at a rapid pace as the owners of smaller companies reach retirement age, said Mark Griffin, president of the Michigan Petroleum Association and the Michigan Association of Convenience Stores.

“We’re seeing a lot of second-generation owners now and the third generation of family members aren’t necessarily interested in the business anymore,” he said. “For a lot of our members, it’s time (to sell).”

Membership in the Michigan Petroleum Association has fallen by half over the past 26 years, mostly because of mergers and acquisitions, Griffin said. The association has 120 members — petroleum wholesalers who own 2,400 service stations and convenience stores in the state.

True North operates 135 convenience stores in Traverse City, Chicago, Detroit and in five Ohio cities. It is in the process of renaming the Schmuckal Mini-Marts to the True North brand.

Paul Schmuckal joined the business in 1977 after working as a certified public accountant at a major accounting firm in Detroit and Boston. It was while working in Boston that he noticed small gas stations were converting their service bays into convenience stores, selling a variety of food and beverages.

“I came back thinking I knew everything about convenience stores,” he said, chuckling.

After joining the family business, Schmuckal converted the company’s first two service stations in Marion and Lake City into convenience stores. The company begin building new convenience stores throughout the region in 1979.

While the company grew steadily, Schmuckal said there were bumps along the way. Federal price controls in response to gasoline shortages in the 1970s crimped the company’s profits.

“We had some tough times,” Schmuckal said. “It seemed like every five years or so we had to make some hard decisions to cut advertising and employees.”

Financing operations and growth was particularly difficult in the Great Recession of the late 2000s as consumers tightened spending.

“We were not liked by the banks,” Schmuckal said. “If you were in the petroleum business, banks didn’t want to lend to you.”

But the company has since prospered and has had an impact on the petroleum and convenience store industries beyond northwest Michigan.

“They have been long-standing members who have helped our organization become a successful organization while they themselves became a successful organization,” Griffin said. “Paul has helped us a lot.”

Schmuckal is a past chairman of the petroleum association, as was his father.

Much of the company’s recent prosperity was attributed by Schmuckal to Severt, the CEO. Severt worked at Schmuckal Oil from 2006 to 2008, left to run a beer distributorship and returned in 2015 to become the company’s lubrication sales manager. Or so he thought.

Schmuckal said he was so impressed with a personality study Severt underwent as part of the interviewing process, he decided to make Severt CEO.

“On his first day I said, ‘What would you think if you sat in there?’” Schmuckal said, referring to his office. “He’s a highly respected, motivated individual.”

Schmuckal Oil’s employees also were a key ingredient to the company’s success, Schmuckal said.

“We had a lot of good people over the past 64 years,” he said. “They took their jobs seriously and put customers first. And we had a lot of long-term employees.”

Schmuckal decided to sell the business to True North for a variety of reasons, some of them personal.

“I was really looking for a family business that had multiple generations in the business, and would keep the Shell Oil brand and our employees,” he said. “That came across in our discussions with them.”

True North Energy was founded in 1999 as a 50-50 partnership between Shell Oil and the Lyden family, which has been in the petroleum sales business since 1919.

Schmuckal said True North and Schmuckal Oil utilized the same business consultant and employed a similar business operating philosophy. And they shared the same religious faith.

“They’re Catholic and one of the family members attended Notre Dame,” he said. Schmuckal earned his undergraduate degree there, as well.

The Schmuckal family has been deeply involved in the local Catholic community. They’ve helped to raise millions of dollars for local Catholic churches and schools, and other community assets such as Munson Medical Center and Northwestern Michigan College.

Schmuckal said he intends to remain active in community affairs and hints that he might have a second act in the business world.

“It’s time to do something different,” he said, “but I don’t know what that is.”

 

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