What’s Up With Morton? And A Potential Salt Storage Issue

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Who will pull the trigger to acquire Morton Salt? And one of the industry’s largest suppliers waves a red flag about salt storage requirements.

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August 19, 2020

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It’s no secret German fertilizer producer K+S AG is seeking a buyer for its Morton Salt business in North and South America. In fact, some insiders speculate a buyer is currently conducting its due diligence and that a deal will be announced by the end of this year, or early in 2021.

German K+S’, owner of the Morton Salt brand, recently put the salt business up for sale as part of efforts to reduce debt that had soared after an investment in a new potash mine in Canada. Insiders anticipate a deal to be done by the end of 2020, or first quarter 2021.

Last month, Reuters reported Meritage Group LP, an investment firm for the family of hedge fund investor James Simons of Renaissance Technologies, has partnered with U.S. salt producer Kissner for its bid to acquire Morton Salt.

Private equity investors Advent International, American Securities and Cerberus Capital Management also made it to the second round of the bidding, according to the Reuters’ report.

Kissner is owned by buyout group Stone Canyon Industries, which bought Kissner for $2 billion in April. Among the other major players serving the North American commercial snow and ice industry, you’ve got (in no particular order):

  • Cargill Salt (mines in Cleveland, Lansing, NY, and Louisiana)
  • American Rock Salt (NY mine, largest in US)
  • Compass Minerals (Cote Blanche, La., mine)

Many snow and ice professionals wonder if one of these major players takes over Morton would the sheer size of the consolidated market create a monopoly in some of the major North American snow markets? According to the federal antitrust laws, a company has a monopoly when their market share for a product or service exceeds 75%.

We’ll have to wait to see who the new owner is, what their plans are for Morton, and whether the move turns heads over at the SEC or with snow state attorneys general.

One salt industry insider encouraged me to peruse the K+S 2019 annual report for any additional details on the scope of Morton’s share of the North American salt market. While concrete (and understandable) market share data eluded me in the 250-plus page financial report, I did come across something interesting about half way through where K+S identified and speculated on specific threats that could impact its business operations and profitability in the coming years.

In the section titled “Risks and Opportunities 2020-2022,” the report identifies “More stringent requirements regarding the outdoor storage of deicing salt in North America” as having a 10%-50% possibility of occurring with a “significant” loss. The report defines a “significant financial impact” – as a loss potential greater than $235 million (US).

Here’s how K+S defines this potential problem:

In the past, there have been no special environmental protection requirements regarding the outdoor storage of de-icing salt in North America. However, more and more individual states and local authorities are now moving towards defining mandatory standards in this regard. As a result of stricter local requirements, comprehensive measures may be required, including indoor storage.

In conjunction with environment experts, we continue to work on environmental audits to determine whether owned and leased warehouse locations comply with the new local requirements. [Page 127]

Now, consider the attention winter salt use and the salination of freshwater lakes and streams has received over the last two years, and it’s fair to speculate stricter storage measures could become a real issue for our industry. While environmental enforcement tends to trickle down from suppliers (who have the largest targets painted on their backs), to municipalities, and finally on to the professional snow contractor, this could become an expensive and potentially litigious issue for the commercial segment of the industry.

Are you beginning to experience greater scrutiny among local and state municipalities about how your winter rock salt is being stored? And if there is a crackdown and a push for indoor storage, what sort of financial impact would this have on your snow ops?




Industry loses a member

Snow veteran George Sosnowski passes in late July after a long-term battle with cancer.

Sosnowski

I was very saddened to learn that snowfighter and ASCA member George Sosnowski had passed away recently (July 24). I had learned some time ago that he was battling cancer, however it never seemed to impact his positive attitude and joyful and fun-loving nature when we would see each other at various industry events.

George was a fixture at ASCA's Executive Summits and Snow Shows over the years. He was an industry cheerleader and an advocate for professional snow and ice management. Like he always said, he was born for this industry because he had "snow" in the middle of his last name.

George, you will be missed.

CLICK HERE to read his online obituary.




Winter Wonderland?

Should we bet the farm on predictions for a busy season La Nina conditions through Winter 2020-21?

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I came across an interesting weather item from NOAA’s Climate Prediction Center, they’re predicting a 50-55% chance of a La Nina conditions arriving this fall and lasting throughout Winter 20-21.

If this in fact is the case, what does this mean for North American snow and ice management professionals

I’m a little rusty on my Nina/Nino conditions, so I reached out to my weather buddies at industry weather forecaster Thermodynamic Solutions to get the scoop on what La Nina could influence weather-wise.

Here's what TDS's Beth Carpenter had to say:

On July 9, the Climate Prediction Center (CPC) issued a La Nino Watch, for a 50-55% chance of La Nina development in the Northern Hemisphere this Fall. Meteorologically speaking, Fall is defined as September through November. So, what does this mean?

You’ve heard of the terms El Nino and La Nina, which are two of the three phases of the El Nino Southern Oscillation (ENSO). The third is ENSO-neutral. ENSO is characterized by changes in the oceanic and atmospheric circulations of the Earth along the equator- specifically the Equatorial Pacific.

During El Nino conditions, warmer than normal sea surface temperatures (water temperatures) are observed in the aforementioned region. We also see a weakening of the traditional easterly trade winds (winds that blow from east to west), or even a reversal to westerly winds (winds that blow from west to east).

During La Nina conditions, the opposite occurs. Sea surface temperatures cool to below normal in the Equatorial Pacific and the typical easterly winds along the equator strengthen even more. To be defined as El Nino or La Nina, both the atmospheric state and the oceanic state must be in agreement of these conditions. In ENSO neutral years, neither El Nino or La Nina conditions are present and sea surface temperatures are near average, or the oceanic and atmospheric conditions are not in agreement. For example, the sea surface temperatures appear to feature El Nino conditions, but the equatorial winds are unchanged). Typical El Nino and La Nina oceanic conditions are shown below. On July 9, the Climate Prediction Center (CPC) issued a La Nino Watch, for a 50-55% chance of La Nina development in the Northern Hemisphere this Fall. Meteorologically speaking, Fall is defined as September through November. So, what does this mean?

You’ve heard of the terms El Nino and La Nina, which are two of the three phases of the El Nino Southern Oscillation (ENSO). The third is ENSO-neutral. ENSO is characterized by changes in the oceanic and atmospheric circulations of the Earth along the equator- specifically the Equatorial Pacific.

During El Nino conditions, warmer than normal sea surface temperatures (water temperatures) are observed in the aforementioned region. We also see a weakening of the traditional easterly trade winds (winds that blow from east to west), or even a reversal to westerly winds (winds that blow from west to east).

During La Nina conditions, the opposite occurs. Sea surface temperatures cool to below normal in the Equatorial Pacific and the typical easterly winds along the equator strengthen even more. To be defined as El Nino or La Nina, both the atmospheric state and the oceanic state must be in agreement of these conditions. In ENSO neutral years, neither El Nino or La Nina conditions are present and sea surface temperatures are near average, or the oceanic and atmospheric conditions are not in agreement. For example, the sea surface temperatures appear to feature El Nino conditions, but the equatorial winds are unchanged). Typical El Nino and La Nina oceanic conditions are shown below.

This Summer, we’ve been in ENSO-neutral conditions, where we aren’t seeing strong influences from El Nino or La Nina. However, the strongest effects from these phenomena are typically felt in the United States during the Winter Months. Sea surface temperatures are expected to continue to cool through the latter portions of Summer and through the Fall months, hinting at the possibility of La Nina development into Winter. The below chart shows a plume of climate model data and the trend of decreasing sea surface temperatures.

During La Nina years, the United States sees a very active Polar Front Jet (PFJ). This is the northern branch of the jet stream that sags southward over the United States during the wintertime. A more active jet stream means more troughs and ridges, resulting in more active weather at the surface and more storm systems. It also results in more variations in temperatures from cool to warm and back again. Sustained cold (below normal temperatures) typically settles in across the north-central United States, while warmer air settles in south. The Great Lakes, Midwest, and Northeast get caught somewhere in between!

La Nina years typically bring a wetter pattern to the Great Lakes and Mid-Atlantic as well, but this doesn’t always result in snowier years. So, what does this mean for snow contractors? In weaker La Nina years, above average snowfall typically occurs across most of the Snow Belt. In stronger La Nina years, the above normal snowfall is focused primarily across the Pacific Northwest, the Upper Midwest, and New England.




Thoughts On A Fuel Price Increase

A recent study shows support for a 10¢ increase to the national fuel tax, but how would this impact snow contractors’ bottom lines?

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Thankfully, the snow and ice management community hasn't discussed the negative impact of high gas and diesel prices for some time.

Back in 2008, under the shadow of the Great Recession, the industry was buzzing with how it would manage record-high prices for gasoline and diesel fuel. According to the American Automobile Association (AAA) website, gasoline and diesel prices per gallon topped out in mid-July of that year at $4.11 and $4.84, respectively.

Today, according to AAA, those prices are a bit more manageable — and stable — at a national average for gasoline and diesel of $2.18 and $2.42, respectively. These prices are down from a 2019 average of $2.71 and $2.99, respectively. Again, these are national averages and don’t take into account price variances across snowbelt states.

While it seems snow and ice management contractors are worrying less about how to manage this operational expense, a recent survey exploring public support for raising federal transportation revenues through gas taxes and mileage fees, the majority of respondents supported a gas tax increase.

While the government has not raised the rate of the federal gas tax since 1993, in April Congress and the Trump administration were considering an increase of 18.4¢ for gasoline and 24.4¢ a gallon for diesel fuel to address infrastructure issues and aid in repairs.

Conducted by The Mineta Transportation Institute at San Jose State University, the national study asked participants if they would support raising the federal gas tax rate by 10¢ per gallon. While 75 percent of respondents support a 10¢ (per gallon) gas tax increase if the revenue raised is dedicated to maintenance projects, only 44% support the same increase if the money is used more generally to maintain and improve the transportation system.

Other findings include:

  • A majority valued the idea of using the gas tax revenue on improvements across different transportation modes, including for both road and public-transit-related projects.
  • If Congress were to adopt a federal mileage fee to replace the gas tax, more than three-quarters would prefer to pay monthly or at the time they buy fuel or charge a vehicle, while 23% preferred to pay an annual bill.
  • Respondents thought mileage fee rates should be lower for electric vehicles than for gas and diesel vehicles.

Taking into account how much fuel your equipment fleet consumes during an average winter, alongside how much gasoline and diesel you couple potentially use during an aggressive winter, what sort of impact would a 10¢ per gallon tax have on your bottom line?




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Supercharge Your Biz

I recently came across a great article authored by Silvia Coulter, the Co-founding Principal of LawVision, a firm that provides business coaching to law firms. Coulter, herself, has an extensive background in sales, client planning and leadership development. Her article aims to supercharge business development, and focused on topics that are universal to all business owners, not just legal pros.

So, with Coulter's permission, here are her tips (a few slightly modified for this audience) you can employ right now to fuel, grow and expand your snow and ice management business.

Make it easy for people to do business with you.

Add your contact information to the emails you initiate and to the emails to which you reply. It’s easy and it makes life easier for people who are trying to find your contact information. In Outlook, click on Tools; Options; Mail Format and Signatures, and check the box to add your contact info to all messages.

Make your contact information user-friendly.

Allow for people to download your v-card from your bio. Then all your contacts have to do is click your v-card and save it in their files. Again, this makes it easy for them to do business with you. If they have to copy your information from your bio manually, it may not get done and then your info is not what’s in their files!

Categorize your contacts in Outlook.

Go to your “Contacts” folder and look for the “Category” label and click on it. You can add multiple (not too many!) categories to sort through your contacts quickly and efficiently. Most company databases easily transfer this information from Outlook to the database information you have on file. This allows you to then sort through your contacts for specific purposes. To be totally efficient, print out your contacts and write onto your list which categories you want each contact to be labeled. Some of the suggestions we have: industry, specialty, position, holiday card, gender, etc.

Rebuild past relationships.

So often we try to meet new people and we already have a lot of good clients who are contacts. Make it a point to call every past client you’ve ever had. They are either referral sources or sources of new business (repeat business) for you. This is one of the best ways to obtain new business. It works all the time for our clients. Call them to find out how they are doing. Go back at least 10 years and make it a point to call to say hello and hear how their life/their business is going. You’ll be amazed at the results.

Thank your clients for their business.

It may sound trite, but it works. Make a special effort to write a hand-written note or place a phone call to each client and thank him/her for doing business with you/your firm. They will always appreciate the special effort.

Send a gift.

Everyone likes presents. Send a book from the NY Times bestseller list for summer reading; send your favorite new book on leadership to owners/managers with whom you do business. For people who send referrals your way, thank them by sending a thank you gift for the gesture once you land the client. For referrals that may not end up as a client, send the referring party a thank you note for thinking of you. These gestures build relationships.

Know your clients.

Identify the top five clients with whom you work. Take each to lunch or schedule a virtual lunch, and learn more about their business. If you are limited due to distance, then visit their web site and learn about their business goals and products by reading press releases, their mission statement and investor relations’ pages if public. Ask them how they are doing this year with their goals. People like to know they matter and that you’re interested. We hear from clients that few of those with whom they have outside relationships ask these questions.

Get set up on Linked In and Facebook.

Complete your profiles so it’s easy to find you. Keep in mind you will want to maintain the utmost professional profile at all times. Again, make it easy for people to find you and to do business with you. To learn more about Linked In, visit westlegaledcenter.com for a November 2008 webcast on the topic.

Make yourself memorable.

Don't just say: "I'm a snow contractor." That’s not entirely memorable. Try, “I help businesses reduce their risk to frivolous winter slip-and-fall claims (which focuses on end results and benefits to the perspective client) and when I’m not working for clients, I enjoy hiking and other outdoor activities.” They’ll remember you the next time. Give people opportunities to connect with you by saying things about yourself that they will remember.




Still A Great Place To Work

For the 11th year, DD earns regional workplace accolade.

Kudos to the leadership at Douglas Dynamics, the Milwaukee-based parent company to snow and ice industry brands such as Western, Fisher, Blizzard and SnowEx.

For the 11th consecutive year The Milwaukee Journal Sentinel has name the industry supplier a Top Workplace among medium-sized companies. According to DD, the 70-year-old company is one of only 10 other local companies to be recognized annually since the newspaper started the program 11 years ago.

“It is truly an honor to be recognized as a Top Workplace for 11 consecutive years. Our people are the foundation of our culture and the driving force behind our Company’s growth and success,” said Linda Evans, vice president of human resources, in a statement. “We extend a huge ‘Thank You’ to our entire team of outstanding employees for their continual focus on integrity, teamwork and high performance, which has enabled us to create an ideal work environment for our employees that promotes engagement and personal growth.”

Top Workplaces are nominated by employees and judged solely on employee surveys administered by Energage, a CultureTech specialist company that provides workplace improvement insights from an employee-centric approach. According to the Milwaukee Journal Sentinel, “The program recognizes businesses and organizations in southeast Wisconsin that provide their employees with a great work environment, flexibility, advancement opportunities and other tools they need to succeed.”